Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2018-02-27 - AGENDA REPORTS - PFA 2018 REVENUE BONDS (2)
O Agenda Item: 6 CITY OF SANTA CLARITA AGENDA REPORT PUBLIC HEARINGS 14) CITY MANAGER APPROVAL: "41 , DATE: February 27, 2018 SUBJECT: APPROVAL OF PRELIMINARY OFFICIAL STATEMENT AND BOND PURCHASE AGREEMENT IN CONNECTION WITH THE PROPOSED SANTA CLARITA PUBLIC FINANCING AUTHORITY 2018 REVENUE BONDS (STREETLIGHT ACQUISITION AND RETROFIT PROGRAM) SERIES A AND B DEPARTMENT: Administrative Services PRESENTER: Carmen Magana RECOMMENDED ACTION City Council: 1. Conduct a Public Hearing. 2. Adopt a Resolution approving the issuance of the Santa Clarita Public Financing Authority 2018 Revenue Bonds (Streetlight Acquisition and Retrofit Program) in the aggregate principal amount not to exceed $17,000,000, and approving an Indenture, an Installment Purchase Agreement, a Bond Purchase Agreement, a Continuing Disclosure Certificate, a Preliminary Official Statement and a Final Official Statement in connection therewith, and authorizing the taking of certain other actions in connection therewith. Santa Clarita Public Financing Authority (PFA): Adopt a Resolution approving the issuance of the Santa Clarita Public Financing Authority 2018 Revenue Bonds (Streetlight Acquisition and Retrofit Program) in the aggregate principal amount not to exceed $17,000,000, and approving an Indenture, an Installment Purchase Agreement, a Bond Purchase Agreement, a Preliminary Official Statement and a Final Official Statement in connection therewith, and authorizing the taking of certain other actions in connection therewith. Page 1 Packet Pg. 41 O BACKGROUND On May 23, 2017, the City Council approved a Purchase and Sale Agreement with Southern California Edison (SCE) for the acquisition of the streetlight system within the City of Santa Clarita (City). Final approval of the sale is required to be obtained from the California Public Utilities Commission (PUC). A pre -hearing conference with the PUC was held on December 14, 2017, at which approval was obtained to bring the sale forward to the full PUC Board. Approval from the PUC Board is pending and expected in the near future. The SCE Purchase Agreement provides for the City to acquire the streetlight system for a purchase price of $9,573,728. The City estimates the one-time cost associated with purchasing SCE's streetlight system to be $11,148,728, which includes an additional $1,575,000 for estimated additional poles. The City Council awarded a contract on January 23, 2018, in the amount not to exceed $4,444,513 for the streetlight transition services including retrofit of streetlights to Light -Emitting Diode (LED) technology bringing the estimated total cost of the Project to $15,593,241 to be entirely funded from Bond proceeds. The Bonds will not be sold until final approval of the sale is received from the PUC. The purchase of the streetlight system from SCE and the conversion to LED technology (Project), inclusive of financing, is estimated to result in projected operational savings beginning in fiscal year 2019-20 at approximately $500,000 increasing to over $2 million per year, twenty- five years out. Savings on average increase between $40,000 and $60,000 per year in most years. Present value savings are estimated at $17.7 million and total savings is in excess of $30 million over 30 years. The proposed plan is to finance the costs of the Project through the issuance of municipal revenue bonds. The City's Public Financing Authority (PFA) will issue its 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) (Bonds) in two bond series, one series being taxable. Approximately 75 percent of the Bonds will be issued as tax exempt Series A Bonds, and 25 percent will be issued as Taxable Series B Bonds. At Council's discretion, the City may lease up to approximately 4,500 poles based on potential demand and location, to telecom companies for their internet and phone equipment. Poles which may be leased to telecom companies cannot be financed on tax exempt basis. Leasing the poles will generate income for the City. Any future lease agreements will be brought to Council for consideration. Proceeds of the Bonds will be put into an Acquisition Fund and used to finance the Project including the purchase of street lights from SCE and the retrofit with LED lighting. The City and the PFA will enter into an Installment Purchase Agreement whereby the City will make installment payments from the City's existing lighting assessment districts and other property tax collections to acquire the Project from the PFA. The installment payments will be equal to the debt service on the Bonds. The PFA transfers the installment payments to the bond trustee to pay bond holders. The costs of undertaking this financing will be funded entirely by the proposed bond issue. The proposed Bonds are expected to be rated by Standard and Poor's Corporation and are expected to be sold with "AA" category bond ratings. Bond insurance may be considered. The Bonds are proposed to be sold through a negotiated sale with Piper Jaffray & Co. (Underwriter) in early Page 2 Packet Pg. 42 O March with closing scheduled for later in that month. The proposed term of the bonds is 30 years and the payments are expected to level. The final interest cost will depend on market interest rates at time of sale. The current estimated all in true interest cost is 3.75 percent. The public disclosures required under SB450, effective January 1, 2018, are incorporated herein. The estimates have been determined as of February 6, 2018, specifically: 1) The all in true interest cost of the bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of bonds is currently estimated to be 3.75 percent. 2) The finance charge of the bonds, which means the sum of all fees and charges paid to third parties is estimated to be $266,813. Bond insurance and Bonds reserve fund surety premiums, which lower interest cost in excess of the fees charged, are estimated to be $0. Such insurance is not expected to be cost effective; however, bond insurance may still be considered. 3) The amount of proceeds received by the public body for sale of the bonds less the finance charge of the bonds described and any reserves or capitalized interest paid or funded with proceeds of the bonds is estimated to be $15,595,171. 4) The total payment amount means the sum total of all payments the borrower will make to pay debt service on the bonds, plus any finance charge not paid with the proceeds of the bonds. The total payment amount calculated to the final maturity of the bonds is estimated to be $25,630,052. The action today by the City is to hold a public hearing relating to the issuance of the Bonds and for City Council to approve the issuance of the Bonds, along with the related bond documents. The action today by the PFA is to also approve the issuance of the Bonds, along with related bond documents. At the conclusion of the public hearing, City Council and the PFA will consider adoption of the resolutions authorizing the issuance of the Bonds. A resolution for the City and the PFA is attached and would authorize the issuance of a not -to -exceed amount of $17,000,000 in Bonds. Final sizing will be determined at time of bond sale. The Bonds will be sold on a negotiated basis. The resolution also approves the various documents in connection with the issuance of the Bonds. General Summary of Security: The Bonds are secured by the revenues from the installment payments. Pledged to the payment of the installment payments by the City are (1) assessments levied in the Santa Clarita Landscaping and Lighting District: Streetlighting Zone A and Streetlighting Zone B, and (2) the ad valorem revenues from Streetlight Maintenance District No. 2, formerly County district CLMD 1867, which the City has always included in its streetlighting budgets. Potential investors will look closely at these two sources of funds. Installment payments will be funded first from these sources before these sources may be used for operation and other expenses of the lighting services provided by the City. The financing documents are described below. Indenture: Key legal document that lays out the legal structure and terms of the financing of the Bonds. Revenues received from the Installment Purchase Agreement are assigned to the trustee Page 3 Packet Pg. 43 to make debt service payments on the Bonds. The indenture specifies payment dates, maturity dates of the Bonds; revenues and accounts specifically pledged to the repayment of the Bonds; the project fund; flow of funds, default and remedy provisions; redemption and defeasance provisions in the event the Bonds are prepaid or redeemed early; and covenants of the issuer. It is drafted by Bond Counsel and executed by the PFA and The Bank of New York Mellon, as trustee. Installment Purchase Agreement: Document in which the City purchases the Project from the PFA. It specifies amount and dates of installment payments; revenues and accounts specifically pledged to make the Installment Payments; flow of funds; default and remedy provisions; prepayment provisions; and covenants of the City regarding use of the project and funds pledged to the payment of the installment payments. The document is drafted by Bond Counsel and executed by the City and PFA. Continuing Disclosure Certificate: This undertaking outlines the updated information related to the security that the City will agree to provide to the bond markets. Disclosure is required annually and on an exceptional basis for any major "material" event. This document is drafted by Bond Counsel and executed by the City. Preliminary Official Statement (POS): The POS is the "offering document" for the Bonds. The City and the PFA have an obligation to ensure that the POS includes all information that would be material to a prospective investor's decision whether to purchase the Bonds. The POS describes the terms of the bonds, the pledged revenues, the PFA and City, investor risk, and other information for potential investors. The City's legal counsel, consultants, and the Underwriter have participated in preparing the POS, the City/PFA and staff are ultimately responsible for ensuring that the POS is accurate, contains no misleading information, and does not omit any information necessary to make the POS not misleading to investors. Bond Purchase Contract: The Bond Purchase Contract is the contract among the PFA, the City and the Underwriter, pursuant to which the Underwriter agrees to buy the Bonds when issued, subject to certain termination events, for resale to investors. The bond sale is scheduled for March, with a closing by the end of March. More specific details of the financing can be found in the drafts of the documents referenced above. The documents being recommended for approval are available in the office of the City Clerk. Adoption of the attached resolutions approves the issuance by the PFA of the Bonds, and authorizes the City and the PFA to enter into certain related documents. The PFA resolution also approves the following appointments: a) C.M. de Crinis & Co., Inc., as Municipal Advisor; b) Piper Jaffray & Co. as Underwriter; and c) Norton Rose Fulbright US LLP, as Bond and Disclosure Counsel. ALTERNATIVE ACTION Other action as determined by City Council. O Page 4 Packet Pg. 44 FISCAL IMPACT Annual debt service payments on the Bonds are expected to average $854,335 beginning in 2018. Operational savings, inclusive of financing, are expected to begin in fiscal year 2019-20 at approximately $500,000 increasing to over $2 million per year, twenty-five years out. Savings on average increase between $40,000 to $60,000 per year in most years. There may also be new additional revenues generated from leasing poles to telecom companies, at Council's discretion. ATTACHMENTS Public Hearing Notice City Council Resolution PFA Resolution Preliminary Official Statement (available in the City Clerk's Reading File) Bond Purchase Agreement (available in the City Clerk's Reading File) Continuing Disclosure Certificate (available in the City Clerk's Reading File) Indenture (available in the City Clerk's Reading File) Installment Purchase Agreement (available in the City Clerk's Reading File) O Page 5 Packet Pg. 45 CITY OF SANTA CLARITA NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN: A Public Hearing will be held before the City Council of the City of Santa Clarita in the City Hall Council Chambers, 23920 Valencia Boulevard, first floor, Santa Clarita, California, on the 27th day of February 2018, at or after 6:00 p.m., to consider the proposed issuance of the Santa Clarita Public Financing Authority 2018 Revenue Bonds (Streetlight Acquisition and Retrofit Program) (the "Bonds"). A portion of the proceeds of the Bonds will be used to assist the City in financing the acquisition and installation of approximately 17,856 streetlight facilities located in the City from Southern California Edison and certain improvements related thereto, including LED light retrofit program. At the hearing, the testimony of all interested persons will be heard. Further information may be obtained by contacting the Administrative Services Department, 23920 Valencia Boulevard, Santa Clarita, CA 91355; (661) 255-4960, Cindy Valdivia, Administrative Analyst. If you wish to challenge this action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council, at, or prior to, the public hearing. Dated: February 12, 2018 Mary Cusick City Clerk Publish Date: February 15, 2018 6.a Packet Pg. 46 RESOLUTION NO. 18 - RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING THE ISSUANCE OF SANTA CLARITA PUBLIC FINANCING AUTHORITY 2018 REVENUE BONDS (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $17,000,000, AND APPROVING AN INSTALLMENT PURCHASE AGREEMENT, A BOND PURCHASE CONTRACT, A CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND A FINAL OFFICIAL STATEMENT IN CONNECTION THEREWITH, AND AUTHORIZING THE TAKING OF CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the Santa Clarita Public Financing Authority (Authority) is a joint exercise of powers authority duly organized and existing under and pursuant to that certain Joint Exercise Powers Agreement by and among the City of Santa Clarita (City), the Successor Agency to the Redevelopment Agency of the City, as successor to the Redevelopment Agency of the City, and the Santa Clarita Parking Authority, under the provisions of Articles 1 through 4, commencing with Section 6500, of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (Act), and is authorized pursuant to Article 4 of the Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing and refinancing for capital improvements of member entities of the Authority; and WHEREAS, the Authority desires to assist the City in financing the acquisition and installation of a minimum of 16,125 streetlight facilities located in the City from Southern California Edison and certain improvements related thereto, including Light -Emitting Diode (LED) light retrofit program (Project), and has determined to issue its 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A (Tax -Exempt Bonds) and its 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B (Taxable Bonds), and together with the Tax -Exempt Bonds, (the Bonds) for such purpose; and WHEREAS, the City will sell to the Authority the Project in consideration for the issuance of the Bonds and simultaneously purchase the Project from the Authority in consideration for installment payments equal to the principal and interest coming due on the Bonds pursuant to an Installment Purchase Agreement (Installment Agreement); and WHEREAS, as a condition precedent to the Bonds to provide financing for the Project, Section 6586.5 of the California Government Code requires that the City approve the proposed financing by the Authority and that the City make certain findings with respect to such financing, as hereinafter set forth, and said Section 6586.5 further requires that such approval be given and findings be made only after noticed public hearing thereon; and WHEREAS, as required by Section 6586.5, the City has caused publication of a notice of a public hearing on the financing of the Project once at least five days prior to the hearing in a newspaper of general circulation in the City; and WHEREAS, this Council held a public hearing at which all interested persons were provided the opportunity to speak on the subject of financing the Project; and 6.b Packet Pg. 47 WHEREAS, the City has duly considered such transactions and wishes at this time to approve certain matters relating to the transactions as being in the public interest of the City. NOW, THEREFORE, the City Council of the City of Santa Clarita (City Council), does hereby resolve as follows: Findings. The City Council hereby finds and determines that the recitals hereto are true and correct. SECTION 1. Determinations. Pursuant to the Act, and based on the information provided to the City Council by City staff and consultants, all as set forth in the proceedings and documents providing for the issuance and delivery of the Bonds, the City Council hereby finds and determines that the issuance of the Bonds to finance the Project and the transactions related thereto will result in significant public benefits within the contemplation of Section 6586 of the of the California Government Code, including, but not limited to, demonstrable savings in bond preparation, bond underwriting and bond issuance costs. SECTION 2. Approval of Bonds. The City Council hereby approves the issuance of the Bonds by the Authority in the aggregate principal amount not to exceed $17,000,000. SECTION 3. Installment Agreement. The City Council hereby approves the Installment Agreement, in substantially the form on file with the City Clerk and presented to the City Council at this meeting. Any one of the Mayor, the Vice Mayor, the City Manager, the Deputy City Manager, or the Director of Administrative Services, and each of them (each an Authorized Officer and collectively, Authorized Officers), is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Installment Agreement, 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. SECTION 4. Continuing Disclosure Certificate. The City Council hereby approves the Continuing Disclosure Certificate, in substantially the form on file with the City Clerk and presented to the City Council at this meeting. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate 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. SECTION 5. The Sale of Bonds. City Council hereby authorizes the sale of the Bonds to Piper Jaffray & Co., as underwriter (Underwriter) pursuant to and in accordance with the Bond Purchase Contract, in substantially the form on file with the City Clerk and presented to the City Council at this meeting. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Bond Purchase Contract, 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. The underwriter's discount for the Bonds specified in the Bond Purchase Contract shall not exceed 0.5 percent of the par amount of the Bonds. The true interest cost on the Bonds shall not exceed 4.75 percent. 2 6.b Packet Pg. 48 SECTION 6. Preliminary Official Statement. The City Council hereby approves the form of the Preliminary Official Statement (Preliminary Official Statement), in substantially the form on file with the City Clerk and presented to the City Council at this meeting, with such changes and modifications as shall be necessary or appropriate for completion to the satisfaction of any Authorized Officer. Any one of the Authorized Officers is authorized and directed, on behalf of the City to deem the Preliminary Official Statement "final" pursuant to Rule 15c2-12 under the Securities and Exchange Act of 1934. The City Council further approves distribution of the Preliminary Official Statement by the Underwriter to persons who may be interested in purchasing the Bonds. Any one of the Authorized Officers is authorized and directed to execute and deliver a final Official Statement in substantially the form of the Preliminary Official Statement hereby approved, with such additions thereto and changes therein as are consistent with this Resolution and recommended or approved by disclosure counsel to the City and approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 7. Further Action. The Authorized Officers, the other officers and employees of the City, the members of the City Council, Bond Counsel, Disclosure Counsel, and the other consultants to and agents of the City, are each hereby authorized and directed to do all things and take all actions necessary or desirable to effectuate the transactions contemplated by this Resolution, and to execute such other assignments, agreements, certificates, receipts, endorsements, orders, opinions, and other documents in connection with such transactions, including, without limitation, closing documents, investment agreements, bond insurance, reserve fund surety policies, and guaranteed investment agreements, in connection with the issuance of the Bonds, and all actions heretofore taken by the officers, employees, and agents of the City in connection with the issuance of the Bonds are hereby ratified, approved, and confirmed in every respect. SECTION 8. Effective Date. This Resolution shall take effect immediately upon its adoption. PASSED, APPROVED, AND ADOPTED this day of February, 2018 ATTEST: CITY CLERK DATE: 3 MAYOR 6.b Packet Pg. 49 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Mary Cusick, 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 the regular meeting thereof, held on the day of February, 2018, by the following vote: AYES: COUNCIL,MEMBERS: NOES: COUNCIL,MEMBERS: ABSENT: COUNCIL,MEMBERS: 4 CITY CLERK 6.b Packet Pg. 50 RESOLUTION NO. RESOLUTION OF THE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY APPROVING THE ISSUANCE OF SANTA CLARITA PUBLIC FINANCING AUTHORITY 2018 REVENUE BONDS (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $17,000,000, AND APPROVING AN INDENTURE, AN INSTALLMENT PURCHASE AGREEMENT, A BOND PURCHASE CONTRACT, A PRELIMINARY OFFICIAL STATEMENT AND A FINAL OFFICIAL STATEMENT IN CONNECTION THEREWITH, AND AUTHORIZING THE TAKING OF CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the Santa Clarita Public Financing Authority (Authority) is a joint exercise of powers authority duly organized and existing under and pursuant to that certain Joint Exercise Powers Agreement by and among the City of Santa Clarita (City), the Successor Agency to the Redevelopment Agency of the City, as successor to the Redevelopment Agency of the City, and the Santa Clarita Parking Authority, under the provisions of Articles 1 through 4, commencing with Section 6500, of Chapter 5 of Division 7 of Title I of the Government Code of the State of California (Act), and is authorized pursuant to Article 4 of the Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing and refinancing for capital improvements of member entities of the Authority; and WHEREAS, the Authority desires to assist the City in financing the acquisition and installation of a minimum of 16,125 streetlight facilities located in the City from Southern California Edison and certain improvements related thereto, including Light -Emitting Diode (LED) light retrofit program (Project), and has determined to issue its 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A (Tax -Exempt Bonds) and its 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B (Taxable Bonds), and together with the Tax -Exempt Bonds (the Bonds) for such purpose; and WHEREAS, the City will sell to the Authority the Project in consideration for the issuance of the Bonds and simultaneously purchase the Project from the Authority in consideration for installment payments equal to the principal and interest coming due on the Bonds pursuant to an Installment Purchase Agreement (Installment Agreement); and WHEREAS, as required by Section 6586.5 of the Act, the City has caused publication of a notice of a public hearing on the financing of the Project once at least five days prior to the hearing in a newspaper of general circulation in the City; and WHEREAS, the City Council held a public hearing at which all interested persons were provided the opportunity to speak on the subject of financing the Project, and, following the hearing, found that issuance of the Bonds for the purpose of financing the Project will result in significant public benefits of the type described in Section 6586 of the Act, including, but not limited to, demonstrable savings in bond preparation, bond underwriting and bond issuance costs; and 1 6.c Packet Pg. 51 6,c WHEREAS, the Board of Directors has duly considered these transactions and wishes at this time to approve these transactions and make certain findings regarding significant public benefits to the Authority's members with respect to these transactions; NOW, THEREFORE, the Board of Directors of the Santa Clarita Public Financing Authority (Board) does hereby resolve as follows: SECTION 1. Findings. The Board hereby finds and determines that the recitals hereto are true and correct. SECTION 2. Determinations. Pursuant to the Act, the Board hereby finds and determines that the issuance of the Bonds to finance the Project and the transactions related thereto will result in significant public benefits to its members within the contemplation of Section 6586 of the Act. SECTION 3. Approval of Bonds. The Authority hereby approves the issuance of the Bonds in the aggregate principal amount not to exceed $17,000,000 pursuant to the Indenture (Indenture), and approves the Indenture in substantially the form on file with the Secretary of the Authority and presented to the Board at this meeting. Any one of the Chairman, the Executive Director and the Treasurer of the Authority, and each of them, and any designee of any of them (each, an Authorized Officer and collectively, the Authorized Officers), is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Indenture, 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. SECTION 4. Installment Agreement. The Authority hereby approves the Installment Agreement, in substantially the form on file with the Secretary of the Authority and presented to the Board at this meeting. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Installment Agreement, 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 SECTION 5. The Sale of Bonds. The Authority hereby authorizes the sale of the Bonds to Piper Jaffray & Co., as underwriter (Underwriter) pursuant to and in accordance with the Bond Purchase Contract, in substantially the form on file with the Secretary of the Authority and presented to the Board at this meeting. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Bond Purchase Contract, 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. The underwriter's discount for the Bonds specified in the Bond Purchase Contract shall not exceed 0.5 percent of the par amount of the Bonds. The true interest cost on the Bonds shall not exceed 4.75 percent. SECTION 6. Preliminary Official Statement. The Authority hereby approves the form of the Preliminary Official Statement (Preliminary Official Statement), in substantially the form on file with the Secretary of the Authority and presented to the Board at this meeting, with such changes and modifications as shall be necessary or appropriate for completion to the satisfaction 2 Packet Pg. 52 of any Authorized Officer. Any one of the Authorized Officers is authorized and directed, on behalf of the Authority to deem the Preliminary Official Statement "final" pursuant to Rule 15c2-12 under the Securities and Exchange Act of 1934. The Authority further approves distribution of the Preliminary Official Statement by the Underwriter to persons who may be interested in purchasing the Bonds. Any one of the Authorized Officers is authorized and directed to execute and deliver a final Official Statement in substantially the form of the Preliminary Official Statement hereby approved, with such additions thereto and changes therein as are consistent with this Resolution and recommended or approved by disclosure counsel to the Authority and approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 7. Bond Insurance. Any one of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Authority, to evaluate and select one or more municipal bond insurers for all or any portion of the Bonds and to execute and deliver such contracts and agreements with such bond insurers 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. SECTION 8. Professional Services. The Authority hereby appoints C.M. de Crinis & Co., Inc., as Municipal Advisor, Piper Jaffray & Co., as Underwriter, Norton Rose Fulbright US LLP, as Bond and Disclsoure Counsel, in connection with the issuance of the Bonds. SECTION 9. Further Action. The Authorized Officers, the other officers and employees of the Authority, the members of the Authority's Board of Directors, Bond Counsel, Disclosure Counsel, and the other consultants to and agents of the Authority, are each hereby authorized and directed to do all things and take all actions necessary or desirable to effectuate the transactions contemplated by this Resolution, and to execute such other assignments, agreements, certificates, receipts, endorsements, orders, opinions, and other documents in connection with such transactions, including, without limitation, closing documents in connection with the issuance of the Bonds, and all actions heretofore taken by the officers, employees, and agents of the Authority in connection with the issuance of the Bonds are hereby ratified, approved, and confirmed in every respect. SECTION 10. Effective Date. This Resolution shall take effect immediately upon its adoption. PASSED, APPROVED, AND ADOPTED this day of February, 2018 CHAIRPERSON ATTEST: SECRETARY DATE: 6,a Packet Pg. 53 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Mary Cusick, Secretary of the Santa Clarita Public Financing Authority, do hereby certify that the foregoing Resolution was duly adopted by the Board of Directors of the Santa Clarita Public Financing Authority at the regular meeting thereof, held on the day of February, 2018, by the following vote: AYES: BOARDMEMBERS: NOES: BOARDMEMBERS: ABSENT: BOARDMEMBERS: 0 CITY CLERK 6.c Packet Pg. 54 2/16/18 y PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY_, 2018 o.a NEWISSUE— BOOK-ENTRYONLY RATINGS: S&P "_ " (Insured) / "_" (Underlying) (See "RATINGS" herein) 8 In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, under existing statutes, regulations, rulings and court decisions, and assuming compliance with the tax covenants described herein, interest on the Tax -Exempt Bonds is excluded pursuant to o w 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 o item of tax preference for purposes of the federal alternative minimum tax. It is also the opinion of Bond Counsel that under existing law interest on the Bonds is exempt from personal income taxes of the State of California. The Authority has taken no action to cause, and does not intend, interest on the Taxable Bonds to be 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. See "TAX MATTERS" herein. U � a Q� SNNTA C SANTA CLARITA PUBLIC FINANCING AUTHORITY (Streetlights Acquisition and Retrofit Program) o 0 1 $[Series A principal amount] * $[Series B principal amount] * 2018 REVENUE BONDS 2018 TAXABLE REVENUE BONDS w E°15DECE4" SERIES A SERIES B ow � o o Dated: Date of Delivery Due: September 1, as set forth on inside cover 0 The Santa Clarita Public Financing Authority (the "Authority") will issue its 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A (the "Tax -Exempt Bonds") and its 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B (the "Taxable Bonds" and together with the Tax -Exempt Bonds, the `Bonds") under an Indenture, dated as of March 1, 2018, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). Proceeds from the sale of the Bonds will be used to (i) finance the acquisition and installation of certain streetlight improvements and LED light retrofit program (the "Project'), and (ii) pay certain costs of issuing the Bonds. The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (`DTC"), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book -entry system maintained by DTC. Interest on the Bonds is payable semiannually on March 1 and September 1 each year, commencing September 1, 2018. See "THE BONDS — Issuance of the Bonds" and "APPENDIX E — The Book -Entry y System" herein. The Bonds are subject to redemption prior to maturity as described herein. See "TFIE BONDS — Redemption" herein. J P � P t3' P The Bonds are special obligations of the Authority. The Bonds will be payable solely from and secured by (i) Revenues, which pursuant to the o Indenture consist of all Installment Payments received or receivable by the Authority pursuant to an Installment Purchase Agreement, dated as of o March 1, 2018 (the "Installment Purchase Agreement"), by and between the City, as purchaser, and the Authority, as seller, and (ii) amounts held in certain funds and accounts held by the Trustee under the Indenture. Pursuant to the Indenture, the Authority has assigned to the Trustee its right to receive the Installment Payments under the Installment Purchase Agreement and any and all of its rights and privileges thereunder, except for the ° Authority's rights to indemnification and payment of certain fees and expenses. ow o The Installment Payments are special limited obligations of the City payable solely from and secured by a pledge of and first hen on amounts on deposit in the Streetlighting Revenue Fund consisting of Assessment Revenues and Ad Valorem Revenues (as defined in the Installment Purchase Agreement). In July 1998, two County of Los Angeles ("County") street lighting maintenance districts were transferred to the jurisdiction of the City. One district, currently a part of the Santa Clarita Landscaping and Lighting Maintenance District (the "District'), was formed by the County in July 1979 pursuant to the Landscaping and Lighting Act of 1972 (Section 22500 et seq. of the California Streets and Highways Code) y (the "Act"). "Assessment Revenues" from the District mean (a) the proceeds received by the City of the Streetlighting Levy A and Levy B assessments levied within the District pursuant to the Act (the "Assessments"), (b) income and gains with respect to the investment of amounts on deposit in the funds and accounts established under the Indenture, and (c) proceeds of the redemption or sale of property sold as a result of o foreclosure of the lien of the Assessments. Notwithstanding the foregoing, "Assessment Revenues" does not include any penalties or interest in oexcess of the interest payable on the Bonds collected in connection with delinquent Assessments. The other district, Streetlighting Maintenance 3 District No. 2 ("SMD No. 2") was previously formed by the County and funded by ad -valorem property tax revenues pursuant to the Improvement Act of 1911. "Ad Valorem Revenues" mean, to the extent permitted by law, the ad valorem streetlighting tax revenues derived from SMD No. 2 and deposited into the Streetlighting Revenue Fund. The Ad Valorem Revenues are part of the 1% property tax allocation for certain tax rate areas within the City. See "SECURITY FOR THE BONDS" herein. 7:; Unpaid Assessments and the Ad Valorem Revenues do not constitute a personal indebtedness of the owners of the parcels relating thereto, and the property owners have made no commitment to pay the principal of or interest on the Bonds. In the event of delinquency, proceedings may be conducted only against the real property securing the delinquent Assessment or Ad Valorem Revenues. There is no assurance the property owners 4 will be able to pay the Assessments and Ad Valorem Revenues or that they will pay the Assessments and Ad Valorem Revenues even though w financially able to do so. U U � � This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. See "BOND OWNERS' RISKS" herein. .= THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM, AND SECURED BY A PLEDGE OF, a" INSTALLMENT PAYMENTS AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE. THE AUTHORITY HAS NO Ho. TAXING POWER THE CITY'S OBLIGATION TO PAY INSTALLMENT PAYMENTS 1S A SPECIAL OBLIGATION OF THE CITY LIMITED SOLELY TO THE ASSESSMENT REVENUES AND AD VALOREM REVENUES. NO OTHER FUNDS OR PROPERTY OF THE 2/16/18 CITY ARE LIABLE FOR THE PAYMENT OF THE INSTALLMENT PAYMENTS OR ANY OTHER AMOUNTS PAYABLE UNDER THE INSTALLMENT PURCHASE AGREEMENT OR THE INDENTURE. NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE INSTALLMENT PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. The Bonds are offered when, and if issued and accepted by the Underwriter subject to the approval, as to their legality, of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel. Certain legal matters will be passed on for the Authority and for the City by Burke Williams & Sorensen LLP, Los Angeles, California, City Attorney and Authority Counsel, and by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Nossaman LLP, Irvine, California. It is expected that the Bonds will be available for delivery in book -entry form on or about March 2018. Date: February , 2018 Piper Jaffray *Preliminary, subject to change. MATURITY SCHEDULES Base Cusip SANTA CLARITA PUBLIC FINANCING AUTHORITY (Streetlights Acquisition and Retrofit Program) $[Series A principal amount]' 2018 REVENUE BONDS SERIES A Maturity Date Principal September 1) Amount Interest Rate Yield $ % Term Bond due September 1, 20 — Yield $[Series B principal amount]* 2018 TAXABLE REVENUE BONDS SERIES B Maturity Date Principal (September 1) Amount Interest Rate Yield $ % Term Bond due September 1, 20 — Yield 'Preliminary, subject to change. Price CUSIPfi %, Price: CUSIPfi: Price CUSIPfi %, Price: , CUSIPfi: t CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright© 2018 CUSIP Global Services. All rights reserved CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in anyway as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Neither the Authority, the City nor the Underwriter take any responsibility for the accuracy ofsuch numbers. SANTA CLARITA PUBLIC FINANCING AUTHORITY CITY OF SANTA CLARITA CITY COUNCIL AND AUTHORITY OFFICERS Laurene F. Weste, Mayor Marsha A. McLean, Mayor Pro Tem Robert C. Kellar, Councilmember William Miranda, Councilmember Cameron Smyth, Councilmember CITY OFFICIALS Kenneth W. Striplin, Ed.D., City Manager Frank Oviedo, Assistant City Manager Darren Hernandez, Deputy City Manager Carmen Magaiia, Director ofAdministrative Services Mary Cusick, City Clerk Joseph M. Montes, City Attorney SPECIAL SERVICES Bond and Disclosure Counsel Norton Rose Fulbright US LLP Los Angeles, California Trustee The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Municipal Advisor C.M. de Crinis & Co., Inc. Glendale, California Underwriter's Counsel Nossaman LLP Irvine, California GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or for any other purpose. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority or City in any press release and in any oral statement made with the approval of an authorized officer of the Authority or City, the words or phrases "will likely resulf', "are expected to", "will continue", "is anticipated", "estimate", "project", "forecast", "expect", "intend" and similar expressions identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the Authority or City since the date hereof. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. 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 a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. 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. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority since the date hereof. All summaries of the Indenture, the Installment Purchase Agreement (as such terms are defined herein), or other documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. Public Offering Prices. The Underwriter may offer and sell the Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and the Underwriter may change those public offering prices from time to time. Web Page. The City of Santa Clarita maintains a website. However, the information maintained on the website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds. TABLE OF CONTENTS cont'd Page INTRODUCTION........................................................................................................................................... 1 Purposeof the Bonds.............................................................................................................................1 Issuanceof the Bonds......................................................................................................................... 1 Securityfor the Bonds........................................................................................................................ 2 TheCity of Santa Clarita.................................................................................................................... 2 LimitedObligations............................................................................................................................ 3 ContinuingDisclosure...................................................................................................................... 3 BondOwners' Risks..............................................................................................................................3 Limited Scope of Official Statement.................................................................................................. 3 PLANOF FINANCE..........................................................................................................................................4 ESTIMATED SOURCES AND USES OF FUNDS.........................................................................................4 THEBONDS.......................................................................................................................................................5 AuthorityFor Issuance....................................................................................................................... 5 Issuanceof the Bonds......................................................................................................................... 5 Redemption......................................................................................................................................... 6 Transfer or Exchange of Bonds............................................................................................................. 8 SECURITYFOR THE BONDS......................................................................................................................... 9 LimitedObligation.............................................................................................................................. 9 Revenues; Revenue Fund................................................................................................................. 8 Installment Payments; Streetlighting Revenue Fund..................................................................... 11 Limited Obligation Upon Delinquency............................................................................................ 13 Collectionof Assessments...................................................................................................................13 Annual Assessments and Liens...........................................................................................................14 No Los Angeles County Tax Loss Reserve..................................................................................... 15 No Outstanding Parity Obligations.................................................................................................. 15 NoAdditional Bonds...........................................................................................................................15 Additional Obligations on a Parity with Installment Payments Solely for Refunding Purposes .... 15 Ownershipof Property...................................................................................................................... 16 THECITY...................................................................................................................................................... 16 GovernmentalOrganization............................................................................................................. 16 City and District Administration...................................................................................................... 17 THEAUTHORITY....................................................................................................................................... 18 AD VALOREM REVENUES AND ASSESSMENTS..............................................................................17 History...........................................................................................................................................17 SMD No. 2 and the Ad Valorem Revenues.................................................................................17 TaxRates and Levies..................................................................................................................... 20 Assessed Valuation of SMD No. 2................................................................................................ 21 SMD No. 2 Ad Valorem Collections and Delinquencies............................................................ 23 TaxRates....................................................................................................................................... 24 Largest Tax Payers for SMD No. 2............................................................................................... 25 Assessments................................................................................................................................... 25 Description and Purpose of the Assessments......................................................................................26 Excerpt of Engineer's Report; Basis of Special Benefit Proportioning ........................................... 26 Propertyin the District...................................................................................................................... 29 Assessment Collection History......................................................................................................... 31 Budget; Actual Revenues and Expenditures.................................................................................... 32 Directand Overlapping Debt............................................................................................................ 37 SCHEDULE OF INSTALLMENT PAYMENTS......................................................................................... 40 TABLE OF CONTENTS cont'd DEBT SERVICE COVERAGE FOR THE INSTALLMENT PAYMENTS ....................... BONDOWNERS' RISKS.................................................................................................... General...................................................................................................................... Property Owners Not Obligated to Pay Bonds or Assessments ................................ Bankruptcy and Foreclosure..................................................................................... Availability of Funds to Pay Delinquent Assessments .......................................... Limited Obligation Upon Delinquency.................................................................. Levy of Assessments; Procedural Limitations and Risks ...................................... Collection of Assessments; Legal Remedies......................................................... Limitations on Enforceability of Remedies........................................................... Interest of Federal Agencies or Government Sponsored Enterprises in Properties PropertyValues...................................................................................................... SeismicFactors...................................................................................................... Riskof Floods........................................................................................................ Risk of Structural and Wildland Fire..................................................................... Hazardous Substances............................................................................................ Future Overlapping Indebtedness.......................................................................... No Acceleration Provision..................................................................................... Investmentof Funds............................................................................................... Lossof Tax Exemption.......................................................................................... SecondaryMarket.................................................................................................. CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS....... Property Tax Rate Limitations - Article XIIIA...................................................... Legislation Implementing Article XIIIA............................................................... Appropriation Limitation - Article XIIIB.............................................................. Property Tax Collection Procedures...................................................................... Proposition218...................................................................................................... CONTINUINGDISCLOSURE.......................................................................................... LEGALOPINION.............................................................................................................. MUNICIPALADVISOR.................................................................................................... TAXMATTERS................................................................................................................. TaxExempt Bonds................................................................................................. Tax Accounting Treatment of Bond Premium ...................................................... Other Tax Consequences....................................................................................... RATINGS........................................................................................................................... NOLITIGATION............................................................................................................... UNDERWRITING.............................................................................................................. MISCELLANEOUS........................................................................................................... APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS .............. APPENDIX B — GENERAL INFORMATION ABOUT THE CITY OF SANTA AND THE COUNTY OF LOS ANGELES .................................. APPENDIX C — FORM OF BOND COUNSEL OPINION ................................... APPENDIX D — FORM OF CONTINUING DISCLOSURE CERTIFICATE....... APPENDIX E — THE BOOK -ENTRY SYSTEM .................................................. Page 41 43 43 44 44 45 45 45 46 47 47 48 49 49 50 50 51 51 51 51 52 52 52 52 53 53 54 55 58 58 58 58 59 60 64 64 65 65 ........................... A-1 B-1 C-1 D-1 E-1 OFFICIAL STATEMENT SANTA CLARITA PUBLIC FINANCING AUTHORITY (Streetlights Acquisition and Retrofit Program) $[Series A principal amount]' $[Series B principal amount]* 2018 REVENUE BONDS 2018 TAXABLE REVENUE BONDS SERIES A SERIES B This Official Statement, including the cover page and the appendices hereto, is provided to furnish information regarding the issuance by the Santa Clarita Public Financing Authority (the `Authority') of its 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A (the "Tax -Exempt Bonds') and its 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B (the "Taxable Bonds " and together with the Tax -Exempt Bonds, the "Bonds'). Potential investors are encouraged to read the entire Of`ilc Statement. Definitions of certain terms used in this Official Statement are set forth in "APPENDIXA SUMMARY OF PRINCIPAL LEGAL DOCUMENTS. " INTRODUCTION This introduction is not a summary of this Official Statement, and is qualified by the more complete and detailed information contained in the entire Official Statement and the documents described or summarized herein. The sale of Bonds to potential investors is made only by means of the entire Official Statement. Purpose of the Bonds Proceeds from the sale of the Bonds will be used to (i) finance the acquisition and installation of certain streetlight improvements and LED light retrofit program (the "Project"), and (ii) pay certain costs of issuing the Bonds. See "PLAN OF FINANCE." Issuance of the Bonds The Bonds are being issued pursuant to the provisions relating to the joint exercise of powers found in Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Law"), including the provisions of the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 thereof (the "Bond Law"), and an Indenture, dated as of March 1, 2018 (the "Indenture") between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). The Bonds will be dated the date of original delivery and are issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). Ultimate purchasers of Bonds will not receive physical bonds representing their interest in the Bonds; payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee, so long as DTC or Cede & Co. is the registered owner of the Bonds. See "THE BONDS — Issuance of the Bonds" and "APPENDIX E — The Book -Entry System" herein. The principal of and redemption premiums, if any, and interest on the Bonds shall be payable in lawful money of the United States of America. Interest is payable semiannually on March 1 and ' Preliminary, subject to change. September 1 each year, commencing September 1, 2018 Security for the Bonds The Bonds are special obligations of the Authority. The Bonds will be payable solely from and secured by (i) Revenues, which pursuant to the Indenture consist of all Installment Payments received or receivable by the Authority pursuant to an Installment Purchase Agreement, dated as of March 1, 2018 (the "Installment Purchase Agreement"), by and between the City, as purchaser, and the Authority, as seller, and (ii) amounts held in certain funds and accounts held by the Trustee under the Indenture. Pursuant to the Indenture, the Authority has assigned to the Trustee its right to receive the Installment Payments under the Installment Purchase Agreement and any and all of its rights and privileges thereunder, except for the Authority's rights to indemnification and payment of certain fees and expenses. The Installment Payments are special limited obligations of the City payable solely from and secured by a pledge of and first lien on Assessment Revenues and Ad Valorem Revenues (as defined in the Installment Purchase Agreement). As such, the Installment Payments are payable prior to any other expenses with respect to the Authorized Lighting Facilities (as defined below), including administrative costs and operation and maintenance expenses. In July 1998, two County of Los Angeles ("County") street lighting maintenance districts were transferred to the jurisdiction of the City. One district, currently a part of the Santa Clarita Landscaping and Lighting Maintenance District (the "District"), was formed by the County in July 1979 pursuant to the Landscaping and Lighting Act of 1972 (Section 22500 et seq. of the California Streets and Highways Code) (the "Act"). "Assessment Revenues" from the District mean (a) the proceeds received by the City of the Streetlighting Levy A and Levy B assessments levied within the District pursuant to the Act (the "Assessments"), (b) income and gains with respect to the investment of amounts on deposit in the funds and accounts established under the Indenture, and (c) proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Assessments. Notwithstanding the foregoing, "Assessment Revenues" does not include any penalties or interest in excess of the interest payable on the Bonds collected in connection with delinquent Assessments. The other district, Streetlighting Maintenance District No. 2 ("SMD No. 2") was formed by the County before approval of Proposition 13 and is funded by ad valorem property tax revenues pursuant to the Improvement Act of 1911. "Ad Valorem Revenues" mean, to the extent permitted by law, the ad valorem streetlighting tax revenues derived from SMD No. 2 and deposited into the Streetlighting Revenue Fund. The Ad Valorem Revenues are part of the 1% property tax allocation for certain tax rate areas within the City. See "SECURITY FOR THE BONDS" herein. The Assessments and the Ad Valorem Revenues are levied and collected to provide for the cost and expense of constructing, acquiring, or otherwise installing such streetlights, safety lights, traffic signals, and other public lighting facilities (including the Project) and any related appurtenances as may be reasonably required by the City (collectively, the "Authorized Lighting Facilities"), and of maintaining, operating, and servicing the Authorized Lighting Facilities. The levy of Assessments and the Ad Valorem Revenues are included on the regular county property tax bills sent to owners of real property within the Streetlighting Zone A and B of the District and SMD No. 2, respectively. Under the Installment Purchase Agreement, the City is obligated to deposit in the Streetlighting Revenue Fund, not later than two business days from receipt the Assessment Revenues and Ad Valorem Revenues until such time as the amounts therein are sufficient to make the Installment Payments on each Installment Payment Date during the current Bond Year. The City will transfer from the Streetlighting Revenue Fund, the Installment Payments to the Trustee for deposit to the Revenue Fund established under the Indenture. See "SECURITY FOR THE BONDS" and "THE AD VALOREM REVENUES AND ASSESSMENTS." The City of Santa Clarita The City is a general law city, incorporated in 1987. The City is located in the Santa Clarita Valley, which is comprised of the communities of Canyon Country, Newhall, Saugus, and Valencia, -2- within Los Angeles County (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, 2017, had an estimated population of approximately 216,350. The City operates under a Council Manager form of municipal government. The City Council is comprised of five council members, elected biannually at large to four-year staggered terms. The City provides general government services either with its own employees or through contracts. See Appendix B for further information with respect to the City. The City provides a broad range of services, including highway, street, drainage, sewer, and infrastructure construction and maintenance; planning and zoning; and parks, recreation and cultural activities. Sheriff's, and animal control services are provided under contract with the County, whereas fire protection, water, sanitation, and school are funded by special districts not under City control. Other regularly contracted services include refuse and recycling collection, landscaping, library and public transit services. Limited Obligations THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM, AND SECURED BY A PLEDGE OF, INSTALLMENT PAYMENTS AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE. THE AUTHORITY HAS NO TAXING POWER. THE CITY'S OBLIGATION TO PAY INSTALLMENT PAYMENTS IS A SPECIAL OBLIGATION OF THE CITY LIMITED SOLELY TO THE ASSESSMENT REVENUES AND AD VALOREM REVENUES. NO OTHER FUNDS OR PROPERTY OF THE CITY ARE LIABLE FOR THE PAYMENT OF THE INSTALLMENT PAYMENTS OR ANY OTHER AMOUNTS PAYABLE UNDER THE INSTALLMENT PURCHASE AGREEMENT OR THE INDENTURE. NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE INSTALLMENT PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. Continuing Disclosure The City covenants in a Continuing Disclosure Certificate to prepare and deliver an annual report to the Municipal Securities Rulemaking Board and to provide certain other information in compliance with Securities and Exchange Commission Rule 15c2-12. See "CONTINUING DISCLOSURE" and "APPENDIX D — FORM OF CONTINUING DISCLOSURE CERTIFICATE." Bond Owners' Risks Prospective investors should review this Official Statement and the appendices hereto in their entirety and should consider certain risk factors associated with the purchase of the Bonds, which have been summarized in the section herein entitled "BOND OWNERS' RISKS." Limited Scope of Official Statement There follows in this Official Statement descriptions of the Authority, the Bonds, the District, the Indenture, the City, the Installment Purchase Agreement, and certain other documents. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions. All statements herein with respect to such documents are qualified in their entirety by reference to each such document for the complete details of all of their respective terms and conditions. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors' rights generally. Terms not defined herein shall have the meanings set -3- forth in the Indenture. The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof. All financial and other information presented in this Official Statement has been provided by the Authority and the City from their records, except for information expressly attributed to other sources. The presentation of information is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial or other affairs of the owners, the District, the Authority or the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeated in the future. PLAN OF FINANCE The City has entered into a Purchase and Sale Agreement, dated as of May 23, 2017, (the "SCE Purchase Agreement"), with Southern California Edison, a California corporation ("SCE). Pursuant to the SCE Purchase Agreement, Southern California Edison has agreed to sell, convey, assign, transfer, and deliver to the City all of Southern California Edison's right, title and interest in the Streetlight Improvements. The Streetlight Improvements consist of approximately 17,272 electric streetlight facilities presently owned by Southern California Edison within the City. The State Public Utilities Commission approved the sale of the Streetlight Improvements to the City by Decision 18- , dated 12018 and issued on 12018. The SCE Purchase Agreement provides for the City to acquire the Streetlight Improvements for a purchase price of $9,573,728. The City estimates the one-time cost associated with purchasing SCE's streetlight system to be $11,148,728, which includes an additional $1,575,000 for estimated additional poles and true -up costs following an audit. The City Council awarded a contract on January 23, 2018 in the amount not to exceed $4,444,513 for the streetlight transition services including retrofit of streetlights to LED technology. The estimated total cost of the Project is $ $15,593,241 to be entirely funded from proceeds of the Bonds. A portion of the costs of providing, operating, maintaining, and servicing the Authorized Lighting Facilities is currently paid from the Assessment Revenues derived from the levy of the Assessments on real property within Streetlighting Zones A and B of the District and from Ad Valorem Revenues derived from property within SMD No. 2. See "AD VALOREM REVENUES AND ASSESSMENTS — Budget; Actual Revenues and Expenditures" herein for more information. The City expects that by acquiring ownership and self -maintaining the Streetlight Improvements, the City could lower the annual maintenance costs of the Authorized Lighting Facilities. The Bonds are being issued to finance the acquisition and installation of the Streetlight Improvements. A portion of the proceeds of the Bonds will be used to pay the acquisition price for the Streetlight Improvements under the SCE Purchase Agreement. As consideration for the issuance of the Bonds, the City will sell the Streetlight Improvements to the Authority, and simultaneously therewith, the Authority will sell the Streetlight Improvements to the City pursuant to the terms of the Installment Purchase Agreement. A portion of the proceeds of the Bonds also will be used by the City to pay the cost of retrofitting certain of the Streetlight Improvements with the installation of LED lighting components. The Taxable Bonds in the principal amount of $ will be sold as federally taxable bonds to allow the City future flexibility to generate revenue from private leases of a portion of the Streetlight Improvements. -4- ESTIMATED SOURCES AND USES OF FUNDS The proceeds from the sale of the Bonds are estimated to be disbursed as set forth below. Sources('): Tax -Exempt Taxable Bonds Total Bonds Principal Amount of Bonds Plus/Less Original Issue Premium/Discount Total Sources Uses('): Acquisition Fund Costs of Issuance (2) Total Uses Rounded to nearest dollar. z> Includes fees and expenses of Bond Counsel, Disclosure Counsel, Municipal Advisor, Trustee, printing expenses, rating agency fees, Underwriter's discount and other miscellaneous costs. THE BONDS Authority For Issuance The Bonds are being issued pursuant to the provisions of the Bond Law, consisting of the Marks - Roos Local Bond Pooling Act of 1985 (Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code), and the Indenture. Issuance of the Bonds The Bonds will be dated the date of initial delivery of the Bonds to the Underwriter (the "Closing Date"). The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of DTC and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book -entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical bonds representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners shall mean Cede & Co., and shall not mean the ultimate purchasers of the Bonds. Payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee, so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC's Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC's Participants and Indirect Participants, as more fully described herein. See "APPENDIX E — The Book -Entry System" herein. The interest on and principal of and redemption premiums, if any, on the Bonds shall be paid in lawful money of the United States of America. Interest is payable semiannually on March 1 and September 1, 2018 (each, an "Interest Payment Date"). The Bonds shall bear interest from the Closing Date. Payment of interest on the Bonds due on or before the maturity or prior redemption of the Bonds shall be made to the person whose name appears in the registration books maintained by the Trustee under the Indenture (the "Registration Books") as the Owner thereof as of the close of business on the Record Date, next preceding each Interest Payment Date, such interest to be paid by check mailed by first class mail, postage prepaid, on each Interest Payment Date to such Owner at the Owner's address as it appears -5- in the Registration Books, or, upon written request received prior to the Record Date next preceding an Interest Payment Date of an Owner of at least one million dollars ($1,000,000) in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account within the continental United States of America designated by such Owner. "Record Date" means the close of business on the 15th day of the month preceding any Interest Payment Date, whether or not such day is a Business Day. The principal of and redemption premiums, if any, on the Bonds shall be payable upon the surrender thereof at maturity or the prior redemption thereof at the Corporate Trust Office of the Trustee. Interest shall be calculated on the basis of a 360 -day year consisting of twelve 30- day months. So long as the Bonds are registered to Cede & Co., payments shall be made to Cede & Co. under the book -entry system. See "APPENDIX E — The Book -Entry System" herein. Redemption Optional Redemption. (a) The Tax -Exempt Bonds maturing by their terms on or after 1, 20, are subject to optional redemption by the Authority on any date on or after 1, 20 , to their respective stated maturity dates, as a whole or in part in such principal amounts and from such maturity dates as selected by the Authority, from funds derived by the Authority at the direction of the City from any lawful source and deposited with the Trustee not later than the date of redemption, upon mailed notice as provided in the Indenture, at a redemption price equal to the principal amount of the Tax -Exempt Bonds or the portions thereof, together with interest accrued thereon to the date fixed for redemption without premium. (b) [[The Taxable Bonds may be redeemed, at the written direction of the Authority, in whole or in part in integral multiples of $5,000, on any Business Day, from funds provided by the Authority for such purpose, upon mailed notice as provided in the Indenture, at the "MakeAVhole Redemption Price" for such Taxable Bonds to be redeemed determined by the Designated Investment Banker equal to the greater of (i) the issue price as shown on the inside cover page of the Official Statement (but not less than 100% of the principal amount of the Taxable Bonds to be redeemed), or (ii) an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest on the Taxable Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Taxable Bonds are to be redeemed, discounted to the date on which such Taxable Bonds are to be redeemed on a semi-annual basis, assuming a 360 -day year consisting of twelve 30 -day months, at the "Treasury Rate" plus _ basis points, plus accrued and unpaid interest on the Taxable Bonds to be redeemed on the redemption date.]] Mandatory Sinking Fund Redemption. (a) The Tax -Exempt Bonds maturing September 1, 20 (the "Tax -Exempt Term Bonds") are subject to mandatory redemption, in part by lot, on September 1 in each year shown below until maturity, from sinking account payments made by the Authority, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that in lieu of redemption thereof, such Tax -Exempt Term Bonds may be purchased by the Authority and tendered to the Trustee. W Tax -Exempt Term Bonds Maturing September 1, 20 Redemption Date Redemption (September 1) Amount (maturity) If some but not all of the Tax -Exempt Term Bonds have been redeemed pursuant to optional redemption, 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 Tax -Exempt 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 which shall include a revised sinking fund schedule filed by the Authority with the Trustee. (b) The Taxable Bonds maturing September 1, 20 (the "Taxable Term Bonds") are subject to mandatory redemption, in part by lot, on September 1 in each year shown below until maturity, from sinking account payments made by the Authority, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that in lieu of redemption thereof, such Taxable Term Bonds may be purchased by the Authority and tendered to the Trustee. Taxable Term Bonds Maturing September 1, 20 Redemption Date Redemption (September 1) Amount (maturity) If some but not all of the Taxable Term Bonds have been redeemed pursuant to optional redemption, 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 Taxable 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 which shall include a revised sinking fund schedule filed by the Authority with the Trustee. Notice of Redemption. Notice of redemption of any Bonds or any portions thereof shall be mailed by first class mail, postage prepaid, by the Trustee not less than 30 days nor more than 60 days prior to the redemption date of such Bonds (i) to the respective Owners of the Bonds designated for redemption at their addresses appearing on the bond registration books kept by the Trustee, (ii) to the Information Services (as defined in the Indenture) and (iii) to the Securities Depositories (as defined in the Indenture). Each notice of redemption shall state the date of such notice, the Bonds to be redeemed, the date of issue of such Bonds, the redemption date, the redemption price, whether funds are then on deposit sufficient to pay the redemption price, the place of redemption (including the name and appropriate address), the CUSIP number (if any) of the maturity or maturities, and, if less than all Bonds of any such maturity are to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed and, in the case of -7- Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on such redemption date there will become due and payable on each of such Bonds the redemption price thereof or of the specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the Corporate Trust Office of the Trustee specified in the redemption notice as the place of redemption; provided, that failure by the Trustee to give notice pursuant to the Indenture to any one or more of the Information Services or Securities Depositories, or the insufficiency of any such notice or the failure of any Owner to receive any redemption notice mailed to such Owner or any immaterial defect in the notice so mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds. Selection of Bonds for Redemption. Except as otherwise provided in the Indenture, whenever less than all the Outstanding Bonds of a series maturing on any one date are called for redemption at any one time, the Trustee shall select the Bonds to be redeemed (from the Outstanding Bonds maturing on such date not previously selected for redemption) by lot in any manner which the Trustee deems fair. Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the Authority shall execute and the Trustee shall (upon receipt of a Written Request of the Authority) authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered and of the same maturity. Effect of Redemption. From and after the date fixed for redemption of any Bonds or any portions thereof, if notice of such redemption shall have been duly given and funds available for the payment of such redemption price of the Bonds or such portions thereof so called for redemption shall have been duly provided, no additional interest shall accrue on such Bonds or such portions thereof from and after the redemption date specified in such notice. All Bonds redeemed or purchased in lieu of redemption pursuant to the Indenture shall be cancelled and destroyed by the Trustee in accordance with its retention policy then in effect and the Trustee shall deliver a certificate of destruction to the Authority. Transfer or Exchange 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 such person's duly authorized attorney, upon surrender of such Bond for cancellation at the Corporate Trust Office of the Trustee accompanied by delivery of a duly executed written instrument of transfer in a form as provided by the Indenture. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall (upon receipt of a Written Request of the Authority) authenticate and deliver a new Bond or Bonds for a like aggregate principal amount and maturity date. The Bonds may be exchanged at the Corporate Trust Office of the Trustee for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations. The Trustee shall require the payment by the Owner requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange. The cost of any services rendered or expenses incurred by the Trustee in connection with any transfer or exchange shall be paid by the Authority. No transfer or exchange of any Bond shall be required to be made by the Trustee (i) during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption, (ii) -8- of any Bonds which have been selected for redemption (except for any unredeemed portion of any of such Bonds) or (iii) of any Bonds during the period from any Record Date to any Interest Payment Date. SECURITY FOR THE BONDS Limited Obligation The Bonds are special obligations of the Authority, secured by a first and exclusive lien on and pledge of (i) Revenues, as hereinafter defined, and (ii) all money held by the City in the Streetlighting Revenue Fund and by the Trustee in the Revenue Fund, the Interest Fund, and the Principal Fund established under the Indenture. Revenues (as more particularly described under "— Installment Payments" below) consist of all Installment Payments received or receivable by the Authority pursuant to an Installment Purchase Agreement. The Installment Payments are a limited obligation of the City and are secured by Assessment Revenues consisting primarily of (a) the Assessments to be paid by owners of property in the District and (b) Ad Valorem Revenues from SMD No. 2. The Installment Payments are payable by the City under the Installment Purchase Agreement in scheduled semi-annual amounts equivalent to the scheduled semi- annual debt service payments payable by the Authority on the Bonds. All obligations of the Authority under the Indenture and the Bonds are special obligations of the Authority, payable from and secured by Revenues and amounts in certain funds established by the Indenture. All obligations of the City under the Installment Purchase Agreement are not general obligations of the City, but are limited obligations, payable from the Assessment Revenues and the Ad Valorem Revenues, and the Streetlighting Revenue Fund pledged therefor under the Installment Purchase Agreement. The City is not obligated to advance available surplus funds from the City treasury to cure any deficiency in the Streetlighting Revenue Fund; provided, however, the City is not prevented, in its sole discretion, from so advancing funds. Neither the faith and credit of the City nor of the State of California (the "State") or any political subdivision thereof is pledged to the payment of the Installment Payments. See "SECURITY FOR THE BONDS — Revenues; Revenue Fund," "— Installment Payments; Streetlighting Revenue Fund." below. The Bonds are special limited obligations of the Authority, payable from the Installment Payments received pursuant to the Installment Purchase Agreement as described in the Indenture and secured as to the payment of the principal of and the redemption premiums, if any, and the interest on in accordance with their terms and the terms of the Indenture. The Bonds shall not constitute a charge against the general credit of the Authority or any of its members, and under no circumstances shall the Authority be obligated to pay principal of or redemption premiums, if any, or interest on the Bonds except as provided in the Indenture. The Authority has no taxing power. Neither the State, the City, nor any public agency (other than the Authority) nor any member of the Authority is obligated to pay the principal of or redemption premiums, if any, or interest on the Bonds, and neither the faith and credit nor the taxing power of the State, the City, or any public agency thereof or any member of the Authority is pledged to the payment of the principal of or redemption premiums, if any, or interest on the Bonds. The payment of the principal of or redemption premiums, if any, or interest on, the Bonds does not constitute a debt, liability or obligation of the State, the City, or any public agency (other than the Authority) or any member of the Authority. Revenues; Revenue Fund Pursuant to the Indenture, the Bonds are secured by (i) a first and exclusive lien on and pledge of Revenues, and (ii) all money held by the City in the Streetlighting Revenue Fund, and the Trustee in the M Revenue Fund, the Interest Fund, and the Principal Fund established under the Indenture, all in accordance with the terms of the Bonds and the provisions of the Indenture. Said pledge constitutes a lien on and security interest in the Revenues upon the physical delivery thereof. Under the Indenture "Revenues" means all Installment Payments received or receivable by the Authority; and "Installment Payments" means the installment payments due under the Installment Purchase Agreement. See "SECURITY FOR THE BONDS — Installment Payments; Streetlighting Revenue Fund" below. In the Indenture, the Authority irrevocably transfers, assigns and sets over to the Trustee without recourse all of the Installment Payments and any and all rights and privileges it has under the Installment Purchase Agreement, including, without limitation, the right to collect and receive directly all of the Installment Payments and the right to hold and enforce any security interest, subject only to the provisions of the Indenture and the Installment Purchase Agreement, but excluding the Authority's rights to indemnification and payment of certain fees and expenses by the City under the Installment Purchase Agreement. Subject to the provisions thereof, the Indenture requires the Trustee to take all steps, actions and proceedings required to be taken as provided in any opinion of nationally recognized bond counsel delivered to it necessary to maintain in force for the benefit of the Owners of the Bonds the Trustee's rights in and priority to the security granted to it for the payment of the Bonds including but not limited to the Trustee's rights as assignee of the Installment Payments, interest and other income, and all other rights as assignee of the Installment Payments, interest and other income and all other rights to security for the Bonds which the Trustee may receive in the future. Under the Installment Purchase Agreement, the City is obligated to deposit the Assessment Revenues and Ad Valorem Revenues in the Streetlighting Revenue Fund held by the City, not later than two business days from receipt, until such time as the amounts therein are sufficient to make the Installment Payments on each Installment Payment Date during the Bond Year, (described below under "— Installment Payments; Streetlighting Revenue Fund"). Any Installment Payments collected or received by the Authority will be paid by the Authority to the Trustee. As soon as sufficient moneys are available in the Streetlighting Revenue Fund to make the Installment Payments due in the current Bond Year, the City will transfer from the Streetlighting Revenue Fund, the Installment Payments to the Trustee for deposit in the Revenue Fund, but in no event later than the applicable Installment Payment Date. Pursuant to the Installment Purchase Agreement, each Installment Payment Date occurs on the fifteenth (15'h) day of the month prior to each related Interest Payment Date, or if said date is not a Business Day, then on the preceding Business Day. There is established under the Indenture a special fund to be known as the "Revenue Fund," held by the Trustee. Beginning on the date the Bonds become Outstanding and continuing until no Bonds are Outstanding, the Trustee shall deposit all Installment Payments as and when received by it in the Revenue Fund, and the Authority agrees and covenants that all Revenues deposited by it in the Revenue Fund will be accounted for through and held in trust in the Revenue Fund. The Indenture provides that all such Revenues will be disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture and will be accounted for separately and apart from all other money, funds, accounts or other resources of the Trustee. Pursuant to the Indenture, amounts in the Revenue Fund will be transferred by the Trustee for deposit in the following respective funds created by the Indenture and maintained by the Trustee, at the following times and in the following order of priority (the Trustee shall not withdraw from any particular Installment Payment Account an amount in excess of the debt service scheduled to be paid by the Installment Payments deposited therein): (i) Interest Fund. The Trustee will transfer from the Revenue Fund and deposit in the Interest Fund for receipt before March 1 and September 1 of each year, beginning on -10- September 1, 2018, an amount of money from the Revenue Fund which is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. No deposit need be made into the Interest Fund if the amount contained therein is at least equal to the amount of the interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. Any earnings on deposit in the Interest Fund after payment of interest on Bonds on an Interest Payment Date will be transferred to the Revenue Fund for credit to the next occurring Installment Payment. (ii) Principal Fund. The Trustee will deposit in the Principal Fund before September 1 of each year an amount of money from the Revenue Fund which, together with any money contained in the Principal Fund, is equal to the aggregate amount of the principal becoming due and payable on all Outstanding Serial Bonds on such Principal Payment Date. No deposit need be made into the Principal Fund if the amount contained therein is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds on such Principal Payment Date. Any earnings on deposit in the Principal Fund after payment of principal of the Bonds on a Principal Payment Date will be transferred to the Revenue Fund. Installment Payments; Streetlighting Revenue Fund The Installment Payments are special limited obligations of the City payable solely from and secured by an irrevocable pledge of and first lien on Assessment Revenues and Ad Valorem Revenues pursuant to the terms and provisions of the Installment Purchase Agreement. As such, the Installment Payments are payable prior to any other expenses with respect to the Authorized Lighting Facilities, including administrative costs and operation and maintenance expenses. Under the Installment Purchase Agreement, "Assessment Revenues" means (a) the proceeds of the Assessments received by the City, (b) income and gains with respect to the investment of amounts on deposit in the funds and accounts established thereunder for the Bonds, and (c) proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Assessments. Notwithstanding the foregoing, "Assessment Revenues" does not include any penalties or interest in excess of the interest payable on the Bonds collected in connection with delinquent Assessments; and "Assessments" means the Streetlighting Levy A and Streetlighting Levy B assessments levied within the District pursuant to the Act and the Installment Purchase Agreement. Under the Installment Purchase Agreement, "Ad Valorem Revenues" mean, to the extent permitted by law, the ad valorem streetlighting tax revenues derived from SMD No. 2 and deposited into the Streetlighting Revenue Fund of the District. The Ad Valorem Revenues are part of the 1% property tax allocation for certain areas within the City. See "AD VALOREM REVENUES AND ASSESSMENTS" herein. "Purchase Price" means the principal amount of the City's obligations under the Installment Purchase Agreement, plus the interest to accrue on the unpaid balance of such principal amount from the effective date of the Installment Purchase Agreement over the term thereof, subject to prepayment as provided therein. Subject to any rights of prepayment provided in the Installment Purchase Agreement, the City will pay the Authority the Purchase Price for the Project in Installment Payments of interest and principal in the amounts and on the Installment Payment Dates as set forth in a schedule set forth in the Installment Purchase Agreement. Pursuant to the Installment Purchase Agreement, each Installment Payment Date occurs on the fifteenth day (15th) of the month prior to each related Interest Payment Date for the Bonds, or if said date is not a Business Day, then on the preceding Business Day. -11- In order to carry out and effectuate the pledge and lien contained in the Installment Purchase Agreement, the City agrees and covenants that all Assessment Revenues and Ad Valorem Revenues be received by the City in trust under the Installment Purchase Agreement and will be transferred not later than two (2) business days from receipt thereof for deposit into a special fund designated as the "Streetlighting Revenue Fund," until such time as amounts therein for the then current Bond Year equal the Installment Payments, Additional Obligation Payments and Additional Payments due for such Bond Year. The Streetlighting Revenue Fund is established under the Installment Purchase Agreement by the City and the City agrees and covenants to maintain and to hold such fund separate and apart from other funds so long as any Installment Payments remain unpaid. The City may maintain separate accounts within the Streetlighting Revenue Fund. The amounts in the Streetlighting Revenue Fund will be invested in Authorized Investments (as defined in the Indenture). Moneys in the Streetlighting Revenue Fund will be used and applied by the City as provided in the Installment Purchase Agreement. Assessment Revenues and Ad Valorem Revenues not required to be deposited in the Streetlighting Revenue Fund may be expended by the City once the City's Installment Payment obligation has been funded for the applicable Bond Year, for any purpose permitted by law, including the costs of maintaining, operating, and servicing the Project and other lighting facilities authorized for the District and the City. For each Fiscal Year, all moneys in the Streetlighting Revenue Fund will be set aside by the City at the following times for the transfer to the following respective special funds in the following order of priority; and all moneys in each of such funds will be held in trust and will be applied, used and withdrawn only for the purposes set forth therein: (i) Installment Payments. As soon as sufficient moneys are available in the Streetlighting Revenue Fund to make the Installment Payments due in the current Bond Year, but in no event later than the applicable Installment Payment Date, the City will, from the moneys in the Streetlighting Revenue Fund, transfer to the Trustee the Installment Payments due and payable for deposit to the Revenue Fund. The City will also, from the moneys in the Streetlighting Revenue Fund, transfer to the applicable trustee for deposit in the respective funds, without preference or priority, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, any other Additional Obligation Payments in accordance with the provisions of any Additional Obligation. (ii) Su!plus. Moneys on deposit in the Streetlighting Revenue Fund not necessary to make any of the payments required above, may be expended by the City at any time for any purpose permitted by law, including but not limited to payments with respect to Subordinate Obligations and the costs of maintaining, operating, and servicing the Project and other lighting facilities authorized for the District and the City. The Assessments and the Ad Valorem Revenue levy do not constitute a personal indebtedness of the owners of the parcels related thereto, and the property owners have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. In the event of delinquency, proceedings may be conducted only against the real property securing the delinquent Assessment or Ad Valorem Revenue levy. There is no assurance the property owners will be able to pay the Assessments or Ad Valorem Revenue levy or that they will pay the Assessments or Ad Valorem Revenue levy even though financially able to do so. The Assessments and Ad Valorem Revenues will be collected and transferred by the County to the City in approximately equal semi-annual installments and are payable and become delinquent at the same time and in the same proportionate amounts, and bear the same proportionate penalties and interest after delinquency, as do general property taxes collected by the County on secured real property tax bills. The properties upon which the Assessments are levied and the Ad Valorem Revenues are collected are subject to the same provisions for sale and redemption as are properties for nonpayment of general property taxes collected by the County on secured real property tax bills. -12- Neither the faith and credit nor the taxing power of the City, the County, the State or any political subdivision thereof is pledged to the payment of the Installment Payments. Limited Obligation Upon Delinquency :.rS[]0f.Y�]�1101�/_tlytr[].��r'�I1�1:]�I.a1101�1V1�J�1►�1 ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE FROM AND SECURED BY REVENUES AND THE AMOUNTS IN THE REVENUE FUND. THE INSTALLMENT PAYMENTS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM AND SECURED BY THE ASSESSMENT REVENUES, AD VALOREM REVENUES AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED AND MAINTAINED PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT. THE AUTHORITY AND THE CITY HAVE NO OBLIGATION TO ADVANCE MONIES TO PAY BONDS DEBT SERVICE IN THE EVENT OF DELINQUENT ASSESSMENT OR AD VALOREM TAX INSTALLMENTS. BOND OWNERS SHOULD NOT RELY UPON THE CITY TO ADVANCE MONIES TO THE TRUSTEE. NOTWITHSTANDING THE FOREGOING, THE CITY MAY, AT ITS SOLE OPTION AND IN ITS SOLE DISCRETION ELECT TO ADVANCE AVAILABLE SURPLUS FUNDS, INCLUDING ASSESSMENT REVENUES AND AD VALOREM REVENUES, OF THE CITY TO PAY FOR ANY DELINQUENT INSTALLMENTS PENDING SALE, REINSTATEMENT, OR REDEMPTION OF ANY DELINQUENT PROPERTY. Collection of Assessments and Ad Valorem Revenues The City is not required to take any action to collect the Ad Valorem Revenues. The Assessments were authorized in the fiscal year 2017-18 Proposition 218 proceedings and installments thereof are annually levied by the City. The Ad Valorem Revenues and Assessment installments are collected by the County along with general property taxes on the secured real property tax bills of properties within the District. The City's Deputy City Manager under the Neighborhood Services Department administers the Assessments and annually determines the amount of the Assessment to be levied on each parcel of real property in the District. See "AD VALOREM REVENUES AND ASSESSMENTS — Excerpt of Engineer's Report; Basis of Special Benefit Proportioning" herein. The City Council adopts resolutions to order the Assessment Engineer (Willdan Financial Services) to prepare an engineer's report containing certain information, including the proposed amounts of the Assessment installments, to preliminarily approve such report, and to establish the date of a public hearing. Following a public hearing on the levy of the proposed Assessment installments for the Fiscal Year, held no later than August 10, the City Council may adopt another resolution confirming the levy of the Assessment installments. If, however, the amount of the proposed annual Assessment installment is increased from the maximum amounts previously authorized pursuant to Proposition 218, the City would be required to conduct another full assessment balloting proceeding under Proposition 218, which is more extensive and involved than the abbreviated annual levy proceeding described in this paragraph. See CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS — Proposition 218" herein. Each Fiscal Year, the City must provide the County with the amounts of the Assessment installments to be levied on the parcels within Streetlighting Zone A and Streetlighting Zone B of the District for such Fiscal Year. The City must submit such information to the County by a date established by the County for the Assessments to be included on the tax bills for such Fiscal Year. Assessments and Ad Valorem Revenue levies are due in two equal installments, on November 1 and February 1 of each Fiscal Year and become delinquent, if not paid, on the next succeeding December 10 and April 10. Assessments and Ad Valorem Revenue levies which become delinquent are subject to the same penalties, interest charges and collection procedures as exist now for delinquent secure real property taxes, such as the tax, penalties, and interest becoming a lien on the property and the eventual sale of the -13- property to satisfy the tax lien. See "AD VALOREM REVENUES AND ASSESSMENTS — SMD No. 2 Ad Valorem Collection and Delinquencies" and "- Assessment Collection History." Under the Installment Purchase Agreement, Assessment Revenues include the proceeds of the Assessments received by the City and the proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Assessments, but exclude any penalties or interest in excess of the interest payable on the Bonds collected in connection with delinquent Assessments. See "SECURITY FOR THE BONDS — Installment Payments; Streetlighting Revenue Fund." The annual Assessments and Ad Valorem Revenue levies, and any interest and penalties thereon, constitute a lien against the parcels on which they were imposed until the same are paid and do not constitute personal indebtedness of the respective owners of such parcels. Accordingly, in the event of delinquency, proceedings may be conducted only against the real property securing the delinquent Assessment. The City has no power to institute judicial foreclosure proceedings in the event of a delinquency by any particular property owner in the payment of Assessments. Under current State law, payment of any delinquent annual Assessment or Ad Valorem tax would be enforced by tax sale and foreclosure on the property by the County with the delinquent general ad valorem property taxes after the fifth year of delinquency. See "BOND OWNERS' RISKS — Property Owners Not Obligated to Pay Bonds, Assessments or Ad Valorem Tax," "— Levy of Assessments; Procedural Limitations and Risks," "— Collection of Assessments; Legal Remedies," and "— Limitations on Enforceability of Remedies." Liens Under the provisions of the Act, the Assessments are levied annually by the City and collected by the County along with general property taxes on the secured real property tax bills of properties within the Streetlighting Zone A and Zone B of the District. The annual Assessment installment and any interest and penalties thereon constitute a lien against the parcels on which they were imposed until the same are paid. Likewise, the Ad Valorem tax is collected by the County along with general property taxes on the secured real property tax bills of properties within SMD No. 2. Any interest and penalties due to delinquencies constitute a lien against the parcels on which they were imposed until the same are paid The annual budget for the streetlighting services within the District itemizes the expenditures to be funded by Ad Valorem Revenues derived from SMD No. 2 and the Assessment Revenues collected from the levy of the annual Assessment installments on the parcels within Streetlighting Zone A and Zone B of the District. Commencing with Fiscal Year 2017-18 and ending with Fiscal Year 2047-48, these annual expenditures include, or are expected to include, as applicable, the following items: (i) administrative costs of the District, (ii) the costs of operating, maintaining, and servicing the Authorized Lighting Facilities, and (iii) an annual installment representing one -thirtieth of the cost of acquiring and installing the Project, including related incidental expenses, which is equivalent to the annual Installment Payment for the Bond Year commencing in such Fiscal Year. See "AD VALOREM REVENUES AND ASSESSMENTS — Budget; Actual Revenues and Expenditures" herein. The Assessments are established and levied annually. The City has taken the applicable actions under the Act to provide for annual installments of the portion of the Assessments allocable to the cost of acquiring and retrofitting the Streetlight Improvements and the inclusion, pursuant to the Act, of such annual installment in each annual Engineer's Report for the District, which if approved by the City Council of the City, establishes the amount of each annual Assessment levied on each parcel in the District. However, unlike other types of assessments, which may have been levied in whole in one year and then collected in installments in subsequent years, the Assessments consist only of the respective amounts annually levied on the parcels within Streetlighting Zone A and Zone B of the District by the City Council. Therefore, under the Act and other applicable State law, the lien secures only the annual Assessment installment levied on the applicable parcel within Streetlighting Zone A and Zone B. A new lien is established each year with respect to the annual Assessment installment levied for such Fiscal Year. See "CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS — Proposition -14- 218," "BOND OWNERS' RISKS — Levy of Assessments; Procedural Limitations and Risks," and "BOND OWNERS' RISKS — Collection of Assessments; Legal Remedies." The City has covenanted in the Installment Purchase Agreement, that to the maximum extent that the law permits it to do so, the City will not initiate proceedings to reduce the annual Assessments levied within Streetlighting Zone A and Zone B of the District, unless, in connection therewith, the City receives a certificate from its City Engineer which certifies that the total amount of Assessment Revenues and Ad Valorem Revenues for each Bond Year for any Bonds Outstanding will equal at least 200% of the sum on the debt service in that Bond Year on all Bonds to remain Outstanding after the reduction is approved. Similarly, the City covenants in the Installment Purchase Agreement that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the annual Assessments being levied below the levels specified in the foregoing sentence or to limit the power of the City to levy the annual Assessments for the purposes described in the Installment Purchase Agreement, including without limitation transmittal of any Assessment Revenues directly to the Trustee for deposit into the funds and accounts specified in the Installment Agreement, the City will commence and pursue legal action in order to preserve its ability to comply with such covenants. See "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" herein. See also "CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS — Proposition 218" and "BOND OWNERS' RISKS — Levy of Assessments; Procedural Limitations and Risks." No Los Angeles County Tax Loss Reserve The County does not participate in a "Teeter Plan" (Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Therefore the collections of Assessments and the Ad Valorem Revenues will reflect actual delinquencies. No Outstanding Parity Obligations Except for the Bonds, the Authority does not have any outstanding indebtedness or other obligation that is payable from and secured by the Revenues. Except for the Installment Purchase Agreement, the City does not have any outstanding indebtedness or other obligation that is payable from and secured by the Assessment Revenues and Ad Valorem Revenues. No Additional Bonds The Indenture does not authorize the issuance of any additional bonds payable from or secured by a lien and charge upon the Revenues equal to and on a parity with the lien and charge securing, the Bonds. Additional Obligations on a Parity with Installment Payments Under the Installment Purchase Agreement, the City may incur obligations secured by a pledge of the Assessment Revenues and Ad Valorem Revenues on a parity with the pledge and lien of the Installment Payments thereon (each, an "Additional Obligation") for refunding purposes resulting in debt service savings where the Annual Debt Service for each Fiscal Year during which such Additional Obligation is outstanding will not be increased by reason of the issuance of such Additional Obligation. The City may at any time enter into any Additional Obligation, provided that each of the following additional conditions has been satisfied: (a) The City shall be in compliance with all agreements, conditions, covenants and terms contained in the Installment Purchase Agreement and in all Supplemental Agreements (as defined in the Installment Purchase Agreement) required to be observed or performed by it, and a Certificate of the City to that effect shall have been filed with the Trustee (with the -15- consent of the Bond Insurer this condition shall not apply where the purpose of the proposed Additional Obligation is to cure such non-compliance); (b) The Additional Obligation shall have been duly authorized pursuant to the Law (as defined in the Installment Purchase Agreement) and all applicable laws. The City may also issue or incur obligations that are secured by or payable from Assessment Revenues on a subordinate basis to the Installment Payments. Ownership of Property Unpaid Assessments or Ad Valorem taxes do not constitute a personal indebtedness of the owners of the parcels related thereto and the property owners have made no legally binding commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the property owners have the ability to pay the Assessments or Ad Valorem taxes or that, even if they have the ability, they will choose to pay the Assessments and the Ad Valorem taxes. An owner may elect to not pay the Assessments or Ad Valorem tax when due and cannot be legally compelled to do so. Neither the City nor any Bond Owner will have the ability at any time to seek payment from the owners of property within the District of any Assessment or within SMD No. 2 of the Ad Valorem taxes, or any principal or interest due on the Bonds, or the ability to control who becomes a subsequent owner of any property subject to the Assessments or Ad Valorem tax. THE CITY Governmental Organization The City is a general law city, incorporated in 1987. The City is located in the Santa Clarita Valley, which is comprised of the communities of Canyon Country, Newhall, Saugus, and Valencia, within Los Angeles County (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, 2017, had an estimated population of approximately 216,350. 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 was consolidated with Los Angeles County General Election held on November 8, 2016. As of July 1, 2017, the City had a staff of [398.4] funded equivalent full time positions. For financial, demographic and statistical information on the City and the surrounding area, see "APPENDIX B — GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA AND THE COUNTY OF LOS ANGELES" attached hereto. THE AUTHORITY The Santa Clarita Public Financing Authority (the "Authority") was established pursuant to a Joint Exercise of Powers Agreement dated as of July 9, 1991, as amended on May 10, 2016, by and among the City, the City as successor agency to the Redevelopment Agency of the City of Santa Clarita, and the Santa Clarita Parking Authority, (the "JPA Agreement"), in accordance with the provisions of Articles 1, 2 and 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Joint Powers Law"). -16- The Authority was created for the purpose of assisting in the financing and refinancing of public capital improvements for the City and its related entities, such as the former Santa Clarita Redevelopment Agency and the Successor Agency. Under the Marks -Roos Local Bond Pooling Act of 1985, Section 6854 et seq. of the State Government Code, the Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Authority is governed by a five -member Board of Directors which consists of the City Council of the City. The Chair of the Authority is the Mayor of the City, and the Vice Chair of the Authority is the Vice Mayor of the City. The City Manager acts as its Executive Director, the City Clerk acts as its Secretary, and the Finance Director acts as its Treasurer. The Authority has no taxing power. The Authority and the City are each separate and distinct legal entities, and the debts and obligations of one such entity are not debts or obligations of the other entity. AD VALOREM REVENUES AND ASSESSMENTS History Prior to Fiscal Year 1998-99, streetlight services in the City were provided and funded by two contiguous special districts administered by the County of Los Angeles, (the "County") which included County Lighting Maintenance District ("CLMD 1867") formed prior to approval of Proposition 13 by the County that was funded by ad -valorem property tax revenues pursuant to the Improvement Act of 1911, and County Lighting District LLA -1 ("County Lighting District LLA -1") that was formed in July 1979 after the passage of Proposition 13 and funded by assessments pursuant to the 1972 Act. Upon incorporation of the City in 1987, a Santa Clarita Zone was established by the County specifically for the area within the City's boundaries incorporating CLMD 1867 and County Lighting District LLA -1 which covered the greater portion of the City. In July 1998, the two County streetlighting districts were transferred to the jurisdiction of the City as Streetlight Maintenance District No. 1 ("SMD No. 1") (previously County Lighting District LLA -1) and Streetlight Maintenance District No. 2 ("SMD No. 2") (previously CLMD 1867). Upon the effective date of the transfer, the City assumed total responsibility for the maintenance contract under which Southern California Edison provides the required services and the City Council became the legislative body for acting as the governing body for the operation and administration of the districts. SMD No. 1 consisted of parcels in either Zone A (fixed assessments) or Zone B (assessments with an escalator). For Fiscal Year 2017-18, the City Council as part of its Proposition 218 proceedings described above, consolidated the SMD No. 1 (including Zone A and Zone B) with two (2) other existing landscape districts into a single assessment district to be designated as "Santa Clarita Landscaping and Lighting District" (the "District"). The resulting zones are entitled Streetlighting Zone A and Streetlighting Zone B of the District. The City holds the Assessment Revenues within its Fund 359. SMD No. 2 and the Ad Valorem Revenues The Ad Valorem Revenues are part of the 1% tax rate among local agencies and are held by the City in Fund 354. The collection of the Ad Valorem Revenue each fiscal year associated with SMD No. 2 (previously CLMD 1867) requires no annual City Council action. California's system for allocating property tax revenue from the 1% rate among local governments is complex and has changed over time. The most significant change was voter approval of Proposition 13 in 1978, which shifted the control over the allocation of property taxes from local communities to the State. Article XIIIA of the California Constitution limits the amount of any ad valorem tax on real property, to I% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on -17- indebtedness approved by the voters prior to July 1, 1978, and on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the voters on such indebtedness or 55% of voters voting on the proposition. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value," or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership have occurred after the 1975 assessment." The full cash value may be increased at a rate not to exceed 2% per year to account for inflation. Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in other minor or technical ways. Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter -approved indebtedness). The 1% property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1979. Prior to voter approval of Proposition 13 in 1978, each local government that was authorized to levy a property tax set its own rate (within certain statutory restrictions). Each local government annually determined the amount of revenue necessary to finance the desired level of services and set its property tax rate to collect that amount. A property owner's property tax bill reflected the sum of the individual rates set by each taxing entity. Although local governments had control over the property tax during this period, property tax revenue had an effect on the State's budget beginning in 1972. Chapter 1406, Statutes of 1972 (SB 90, Dills), started an education finance system in which the state guarantees each school district an overall level of funding. This system of school finance gave the State a significant fiscal interest in the distribution of local property tax revenue. Proposition 13 fundamentally changed local government finance and assigned the State responsibility for property tax allocation. Property tax receipts fell by more than 60% because Proposition 13 lowered the statewide property tax rate to a constitutional maximum of 1%. Additionally, the measure required the State, rather than local communities, to determine the allocation of property tax revenue among the local governments within a county. In response to Proposition 13, the Legislature enacted two major bills: Chapter 292, Statutes of 1978 (SB 154, Petris) and then Chapter 282, Statutes of 1979 (AB 8, L. Greene). In general, these bills established methods for allocating the new lower amount of property tax revenue and shifted certain county and school district costs to the State. Under SB 154, a local government's share of the 1% property tax rate in 1978-79 was based on the share of countywide property tax revenue going to that local government before Proposition 13. For example, if a city received 10% of the property taxes collected by all local jurisdictions in the county prior to the passage of Proposition 13, the city would receive 10% of the property taxes collected in the county at the I% rate. AB 8 established a new base property tax allocation for 1979-80. The new base allocations in AB 8 resembled those in SB 154—a local government's share was based on the share of the countywide property tax going to that local government before Proposition 13—with some modification. Specifically AB 8 increased the base share of property taxes allocated to most counties, cities, and special districts by reducing the base share going to K-14 districts. (Under the State's school finance system, K-14 district losses were in turn made up with increased State funds for education.) AB 8 also established a new process for allocating growth (or decline) in property tax revenue in future years. In contrast to the property tax allocation process in 1978-79 and 1979-80 (that distributed revenue on a countywide basis without regard to where the property was located), the legislation specified that future growth in property tax revenue would be allocated -18- only to those local governments serving the property where the revenue increase took place. Accordingly, beginning in 1980-81, AB 8 required that each local government receives the same amount of property tax it received in the prior year plus its share of any growth or decline in property tax revenue that occurred in its jurisdiction. To ensure that each local government receives the property tax growth from the properties it serves, each county is divided into tax rate areas (TRAs). Each local government represented in a TRA receives a share of the property tax growth that occurs within that TRA. As required by AB 8, county auditors developed a methodology to determine the percentage of property tax growth—known as TRA factors—to allocate to each local government in each TRA. These TRA factors were based largely on the 1979-80 base allocation established by AB 8 (including the shift of property tax revenue from K-14 districts to other local governments). In most counties, these TRA factors remain constant. Thus, if a city received 25% of the property tax revenue growth generated in a TRA in 1980-81 (the first year TRA factors were used to distribute property tax revenue growth), it continued to receive 25% of the growth in property taxes in future years. As a result, the distribution of property tax revenue among local governments continued to closely resemble the 1979-80 distribution until the first major changes to the AB 8 system occurred in the 1990s. SMD No. 2 contains 212 TRAs. By comparison, the City contains 956 TRAs. The weighted average share of the 1% tax rate for SMD No. 2 amongst its 212 TRAs for Fiscal Year 2017-18 is 0.001762845%. The City receives the collections for SMD No. 2 from a parcel within each applicable TRA based on SMD No. 2's share of the 1% for such TRA multiplied by the net assessed value for such parcel. See "- Assessed Valuations of SMD No. 2" and "- Tax Rates" below. Below is a map of the boundaries of SMD No. 2. [insert map of SMD No. 2] -19- The State property tax allocation system set up in AB 8 continues to be the basis for property tax allocation among local governments today. Since 1979, however, there have been some significant changes to the original property tax allocation system contained in AB 8. In most cases, the changes reflect the complex fiscal relationship between the State and local governments. Because of the State's role in allocating property tax revenue after Proposition 13 and in funding K-14 districts and other local programs, decisions regarding the State budget and other policy issues have led the Legislature and Governor to occasionally change how property tax revenue is distributed, including Educational Revenue Augmentation Fund (ERAF), vehicle license flip (VLF) swap and the triple flip. In 2004 Proposition IA and in 2010 Proposition 22 limited the State's authority to change property tax allocation laws. Measures that reallocate property tax revenue among counties, cities, and special districts require a two—thirds vote of the Legislature and measures that change State laws to increase the percentage of property taxes allocated to schools are prohibited. California residents and local officials have virtually no control over the distribution of property tax revenue to local governments. Instead, all major decisions regarding property tax allocation are controlled by the State. Even without additional legislative action, however, the distribution of property tax revenue has changed due the dissolution of redevelopment agencies and the end of the triple flip. Tax Rates and Levies Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. However, upon a change in ownership of property or completion of new construction, State law permits an accelerated recognition and taxation of increases in real property assessed valuation (known as a "floating lien date"). For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State assessed property secured by a lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." The County levies a 1% property tax, including the Ad Valorem Revenues, on behalf of all taxing agencies in the County. The taxes collected are allocated on the basis of a formula established by State law enacted in 1979. See "SMD No. 2 and the Ad Valorem Revenues," above. Under this formula, the County and all other taxing entities receive a base year allocation plus an allocation on the basis of "situs" growth in assessed value (new construction, change of ownership, inflation) prorated among the jurisdictions which serve the TRAs within which the growth occurs. In addition, the County levies and collects additional approved property taxes and assessments, including the Assessments, on behalf of any taxing agency within the County. The property taxes, including the Ad Valorem Revenues, and Assessments, on the secured roll are due in two installments, on November 1 and February 1. If unpaid, such Ad Valorem Revenues and Assessments become delinquent after 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 and assessments are delinquent is declared tax -defaulted on or about June 30. Such property may thereafter be redeemed by payment of the delinquent property taxes, including the Ad Valorem Revenues, and Assessments and the delinquency penalty, plus costs and redemption penalty of one and '/2% per month to the time of redemption. If property taxes, including Ad Valorem Revenues, and Assessments are unpaid for a period of five years or more, the tax -defaulted property is subject to sale by the County Treasurer. Property taxes on the unsecured roll are currently due as of the January 1 lien date prior to the commencement of a fiscal year 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 1'/2% per month begins to accrue on November 1. The taxing authority 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 recordation in the County Recorder's office in order to obtain a lien on certain property of -20- the taxpayer; and (4) seizure and sale of personal property, improvements, bank accounts or possessory interests belonging or assessed to the taxpayer. The County levies and collects all property taxes, including the Ad Valorem Revenues, for property falling within its taxing boundaries. Certain counties in the State operate under a statutory program entitled Alternate Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"). Under the Teeter Plan local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the county. The County has not adopted the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities within the County, such as the City. The City's receipt of Ad Valorem Revenues and Assessments is therefore subject to delinquencies. See Tables 3 and 11 herein. Assessed Valuations of SMD No. 2 The assessed valuation of property in SMD No. 2 is established by the County Assessor, except for public utility property which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. The State -reimbursed exemption currently provides a credit of $7,000 of the full value of an owner - occupied dwelling for which application has been made to the County Assessor. The revenue estimated to be lost to local taxing agencies due to the exemption is reimbursed from State sources. Reimbursement is based upon total taxes due upon such exempt value and is not reduced by any amount for estimated or actual delinquencies. In addition, certain classes of property such as churches, colleges, not-for-profit hospitals and charitable institutions are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions. For fiscal year 2016-17 and 2017-18, SMD No. 2's total net taxable assessed valuation is $15,107,798,485 and $15,757,337,512, respectively. As a comparison, the cumulative net taxable assessed value for the entire City is $30,727,345,419. Shown in the following tables is information relating to the assessed valuation of property in SMD No. 2 during the current and past nine fiscal years, and net taxable assessed valuation and parcels by land use. TABLE NO. 1 STREETLIGHTING MAINTENANCE DISTRICT NO.2 Summary of Net Taxable Assessed Valuations Source: Los Angeles County Auditor -Controller. -21- % Change 3.70% -5.80 -0.64 0.47 -1.09 2.54 6.79 4.98 3.55 4.30 Secured SBE Nommitary Unsecured Total 2008-09 $13,124,039,382 $ 87,620 $520,485,824 $13,644,612,826 2009-10 12,326,919,260 2,587,624 523,540,897 12,853,047,781 2010-11 12,285,400,446 2,587,624 483,023,596 12,771,011,666 2011-12 12,376,180,298 2,528,818 451,844,668 12,830,553,784 2012-13 12,224,647,957 2,528,818 463,712,686 12,690,889,461 2013-14 12,546,837,107 2,528,818 464,431,774 13,013,797,699 2014-15 13,425,725,700 2,528,818 469,669,514 13,897,924,032 2015-16 14,151,576,351 2,528,818 436,109,869 14,590,215,038 2016-17 14,664,819,038 2,528,818 440,450,629 15,107,798,485 2017-18 15,295,720,150 2,608,900 459,008,462 15,757,337,512 Source: Los Angeles County Auditor -Controller. -21- % Change 3.70% -5.80 -0.64 0.47 -1.09 2.54 6.79 4.98 3.55 4.30 TABLE NO. 2 STREETLIGHTING MAINTENANCE DISTRICT NO.2 2017-18 Net Taxable Assessed Valuation and Parcels by Land Use (1) Local Secured Assessed Valuation, excluding tax-exempt property. (2) Parcels with SBE Nonunitary, Cross Reference and Unsecured valuations are duplicative with other categories and are not included in total parcel count. Source: Los Angeles County Assessor 2017118 Combined Tax Rolls. [Remainder of Page Intentionally Left Blank.] -22- 2017-18 Assessed No. of % of Valuation(') % of Total Parcels Total Commercial $ 2,091,350,662 13.3% 551 1.6% Industrial 715,947,572 4.5 225 0.6 Vacant 147,188,413 0.9 1,269 3.3 Irrigated 1,559,688 0.0 3 0.0 Miscellaneous 262,189 0.0 2 0.0 Recreational 61,094,285 0.4 20 0.0 Government Owned 363,846 0.0 5 0.0 Institutional 136,666,193 0.9 67 0.2 Exempt 0 0.0 671 1.8 SBE Nommitary 2,608,900 0.0 4(2) - Cross Reference 35,084,480 0.2 607 (2) - Unsecured 459,008,462 2.9 2,524(2) - Subtotal Non -Residential $ 3,651,134,690 23.2% 2,813 7.5% Residential $12,106,202,822 76.8% 34,715 92.5% Total $15,757,337,512 100.0% 37,528 100.0% (1) Local Secured Assessed Valuation, excluding tax-exempt property. (2) Parcels with SBE Nonunitary, Cross Reference and Unsecured valuations are duplicative with other categories and are not included in total parcel count. Source: Los Angeles County Assessor 2017118 Combined Tax Rolls. [Remainder of Page Intentionally Left Blank.] -22- SMD No. 2 Ad Valorem Collections and Delinquencies The following tables set forth secured tax charges levied and collections in SMD No. 2 for fiscal years 2012-13 through 2017-18. For Fiscal Year 2017-18, SMD No. 2 contains 212 TRAs with tax rate factors ranging from 0.003422700 to 0.025871952 of the 1% tax rate. The weighted average share of the 1% tax rate for SMD No. 2 amongst the 212 TRAs for 2017-18 is 0.001762854. TABLE NO. 3 STREETLIGHTING MAINTENANCE DISTRICT NO.2 Tax Charges and Collections Fiscal Year Net Taxable Assessed Value Weighted Ave. Share of 1%(') Ad Valorem Tax Levy 2012-13 $12,690,889,461 1.709848% $2,169,950 2013-14 13,013,797,699 1.689164 2,198,244 2014-15 13,897,924,032 1.675609 2,328,749 2015-16 14,590,215,038 1.721681 2,511,970 2016-17 15,107,798,485 1.735317 2,621,683 2017-18 15,757,337,512 1.762854 2,704,854 (1) 1% general fund apportionment. Excludes redevelopment agency impounds Source: Los Angeles County Assessor 2017118 Combined Tax Rolls. [Remainder of Page Intentionally Left Blank.] -23- Ad Valorem Collections. Collection (June 30) Rate $2,229,107 102.7% 2,297,956 104.5 2,472,408 106.1 2,576,431 102.5 2,705,514 103.2 n/a n/a Tax Rates The percentage of assessed value of 1% tax rate for the 212 TRAs within SMD No. 2 range from a low of .003422700 to a high of .025871952 for Fiscal Year 2017-18. The average weighted share of the I% tax rate over the entire 212 TRAs for SMD No. 2 for Fiscal Year 2017-18 produces a 1% tax rate breakdown of 0.017628. The following table sets forth the breakdown levied as a percentage of assessed value of the 1% tax rate for Tax Rate Area 14938, excluding redevelopment factors and additional debt service, for Fiscal Year 2017-18. TABLE NO. 4 STREETLIGHTING MAINTENANCE DISTRICT NO.2 1% Tax Rate Breakdown Sample TRA (TRA 14938) Los Angeles County Los Angeles Consolidated Fire Department Educational Augmentation Impound Fund Educational Revenue Augmentation Fund William S. Hart Union High City of Santa Clarita Castaic Lake Water District Saugus Union School District William S. Hart Elementary School Fund Santa Clarita Community College Co. Sanitation District No. 32 Operating Santa Clarita Library LIGHT MAINTENANCE NO. 2 LA County Flood Control Maintenance County School Service Fund Saugus Union LA County FFEw Childrens Instil. Tuition Fund LA County Flood Dr Imp District Maintenance County School Services Developed Center Handicapped Minor Saugus Greater LA Vector Control County School Service Fund William S. Hart LA County Accum. Capital Outlay Total .216741768 .160790020 .133767784 .081905306 .074672205 .057290609 .052594986 .049893744 .039290251 .034294299 .032466285 .020870033 .017662911 .008615512 .007187019 .004973371 .002595845 .001533361 .001308107 .000823917 .000322403 .000311317 .000088947 1.000000000 Source: Los Angeles County Assessor 2017118 Combined Tax Rolls -24- Largest Taxpayers for SMD No. 2 The 20 largest taxpayers in SMD No. 2 and their assessed valuations for 2017-18 are shown in the following table. TABLE NO. 5 STREETLIGHTING MAINTENANCE DISTRICT NO.2 Largest 2017-18 Taxpayers Based on Net Taxable Assessed Values Source: Los Angeles County Assessor 2017118 Combined Tax Rolls and the SBE Non Unitary Tax Roll Assessments Annually, the City established the assessments for each Zone of SMD No. 1 (previously County Lighting District LLA -1) based on the special benefit received by the properties in each Zone and the associated net special benefit expenses. These special benefit expenses were based on the historical and estimated costs to maintain the improvements that provide direct and special benefits to properties within each Zone of SMD No. 1 and include all expenditures, deficits, surpluses, revenues, and reserves. Each parcel was assessed proportionately for only those improvements provided and for which the parcel receives special benefits. Following consideration of all public comments and written protests at a noticed public hearing and review of the engineer's report, the City Council ordered amendments to the report or confirmed the report as submitted. Following final approval of the report and confirmation of the assessments for SMD No. 1, the Council ordered the levy and collection of assessments pursuant to the 1972 Act. Once the levy was approved, the assessment information was be submitted to the County Auditor -Controller and included on the property tax roll for each benefiting parcel. For Fiscal Year 2017-18, the City Council as part of its Proposition 218 proceedings described -25- 2017-18 % of Property Owner Number of Parcels Assessed Valuation Total 1. Valencia Town Center Venture LP 17 $ 378,768,661 2.40% 2. Bel Valencia LLC 9 162,999,991 1.03 3. ARC SLSTCCA001 LLC 4 99,413,280 0.63 4. Canyon Crest Fee Owner LLC 3 66,506,081 0.42 5. EQR Valencia LLC 217 65,602,016 0.42 6. IVT River Oaks Valencia LLC 7 61,034,930 0.39 7. GSG Residential Montecito LLC 1 60,917,147 0.37 8. Walmart/Sam's 3 59,295,210 0.37 9. Palmer Saugus Limited 22 58,787,588 0.37 10. Hcn G And L Valencia Sub LLC 2 55,609,302 0.35 11. SWVP Valencia LLC 3 55,391,874 0.35 12. Soledad Canyon Center LLC 7 54,323,130 0.34 13. Regency Centers LP 4 51,263,914 0.32 14. BRE California Office Owner LLC 1 50,898,000 0.32 15. Westcreek Properties Limited 193 49,222,734 0.31 16. PK I Granary Square LP 1 47,908,015 0.30 17. Gelt Whites Canyon Holdings LLC 2 46,420,099 0.29 18. C C V Partnership II 5 38,306,688 0.24 19. Easton Investments II 8 35,404,025 0.22 20. M G Enterprises LLC 5 33,355,110 0.21 Subtotal 514 $ 1,531,427,795 9.72% Total Net Taxable Assessed Valuation 37,528 $15,757,337,512 100.00% Source: Los Angeles County Assessor 2017118 Combined Tax Rolls and the SBE Non Unitary Tax Roll Assessments Annually, the City established the assessments for each Zone of SMD No. 1 (previously County Lighting District LLA -1) based on the special benefit received by the properties in each Zone and the associated net special benefit expenses. These special benefit expenses were based on the historical and estimated costs to maintain the improvements that provide direct and special benefits to properties within each Zone of SMD No. 1 and include all expenditures, deficits, surpluses, revenues, and reserves. Each parcel was assessed proportionately for only those improvements provided and for which the parcel receives special benefits. Following consideration of all public comments and written protests at a noticed public hearing and review of the engineer's report, the City Council ordered amendments to the report or confirmed the report as submitted. Following final approval of the report and confirmation of the assessments for SMD No. 1, the Council ordered the levy and collection of assessments pursuant to the 1972 Act. Once the levy was approved, the assessment information was be submitted to the County Auditor -Controller and included on the property tax roll for each benefiting parcel. For Fiscal Year 2017-18, the City Council as part of its Proposition 218 proceedings described -25- above, consolidated the SMD No. 1 (including Zone A and Zone B) with two (2) other existing landscape districts into a single assessment district to be designated as "Santa Clarita Landscaping and Lighting District" (the "District"). The resulting zones applicable to the Assessments are entitled Streetlighting Zone A and Streetlighting Zone B of the District. Pursuant to the Act, the City Council is now the legislative body for the District which includes the former SMD No. 1, may levy annual assessments and act as the governing body for the operation and administration of the District. As in past years, as territory is annexed into the City, annexation to Streetlighting Zone B of the District will be a condition of annexation. The City holds Assessment Revenue in Fund 359. Description and Purpose of the Assessments The Assessments are levied to provide for the cost and expense of constructing, acquiring, improving, or otherwise installing the Authorized Lighting Facilities, and of maintaining, operating, and servicing the Authorized Lighting Facilities, including but not limited to energy costs. Assessments levied within the District are included on the regular county property tax bills sent to owners of real property within the District. The Streetlighting Zones within the District were established to collect funds to cover the expenses for energy and maintenance of a majority of streetlights in the City. These costs are billed by the Southern California Edison Company for all approximate 17,272 streetlights currently owned and maintained by Edison and all approximate 689 streetlights owned by the City. In fiscal year 2017-18 Engineer's Report, the proposed new and/or existing improvements for Streetlighting Zones A and B include, but were not limited to, (a) the installation of streetlighting, traffic signals and other appurtenant facilities that are necessary for the daily operation of said lighting located within City road rights-of-way (installation covers all work necessary for the installment or replacement of said lighting and all appurtenant work necessary to complete said installation or replacement); (b) the operation, maintenance, and servicing of all existing streetlighting, traffic signals, and other appurtenant facilities that are necessary for the daily operation of said lighting located within City road rights-of-way (operation, maintenance, and servicing means all work necessary for the daily maintenance required to maintain said lights in proper operation including providing said lights with the proper energy necessary to operate the lights); (c) the payment of debt service on bonds or other obligations, including installment payments, to be issued or incurred during the fiscal year (obligations may be incurred during the fiscal year for the acquisition, installation and conversion, including the retrofitting, of street lights within the District and Zones and may be secured by and/or payable from a portion of the assessments levied in each fiscal year until the obligation is paid and the City Council has determined that estimated cost of the acquisition, installation and conversion of street lights within the District and retrofit thereof, is greater than can be conveniently raised from a single annual assessment, and that the estimated cost, plus incidental expenses and financing costs, shall be collected over a period not to exceed thirty (30) years, commencing fiscal year 2017-18 and continuing through 2047-48), and (d) all improvements consisting of ornamental streetlights, mast arm streetlights and appurtenant facilities. Excerpt of Engineer's Report; Basis of Special Benefit Proportioning for Assessments For residential parcels, approximately 95% are single-family homes or condominiums, and the remainder being duplexes, triplexes, or apartments. In view of this and the benefits derived by the family unit, both at and in the proximity of their property, a value of 1.00 has been assigned to the basic family unit or Equivalent Benefit Unit (EBU), i.e. the single-family home or condominium. The existing district includes some properties that may not actually have streetlights in their block but which do receive a neighborhood benefit from the lights in the area. These properties were also included in the District. Therefore a weighted value of 0.50 was given to "People Use" while "Intensity" and "Security Benefit" were each rated at 0.25 to form the basic unit (1.00 EBU). Parcels in other land use categories were assigned weighted values by comparison with this basic EBU. For multiple rental type properties, the value for Intensity would remain at 0.25, but the other two items would increase in proportion to the -26- number of family dwelling units on the parcel. For example, a duplex was assigned 0.25 for Intensity, 1.00 for People Use and 0.50 for Security Benefit for a total of 1.75 EBU's. The owner of such property would therefore pay 1.75 times as much for lighting as the owner of a single-family unit. In consideration of the distance some units would be from the lighted roadway, Security Benefits in the residential category would not be increased beyond a value of 1.00. Thus, a 5 -unit apartment would be assigned 0.25 for Intensity, 2.50 for People Use and 1.00 for Security Benefits for a total of 3.75 EBU's. As the number of apartments on a parcel increases, the service charge units assigned for people would follow a declining scale. The non-residential lots or parcels are separated into 38 land use categories as determined by the County Assessor. Equivalent Benefit Units (EBU's) are assigned on the basis of average benefits for different groups of land uses, Groups A -K. Properties within the 10 land use categories in Group K varied widely from the norm and therefore these lots or parcels were considered on an individual basis. Each of the parcels or lots in these land use categories was identified on the official lighting district maps and each streetlight or portion thereof in the immediate proximity of the lots or parcels benefiting the lots or parcels was assigned a number of units as identified below. The total number of EBU's so determined for that category would be distributed among the lots or parcels in that category in proportion to the lot or parcel area as shown in the table below. A minimum of 3.00 EBU's would be assessed to each lot or parcel to be compatible with group D which contains many of the smaller business categories. Several large lots or parcels in outlying areas within the existing lighting district have no lights in the immediate proximity and therefore those lots or parcels would be assessed the minimum amount. Since benefits have been related to property use and property users, no charge would be assessed on vacant parcels within the District. Exempt parcels include streets, avenues, lanes, roads, drives, courts, alleys, public easements, right-of-ways, and parkways. Also exempt are utility rights-of-way used exclusively for utility transmission, common areas (such as in condominium complexes), land dedicated as open space or parks, landlocked parcels, and small parcels vacated by the City, as these parcels do not benefit from the improvements. For Fiscal Year 2017-18 the maximum assessment rate for parcels in Streetlighting Zone A is $12.38 per Equivalent Benefit Unit (EBU), which is the maximum rate previously established by Los Angeles County at the time the original district parcels (Zone A parcels) were transferred to the City's jurisdiction. The maximum assessment rate for Zone A does not have a Consumer Price Index (CPI) adjustment. Subsequent annexations to the City and new developments within the City that receive special benefit from streetlighting have been assigned to Streetlighting Zone B with a higher assessment rate that includes a Consumer Price Index (CPI) adjustment. For Fiscal Year 2017-18, the Streetlighting Zone B maximum assessment rate is $78.87 and was adjusted by the Consumer Price Index during the preceding year for an increase of $1.53. Future development within the City is conditioned to annex into Zone B of the District. The most recent annexation consisted of 798 additional parcels and occurred on January 23, 2018 and will be included in the 2018-19 levy. It is estimated that these additional parcels will increase the Fiscal Year 2018-19 levy by approximately $180,000. The assessment rates for the Streetlighting Zones are summarized in the table below. -27- TABLE NO. 6 STREETLIGHTING ZONE A AND ZONE B SUMMARY OF EBU AND NUMBER OF PARCELS IN THE DISTRICV) Zone A Zone B Fiscal Year Number of No. of No. of Maximum Estimated Fiscal Year Parcels Units EBUs Rate per EBU Assessment Revenue 2012-13 34,158 33,368 40,479.40 $12.38 $501,133.15 2013-14 34,152 38,736 39,148.69 12.38 484,658.97 2014-15 34,033 38,620 39,039.25 12.38 483,304.08 2015-16 34,035 38,615 39,025.87 12.38 483,138.47 2016-17 34,029 38,615 39,014.87 12.38 483,002.29 2017-18 34,018 38,609 38,842.95 12.38 480,873.95 Zone B Fiscal Year Number of Parcels No. of Units No. of Maximum EBUs Rate per EBU Estimated Assessment Revenue 2012-13 13,604 10,867 18,117.72 $73.68 $1,334,192.81 2013-14 20,089 23,026 25,114.26 75.32 1,890,868.65 2014-15 20,118 22,356 25,695.96 75.73 1,945,213.40 2015-16 20,214 23,162 25,859.96 75.80 1,959,443.57 2016-17 20,624 23,510 25,933.87 77.34 2,004,968.34 2017-18 23,165 25,192 28,500.27 78.87 2,247,815.36 Streetli0tint! Zone A and Zone B Total No. of Total No. of Total No. of Estimated Total Fiscal Year Parcels Units EBUs Assessment Revenue 2012-13 47,762 44,235 58,597.12 $1,835,325.96 2013-14 54,241 61,762 64,262.95 2,375,527.62 2014-15 54,151 60,976 64,735.21 2,428,517.48 2015-16 54,249 61,777 64,885.83 2,442,582.04 2016-17 54,653 62,125 64,948.74 2,487,970.63 2017-18 57,183 63,801 67,343.22 2,728,689.31 (1) Includes parcel count for exempt and vacant parcels with $0 levy. Estimated assessment revenue is different from Fiscal Year 2017-18 Total Levy in Tables 7, 8, 9 and 10 due to parcel changes after approval of Engineer's Report. Source: City of Santa Clarita Engineer's Reports Regarding Levying of an Assessment for Santa Clarita Lighting Maintenance District for Fiscal Years 2012-13 through 2017-18. -28- Property in Streetlighting Zone A and Zone B of the District Land Use. Table 7 provides a summary of the parcels for which Assessments have been levied for the current Fiscal Year by land use. The cumulative net taxable assessed value for the parcels subject to the Assessments for Fiscal Year 2017-18 is $27,270,174,825. As a comparison, the cumulative net taxable assessed value for the entire City is $30,727,345,419. TABLE NO. 7 STREETLIGHTING ZONE A AND ZONE B ASSESSMENT LEVY BY TYPE OF LAND USE 2017-18 Annual Assessments Source: City of Santa Clarita, as to the Santa Clarita Lighting Maintenance District -29- No. of Total 2017-18 Total 2017-18 % of Total Land Use Category Parcels Assessed Value Assessment Levv Levv Single Family Residential 36,754 $15,253,721,454 $1,327,082.89 47.83% Condo 15,673 4,599,258,163 633,585.04 22.83 Apt 2 211 64,140,019 6,113.93 0.22 Apt 5 94 201,110,863 29,205.90 1.05 Apt 21 58 267,143,031 37,438.75 1.35 Apt 51 20 221,410,683 17,843.51 0.64 Apt 101 36 978,613,375 94,945.38 3.42 A. Irrigated Farms, Dry Farms, Cemeteries, 3 1,559,688 37.14 0.00 Dump Sites B. Animal Kennels, Nurseries and 82 273,945,574 25,707.13 0.93 greenhouses, parking lots, Churches, Private Schools, Petroleum and Gas, Utility C. Commercial parking lots 68 101,259,690 9,790.16 0.35 D. Office & Professional building, Bank, 284 1,025,300,562 47,574.90 1.71 Savings & Loan, Service Shop, Lumber Yard, Golf Course, Race track/stable, Camp, Home for the Aged E. Store, Store w/ office or residence, Service 201 404,018,133 27,772.84 1.00 Station, Club & Lodge Hall F. Rooming House (same as 6 unit apartment) 0 0 0.00 0.00 G. Restaurant, theater 47 65,752,825 9,423.02 0.34 H. Light Manufacturing, Food Processing 616 1,412,042,661 198,269.89 7.14 Plant, L Auto, Recreational Equipment Sales & 82 207,749,196 17,972.40 0.65 J. Market, Bowling Alley, Skating Rink, 39 295,408,443 15,348.36 0.55 Department Store, Hotel/Motel, Mobile Home Park KI. Open storage, mineral processing 6 4,774,225 1,665.77 0.06 K2. Private College/University, Wholesale and 31 288,076,047 32,340.20 1.16 manufacturing outlets, Athletic and Amusement Facilities, Heavy Manufacturing, Hospitals K3s. Motion Picture, Radio, T.V., 149 1,411,487,788 203,163.08 7.32 Neighborhood Shopping Center, Regional Shopping Center Vacant 537 321,109,377 42,353.19 1.52 TOTAL: 54,859 $27,270,174,825 $2,774,552.96 100.00% Source: City of Santa Clarita, as to the Santa Clarita Lighting Maintenance District -29- Ownership. The following table shows the ten property owners responsible, through their parcel ownership, for the largest amounts of Fiscal Year 2017-18 Assessments. If a property owner owns more than one parcel in Streetlighting Zone A and Zone B of the District on which Assessments are levied, the Assessments attributable to all such parcels are aggregated by property owner. See "BOND OWNERS' RISKS — Property Owners Not Obligated to Pay Bonds or Assessments." TABLE NO. 8 STREETLIGHTING ZONE A AND ZONE B LARGEST ASSESSMENT PAYERS Fiscal Year 2017-18 Total 2017-18 % of 2017-18 Property Owner(') Primary Land Use(s) Assessments Levied(l) Assessments 1. Valencia Town Center Venture LP Commercial $ 45,859.77 1.65% 2. Saugus Colony Limited Residential 25,846.87 0.93 3. Packard Humanities Institute Commercial 23,542.83 0.85 4. Wesco IV LLC Residential 19,382.30 0.70 5. Valencia Biomedial Park LLC Commercial 18,781.31 0.68 6. Park Sierra Properties Residential 18,573.87 0.67 7. EQR The Oaks LLC Residential 18,389.69 0.66 8. MGP XI Properties LLC Commercial 13,942.31 0.50 9. Solemint Heights Partnership Residential 13,498.59 0.49 10. NF Capital Finance Southwest LP Residential 12,145.98 0.44 Subtotal $209,963.52 7.57% Total $2,774,552.96 100.00% (1) If a property owner owns more than one parcel in the District on which Assessments are levied, the Assessments attributable to all such parcels are aggregated by property owner. Source: Willdan, Inc. with information from the City of Santa Clarita, as to the Santa Clarita Lighting Maintenance District. Neither the Bonds nor the Assessments are personal obligations of any person or entity owning property within the District or having any interest in such property at the present time or at any time in the future, including the homeowners. An owner of land in Zone A or Zone B of the District can elect at any time to not pay Assessments and allow the property to be foreclosed and in doing so, such owner will incur no personal liability for the Assessments. [The remainder of this page is intentionally left blank.] -30- Summary of 2017-18 Assessment Amounts Per Parcel. The following tables summarize the distribution of levy amounts per parcel, as well as the associated net assessed values, for all of the parcels included in Streetlighting Zone A and Zone B of the District for Fiscal Year 2017-18. TABLE NO. 9 STREETLIGHTING ZONE A AND ZONE B SUMMARY OF ASSESSMENT AMOUNTS PER PARCEL Fiscal Year 2017-18 2017-18 Assessment Amount Per Parcel No. of Parcels Total 2017-18 Assessed Value Aggregate 2017-18 Assessment Levy % of Total Assessment Levy Greater than $15,000 3 $ 330,425,693 $ 60,376.41 2.176% $12,500 to $14,999 1 55,607,911 14,827.56 0.534 $10,000 to $12,499 1 185,978,625 10,745.93 0.387 $7,500 to $9,999 2 68,561,182 18,002.07 0.649 $5,000 to $7,499 9 353,237,296 51,730.49 1.864 $2,500 to $4,999 30 655,375,544 100,569.93 3.625 $1,000 to $2,499 58 549,181,742 92,958.59 3.350 $750 to $999 53 346,180,895 45,921.21 1.655 $500 to $749 52 452,762,076 32,026.72 1.154 $250 to $499 669 1,613,107,708 258,702.02 9.324 $100 to $249 358 1,354,635,992 74,888.05 2.699 $50 to $99 20,171 10,247,251,120 1,587,874.66 57.230 Less than $50 33,452 11,057,869,041 425,929.32 15.351 Total: 54,859 $27,270,174,825 $2,774,552.96 100.000% Source: Willdan, Inc. with information from the City of Santa Clarita, as to the Santa Clarita Lighting Maintenance District, and the Los Angeles County Assessor 2017118 Combined Tett Rolls and the SBE Non Unitary Tax Roll, as to Assessed Valuations. Assessment Collection History Assessments are levied and collected by the County along with the general property taxes on the secured real property tax bills of property within the District. Taxpayers are obligated to pay the total of general and specific tax and assessment levies appearing on County tax bills; partial payments of the total tax levy are applied pro rata among all individual taxes and assessments appearing on the tax bill. The following table provides the historical collections for the Assessments and the collection rate. [The remainder of this page is intentionally left blank.] -31- TABLE NO. 10 STREETLIGHTING ZONE A AND ZONE B ASSESSMENT COLLECTION RATE HISTORY Fiscal Years 2012-13 through 2017-18 Fiscal Estimated Actual Remaining Collection Year Levy Levy(') Collections Balance Rate 2012-13 $1,835,326 2013-14 2,375,528 2014-15 2,428,517 2015-16 2,442,582 2016-17 2,487,971 2017-18 2,728,689 $1,835,326 $1,852,545 2,375,528 2,370,426 2,428,517 2,416,001 2,442,582 2,423,395 2,487,971 2,540,682 2,774,553 n/a $(17,219) 100.9% 5,102 99.8 12,516 99.4 19,187 99.2 (52,711) 102.1 n/a n/a (1) Actual levy may be different from estimated levy in Engineer's Report due to parcel changes after approval of Engineer's Report. Source: Willdan, Inc. Budget; Actual Revenues and Expenditures The costs of providing, operating, maintaining, and servicing the Authorized Lighting Facilities is currently paid from the Assessment Revenues derived from the levy of the Assessments on real property within Streetlighting Zone A and Zone B of the District and from the Ad Valorem Revenues. The major expenses include utility cost payments to SCE, maintenance costs and personnel costs. The payment to SCE is determined primarily based on electricity used and whether or not the streetlighting pole is owned by SCE or the City. SCE has three rate schedules approved by the California Public Utilities Commission to charge for the energy and maintenance of street lights, as follows: LS -1 schedule (unmetered, SCE owned and maintained lights), LS -2 schedule (unmetered, customer owned and maintained lights) and LS -3 schedule (metered, customer owned and maintained lights). Presently, all street lights in the District are on the LS -1 schedule except for the approximately 1,356 lights that are City -owned and are either on the LS -2 or LS -3 schedule. The City reports that the SCE monthly maintenance charges for lights on the LS -1 schedule are currently $[9.89 to $13.15] per pole. Subsequent to their acquisition by the City from SCE, the applicable SCE monthly charge for the Streetlight Improvements (consisting of 16,125 streetlights) will change to the LS -2 schedule, which according to the City is estimated at a current monthly charge of $24 per pole. After taking into account increases in City staff and materials expenditures due to self -maintaining the Streetlight Improvements, the retrofit of the Streetlight Improvements with LED lighting components and the cost of this financing, the City expects to save around $500,000 in Fiscal Year 2019-20, with savings on average increasing between $40,000 to $60,000 per year in most years following completion of the Project. See Table 13 and Table 17 under the caption "DEBT SERVICE COVERAGE FOR THE INSTALLMENT PAYMENTS" herein. The Installment Payments are payable from Assessment Revenues and Ad Valorem Revenues prior to other authorized expenditures for the authorized Lighting Facilities, such as for operations and maintenance costs. See "SECURITY FOR THE BONDS — Installment Payments; Streetlighting Revenue Fund" and "DEBT SERVICE COVERAGE FOR THE INSTALLMENT PAYMENTS" herein. -32- Table 11 on the following page provides a summary of the streetlighting portion of the District's historical revenues and expenditures for the past five Fiscal Years and current Fiscal Year 2017-18. Fund 354 (Ad Valorem Revenues) and Fund 359 (Assessments) are components within the City's Comprehensive Annual Financial Reports (CAFR) under the Non Major Governmental fund entitled Special Revenue Fund - Special Assessment. Table 12 sets forth the estimated projected budget for the Authorized Lighting Facilities for the next five Fiscal Years, including projected Assessment Revenues and Ad Valorem Revenues and expenditures, assuming completion of the Project and generation of the savings related thereto. The assumptions for the projections and debt service coverage are as follows: (a) the Installment Payment for September 1, 2018 will be funded at bond closing from cash on hand derived from Assessments and Tax Ad Valorem Revenues collected during Fiscal Year 2017-18. (b) only existing parcels subject to the Assessments during the Fiscal Year 2017-18 are assumed (no future annexations have been incorporated into either revenue or expense projections). (c) Assessments collected for Fiscal Years 2018-19 and thereafter for Streetlighting Levy B are estimated to increase by a 3.60% CPI factor for Fiscal Year 2018-19 and annually thereafter by a 2.00% CPI factor. (d) operating expenses, including personnel costs and operation and maintenance costs, are projected to increase by 3% annually from Fiscal Year 2017-18 approved midyear budget amounts, commencing in Fiscal Year 2018-19. (e) the estimated amount of the Installment Payments (provided by the Underwriter) are presented on a Bond Year basis and are paid from the pledged Assessment Revenues and Ad Valorem Revenues derived from corresponding Fiscal Year in which each Bond Year begins. (f) the number of streetlights are estimated to include 16,210 City -owned metered lights, 1,060 SCE -owned lights, and 689 City -owned unmetered lights. (g) operational costs are expected to rise due to increased outsource maintenance contracts and insurance costs, as well as pole replacement. (h) electrical utility costs are expected to fall due to lower utility payments to SCE resulting from a combination of lower tier electrical rates and City ownership of poles. SCE rate structures are assumed to remain constant. (i) savings estimated are shown on Table 13. [Remainder of Page Intentionally Left Blank.] -33- TABLE 11 SANTA CLARITA LIGHTING MAINTENANCE Historical Revenues and Expenses Fiscal Years 2012-13 through 2017-18 Operating Surplus $ (29,447) $ 619,377 $ 516,980 $ 597,929 $1,031,926 FY 17-18 Capital Projects FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 Year End Transfers Out to GASB 45 Actual Actual Actual Actual Actual Estimate REVENUE: 187,833 Ad Valorem $2,229,107 $2,297,956 $2,472,408 $2,576,431 $2,705,514 $2,728,503 Levy A (no CPI) 482,839 672,469 480,813 479,343 493,390 476,030 Levy B 1,369,706 1,697,957 1,935,188 1,944,052 2,047,293 2,220,921 Total Ad Valorem and Assessment $4,081,652 $4,668,382 $4,888,410 $4,999,826 $5,246,197 $5,425,454 Interest Income 57,834 29,648 35,060 47,840 82,541 64,745 Unrealized Gain/Loss (34,808) 22,583 13,889 51,305 (66,493) -- Signal Inspection 7,500 -- 10,000 -- -- 15,000 Miscellaneous Revenue 13,866 69,465 9,609 31,642 41,474 -- Transfers In -- -- 81,927 -- -- -- TOTAL REVENUE $4,126,043 $4,790,078 $5,038,895 $5,130,611 $5,303,719 $5,505,199 EXPENDITURE: Personnel Cost $ 188,140 $ 198,220 $ 178,368 $ 228,323 $ 208,024 $ 214,010 Electric Utility 2,836,156 2,876,154 3,006,859 2,963,052 2,652,031 3,205,000 Telephone Utility 7,575 7,595 9,048 8,276 9,000 Traffic Signal Maintenance 737,028 750,920 751,615 783,325 856,313 819,600 Contractual Services 177,331 122,069 306,806 258,298 276,971 395,000 Professional Services 6,781 9,855 31,910 48,221 47,188 76,428 Miscellaneous 2,803 2,577 2,481 3,825 6,246 11,129 Insurance Allocation 22,010 21,030 21,420 18,430 18,404 19,565 Reimbursement to the General Fund 185,240 182,300 214,860 220,160 198,340 186,660 Total Operating Expenditure $4,155,490 $4,170,701 $4,521,915 $4,532,682 $4,271,793 $4,936,392 Operating Surplus $ (29,447) $ 619,377 $ 516,980 $ 597,929 $1,031,926 $ 568,807 Capital Projects 27,952 34,634 - - - - Transfers Out to GASB 45 17,996 15,090 15,504 8,266 5,159 5,070 Transfers Out to Pension Liability (1) 187,833 TOTAL EXPENDITURE $4,201,438 $4,220,424 $4,537,419 $4,540,948 $4,276,951 $5,129,295 Revenue Over Expenditure $ (75,395) $ 569,654 $ 501,476 $ 589,663 $1,026,768 $ 375,904 (1) Percentage of unfunded pension liability attributable to streetlighting. Remaining portion of unfunded liability in the amount of $56,226 may be funded in following two years. Source: City of Santa Clarita. -34- TABLE 12 SANTA CLARITA LIGHTING MAINTENANCE Projected Revenues and Expenses Fiscal Years 2017-18 through 2022-23 (1) Ad Valorem Revenue projections are based on information from Los Angeles County Assessor as provided by [HdL]. (2) CPI factor for EBU rates for Assessment Levy B is estimated to be 1.97% for Fiscal Year 2017-18, 3.60% for Fiscal Year 2018-19 and 2.00% thereafter. Fiscal Year 2018-19 includes $189,494 in revenue from EBU counts from additional chargeable parcels annexed in Fiscal Year 2017-18. No additional EBU counts due to annexations are assumed for Fiscal Years 2018-19 and thereafter. (3) Personnel costs and operation and maintenance costs assume a 3% annual increase. Electric Utility costs assume phased reduction in payments to SCE due to installation of Project (70% non -LED rates for acquired poles/30% LED rates for acquired poles in Fiscal Year 2018-19, and 100% LED rates for acquired poles in Fiscal Year 2019-20). Additional expenses due to the Project include outsourced maintenance contracts, 20 pole replacements per year, and insurance premium based on estimated 110 poles knockdown per year. (4) Assumes 3.25% annual increase commencing in Fiscal Year 2019-20. (5) Percentage of unfunded pension liability attributable to streetlighting. Remaining portion of unfunded liability in the amount of $56,226 may be funded in following two years. (6) Does not include expenditure of Bond proceeds from Acquisition Fund for the Project. Source: City of Santa Clarita. -35- FY 17-18 Year End FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Estimate Projected Projected Projected Projected Projected REVENUE: Ad Valorem $2,728,503 $2,782,936 $2,885,334 $2,990,495 $3,098,655 $3,210,036 Assessment Levy A (no CPI) 476,030 476,030 476,030 476,030 476,030 476,030 Assessment Levy B (2) 2,220,921 2,488,473 2,538,242 2,589,007 2,640,787 2,693,603 Total Pledged Revenues $5,425,454 $5,747,438 $5,899,606 $6,055,532 $6,215,472 $6,379,669 Interest Income 64,745 109,853 112,874 141,662 171,789 203,300 Other Revenue 15,000 - - - - - TOTAL REVENUE $5,505,199 $5,857,291 $6,012,480 $6,197,194 $6,387,261 $6,582,969 EXPENDITURES(3): Personnel Cost $ 214,010 $ 223,809 $ 230,524 $ 237,439 $ 244,563 $ 251,899 Electric Utility 3,205,000 2,203,038 1,027,927 1,058,764 1,090,527 1,123,243 Telephone Utility 9,000 9,000 9,270 9,548 9,835 10,130 Traffic Signal Maintenance 819,600 819,600 844,188 869,514 895,599 922,467 Contractual Services 395,000 282,000 290,460 299,174 308,149 317,393 Outsource Maintenance Contract 195,000 200,850 206,876 213,082 219,474 Pole Replacement 129,660 133,550 137,556 141,683 145,933 Insurance Premium/Deductible 190,000 195,700 201,571 207,618 213,847 Professional Services 76,428 50,000 51,500 53,045 54,636 56,275 Miscellaneous 11,129 11,129 11,463 11,807 12,161 12,526 Insurance Allocation 19,565 21,208 21,844 22,500 23,175 23,870 Reimbursement to the General Fund 186,660 196,210 202,096 208,159 214,404 220,836 Total Operating Expenditures $4,936,392 $4,330,655 $3,219,371 $3,315,953 $3,415,431 $3,517,894 Operating Surplus $ 568,807 $1,526,637 $2,793,109 $2,881,241 $2,971,830 $3,065,075 Transfers Out to GASB 45 (4) 5,070 4,444 4,588 4,738 4,892 5,050 Transfers Out to Pension Liability 0) 187,833 - - - - - Additional Payments 10,000 10,300 10,609 10,927 11,255 Estimated Installment Payments 853,070 858,998 857,428 855,291 857,479 TOTAL EXPENDITURES (6) $5,129,295 $5,198,169 $4,093,258 $4,188,727 $4,286,541 $4,391,679 Revenue Over Expenditure $ 375,904 $ 659,122 $1,919,222 $2,008,467 $2,100,721 $2,191,290 (1) Ad Valorem Revenue projections are based on information from Los Angeles County Assessor as provided by [HdL]. (2) CPI factor for EBU rates for Assessment Levy B is estimated to be 1.97% for Fiscal Year 2017-18, 3.60% for Fiscal Year 2018-19 and 2.00% thereafter. Fiscal Year 2018-19 includes $189,494 in revenue from EBU counts from additional chargeable parcels annexed in Fiscal Year 2017-18. No additional EBU counts due to annexations are assumed for Fiscal Years 2018-19 and thereafter. (3) Personnel costs and operation and maintenance costs assume a 3% annual increase. Electric Utility costs assume phased reduction in payments to SCE due to installation of Project (70% non -LED rates for acquired poles/30% LED rates for acquired poles in Fiscal Year 2018-19, and 100% LED rates for acquired poles in Fiscal Year 2019-20). Additional expenses due to the Project include outsourced maintenance contracts, 20 pole replacements per year, and insurance premium based on estimated 110 poles knockdown per year. (4) Assumes 3.25% annual increase commencing in Fiscal Year 2019-20. (5) Percentage of unfunded pension liability attributable to streetlighting. Remaining portion of unfunded liability in the amount of $56,226 may be funded in following two years. (6) Does not include expenditure of Bond proceeds from Acquisition Fund for the Project. Source: City of Santa Clarita. -35- TABLE 13 SANTA CLARITA LIGHTING MAINTENANCE Estimated Savings From Project Fiscal Years 2018-19 through 2022-23 Electric Utility - status quo(n Project Related Differentials (Z) Electric Utility (w/ Project) Outsource Contract Services, Pole Replacement and Insurance Additional Payments Estimated Debt Service Payments Total Project Related Expenses Net Savings Accumulated Savings( ) FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Projected Projected Projected Projected Projected 10,000 10,300 10,609 10,927 11,255 $2,863,496 $2,949,401 $3,037,883 $3,129,020 $3,222,890 $2,203,038 $1,027,927 $1,058,764 $1,090,527 $1,123,243 514,660 530,100 546,003 562,383 579,254 10,000 10,300 10,609 10,927 11,255 853,070 858,998 857,428 855,291 857,479 $3,580,769 $2,427,324 $2,472,804 $ (717,272) $ 522,077 $ 565,079 $ (717,272) $ (195,196) $ 369,883 $2,519,128 $2,571,232 $ 609,891 $ 651,659 $ 979,774 $1,631,433 (1) Assumes the Project is not undertaken. (2) Assumes Bonds are issued and Project is undertaken. Assumes 30% of total utility cost from acquired poles is at LED rates for Fiscal Year 2018-19, and assumes the Project is complete by July 1, 2019. See "PLAN OF FINANCE." Source: City of Santa Clarita. -36- Direct and Overlapping Debt The following tables are statements of SMD No. 2's and the District's direct and estimated overlapping bonded debt as of February 1, 2018. The debt reports are included for general information purposes only. The Authority, the City and the Underwriter have not reviewed the debt reports for completeness or accuracy and make no representation in connection therewith. The Debt Reports generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of SMD No. 2 and the District in whole or in part. Such long term obligations generally are not payable from revenues generated by SMD No. 2 or the District (except as indicated) nor are they necessarily obligations secured by land within SMD No. 2 or the District. In many cases long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. Column 1 in the tables name each public agency which has outstanding debt as of the date of the report and whose territory overlaps SMD No. 2 or the District in whole or in part. Column 2 shows the percentage of each overlapping agency's assessed value located within the boundaries of SMD No. 2 or the District. This percentage, multiplied by the total outstanding debt of each overlapping agency (which is not shown in the table) produces the amount shown in Column 3, which is the apportionment of each overlapping agency's outstanding debt to taxable property within SMD No. 2 or the District. [Remainder of Page Intentionally Left Blank.] -37- TABLE NO. 14 STREETLIGHTING MAINTENANCE NO. 2 DIRECT AND OVERLAPPING BONDED INDEBTEDNESS 2017-18 Assessed Valuation: $15,757,337,512 OVERLAPPING TAX AND ASSESSMENT DEBT: Santa Clarita Community College District William S. Hart Union High School District William S. Hart Union High School District Community Facilities District No. 90-1 Castaic Union School District Newhall School District Newhall School District School Facilities Improvement District No. 2011-1 Saugus Union School District Saugus Union School District School Facilities Improvement District No. 2014-1 Saugus Union School District Community Facilities District No. 2006-2, Improvement Area No Sulphur Springs Union School District City of Santa Clarita Open Space and Parkland Assessment District City of Santa Clarita Community Facilities District No. 2002-1 City of Santa Clarita 1915 Act Bonds Los Angeles County Regional Park and Open Space Assessment District TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations Los Angeles County Superintendent of Schools Certificates of Participation Los Angeles County Sanitation District No. 32 Authority Santa Clarita Community College District Certificates of Participation William S. Hart Union High School District Certificates of Participation Castaic Union School District Certificates of Participation Saugus Union School District Certificates of Participation Sulphur Springs Union School District Certificates of Participation City of Santa Clarita Obligations TOTAL OVERLAPPING GENERAL FUND DEBT OVERLAPPING TAX INCREMENT DEBT (Successor Agencyl: COMBINED TOTAL DEBT % Applicable Debt 2/1/18 37.580% $ 97,646,571 37.574 132,055,509 42.949 137,437 7.052 877,970 59.105 5,207,151 59.895 35,571,641 35.474 8,450,613 35.732 5,795,730 6.656 531,131 35.139 17,076,170 51.281 6,897,295 100. 14,500,000 26.997 —100. 602,036 1.106 293.920 $325,643,174 1.106% $21,394,337 1.106 71,893 39.063 4,449,642 37.580 3,600,164 37.574 2,254,440 7.052 250,346 35.474 8,417,980 35.139 8,916,521 51.281 7111.271 $56,466,594 99.485% $33,805,003 $415,914,771 (1) (1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2017-18 Assessed Valuation: Total Overlapping Tax and Assessment Debt .................................. 2.07% Combined Total Debt....................................................................... 2.64% Ratios to Redevelopment Successor Agency Incremental Valuation ($389,972,428): Total Overlapping Tax Increment Debt ........................................... 8.67% Source: California Municipal Statistics, Inc. -38- TABLE NO. 15 STREETLIGHTING ZONE A AND ZONE B DIRECT AND OVERLAPPING BONDED INDEBTEDNESS 2017-18 Assessed Valuation: $27,634,380,019 (Land and Improvements) OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/18 Santa Clarity Community College District 64.609% $167,876,779 William S. Hart Union High School District 64.600 227,038,407 William S. Hart Union High School District Community Facilities District No.s 90-1 and 2015-1 71.078 -75.918 19,153,804 Castaic Union School District 23.741 2,955,706 Newhall School District 56.026 4,935,886 Newhall School District School Facilities Improvement District No. 2011-1 56.758 33,708,640 Saugus Union School District 79.089 18,840,570 Saugus Union School District School Facilities Improvement District No. 2014-1 79.964 12,918,317 Saugus Union School District Community Facilities Districts 100. 104,450,000 Sulphur Springs Union School District 73.964 35,943,353 Sulphur Springs Union School District Community Facilities District No. 2002-1 100. 24,880,000 City of Santa Clarity Open Space and Parkland Assessment District 88.452 11,896,729 City of Santa Clarita Community Facilities District No. 2002-1 100. 14,500,000 City of Santa Clarity 1915 Act Bonds 24.997 — 60.718 401,255 Los Angeles County Regional Park and Open Space Assessment District 1.901 505,264 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $680,004,710 OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 1.901% $ 36,778,063 Los Angeles County Superintendent of Schools Certificates of Participation 1.901 123,589 Los Angeles County Sanitation District No. 32 Authority 67.481 7,686,760 Santa Clarity Community College District Certificates of Participation 64.609 6,189,505 William S. Hart Union High School District Certificates of Participation 64.600 3,875,980 Castaic Union School District Certificates of Participation 23.741 842,795 Saugus Union School District Certificates of Participation 79.089 18,767,815 Sulphur Springs Union School District Certificates of Participation 73.964 18,768,241 City of Santa Clarity Obligations 87.667 12,157,001 TOTAL OVERLAPPING GENERAL FUND DEBT $105,189,749 OVERLAPPING TAX INCREMENT DEBT (Successor Agencyl: 80.936% $27,501,888 COMBINED TOTAL DEBT $812,696,347 (1) (1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2017-18 Assessed Valuation: Total Overlapping Tax and Assessment Debt......... 2.46% Combined Total Debt..............................................2.94% Source: California Municipal Statistics, Inc -39- SCHEDULE OF INSTALLMENT PAYMENTS The table below shows the annualized schedule of Installment Payments owed by the City (with Installment Payment Dates being the 15th day of the month prior to March 1 and September 1) under the Installment Purchase Agreement. TABLE NO. 16 SANTA CLARITA PUBLIC FINANCING AUTHORITY 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) SCHEDULE OF INSTALLMENT PAYMENTS Bond Year Ending (Sept. 1) Principal Interest Total Total $[principal amount].00 * Preliminary; subject to change. -40- DEBT SERVICE COVERAGE FOR THE INSTALLMENT PAYMENTS The Bonds are secured by a lien on and pledge of Revenues, which generally consist of all Installment Payments received or receivable by the Authority from the City pursuant to the Installment Purchase Agreement (see "SECURITY FOR THE BONDS"). Under the Installment Purchase Agreement, the Installment Payments are special limited obligations of the City payable solely from and secured by a pledge of and first lien on Assessment Revenues and Ad Valorem Revenues. As such, the Installment Payments are payable prior to any other expenses of the District, including administrative costs and operation and maintenance expenses with respect to the Authorized Lighting Facilities. Table 17 on the following page shows the estimated debt service coverage of pledged Assessment Revenues under the Installment Purchase Agreement over Installment Payments for the Bond Year ending September 1, 2018 and the subsequent five Bond Years. -41- TABLE 17 SANTA CLARITA PUBLIC FINANCING AUTHORITY 2018 REVENUE BONDS (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) ESTIMATED DEBT SERVICE COVERAGE FOR THE INSTALLMENT PAYMENTS* ESTIMATED REVENUES Ad Valorem Revenues Assessment Levy A (no CPI) Assessment Levy B (2) Total Pledged Revenues (Est.) ESTIMATED PAYMENTS Additional Payments P) Installment Payments 0) Total Additional & Installment Payments (Est.) Est. Debt Service Coverage for Installment Payments FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 $2,782,936 $2,885,334 $2,990,495 $3,098,655 $3,210,036 476,030 476,030 476,030 476,030 476,030 2,488,473 2,538,242 2,589,007 2,640,787 2,693,603 $5,747,438 $5,899,606 $6,055,532 $6,215,472 $6,379,669 $ 10,000 $ 10,300 $ 10,609 $ 10,927 $ 11,255 853,070 858,998 857,428 855,291 857,479 $863,070 $869,298 $868,037 $866,218 $868,734 6.65x 6.78x 6.97x 7.17x 7.34x (1) Ad Valorem Revenue projections are based on information from Los Angeles County Assessor as provided by [HdL]. (2) CPI factor for EBU rates for Assessment Levy B is estimated to be 3.60% for Fiscal Year 2018-19 and 2.00% thereafter. Fiscal Year 2018-19 includes $189,494 in revenue from EBUs from additional chargeable parcels annexed in Fiscal Year 2017-18. No additional EBU counts due to annexations are assumed for Fiscal Years 2018-19 and thereafter. (3) Estimated Additional Payments are amounts for administration of the Bonds, including annual Trustee fees. (4) Estimated Installment Payments are presented on a Bond Year basis and are paid from the pledged Assessment Revenues and Ad Valorem Revenues derived from previous Fiscal Year in which each Bond Year ends. Annualized Installment Payments are approximately equal for each Bond Year commencing Bond Year FY 2018-19. Installment Payment for September 1, 2018 shall be funded from cash on hand. See "ESTIMATED SOURCES AND USES OF FUNDS." Source: City of Santa Clarita as to projected Revenues and Expenditures. Preliminary, subject to change. -42- BOND OWNERS' RISKS The following information should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. General The Assessments from which the Assessment Revenues securing the Installment Payments derive are determined annually based on the special benefit factors (people use, security benefit, and intensity) and proportioning formulas described in the Engineer's Reports. See "THE DISTRICT — Excerpt of Engineer's Report; Basis of Special Benefit Proportioning." A change in land use or improvements of property in the District caused by economic factors beyond the control of the District, the City, and the Authority, such as complete or partial destruction of such property caused by, among other unforeseen events, an earthquake, other natural disaster or civil unrest, could cause a change in the related special benefit factors and therefore, in the pledged Assessment Revenues. Such reduction of Assessment Revenues could have an adverse impact on the City's ability to make timely payments of Installment Payments to the Authority and, therefore, on the Authority's ability to pay scheduled principal and interest to Owners of the Bonds. Likewise, delinquencies in the payment of property taxes, including the allocated portion consisting of Ad Valorem Revenues, could have an adverse effect on the City's ability to make timely Installment Payments to the Authority and therefore, on the Authority's ability to pay scheduled principal and interest to Owners of the Bonds. The Authority has no power to levy and collect property taxes. See "SECURITY FOR THE BONDS" and "THE DISTRICT." Legislation or initiative measures impacting property, property tax allocation or the rate or rates of the Assessments may affect the security of the Bonds. The implementation of any constitutional or legislative property tax decrease could reduce the Assessments or Ad Valorem Revenues, and accordingly, could have an adverse impact on the ability of the City to pay the Installment Payments to the Authority and therefore, on the Authority's ability to pay scheduled principal and interest to Owners of the Bonds. There is no assurance that the electorate within the State or the State Legislature will not at some future time approve additional limitations that could adversely affect the security of the Installment Payments or the Bonds. Under the provisions of the Act, the Assessments are levied annually by the City and collected by the County along with general property taxes on the secured real property tax bills of properties within the District. See "SECURITY FOR THE BONDS — Annual Assessments and Liens" herein. The Assessments and the Ad Valorem Revenues are due and payable, and bear the same penalties and interest for non- payment, as do regular property tax installments. A property owner cannot pay the county tax collector less than the full amount due on the tax bill. See "BOND OWNERS' RISKS — Collection of Installments" herein. It should also be noted that the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make Assessment payments or to make regular property tax payments, a portion of which consists of the Ad Valorem Revenues, in the future. The Assessments and the allocated portion of property taxes that consists of Ad Valorem Revenues do not constitute a personal indebtedness of the owners of the parcels related thereto, and the property owners have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. In the event of delinquency, proceedings may be conducted only against the real property securing the delinquent Assessment or property tax. There is no assurance the property owners shall be able to pay the Assessments or property tax or that they shall pay the Assessments or property taxes even though financially able to do so. See "BOND OWNERS' RISKS — Property Owners Not -43- Obligated to Pay Bonds or Assessments" below. In order to pay debt service on the Bonds, it is necessary that Assessments and Ad Valorem Revenues are paid in a timely manner. Should the Assessments or Ad Valorem Revenues not be paid on time, the City has not established a reserve fund for the Bonds to cover delinquencies. The Assessments and Ad Valorem Revenues are secured by a lien on the related parcels and, under current State law, are subject to tax sale and foreclosure by the County with the delinquent general ad valorem property taxes after the fifth year of delinquency. See "SECURITY FOR THE BONDS — Collection of Assessments and Ad Valorem Revenues." Failure by owners of the parcels to pay the Assessments and property taxes when due, delay in tax sale and foreclosure proceedings, or the inability of the County to sell parcels which have been subject to tax sale and foreclosure for amounts sufficient to cover the delinquent installments of Assessments and Ad Valorem Revenues levied against such parcels may result in the inability of the City to make full or punctual payments of Installment Payments, and therefore in the inability of the Authority to make full or punctual payments of debt service on the Bonds. Property Owners Not Obligated to Pay Bonds or Assessments The Assessments and the allocated portion of property taxes that consist of Ad Valorem Revenues do not constitute a personal indebtedness of the owners of the related parcels, and the property owners have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the property owners have the ability to pay the Assessments or Ad Valorem Revenues or that, even if they have the ability, they will choose to pay the Assessments or Ad Valorem Revenues. A property owner may elect to not pay the Assessments and Ad Valorem Revenues when due and cannot be legally compelled to do so. If a property owner decides it is not economically feasible to develop or to continue owning its property encumbered by the lien of the Assessment, or decides that for any other reason it does not want to retain title to the property, such owner may chose not to pay Assessments and Ad Valorem Revenues and to allow the property to be subject to tax sale and foreclosure by the County. Such a choice may be made due to a decrease in the market value of the property. A tax sale or foreclosure of the property will result in such owner's interest in the property being transferred to another party. None of the Authority, the City or any Bond Owner will have the ability at any time to seek payment from the owners of property of any Assessment or Ad Valorem Revenues or any principal or interest due on the Bonds, or the ability to control who becomes a subsequent owner of such property. Bankruptcy and Foreclosure The payment of Assessments or Ad Valorem Revenues and the ability of the County to conduct a tax sale to foreclose the lien of a delinquent unpaid Assessment or Ad Valorem Revenues, as discussed under the caption "SECURITY FOR THE BONDS — Collection of Assessments and Ad Valorem Revenues," may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings should not cause the Assessments or Ad Valorem Revenues to become extinguished, bankruptcy of a property owner could result in a delay in any tax sale conducted by the County to foreclose the lien of a delinquent unpaid Assessment and Ad Valorem Revenues and could result in delinquent Assessment or Ad Valorem tax installments not being paid in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds. -44- Availability of Funds to Pay Delinquent Assessments or Taxes If a deficiency occurs for payment of interest on or principal of the Bonds, the City has not established a reserve fund for the Bonds. If, during the period of delinquency, there are insufficient funds in the Streetlighting Revenue Fund to pay the principal of and interest on the Bonds as it becomes due, a delay may occur in payments of principal and/or interest to the owners of the Bonds. Limited Obligation Upon Delinquency ALL OBLIGATIONS OF THE AUTHORITY UNDER THE INDENTURE AND THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE FROM AND SECURED BY REVENUES AND THE AMOUNTS IN THE REVENUE FUND. THE INSTALLMENT PAYMENTS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM AND SECURED BY THE ASSESSMENT REVENUES, AD VALOREM REVENUES AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED AND MAINTAINED PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT. THE AUTHORITY AND THE CITY HAVE NO OBLIGATION TO ADVANCE MONIES TO PAY BONDS DEBT SERVICE IN THE EVENT OF DELINQUENT ASSESSMENT OR AD VALOREM TAX INSTALLMENTS. BOND OWNERS SHOULD NOT RELY UPON THE CITY TO ADVANCE MONIES TO THE DISTRICT. NOTWITHSTANDING THE FOREGOING, THE CITY MAY, AT ITS SOLE OPTION AND IN ITS SOLE DISCRETION ELECT TO ADVANCE AVAILABLE SURPLUS FUNDS OF THE CITY TO PAY FOR ANY DELINQUENT INSTALLMENTS PENDING SALE, REINSTATEMENT, OR REDEMPTION OF ANY DELINQUENT PROPERTY. Levy of Assessments; Procedural Limitations and Risks The Installment Payments comprising the Revenues that secure the Bonds are payable and secured by the Assessment Revenues and the Ad Valorem Revenues. The Assessments from which the Assessment Revenues derive are established annually pursuant to the annual Engineer's Reports adopted by the City Council pursuant to procedures set out in the Act. The Assessments are levied annually and collected at the same time and in the same manner as general ad valorem property taxes. Once the annual Engineer's Report has been adopted by the City Council and the Assessments set forth therein have been enrolled with the County, the levy of Assessments for the applicable Fiscal Year cannot be made at a higher amount due to a change in circumstances. Proposition 218, which added Articles XIIIC and XIIID to the California Constitution, affects the City's ability to impose future assessment rate increases (e.g., assessment rate increases above the CPI adjustment approved in 2003-04 or above $45.00 per lighting unit for Zones which had a majority protest in 2003-04) and removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. Article XIIIC does not define the term "assessment," and it is unclear whether this term is intended to include Assessments levied under the Act. No assurance can be given that future increases in the applicable maximum assessment rate will not encounter majority protest opposition, or that the annual levy of Assessments prior to the final maturity of the Bonds will not be challenged by an initiative action authorized under Proposition 218 or any other kind of a legal challenge as to the validity of the Assessments. In the event that future proposed assessment rate increases or the annual levy of Assessments prior to the final maturity of the Bonds cannot be imposed as a result of majority protest, initiative, or any other kind of legal challenge, the City might thereafter be unable to generate Assessment Revenues in the amounts required by the Installment Purchase Agreement to pay the Installment Payments. -45- The City has covenanted in the Installment Purchase Agreement, that to the maximum extent that the law permits it to do so, the City will not initiate proceedings to reduce the annual Assessments levied within the District, unless, in connection therewith, the City receives a certificate from its City Engineer which certifies that the total amount of Assessment Revenues and Ad Valorem Revenues for each Bond Year for any Bonds Outstanding will equal at least 200% of the sum on the debt service in that Bond Year on all Bonds to remain Outstanding after the reduction is approved. Similarly, the City covenants in the Installment Purchase Agreement that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the annual Assessments being levied below the levels specified in the foregoing sentence or to limit the power of the City to levy the annual Assessments for the purposes described in the Installment Purchase Agreement, including without limitation transmittal of any Assessment Revenues directly to the Trustee for deposit into the funds and accounts specified in the Installment Agreement, the City will commence and pursue legal action in order to preserve its ability to comply with such covenants. Although the City expects that the impairment of contracts clause of the federal Constitution would likely invalidate an initiative measure that violated a covenant in existing revenue bond agreements, it is possible that courts deciding the issue could determine otherwise. If an initiative to reduce the Assessments levied on real property in the District is the subject of a challenge, no guarantee can be made that the courts will agree with such interpretation. See also "CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS — Proposition 218." Other initiative measures could be adopted, affecting the City's ability to generate revenues through property related fees, charges, taxes or otherwise, and to increase appropriations. No assurances can be given as to the potential impact of any future initiative or legislation on the finances and operations of the District. Collection of Assessments and Ad Valorem Revenues; Legal Remedies The annual Assessments and allocated portion of property tax revenues consisting of Ad Valorem Revenues are collected in semi-annual installments on the County's secured tax roll on which general taxes on real property are collected. Each Assessment is payable and becomes delinquent at the same time and bears the same rate of penalty and interest after delinquency as do general property taxes in the County. The property on which each Assessment is levied or on which the Ad Valorem Revenue is derived is subject to the same provisions for sale and redemption that apply to properties for nonpayment of general property taxes in the County. Pursuant to these procedures, if taxes are unpaid for a period of five years or more, the property may be deeded to the State and then is subject to sale by the County. See "CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS — Property Tax Collection Procedures" herein. Taxpayers are obligated to pay the total of general and specific tax and assessment levies appearing on County tax bills; partial payments of the total tax levy are applied pro rata among all individual taxes and assessments appearing on the tax bill. Accordingly, failure to pay less than the total of all property taxes, including Ad Valorem Revenues, and the Assessments due will be considered a delinquency in the payment of both property taxes and Assessments. There can be no assurance that a County tax sale will occur in a timely manner so as to avoid a delay in payments of debt service on the Bonds. In the event that County tax sales of property are necessary, there could be a delay in payments to the Authority of Installment Payments (and therefore, debt service on the Bonds) pending such sales and receipt by the City of the proceeds of sale if the other sources of payment for the Bonds are depleted. See "BOND OWNERS' RISKS — Bankruptcy and Foreclosure" herein. The City has no power to institute judicial foreclosure proceedings in the event of a delinquency by any particular property owner in the payment of Assessments or Ad Valorem Revenues. Under current State law, payment of any unpaid Assessment or Ad Valorem Revenue would be enforced by tax sale and foreclosure on the property by the County with the delinquent general ad valorem taxes after the fifth year of delinquency. -46- Limitations on Enforceability of Remedies The payment of Assessments and Ad Valorem Revenues and the ability of the County to foreclose the lien of delinquent unpaid Assessments and Ad Valorem Revenues through a tax sale may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to tax sale by the County. Although bankruptcy proceedings would not cause the Assessment liens or Ad Valorem real property tax liens to become extinguished, bankruptcy of a property owner could result in a delay in foreclosure proceedings. Such delay, particularly in the case of a major landowner, would increase the likelihood of a delay and a default in payment of the principal of and interest on the Bonds, and the possibility of delinquent Assessments or Ad Valorem property taxes not being paid in full. Interest of Federal Agencies or Government Sponsored Enterprises in Properties The ability of the County to conduct a tax sale to foreclose the lien of delinquent Assessments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"), the Drug Enforcement Agency, the Internal Revenue Service, or another federal agency or a federal government sponsored enterprise (such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as "Fannie Mae" and "Freddie Mac") has or obtains an interest. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC or another federal agency or a federal government sponsored enterprise, and prior thereto or thereafter the loan or loans go into default, then the ability of the County to collect, on behalf of the City, interest and penalties specified by State law and to foreclose the lien of delinquent Assessments may be limited. On November 26, 1996, the FDIC adopted a Statement of Policy Regarding the Payment of State and Local Property Taxes (the "Policy Statement") (which superseded a prior statement issued by the FDIC and the Resolution Trust Corporation in 1991). The Policy Statement applies to the FDIC when it is liquidating assets in its corporate and receivership capacities. The Policy Statement provides, in part, that FDIC's real property is subject to state and local real property taxes if those taxes are assessed according to the property's value, and that the FDIC is immune from ad valorem real property taxes assessed on other bases. The Policy Statement also provides that the FDIC will pay its property tax obligations when they become due and will pay claims for delinquencies as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC interest in the property is appropriate. It further provides that the FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, but only to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay for any fines or penalties and will not pay or recognize liens for such amounts. The Policy Statement also provides that if any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. No property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, a lien for taxes and interest may attach, but the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. With respect to challenges to assessments, the Policy Statement provides: "The [FDIC] is only liable for state and local taxes which are based on the value of the property during the period for which the tax is imposed, notwithstanding the failure of any person, including prior record owners, to challenge an assessment under the procedures available under state law. In the exercise of its business judgment, the [FDIC] may challenge assessments which do not conform with the statutory provisions, and during the challenge may pay tax claims based on the assessment level deemed appropriate, provided such payment will not prejudice the challenge. The [FDIC] will generally limit challenges to the current and immediately -47- preceding taxable year and to the pursuit of previously filed tax protests. However, the [FDIC] may, in the exercise of its business judgment, challenge any prior taxes and assessments provided that (1) the [FDIC's] records (including appraisals, offers or bids received for the purchase of the property, etc.) indicate that the assessed value is clearly excessive, (2) a successful challenge will result in a substantial savings to the [FDIC], (3) the challenge will not unduly delay the sale of the property, and (4) there is a reasonable likelihood of a successful challenge." The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee simple interest unless the amount of tax is fixed at the time the FDIC acquires its fee simple interest in the property, nor will the FDIC recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Assessments on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a tax sale conducted by the County could reduce or eliminate the number of persons willing to purchase a parcel at such a tax sale. If enough property were to become owned by the FDIC, such an outcome could cause a default in payment on the Bonds. Moreover, unless the United States Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the County is required to foreclose through tax sale on the parcel as a result of delinquent Assessments and property taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay the delinquent taxes and assessments and preserve the federal government's mortgage interest. In Rust vs. Johnson, 597 F.2d 174 (9th Cir. 1979), the United States Court of Appeals, Ninth Circuit, held that the City of Los Angeles' foreclosure on property on account of delinquent special assessments, without protecting the federal interest represented by a deed of trust on the property held by the Federal National Mortgage Association (FNMA), was an unconstitutional exercise of state power over property of the United States. The Court held that while the City of Los Angeles was engaging in a valid state function created by state legislation, the valid state function did not render the city's conduct constitutional under the federal Constitution vis-a-vis FNMA, as a federal instrumentality, even though FNMA's stock may be privately -owned. The Court suggested that absent Congressional intent to allow a federal interest to be subject to state law, a federal interest could be protected by excluding the federal interest from the tax foreclosure sale; in effect, the property owners' interest could be subjected to foreclosure sale, but the interest of the federal instrumentality cannot. The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels in the District subject to the Assessments, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding. There can be no assurance that there would be any buyer at a foreclosure sale if FNMA's or another federal instrumentality's lien could not be foreclosed. In the event delinquent property subject to such a lien could not be sold, there is no assurance that Assessment Revenues received by the City would be sufficient to pay the Installment Payments that secure the payment of debt service on the Bonds. Property Values A land value determined by a county assessor or an appraiser is an opinion with respect to the market value, and is generally based upon a sales comparison approach, which determines the value of the subject property by comparing it to sales of comparable property, adjusted for differences between the subject and the comparable property. No assurance can be given that if a parcel with delinquent Assessments or Ad Valorem property taxes is foreclosed, any bid will be received for such property or, if a bid is received, that such bid will be equal to the value determined by the county assessor or an appraiser, -48- or that it will be sufficient to pay delinquent installments of unpaid Assessments or property taxes. Seismic Factors 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 facilities included the City Hall which was repaired and retrofitted for approximately $4.5 million. The occurrence of severe seismic activity in the City could result in substantial damage to property located in the City. In the event of damage to real property upon with Assessments or allocated portion of the property tax consisting of Ad Valorem Revenues are levied, the property owner could become unwilling to pay the property tax bills pursuant to which the Assessments are collected, along with general ad valorem property taxes. In such event, the Assessment Revenues and Ad Valorem Revenues that secure the Installment Payments securing the Bonds could be reduced. Risk of Floods According to information contained in the Safety Element of the City's General Plan, the Santa Clarita Valley contains many natural streams and creeks that function as storm drain channels, conveying surface water runoff into the Santa Clara River. As described in the Conservation and Open Space Element of the City's General Plan, both the City and County have acted to protect the Santa Clara River floodplain from development in order to maintain the river's natural character and to protect future development from flood hazards. Localized flooding has been experienced intermittently in some areas of the valley due to local drainage conditions. During heavy rains some areas of Castaic, Newhall, Friendly Valley, and Bouquet Canyon have experienced mudflows or flooding. Local flooding can be exacerbated by erosion and mudslides when heavy rains occur after wildfires. Two areas of the City known to experience intermittent flooding are portions of Placenta Canyon, Sand Canyon, and Newhall Creek. The majority of the land within the City is designated within the "moderate" and "low" risk flood zones, while select areas along creeks and waterways are designated within the "high" risk flood zone. Potential damage from flooding ranges from inconvenience to property damage and loss of life. Dam failure can result from natural or man-made causes, including earthquakes, erosion, improper siting or design, rapidly -rising flood waters, or structural flaws. Dam failure may cause loss of life, damage to property, and displacement of persons residing in the inundation path. Damage to electric generating facilities and transmission lines could also impact life support systems in communities outside of the immediate inundation area. Within the Santa Clarita Valley, the two major reservoirs which could have a significant impact on the Santa Clarita Valley in the event of a dam failure are located in Bouquet Canyon and Castaic. Failure of these dams during a catastrophic event, such as a severe earthquake, is considered unlikely, due to their type of construction. However, local safety plans have considered the possibility of dam failure and have outlined a procedure for response and recovery from this type of hazard, including identification of inundation areas and evacuation routes. The occurrence of flooding in the City could result in substantial damage to property located in the District. In the event of damage to real property upon with Assessments or Ad Valorem Revenues are levied, the property owner could become unwilling to pay the property tax bills pursuant to which the Assessments and Ad Valorem Revenues are collected. In such event, the Assessment Revenues and Ad Valorem Revenues that secure the Installment Payments securing the Bonds could be reduced. -49- Risk of Structural and Wildland Fire The City contracts fire protection services from the Consolidated Fire Protection District of Los Angeles County, otherwise known as the Los Angeles County Fire Department (the "Fire Department"). The City receives urban and wildland fire protection services from the Fire Department. Mutual aid agreements are maintained with several local, State, and federal agencies. According to information contained in the Safety Element of the City's General Plan, historical records kept by the U.S. Department of Forestry indicate that wildland fires occur regularly within the planning area, with large fires occurring approximately every 10 years. Fire danger rises based on the age and amount of vegetation; therefore, fire incidents tend to be cyclical in an area as vegetation intensity increases with age, and dead vegetation accumulates. The Santa Clanta Valley planning area is susceptible to wildland fires because of its hilly terrain, dry weather conditions, and native vegetation. Steep slopes allow for the quick spread of flames during fires, and pose difficulty for fire suppression due to access problems for firefighting equipment. Late summer and fall months are critical times of the year when wildland fires typically occur, when the Santa Ana winds deliver hot, dry desert air into the region. Highly flammable plant communities consisting of variable mixtures of woody shrubs and herbaceous species, such as chaparral and sage vegetation, allow fires to spread easily on hillsides and in canyons. According to the Fire Department, 80 to 90 percent of the planning area is located in a Very High Fire Hazard Severity Zone, which is the highest classification for areas subject to wildfires. Areas subject to wildland fire danger include portions of Newhall and Canyon Country, Sand Canyon, Pico Canyon, Placenta Canyon, Hasley Canyon, White's Canyon, Bouquet Canyon, and all areas along the interface between urban development and natural vegetation in hillside areas. Fire hazards increase with any drought periods, and are highest for structures at the fringe of forested or wildland areas. In addition to the damage caused directly by a foothill fire, further damage may be caused by resulting mudslides during subsequent rains. The Fire Department has adopted programs directed at wildland fire prevention, including adoption of the State Fire Code standards for new development in hazardous fire areas. Fire prevention requirements include provision of access roads, adequate road width, and clearance of brush around structures located in hillside areas. Additionally, proof of adequate water supply for fire flow is required within a designated distance for new construction in fire hazard areas. The recently reported Thomas and Creek fires in Ventura County had no impact on the City. The Rye Canyon fire within the City did not result in any damage to structures. In the event of damage to real property upon with Assessments and Ad Valorem Revenues are levied, the property owner could become unwilling to pay the property tax bills pursuant to which the Assessments and/or Ad Valorem Revenues are collected. In such event, the Assessment Revenues and Ad Valorem Revenues that secure the Installment Payments securing the Bonds could be reduced. Hazardous Substances Claims regarding hazardous substances can have an adverse impact on the value of property and the security for the Bonds. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is one of the most well-known and widely applicable of these laws, but California laws with respect to hazardous substances are also generally regarded as stringent and similar. Under many of these laws, the property owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the property owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should a parcel subject to the Assessments or Ad Valorem Revenues be affected by a hazardous substance is that the marketability and value of the parcel may be reduced by the costs of remedying the condition, because the purchaser, upon becoming the property owner, will become obligated to remedy the condition just as is the seller. Further, -50- such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the financial and legal liability of a property owner (and thus affect such owners' ability or willingness to pay Assessments or Ad Valorem property taxes when due), as well as the value of the property that is realized upon foreclosure. The City makes no representation and gives no assurance that such hazardous substance liabilities or conditions do not currently exist or will not arise in the future. Future Overlapping Indebtedness The ability of an owner of land subject to the Assessments or the Ad Valorem Revenues could be affected by the existence of other taxes and assessments imposed upon the property subsequent to the date of issuance of the Bonds. In addition, other public agencies whose boundaries overlap these parcels could, without the consent of the City, and in certain cases without the consent of the owners of the land, impose additional taxes or assessment liens on such property to finance additional public improvements. The City has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from and secured by all or a portion of such property. Landowners may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes or assessments having a lien on such property on a parity with, or senior to, the lien of the Assessments. The imposition of additional indebtedness could reduce the willingness and the ability of the such property owners to pay the Assessments or Ad Valorem property taxes when due. See "THE DISTRICT — Direct and Overlapping Debt." No Acceleration Provision The Indenture does not contain a provision allowing for the acceleration of the principal of the Bonds in the event of a payment default or other default under the terms of the Bonds, the Indenture, or the Installment Purchase Agreement. Similarly, the Installment Purchase Agreement does not contain a provision allowing for the acceleration of the Installment Payments in the event of a default or other default under the Installment Purchase Agreement, the Bonds, or the Indenture. Investment of Funds All funds and accounts held under the Indenture are required to be invested in certain Authorized Investments, as defined in the Indenture. See "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS." All investments, including Authorized Investments, authorized by law from time to time for investments by the Authority contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Indenture could have a material adverse effect on the security for the Bonds. Loss of Tax Exemption for Tax -Exempt Bonds Compliance by the City and the Authority. As discussed under the caption "TAX MATTERS," interest on the Tax -Exempt Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Tax -Exempt Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Installment Purchase Agreement or of the Authority in violation of its covenants in the Indenture. The Indenture does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Tax - Exempt Bonds were to be includable in gross income for purposes of federal income taxation, the Tax - Exempt Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional or mandatory redemption. See "THE BONDS — Redemption." -51- Future Legislation or Court Decisions. Legislation affecting the tax exemption of interest on the Tax -Exempt Bonds may be considered by the United States Congress and the State legislature. Federal and state court proceedings and the outcome of such proceedings could also affect the tax exemption of interest on the Tax -Exempt Bonds. No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of issuance of the Bonds will not have an adverse effect on the tax exemption of interest on the Tax - Exempt Bonds or the market value of the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation. See "TAX MATTERS." Secondary Market There can be no assurance that there will be a secondary market for the Bonds, or if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, pricing of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could substantially differ from the original purchase price. CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS Property Tax Rate Limitations - Article XIIIA On June 6, 1978, the California voters added Article XIIIA to the California Constitution which limits the amount of any ad valorem taxes on real property to one percent (1%) of its full cash value, except that additional ad valorem property taxes may be levied to pay debt service on indebtedness approved prior to July 1, 1978 and (as a result of an amendment to Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978, by two-thirds of the voters voting on such indebtedness. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed or a change in ownership has occurred after the 1975 assessment period." This cash value may be increased at a rate not to exceed two percent (2%) per year to account for inflation. The United States Supreme Court has upheld the validity of Article XIIIA in a case decided in June 1992. Article XIIIA as originally implemented has been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly the 1% property tax, which is automatically levied annually by the county and distributed among taxing agencies according to a formula. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. The allocated portion of the 1% property tax that consists of Ad Valorem Revenues equals 0.00225 share of the 1% ad valorem property tax for fiscal year 2017-18. Any special tax to pay voter -approved indebtedness is levied in addition to the basic 1% property tax. Beginning in the 1981-82 fiscal year, assessors in California no longer record property values on -52- tax rolls at the assessed value of 25% of market value which was expressed as $4.00 per $100 of assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the basic tax rate is expressed as $1 per $100 of taxable value. Appropriation Limitation - Article XIIIB On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann Initiative, which added Article XIIIB. On June 5, 1990, the voters approved Proposition 111, which amended Article XIIIB in certain respects. Under Article XIIIB, as amended, state and local government entities have an annual "appropriations limit" which limits the ability to spend certain moneys which are called "appropriations subject to limitation" (consisting of most tax revenues and certain state subventions, together called "proceeds of taxes" and certain other funds) in an amount higher than the "appropriations limit." Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of "appropriations limit," including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by two-thirds of the voters. In general terms, the "appropriations limit" is to be based on the adjusted fiscal year 1986-87 appropriations limit, which is traced back through an annual adjustment process to the 1978-79 fiscal year. Annual adjustments reflect changes in California per capita personal income (or, at the City's option, changes in assessed value caused by local nonresidential new construction), population and services provided by these entities. Among other provisions of Article XIIIB, if the revenues of such entities in any fiscal year and the following fiscal year exceed the amounts permitted to be spent in such years, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. Property Tax Collection Procedures In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The "secured roll" is that part of the assessment roll containing state -assessed public utilities' property and property the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each 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 due is delinquent on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty. 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. Historically, property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB 813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date. -53- Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A ten percent (10%) penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority 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. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent. Proposition 218 General. On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. Article XMIC. Article XIIIC provides that the constitutional initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local taxes, assessments, fees, and charges. Article XIIIC does not define the term "assessment," and it is unclear whether this term is intended to include Assessments levied under the Act. Furthermore, this provision with respect to the initiative power is not limited to taxes, assessments, fees, and charges imposed on or after November 6, 1996, the effective date of Proposition 218. No assurance can be given that the voters of the City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or charges, including a reduction of all or any portion of the Assessments securing Installment Payments that secure the Bonds. Unlike other types of assessments which may have been levied in whole in one year and then collected in installments in subsequent years, the Assessments are established and levied annually. The City has taken the applicable actions under the Act to provide for annual installments of the portion of the Assessments allocable to the cost of acquiring and installing the Project and the inclusion, pursuant to the Act, of such annual installment in each annual Engineer's Report for the District, which if approved by the City Council of the City, establishes the amount of each annual Assessment levied on each parcel in the District. Nonetheless, under the Act and other applicable State law, the lien secures only the annual Assessment levied on the applicable parcel within the District. A new lien is established each year with respect to the annual Assessment levied for such Fiscal Year. The use of the initiative power is arguably limited in the case of levies directly pledged to bonded indebtedness, such as the Assessments pledged as security for payment of the Installment Payments which secure the Bonds. The City has covenanted in the Installment Purchase Agreement, that to the maximum extent that the law permits it to do so, the City will not initiate proceedings to reduce the annual Assessments levied within the District, unless, in connection therewith, the City receives a certificate from its City Engineer which certifies that the total amount of Assessment Revenues and Ad Valorem Revenues for each Bond Year for any Bonds Outstanding will equal at least 200% of the sum on the debt service in that Bond Year on all Bonds to remain Outstanding after the reduction is approved. Similarly, the City covenants the Installment Purchase Agreement that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the annual Assessments being levied below the levels specified in the foregoing sentence or to limit the power of the City to levy the annual Assessments for the purposes described in the Installment Purchase Agreement, including without limitation transmittal of any Assessment Revenues directly to the Trustee for deposit into the funds and accounts specified in the Installment Agreement, the City will commence and pursue legal action in order to preserve its ability to -54- comply with such covenants. Although the City expects that the impairment of contracts clause of the federal Constitution would likely invalidate an initiative measure that violated a covenant in existing revenue bond agreements, it is possible that courts deciding the issue could determine otherwise. If an initiative to reduce the Assessments levied on real property in the District is the subject of a challenge, no guarantee can be made that the courts will agree with such interpretation. Article W11D. Article XIIID requires that, beginning July 1, 1997 and subject to certain exceptions, the proceedings for the levy of any assessment by the City (including, if applicable, any increase in such assessment or any supplemental assessment) must be conducted in conformity with the provisions of Section 4 of Article XIIID. Before any assessment may be imposed or any existing assessment increased above previously authorized maximum rates, the local government agency must provide mailed notice 45 days in advance of a public hearing regarding the proposed imposition or increase, along with an assessment ballot, which may be cast by the property owner at any time before the close of the public hearing on the proposed assessment or increase. If, upon the conclusion of the hearing, ballots submitted in opposition to the proposed assessment or increase exceed the ballots submitted in favor of the proposed assessment or increase (also known as a "majority protest"), then the proposed assessment or increase may not be imposed. Ballots are weighted according to the proportional financial obligation that the property would bear if the proposed assessment or increase is imposed. This procedure is also sometimes referred to as an "assessment balloting proceeding." Article XIIID states that, beginning July 1, 1997, all new or increased assessments must comply with its provisions. The ability of the City to modify the Assessments resulting in an increase in the maximum amount any Assessment could be adversely affected by actions taken or not taken by property owners within the District in connection with any Proposition 218 balloting proceeding undertaken with respect to any such proposed increase. The City covenanted in the Installment Purchase Agreement, that to the maximum extent that the law permits it to do so, the City will not initiate proceedings to reduce the annual Assessments levied within the District, unless, in connection therewith, the City receives a certificate from its City Engineer which certifies that the total amount of Assessment Revenues and Ad Valorem Revenues for each Bond Year for any Bonds Outstanding will equal at least 200% of the sum on the debt service in that Bond Year on all Bonds to remain Outstanding after the reduction is approved. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainly the outcome of such determination. CONTINUING DISCLOSURE The City has agreed in a Continuing Disclosure Certificate (the "Continuing Disclosure Certificate") entered into with Digital Assurance Corporation, as dissemination agent, for the benefit of the holders and Beneficial Owners of the Bonds to provide certain financial information and operating data relating to the City by March 31 following the end of the City's Fiscal Year (currently its Fiscal Year ends on June 30) (the "Annual Report"), commencing with the report for the Fiscal Year ending June 30, 2018, and to provide notices of the occurrence of certain enumerated events. The specific nature of the information to be contained in the Annual Report or the notices of material events by the City is summarized in "APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE." The form of the Continuing Disclosure Certificate is set forth in Appendix D. The Annual Report and the notices of enumerated events will be filed by the City with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org_/. The specific nature of the information to be contained in the Annual Report and the notices of enumerated events are set forth in Appendix D. These covenants have been made in order to assist the Underwriter in complying with -55- Rule 15c2 -12(b)(5) promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12") Other than as described in the following paragraphs, the City has not failed in the previous five years to comply in any material respect with any previous undertaking to provide annual reports or notices of certain events in accordance with Rule 15c2-12. The City or related entity is, or was during the past five years, responsible for providing continuing disclosure with respect to the following nine bond issues: 1. $34,800,000 Successor Agency to the Redevelopment Agency of the City of Santa Clarita Tax Allocation Refunding Bonds, Series 2017, dated February 23, 2017 (the "2017 Bonds"). 2. $10,320,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Golden Valley Road) Series 2016A, dated June 22, 2016 (the "2016A Bonds"). 3. $14,020,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Open Space and Parkland Acquisition) Series 2016B, dated June 22, 2016 (the "2016B Bonds"). 4. $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 (the "2012 Bonds"). 5. $8,850,000 Redevelopment Agency of the City of Santa Clarita Housing Set -Aside Tax Allocation Bonds, Series 2008, dated June 12, 2008 (the "2008 Housing Bonds"). 6. $29,860,000 Redevelopment Agency of the City of Santa Clarita Tax Allocation Bonds (Newhall Redevelopment Project Area), Series 2008, dated June 12, 2008 (the "2008 NonHousing Bonds"). 7. $15,525,000 City of Santa Clarita Certificates of Participation (Open Space and Parkland Acquisition Program) 2007 Series (the "2007 Certificates"). 8. $13,785,000 Santa Clarita Public Financing Authority Lease Revenue Bonds, Series 2007 (Golden Valley Road) (the "2007 Bonds"). 9. $17,700,000 City of Santa Clarita Refunding Certificates of Participation (Public Facilities — Civic Center), 2005 Series, dated July 12, 2005 (the "2005 Certificates"). 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 several instances of non-compliance by the City with the requirements of certain undertakings due primarily to the City failing to provide unaudited financial information when the audited financial statements (AFS) were not yet available, failing to timely link AFS already filed for one bond issue with all applicable bond issues, and failing to provide specific information within certain Annual Reports. Specifically: 1. With respect to the 2012 Bonds, the City for the fiscal years (FY) 2013 and 2015 was late in filing the AFS by 26, and 14 days, respectively, due to the failure to file the unaudited versions of the AFS when the audited version was unavailable prior to applicable deadlines, and the Annual Report that was posted to EMMA failed to include certain required -56- information for FY 2013, which information was subsequently provided in 2014 (303 days late). The City did not file in a timely manner notice of late annual financial information; 2. With respect to the 2008 NonHousing Bonds, the Successor Agency for the Redevelopment Agency of City of Santa Clarita for the fiscal years (FY) 2013 and 2015 was late in filing the AFS by 808, and 22 days, respectively, due to the failure to cross reference the AFS filed for the 2008 Housing Bonds prior to applicable deadlines, and the AFS for 2013 when filed omitted four CUSIP numbers as required. With respect to the 2008 Housing Bonds and the 2008 NonHousing Bonds, the Annual Report for FY 2013 that was posted to EMMA was filed 141 days late and failed to include certain required information, which information was subsequently provided in 2014 (267 days late). The Successor Agency did not file in a timely manner notice of late annual financial information; 3. With respect to the 2007 Certificates, the Annual Report that was posted to EMMA failed to include certain required items for FY 2013, which information was subsequently provided in 2014 (211 days late). The City did not in a timely manner file notice of late annual financial information; 4. With respect to 2007 Bonds, the material event notice was not timely filed for an underlying rating upgrade in 2012, and the City for FY 2011 was late in filing the AFS and Annual Report by 24 days due to failing to file the unaudited versions of the AFS when the audited version was unavailable prior to applicable deadline.; and 5. With respect to the 2005 Certificates, material event notices were not timely filed for bond insurer rating downgrades in 2013 and bond insurer upgrades in 2013 and 2014. The City did not in a timely manner file notice of late material event information. The City recently undertook a review of its adopted Fiscal Policies and has revised its Fiscal Policies to include a formal continuing disclosure policy that will help assure compliance with existing and future continuing disclosure undertakings (including those for related entities) through creation of a disclosure practices working group including a City staff disclosure coordinator. The City believes that its procedures with the Dissemination Agent will be sufficient in the normal due course to assure substantial compliance with its continuing disclosure undertakings in the future, including the Continuing Disclosure Certificate with respect to the Bonds. -57- LEGAL OPINION The proceedings in connection with the issuance of the Bonds are subject to the approval as to their legality by Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel for the Authority. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The legal opinion relates only to the legality of the Bonds and is not intended to be, nor is it to be interpreted or relied upon, as a disclosure document or an express or implied recommendation as to the investment quality of the Bonds. A copy of the proposed form of Bond Counsel's final approving opinion with respect to the Bonds is attached hereto as Appendix C. Certain legal matters will be passed on for the Authority and for the City by Burke Williams & Sorensen LLP, Los Angeles, California, City Attorney and Authority Counsel, and by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Nossaman LLP, Irvine, California. The fees of Underwriter's Counsel are contingent upon the issuance and delivery of the Bonds. MUNICIPAL ADVISOR The City has retained C.M. de Crinis & Co., Inc. (the "Municipal Advisor"), as financial advisor in connection with the authorization, issuance, sale and delivery of the Bonds. The Municipal Advisor is a registered Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended) and has acted as financial advisor to the Authority concerning the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in the Official Statement or any of the other legal documents. TAX MATTERS Tax -Exempt Bonds State and Federal Income Tax Exemption of Interest on the Tax -Exempt Bonds. The Internal Revenue Code of 1986 (the "Code") imposes certain requirements that must be met subsequent to the issuance and delivery of the Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt Bonds. The Successor Agency has covenanted to maintain the exclusion of the interest on the Tax -Exempt 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 Tax -Exempt Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the covenants mentioned herein, interest on the Tax -Exempt 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 Tax -Exempt Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of the Code and, therefore, that interest on the Tax -Exempt 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 Tax - Exempt Bonds owned by a corporation may affect the computation of the alternative minimum taxable income of that corporation. 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. -58- Pursuant to the Installment Purchase Agreement and the Indenture and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the Successor Agency in connection with the issuance of the Tax -Exempt Bonds, the Successor Agency will make representations relevant to the determination of, and will make certain covenants regarding or affecting, the exclusion of interest on the Tax -Exempt Bonds from the gross income of the owners thereof for federal income tax purposes. In reaching its opinions described in the immediately preceding paragraph, Bond Counsel will assume the accuracy of such representations and the present and future compliance by the Successor Agency with such 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 Tax -Exempt Bonds. Furthermore, Bond Counsel will express no opinion as to any federal, state or local tax law consequence with respect to the Tax -Exempt Bonds, or the interest thereon, if any action is taken with respect to the Tax -Exempt 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 Tax -Exempt Bonds may affect the tax status of interest on the Tax -Exempt Bonds or the tax consequences of the ownership of the Tax -Exempt Bonds. Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Successor Agency described above. No ruling has been sought from the Internal 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 Tax -Exempt Bonds is commenced, under current procedures the Service is likely to treat the Successor Agency as the "taxpayer," and the owners would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the interest on the Tax -Exempt Bonds, the Successor Agency may have different or conflicting interests from the owners. Public awareness of any future audit of the Tax -Exempt Bonds could adversely affect the value and liquidity of the Tax -Exempt 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 Tax -Exempt Bonds from personal income taxation by the State of California or of the exclusion of the interest on the Tax -Exempt 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 Tax -Exempt Bonds. Prospective purchasers of the Tax -Exempt Bonds should consult with their own tax advisors with respect to any proposed or future change in tax law. A copy of the form of opinion of Bond Counsel relating to the Bonds is included in Appendix C. Tax Accounting Treatment of Bond Premium. To the extent that a purchaser of a Tax -Exempt 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 -59- its Tax -Exempt Bond is sold or disposed of for an amount equal to or in some circumstances even less than the original cost of the Tax -Exempt Bond to the owner. Persons considering the purchase of Tax -Exempt Bonds with initial bond premium should consult with their own tax advisors with respect to the determination of amortizable bond premium on such Tax - Exempt Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Tax -Exempt Bonds. Bond Counsel will express no opinion regarding such tax accounting matters. Other Tax Consequences with Respect to the Tax Exempt Bonds. Although interest on the Tax - Exempt 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 Tax -Exempt 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 Tax -Exempt Bonds should be aware that (1) section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Tax -Exempt Bonds and the Code contains additional limitations on interest deductions applicable to financial institutions that own tax-exempt obligations (such as the Tax -Exempt Bonds), (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(13)(1) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest on the Tax -Exempt Bonds, (iii) interest on the Tax -Exempt 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 Tax -Exempt 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 the Tax -Exempt Bonds and (vi) under section 32(1) of the Code, receipt of investment income, including interest on the Tax -Exempt Bonds, may disqualify the recipient thereof from obtaining the earned income credit. Bond Counsel will express no opinion regarding any such other tax consequence. Taxable Bonds State Tax Exemption on Taxable Bonds. In the opinion of Bond Counsel, under existing law interest on the Taxable Bonds is exempt from personal income taxes of the State of California. Except as set forth in the preceding sentence, Bond Counsel will provide no opinion in connection with the issuance or offering of the Taxable Bonds with regard to the matters discussed below or any other federal, state or local tax consequence of the ownership or disposition of or the receipt of interest on any Taxable Bond. A copy of the form of opinion of Bond Counsel relating to the Bonds is included in Appendix C. Federal Income Tax Considerations for the Taxable Bonds. The following is a general summary of certain United States federal income tax consequences of the purchase and ownership of the Taxable Bonds. The discussion is based upon the Code, United States Treasury Regulations, rulings and decisions now in effect, all of which are subject to change (possibly, with retroactive effect) or possibly differing interpretations. No assurance can be given that future changes in the law will not alter the conclusions reached herein. The discussion below does not purport to deal with United States federal income tax consequences applicable to all categories of investors and generally does not address consequences relating to the disposition of a Taxable Bond by the owner thereof for federal income tax purposes. Further, the discussion below does not discuss all aspects of federal income taxation that may be relevant to a particular investor in the Taxable Bonds in light of the investor's particular circumstances or to certain types of investors subject to special treatment under the federal income tax laws (including insurance companies, tax exempt organizations and other entities, financial institutions, broker-dealers, persons who have hedged the risk of owning the Taxable Bonds, traders in securities that elect to use a mark to market method of accounting, thrifts, regulated investment companies, pension and other employee benefit plans, partnerships and other pass through entities, certain hybrid entities and owners of interests therein, persons who acquire Taxable Bonds in connection with the performance of services, or persons deemed to sell Taxable Bonds under the constructive sale provisions of the Code). The discussion below also does not discuss any aspect of state, local, or foreign law or United States federal tax laws other than United States federal income tax law. The discussion below is limited to certain issues relating to initial investors who will hold the Taxable Bonds as "capital assets" within the meaning of section 1221 of the Code, and acquire such Taxable Bonds for investment and not as a dealer or for resale. The discussion below addresses certain federal income tax consequences applicable to owners of the Taxable Bonds who are United States persons within the meaning of section 7701(a)(30) of the Code ("United States persons") and, except as discussed below, does not address any consequences to persons other than United States persons. Prospective investors should note that no rulings have been or will be sought from the Service with respect to any of the United States federal income tax consequences discussed below, and no assurance can be given that the Service will not take contrary positions. ALL PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMINING THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE Taxable Bonds. Interest on the Taxable Bonds. Bond Counsel has rendered no opinion regarding the exclusion pursuant to section 103(a) of the Code of interest on the Taxable Bonds from gross income for federal income tax purposes. The Successor Agency has taken no action to cause, and does not intend, interest on the Taxable Bonds to be excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. The Successor Agency intends to treat the Taxable Bonds as debt instruments for all federal income tax purposes, including any applicable reporting requirements under the Code. THE SUCCESSOR AGENCY EXPECTS THAT THE INTEREST PAID ON A Taxable Bond GENERALLY WILL BE INCLUDED IN THE GROSS INCOME OF THE OWNER THEREOF FOR FEDERAL INCOME TAX PURPOSES WHEN RECEIVED OR ACCRUED, DEPENDING UPON THE TAX ACCOUNTING METHOD OF THAT OWNER. Disposition of Taxable Bonds, Inclusion of Acquisition Discount and Treatment of Market Discount. An owner of Taxable Bonds will generally recognize gain or loss on the sale or exchange of the Taxable Bonds equal to the difference between the sales price (exclusive of the amount paid for accrued interest) and the owner's adjusted tax basis in Taxable Bonds. Generally, the owner's adjusted tax basis in the Taxable Bonds will be the owner's initial cost, increased by original issue discount (if any) previously included in the owner's income to the date of disposition. Any gain or loss generally will be capital gain or loss and will be long-term or short-term, depending on the owner's holding period for the Taxable Bonds. Under current law, a purchaser of a Taxable Bond who did not purchase that Taxable Bond in the initial public offering (a "subsequent purchaser") generally will be required, on the disposition (or earlier partial principal payment) of such Taxable Bond, to recognize as ordinary income a portion of the gain (or partial principal payment), if any, to the extent of the accrued "market discount." In general, market discount is the amount by which the price paid for such Taxable Bond by such a subsequent purchaser is less than the stated redemption price at maturity of that Taxable Bond (or, in the case of a Taxable Bond bearing original issue discount, is less than the "revised issue price" (as defined below) of that Taxable Bond upon such purchase), except that market discount is considered to be zero if it is less than one quarter of one -61- percent of the principal amount times the number of complete remaining years to maturity. The Code also limits the deductibility of interest incurred by a subsequent purchaser on funds borrowed to acquire Taxable Bonds with market discount. As an alternative to the inclusion of market discount in income upon disposition, a subsequent purchaser may elect to include market discount in income currently as it accrues on all market discount instruments acquired by the subsequent purchaser in that taxable year or thereafter, in which case the interest deferral rule will not apply. The recharacterization of gain as ordinary income on a subsequent disposition of such Taxable Bonds could have a material effect on the market value of such Taxable Bonds. Stated Interest and Reporting of Interest Payments on the Taxable Bonds. The stated interest on the Taxable Bonds will be included in the gross income, as defined in section 61 of the Code, of the owners thereof as ordinary income for federal income tax purposes at the time it is paid or accrued, depending on the tax accounting method applicable to the owners thereof. Subject to certain exceptions, the stated interest on the Taxable Bonds will be reported to the Service. Such information will be filed each year with the Service on Form 1099 -INT (or other appropriate reporting form) which will reflect the name, address, and taxpayer identification number of the owner. A copy of such Form 1099 INT will be sent to each owner of a Taxable Bond for federal income tax purposes. Original Issue Discount on Taxable Bonds. If the first price at which a substantial amount of the Taxable Bonds of any stated maturity is sold (the "Issue Price") is less than the stated redemption price at maturity of those Taxable Bonds, the excess of the stated redemption price at maturity of each Taxable Bond of that maturity over the Issue Price of that maturity is "original issue discount." If the original issue discount on a Taxable Bond is less than the product of one quarter of one percent of its face amount times the number of complete years to its maturity, the original issue discount on that Taxable Bond will be treated as zero. Original issue discount on a Taxable Bond will be amortized over the life of the Taxable Bond using the "constant yield method" provided in the Treasury Regulations. As original issue discount on a Taxable Bond would accrue under the constant yield method, the owner of a Taxable Bond issued with original issue discount generally will be required to include such accrued amount in its gross income as interest, regardless of its regular method of accounting. This can result in taxable income to the beneficial owner of such a Taxable Bond that exceeds actual cash distributions to that owner in a taxable year. To the extent that a Taxable Bond is purchased at a price that exceeds the sum of the Issue Price of that Taxable Bond and all original issue discount on that Taxable Bond previously includible by any holder in gross income (the "revised issue price" of that Taxable Bond, the subsequent inclusion of original issue discount by that purchaser must be reduced to reflect that excess. The amount of the original issue discount that accrues on the Taxable Bonds each taxable year will be reported annually to the Service and to the owners. The portion of the original issue discount included in each owner's gross income while the owner holds the Taxable Bonds will increase the adjusted tax basis of the Taxable Bonds in the hands of such owner. Amortizable Bond Premium for Taxable Bonds. An owner that purchases a Taxable Bond for an amount that is greater than its stated redemption price at maturity will be considered to have purchased the Taxable Bond with "amortizable bond premium" equal in amount to such excess. The owner may elect to amortize such premium using a constant yield method over the remaining term of the Taxable Bond and may offset interest otherwise required to be included in respect of the Taxable Bond during any taxable year by the amortized amount of such excess for the taxable year. Taxable Bond premium on a Taxable Bond held by an owner that does not make such an election will decrease the amount of gain or increase the amount of loss otherwise recognized on the sale, exchange, redemption or retirement of a Taxable Bond. However, if the Taxable Bond may be optionally redeemed after the beneficial owner acquires it at a price in excess of its stated redemption price at maturity, special rules would apply under the Treasury Regulations which could result in a deferral of the amortization of some bond premium until later in the term of the Taxable Bond. Any election to amortize bond premium applies to all taxable debt instruments -62- held by the beneficial owner on or after the first day of the first taxable year to which such election applies and may be revoked only with the consent of the Service. Medicare Contribution Tax. Pursuant to Section 1411 of the Code, as enacted by the Health Care and Education Reconciliation Act of 2010, an additional tax is imposed on individuals beginning January 1, 2013. The additional tax is 3.8% of the lesser of (i) net investment income (defined as gross income from interest, dividends, net gain from disposition of property not used in a trade or business, and certain other listed items of gross income), or (ii) the excess of "modified adjusted gross income" of the individual over $200,000 for unmarried individuals ($250,000 for married couples filing a joint return and a surviving spouse). Owners of the Taxable Bonds should consult with their own tax advisor concerning this additional tax, as it may apply to interest earned on the Taxable Bonds as well as gain on the sale of a Taxable Bond. Defeasance of Taxable Bonds. Persons considering the purchase of a Taxable Bond should be aware that the bond documents permit the Successor Agency under certain circumstances to deposit monies or securities with the Trustee, resulting in the release of the lien of the Indenture (a "defeasance"). A defeasance could be a taxable event resulting in the realization of gain or loss by the owner of a defeased Taxable Bond for federal income tax purposes, without any corresponding receipt of monies by the owner. Such gain or loss generally would be subject to recognition for the tax year in which such realization occurs, as in the case of a sale or exchange; in addition, the defeased instrument may be treated as having been reissued with original issue discount or bond issuance premium with the consequences described above. Owners of Taxable Bonds are advised to consult their own tax advisers with respect to the tax consequences resulting from such events. Backup Withholding. Under section 3406 of the Code, an owner of a Taxable Bond who is a United States person may, under certain circumstances, be subject to "backup withholding" of current or accrued interest on a Taxable Bond or with respect to proceeds received from a disposition of the Taxable Bond. This withholding applies if such owner of a Taxable Bond: (i) fails to furnish to the payor such owner's social security number or other taxpayer identification number ("TIN"); (ii) furnishes the payor an incorrect TIN; (iii) fails to properly report interest, dividends, or other "reportable payments" as defined in the Code; or (iv) under certain circumstances, fails to provide the payor with a certified statement, signed under penalty of perjury, that the TIN provided to the payor is correct and that such owner is not subject to backup withholding. Backup withholding will not apply, however, with respect to payments made to certain owners of the Taxable Bonds. Owners of the Taxable Bonds should consult their own tax advisors regarding their qualification for exemption from backup withholding and the procedures for obtaining such exemption. Withholding on Payments to Nonresident Alien Individuals and Foreign Corporations. Under sections 861 and 871 of the Code, a tax of 30% is imposed upon the gross amount of certain types of income, including "fixed or determinable annual or periodical income" (such as interest on debt), that is not effectively connected with the conduct of a trade or business within the United States (within the meaning of section 864 of the Code), received by nonresident alien individuals or foreign corporations from sources within the United States. This tax is subject to reduction by treaty, and is not applicable to interest that, as to the recipient, is "portfolio interest" (described below). Under sections 1441 and 1442 of the Code, payments of such income to a nonresident alien individual or foreign corporation are generally subject to tax withholding by the payor or its paying agent. Assuming the interest income of a nonresident alien individual or foreign corporation on Taxable Bonds is not treated as effectively connected income within the meaning of section 864 of the Code, such interest will be subject to 30% withholding (or a lower rate specified in an income tax treaty), unless such interest is treated as portfolio interest. Interest will be treated as portfolio interest if (i) the owner provides a statement to the payor certifying, under penalties of perjury, that such owner is not a United States person -63- and providing the name and address of such owner; (ii) such interest is treated as not effectively connected with the owner's United States trade or business; (iii) interest payments are not made to a person within a foreign country that the Service has included on a list of countries having provisions inadequate to prevent United States tax evasion; (iv) interest payable with respect to the Taxable Bonds is not deemed "contingent interest" within the meaning of the portfolio debt provision; (v) such owner is not a controlled foreign corporation, within the meaning of section 957 of the Code; and (vi) such owner is not a bank receiving interest on the Taxable Bonds pursuant to a loan agreement entered into in the ordinary course of the bank's trade or business. Assuming payments on Taxable Bonds owned by a nonresident alien individual or foreign corporation are treated as portfolio interest within the meaning of sections 871 and 881 of the Code, then no withholding under section 1441 or 1442 of the Code and no backup withholding under section 3406 of the Code is required with respect to interest paid to that owner (or its applicable intermediary) if (i) the owner or intermediary has furnished a properly completed Form W-8 BEN, Form W-8 EXP or Form W-8 IMY, as applicable, asserting the requisite facts, and (ii) the payor and paying agent have no actual knowledge or reason to know that such person is a United States person. The preceding discussion of certain United States federal income tax consequences is for general information only and is not tax advice. Accordingly, each investor should consult its own tax advisor as to particular tax consequences to it of purchasing, owning, and disposing of the Taxable Bonds, including the applicability and effect of any state, local, or foreign tax laws, and of any proposed changes in applicable laws. RATINGS S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC ("S&P"), has assigned their long-term municipal rating of "_ " to the Bonds. In connection with the issuance and delivery of the Bonds, S&P is expected to assign their municipal bond rating of "_ " to the Bonds with the understanding that, upon delivery of the Bonds, the Insurance Policy insuring the payment when due of the principal of and interest on the Bonds will be issued by [Bond Insurer]. These ratings reflect the view of S&P as to the credit quality of the Bonds. The ratings reflect only the view of S&P, and explanation of the significance of the ratings may be obtained from S&P Global Ratings, 55 Water Street, New York, New York 10041 (212) 483-2000. There is no assurance that the ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by S&P, if in the judgment of S&P, circumstances so warrant. Except as otherwise required in the Continuing Disclosure Certificate, the Authority and the City undertake no responsibility either to bring to the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of the rating obtained may have an adverse effect on the marketability or market price of the Bonds. NO LITIGATION There is no action, suit, or proceeding known by the Authority or the City to be pending or threatened at the present time restraining or enjoining the delivery of the Installment Purchase Agreement, the Indenture, or the Bonds or the collection of Assessments levied by the City in the District or the collection of the Ad Valorem Revenues or in any way contesting or affecting the validity of the Bonds, the Indenture, the Installment Purchase Agreement, or any proceedings of the Authority or the City taken with respect to the execution or delivery thereof. -64- UNDERWRITING Piper Jaffray & Co.., the Underwriter of the Bonds, has agreed to purchase the Tax -Exempt Bonds from the Authority at a purchase price of $ , being the aggregate principal amount of the Tax -Exempt Bonds less an underwriter's discount of $ and [plus/less] a net original issue [discount/premium] of $ . The Underwriter has also agreed to purchase the Taxable Bonds from the Authority at a purchase price of $ being the aggregate principal amount of the Taxable Bonds less an underwriter's discount of $ and [plus/less] a net original issue [discount/premium] of $ . The purchase contract pursuant to which the Underwriter is purchasing the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the Underwriter to make such purchase is subject to certain terms and conditions set forth in such contract of purchase. Piper Jaffray & Co., the Underwriter of the Bonds, has entered into a distribution agreement ("Distribution Agreement") with Charles Schwab & Co., Inc. ("CS&Co") for the retail distribution of certain securities offerings at the original issue prices. Pursuant to the Distribution Agreement, CS&Co. will purchase Bonds from Piper Jaffray at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that CS&Co. sells. The public offering prices of the Bonds may be changed from time to time by the Underwriter. The Underwriter may offer and sell Bonds to certain dealers and others at a price lower than the offering price stated on the cover page hereof. MISCELLANEOUS All quotations from, and summaries and explanations of the Indenture, the Installment Purchase Agreement, the Bond Law, the Act, or other statutes and documents contained herein do not purport to be complete, and reference is made to said documents and statutes for full and complete statements of their provisions. This Official Statement is submitted only in connection with the sale of the Bonds by the Authority. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the Authority, the City or the Underwriter. The information contained herein should not be construed as representing all conditions affecting the Authority, the City or the Bonds. -65- All information contained in this Official Statement pertaining to the Authority and the City has been furnished by the Authority and the City, and the execution and delivery of this Official Statement has been duly authorized by the Authority and the City. SANTA CLARITA PUBLIC FINANCING AUTHORITY ma Executive Director CITY OF SANTA CLARITA ma Mayor APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS A-1 APPENDIX B GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA AND THE COUNTY OF LOS ANGELES The following information concerning the City of Santa Clarita and the County of Los Angeles is presented as general background data. The Bonds are payable solely from the sources described herein (see "SECURITY FOR THE BONDS'). The taxing power of the City of Santa Clarita, the County of Los Angeles, the State of California or any political subdivision thereof is not pledged to the payment of the Bonds. See the information under the caption "THE BONDS. " 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 was consolidated with Los Angeles County General Election held on November 8, 2016. As of July 1, 2016, the City had a staff of 398.4 funded equivalent full time positions. The current members of the City Council, term expiration and their principal occupations are as follows: City Council Laurene F. Weste, Mayor Marsha A. McLean, Mayor Pro Tem Robert C. Kellar, Councilmember William Miranda, Councilmember Cameron Smyth, Councilmember Term Expires Occupation November 2018 Community Advocate November 2018 Business Owner November 2020 Retired Police Officer/Realtor November 2018 Business Consultant November 2020 Associate Vice President — State Affairs Current City Management Staff includes the following: Mr. Ken Striplin has been the City Manager for the City 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 the City 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. 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. Mr. Darren Hernandez, Deputy City Manager, leads the Department of Neighborhood Services. Darren joined the City of Santa Clarita in January 2004 as Director of Administrative Services and was named Deputy City Manager in July 2007. Previously Mr. Hernandez 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. Ms. Carmen Magana is the recently appointed Director of Administrative Services for the City. In this position she provides leadership to the Department of Administrative Services and serves as the Chief Financial Officer of the City and the Successor Agency. Ms. Magana began her career with the City in 1998 and prior to this position, she served as the Administrative Services Manager overseeing Finance and Technology Services. She is a member of the City's Leadership Team and serves as a member of the City's Budget Team. Ms. Magana received a Bachelor's degree from California State University, Northridge in Business Administration and Finance and a Master's degree in Public Administration, Public Sector Management and Leadership. 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. Population The following table shows the City's and County's population as of January 1, 2011 through January 1, 2017. Housing As of January 1, 2017, the California Department of Finance reported that there were 44,400 single family detached units in the City, 8,592 single family attached units, 18,320 multifamily housing units and 2,603 mobile home units. The vacancy rate is approximately 3.8%. In 2017, the median price within the City of a single family home was [$520,000] and of a condominium was [$330,000]. In CITY OF SANTA CLARITA AND LOS ANGELES COUNTY Population Year Los Angeles County City of Santa Clarita 2011 9,874,887 177,375 2012 9,956,722 179,323 2013 10,021,318 207,172 2014 10,089,847 208,737 2015 10,150,617 210,062 2016 10,182,961 210,101 2017 10,241,276 216,350 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2011-2017, with 2010 Census Benchmark. Sacramento, California, May 2017, as ofJanuary 1. Housing As of January 1, 2017, the California Department of Finance reported that there were 44,400 single family detached units in the City, 8,592 single family attached units, 18,320 multifamily housing units and 2,603 mobile home units. The vacancy rate is approximately 3.8%. In 2017, the median price within the City of a single family home was [$520,000] and of a condominium was [$330,000]. In 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. Employment The following table summarizes the City's employment and unemployment rates for 2012 through 2016 calendar years. CITY OF SANTA CLARITA CITY OF SANTA CLARITA Civilian Labor Force, Employment and Unemployment Building Permits and Valuations Year Residential Permits Residential Value Non -Residential Value Total 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 2016 2,058 172,063,366 81,352,376 253,415,742 Source: City of Santa Clarita Permit System Employment The following table summarizes the City's employment and unemployment rates for 2012 through 2016 calendar years. CITY OF SANTA CLARITA Civilian Labor Force, Employment and Unemployment Annual Averages 2012 2013 20140 2015 2016 Civilian Labor Force Employment 82,800 85,200 88,400 89,700 91,600 Unemployment 6,000 5,500 7,200 5,900 4,600 Total 88.800 90.700 95.600 95.600 96200 Unemployment Rate (a) 6.7% 6.0% 7.6% 6.1% 4.8% (a) The unemployment rate is calculated using unrounded data. Source: California Employment Development Department. 101 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 Boston Scientific The Master's College California Institute of the Arts Woodward HRT (formerly H.R. Textron) Walmart Aerospace Dynamics International Quest Diagnostics (formerly Specialty Labs) Source: 2017 Economic Outlookfor the Santa Clarita Valley. Commercial Activity and Sales Tax Amusement Park 3,200 Travel 2,026 Hospital 1,948 Medical Device 900 Education 760 Education 700 Aerospace 650 Retail 624 Aerospace 608 Medical R&D 594 Subtotal 12,010 Other 8,574 Private Subtotal 20,584 Government Subtotal 8,319 Total 28,903 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 2011 5,934 $2,601,240 2012 6,021 2,764,693 2013 6,012 2,896,147 2014 6,232 3,004,553 2015 7,008 3,096,583 Source: State Board of Equalization. The following table shows a breakdown of the taxable sales within the City for 2015 calendar year (the latest calendar year in which annual information is available). CITY OF SANTA CLARITA Taxable Sales — 2015 Type of Business Permits Taxable Transactions Retail and Food Services Motor Vehicle and Parts Dealers 179 $ 655,244,968 Home Furnishings and Appliance Stores 311 105,744,954 Bldg. Material and Garden Equip. & Supplies 96 195,681,507 Food and Beverage Stores 149 162,688,507 Gasoline Stations 44 251,596,741 Clothing and Clothing Accessories Stores 730 140,152,340 General Merchandise Stores 275 423,447,092 Food Services and Drinking Places 530 399,382,811 Other Retail Stores 2,313 196,332,992 Retail and Food Total 4,627 S2,530,272,328 All Other Outlets 2,381 566,311,030 Totals All Outlets 7,008 S3,096,583,358 Source: State Board of Equalization. [The remainder of this page is intentionally left blank.] 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. LOS ANGELES -LONG BEACH-GLENDALE MSA Historical Civilian Labor Force Calendar Years 2012 through 2016 Annual Averages Wage and Salary Employment: (2) 2012 2013 2014 2015 2016 Agriculture 5,400 5,500 5,200 5,000 5,300 Mining and Logging 4,300 4,500 4,300 3,900 3,600 Construction 107,600 114,600 118,500 126,200 133,100 Manufacturing 373,300 374,400 370,000 366,800 360,400 Wholesale Trade 211,900 218,700 222,500 225,700 227,000 Retail Trade 400,900 405,600 413,000 419,200 422,300 Transportation, Warehousing, Utilities 154,500 157,500 163,400 171,500 180,600 Information 192,500 197,000 198,800 207,500 230,900 Finance and Insurance 140,200 138,300 134,500 135,600 138,100 Real Estate and Rental and Leasing 72,200 74,700 76,700 80,000 81,700 Professional and Business Services 564,100 586,900 593,300 595,500 605,200 Educational and Health Services 699,500 702,100 720,700 741,100 767,400 Leisure and Hospitality 415,800 440,500 466,600 489,100 520,500 Other Services 141,700 145,700 150,500 151,000 153,400 Federal Government 48,100 47,200 46,700 47,400 47,800 State Government 83,100 83,600 85,300 87,400 89,900 Local Government 425,600 420,500 424,200 433,700 438,600 Total all Industries (1) 4,040,300 4,117,200 4,193,900 4,286,500 4,395,700 (1) Totals may not add due to rounding. Source: State of California Employment Development Department Income The U.S. Census Bureau American FactFinder reports that the median income of households in the City for 2015 is $83,554 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. As reported by The Neilsen Company (US) Inc. - Quick Market Insights, as of April 2016, the 2016 median household income for the County is $57,864 and for the City is $86,685. "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." Im As reported by The Neilsen Company (US) Inc. — Quick Market Insights, as of April 2016, (i) the total effective buying income for the County of Los Angeles is $231,719,110,000 and for the City is $5,395,572,500, and (ii) the median effective buying income for the County is $48,950 and for the City is $70,101. 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 Clanta 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 Clanta 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, Placenta 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 Clanta Repertory Theater, as well as the Friendly Valley, Valencia Country Club, Robinson's Ranch and Vista Valencia golf courses. Santa Clanta residents enjoy the City's distinctive trail system. There are three libraries located in the valley. [The remainder of this page is intentionally left blank.] APPENDIX C FORM OF BOND COUNSEL OPINION Upon issuance and delivery of the Bonds, Norton Rose Fulbright US LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form: [Delivery Date] Santa Clarita Public Financing Authority Santa Clarita, California City of Santa Clarita Santa Clarita, California RE: $ Santa Clarita Public Financing Authority 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A $ Santa Clarita Public Financing Authority 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B Ladies and Gentlemen: We have acted as Bond Counsel to the Santa Clarita Public Financing Authority (the "Authority"), in connection with the issuance of its $ 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A (the "Tax -Exempt Bonds") and $ 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B (the "Taxable Bonds," and together with the Tax - Exempt Bonds, 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 February 1, 2018 (the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). The Bonds are limited obligations of the Authority secured under the Indenture by a pledge of Revenues and certain other moneys held under the Indenture. The Revenues consist primarily of Installment Payments made by the City of Santa Clarita (the "City") pursuant to the Installment Purchase Agreement, dated as of February 1, 2018 (the "Installment Purchase Agreement"), by and between the Authority and the City. As Bond Counsel, we have examined copies certified to us as being true and complete copies of the proceedings of the Authority and the City in connection with the issuance of the Bonds. We have also examined such certificates of officers of the Authority and the City and others as we have considered necessary for the purposes of this opinion. 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: 1. 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. 2. 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 C-1 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. 3. The Installment Purchase Agreement has been duly and validly authorized, executed and delivered by the Authority and the City and constitutes the legally valid and binding obligation of the Authority and the City, enforceable against the Authority and the City in accordance with its terms. 4. Under existing statutes, regulations, rulings and court decisions, and assuming compliance with the covenants mentioned below, interest on the Tax -Exempt Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 (the "Code") from the gross income of the owners thereof for federal income tax purposes. We are further of the opinion that under existing statutes, regulations, rulings and court decisions, the Tax -Exempt Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of the Code and, therefore, that interest on the Tax -Exempt 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 Tax -Exempt Bonds owned by a corporation may affect the computation of the alternative minimum taxable income of that corporation. 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. We are further of the opinion that interest on the Bonds is exempt from personal income taxes of the State of California under present state law. The Code imposes certain requirements that must be met subsequent to the issuance and delivery of the Tax -Exempt 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 Tax -Exempt Bonds to fail to be excluded from the gross income of the owners thereof retroactive to the date of issuance of the Tax -Exempt Bonds. Pursuant to the Indenture and the Installment Purchase Agreement, and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986 being delivered by the Authority and the City in connection with the issuance of the Tax -Exempt Bonds, each of the Authority and the City is making representations relevant to the determination of, and is undertaking certain covenants regarding or affecting, the exclusion of interest on the Tax -Exempt Bonds from the gross income of the owners thereof for federal income 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 each of the Authority and the City 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 through 3 above are qualified to the extent the enforceability of the Bonds, the Indenture and the Installment Purchase Agreement 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, the Indenture and the Installment Purchase Agreement 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. C-2 No opinion is expressed herein on the accuracy, completeness or sufficiency 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 fact or circumstance that may hereafter come to our attention or to reflect any change in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of results 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, C-3 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE D-1 APPENDIX E THE BOOK -ENTRY SYSTEM The information in this Appendix E concerning The Depository Trust Company ("DTC"), New York, New York, and DTC's book -entry system has been obtained from DTC and the Agency takes no responsibility for the completeness or accuracy thereof The City and the Authority cannot and do not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company ("DTC"), New York, NY, 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 certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 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 E-1 behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. 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 effect 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 redemptions, 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 redeemed, 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 City 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). Principal, premium (if any), and interest 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 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, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any), and interest payments with respect to the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates representing the Bonds are required to be printed and delivered. E-2 The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, representing the Bonds will be printed and delivered to DTC in accordance with the provisions of the Indenture. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City and the Authority believe to be reliable, but the City and the Authority take no responsibility for the accuracy thereof. E-1 BOND PURCHASE AGREEMENT SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) 2018 REVENUE BONDS SERIES A Santa Clarita Public Financing Authority Valencia Boulevard Santa Clarita, CA 91355 City of Santa Clarita Valencia Boulevard Santa Clarita, CA 91355 Ladies and Gentlemen: 2018 TAXABLE REVENUE BONDS 12018 SERIES B Piper Jaffray & Co., acting not as a fiduciary or agent for you, but on behalf of itself (the "Underwriter"), offers to enter into this Bond Purchase Agreement (this "Purchase Agreement") with the Santa Clarita Public Financing Authority (the "Authority") and the City of Santa Clarita (the "City"). Upon your acceptance of this offer, this Purchase Agreement will be binding upon the Authority, the City and the Underwriter. Terms not otherwise defined herein have the same meanings as set forth in the Indenture described below. This offer is made subject to the acceptance by the Authority and the City of this Purchase Agreement on or before 11:59 p.m. on the date first set forth above. 1. Purchase and Sale of Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to sell to the Underwriter, all (but not less than all) of the (i) $ Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A (the "Series A Bonds"), at the purchase price of $ (the "Series A Purchase Price") (being the principal amount of the Series A Bonds of $ less an Underwriter's discount of $ , and plus a net original issue premium of $ ) and the (ii) $ Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B (the "Series B Bonds," and together with the Series A Bonds, the "Bonds"), at the purchase price of $ (the "Series B Purchase Price," and together with the Series A Purchase Price, the "Purchase Price") (being the principal amount of the Series B Bonds of $ , less an Underwriter's discount of $ , and less an original issue discount of $ ). The Purchase Price will be delivered to the Trustee on behalf of the Authority. The Authority and the City acknowledge and agree that: (i) the primary role of the Underwriter is to purchase securities for resale to investors in an arms -length commercial transaction between the Authority and the City and the Underwriter and that the Underwriter has financial and other interests that differ from those of the Authority and the City, (ii) the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to the Authority and the City or any other person or entity and has not assumed any advisory or fiduciary responsibility to the Authority and the City with respect to the transaction contemplated hereby and the discussions, undertakings and proceedings leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Authority and the City on other matters), (iii) the only obligations the Underwriter has to the Authority and the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement, except as otherwise provided by applicable rules and regulations of the SEC or the rules of the Municipal Securities Rulemaking Board (the "MSRB"), and (iv) the Authority and the City have consulted their own legal, accounting, tax, financial and other advisors, as applicable, to the extent each has deemed appropriate in connection with the transaction contemplated herein. The Authority and the City acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the MSRB. 2. Authorizing Instruments. (a) Issuance of the Bonds. The Authority is a joint exercise of powers agency organized under the joint exercise of powers act, constituting Article 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State (the "Joint Powers Act"). The Bonds will be issued by the Authority under the provisions of Article 4 of the Joint Powers Act (the "Bond Law"), a resolution adopted by the Board of Directors of the Authority (the "Board") on , 2018 (the "Resolution of Issuance"), and an Indenture, dated as of March 1, 2018 (the "Indenture"), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). Proceeds of the Bonds will be used to: (i) finance the acquisition and installation of certain streetlight improvements and LED light retrofit program, and (ii) pay certain costs of issuing the Bonds. (b) Security for the Bonds. The obligation of the Authority to pay the principal of and interest on Bonds is a special obligation of the Authority, payable solely from "Revenues" received under the Indenture, which generally consist of all Installment Payments (as defined in the Indenture) received or receivable by the Authority pursuant to an Installment Purchase Agreement, dated as of March 1, 2018 (the "Installment Purchase Agreement"), by and between the City, as purchaser, and the Authority, as seller, and (ii) amounts held in certain funds and accounts held by the Trustee under the Indenture. The Installment Payments are special limited obligations of the City payable solely from and secured by a pledge of and first lien on Assessment Revenues and Ad Valorem Revenues (as each are defined in the Installment Purchase Agreement). The principal of and interest on the Bonds are not required to be paid from any other funds of the Authority, including any proceeds of any taxes, and do not constitute a debt or pledge of the faith and credit of the Authority or the State of California (the "State") or any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. 3. Terms of the Bonds. The Bonds will mature on the dates and in the principal amounts, and will bear interest at the rates, as set forth in Exhibit A hereto. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices set forth on the cover of the Final Official Statement described below. 4. Preliminary Official Statement, Official Statement, Continuing Disclosure. (a) The Authority agrees to deliver to the Underwriter as many copies of the Official Statement dated the date of this Purchase Agreement, relating to the Bonds (as supplemented and amended from time to time, the "Final Official Statement") as the Underwriter may reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 ("Rule 15c2-12"). The Authority agrees to deliver such Final Official Statements within seven (7) business days after the execution of this Purchase Agreement, and in sufficient time to accompany any confirmation that requires payment from a customer. The Underwriter agrees to deposit the Final Official Statement with a qualified national registered municipal securities information repository on or as soon as practicable after the Closing Date (as defined in Section 8 below). The Underwriter agrees to deliver a copy of the Final Official Statement to each of its customers purchasing Bonds no later than the settlement date of the transaction. (b) The Authority and the City have authorized and approved the Preliminary Official Statement dated , 2018 (the "Preliminary Official Statement") and the Final Official Statement dated the date of this Purchase Agreement, and consent to their distribution and use by the Underwriter and the execution and approval of the Final Official Statement by a duly authorized officer of the Authority and the City. (c) In connection with issuance of the Bonds, and in order to assist the Underwriter with complying with the provisions of Rule 15c2-12, the City will execute a continuing disclosure certificate with Digital Assurance Corporation, as dissemination agent (the "Continuing Disclosure Certificate"), under which the City will undertake to provide certain financial and operating data as required by Rule 15c2-12. The form of the Continuing Disclosure Certificate was attached as an appendix to the Preliminary Official Statement and will be attached as an appendix to the Final Official Statement. 5. Representations and Warranties of the Authority. The Authority makes the following representations and warranties to the Underwriter. (a) Due Organization and Authority. The Authority is duly organized and validly existing as a joint exercise of powers authority under the laws of the State of California and the Joint Exercise of Powers Agreement (the "Joint Powers Agreement"), and has the full legal right, power and authority, among other things, (i) upon satisfaction of the conditions in this Purchase Agreement and the Resolution of Issuance, to issue the Bonds for the purposes set forth in the Final Official Statement and the Indenture, and (ii) to secure the Bonds in the manner contemplated in the Resolution of Issuance, the Installment Purchase Agreement and the Indenture. (b) Full Right, Power and Authority. The Authority has the full legal right, power and authority to adopt the Resolution of Issuance and the Authority has the full legal right, power and authority: (i) to enter into this Purchase Agreement, the Installment Purchase Agreement and the Indenture (collectively, the "Authority Documents"); (ii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out and consummate all other transactions on its part contemplated by each of the Authority Documents and the Final Official Statement. The Authority has complied with all provisions of applicable law (including the Bond Law) and the Joint Powers Agreement, in all matters relating to the adoption of the Resolution of Issuance and the issuance of the Bonds, including the filing of all notices as required by the Joint Powers Act. (c) Authorization of Documents; Consents and Approvals. The Board of the Authority has duly authorized (i) the execution and delivery of the Bonds and the execution, delivery and due performance by the Authority of its obligations under the Authority Documents, (ii) the distribution and use of the Preliminary Official Statement and execution, delivery and distribution of the Final Official Statement, and (iii) the taking of any and all such action as may be required on the part of the Authority to carry out, give effect to and consummate the transactions on its part contemplated by such instruments. All consents or approvals necessary to be obtained by the Authority in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect. (d) Due Adoption of Resolution and Enforceability of Documents. The Resolution of Issuance has been duly adopted by the Board of the Authority and is in full force and effect; and the Authority Documents, when executed and delivered by the Authority and the other respective parties thereto, will constitute legal, valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally. (e) Enforceability of Bonds. When delivered to the Underwriter, the Bonds will have been duly authorized by the Board of the Authority and duly executed, issued and delivered by the Authority and will constitute legal, valid and binding obligations of the Authority enforceable against the Authority in accordance with their terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, and will be entitled to the benefit and security of the Resolution of Issuance and the Indenture. (i) Preliminary and Final Official Statement. The information contained in the Preliminary Official Statement relating to the Authority and its obligations under the Authority Documents is, and as of the Closing Date such information in the Final Official Statement will be, true and correct in all material respects, and the Preliminary Official Statement does not as of its date, and the Final Official Statement will not as of the Closing Date, contain any untrue or misleading statement of a material fact relating to the Authority or omit to state any material fact relating to the Authority necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (g) Supplements or Amendments to Official Statement. The Authority shall promptly notify the Underwriter in writing if, at any time prior to the earlier of (i) receipt of notice from the Underwriter that Final Official Statement is no longer required to be delivered under Rule 15c2-12 or (ii) the Closing Date (as described in Section 8 below), any event known to the officers of the Authority participating in the issuance of the Bonds occurs as a result of which the Final Official Statement as then amended or supplemented might include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Any information supplied by the Authority for inclusion in any amendments or supplements to the Final Official Statement will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (h) No Conflicts. Neither the adoption of the Resolution of Issuance, the execution and delivery of the Authority Documents, nor the consummation of the transactions on the part of the Authority contemplated herein or therein or the compliance by the Authority with the provisions hereof or thereof will conflict with, or constitute on the part of the Authority a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the Authority is a party or by which it is bound, (ii) any provision of the Joint Powers Agreement, the Joint Powers Act or the State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the Authority (or the members of the Authority, the members of the Board of the Authority, or any of its officers in their respective capacities as such) is subject, that would have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents. (i) No Defaults. The Authority has never been in default at any time, as to principal of or interest on any obligation which it has issued, which default may have an adverse effect on the ability of the Authority to consummate the transactions on its part under the Authority Documents, except as specifically disclosed in the Final Official Statement; and other than the Bonds, the Authority has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the Revenues. 0) No Litigation. Except as is specifically disclosed in the Final Official Statement, to the best knowledge of the Authority, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the Authority has been served with process or threatened, which (i) in any way questions the powers of the Authority or the Board of the Authority, (ii) in any way questions the validity of any proceeding taken by the Board of the Authority in connection with the issuance of the Bonds, (iii) wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by this Purchase Agreement, (iv) which, in any way, could adversely affect the validity or enforceability of the Authority Documents, (v) which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Series A Bonds for federal income tax purposes, or (vi) in any other way questions the status of the Bonds under State tax laws or regulations. (k) Certificates of the Authority. Any certificate signed by an official of the Authority authorized to execute such certificate and delivered to the Underwriter in connection with the transactions contemplated by the Authority Documents shall be deemed a representation and warranty by the Authority to the Underwriter as to the truth of the statements therein contained. 5 (1) Security for Bonds. The Bonds will be paid from Revenues (as defined in the Indenture) received by or on behalf of the Authority. The Indenture creates a valid pledge of, and first lien upon, Revenues deposited thereunder and the moneys in certain funds and accounts established under the Indenture, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. (m) No Other Bonds. Between the date of this Purchase Agreement and the Closing Date, the Authority will not offer or issue any bonds, notes or other obligations of the Authority for borrowed money not previously disclosed to the Underwriter. 6. Representations and Warranties of the City. The City makes the following representations and warranties to the Underwriter. (a) Due Organization and Authority_. The City is duly organized and validly existing under the laws of the State and the Santa Clarita Landscaping and Lighting Maintenance District (the "District") is duly organized and validly existing as a street lighting maintenance assessment district under the Landscaping and Lighting Act of 1972 (Section 22500 et seq. of the California Streets and Highways Code) (the "Act"). (b) Full Right, Power and Authority_. The City has the full legal right, power and authority to adopt the City's resolution of issuance for the Bonds on , 2018 (the "City Resolution"), and the City has the full legal right, power and authority: (i) to enter into this Purchase Agreement, the Installment Purchase Agreement, and the Continuing Disclosure Certificate (collectively, the "City Documents"); (ii) to make the Installment Payments in the manner contemplated in the Installment Purchase Agreement; and (iii) to carry out and consummate all other transactions on its part contemplated by the City Documents. The City has complied with all provisions of applicable law, including the Act, in all matters relating to the adoption of the City Resolution, the formation of the District, and the levy of Assessments (as defined in the Installment Purchase Agreement) in the District. (c) Authorization of Documents, Consents and Approvals. The City Council of the City has duly authorized: (i) the execution and delivery of the Bonds and the execution, delivery and due performance of its obligations under this Purchase Agreement; and (ii) the taking of any and all such action as may be required to carry out, give effect to and consummate the transactions on its part contemplated by the Bonds and the City Documents. All consents or approvals necessary to be obtained in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect. T (d) Due Adoption of Resolutions and Enforceability of City Documents. The City Resolution has been duly adopted by the City Council of the City, and is in full force and effect; and the City Documents, when executed and delivered by the City and the other respective parties thereto, will constitute legal, valid and binding obligations of the City, enforceable against the City in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally. (e) Preliminary and Final Official Statement. The information contained in the Preliminary Official Statement relating to the City and the District is, and as of the Closing Date such information in the Final Official Statement will be, true and correct in all material respects, and the Preliminary Official Statement does not as of its date, and the Final Official Statement will not as of the Closing Date, contain any untrue or misleading statement of a material fact relating to the City and the District, or omit to state any material fact relating to the City and the District necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (fl No Conflicts. Neither the adoption of the City Resolution, the execution and delivery of the City Documents, nor the consummation of the transactions contemplated herein or therein or the compliance with the provisions hereof or thereof, will conflict with, or constitute on the part of the City a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the City is a parry or by which it is bound, (ii) any provision of the Act or the State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the City (or the members of the City Council of the City or any of its officers in their respective capacities as such) is subject, that would have a material adverse effect on the ability of the City to perform its obligations under the City Documents. (g) No Defaults. The City has not been in default at any time, as to principal of or interest on any obligation which it has issued, which default may have an adverse effect on the ability of the City to consummate its transactions contained in the City Documents, except as specifically disclosed in the Preliminary and Final Official Statements; and other than the Installment Purchase Agreement, the City has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on any of the Assessments. (h) No Litigation. Except as is specifically disclosed in the Final Official Statement, to the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the City has been served with process or threatened, which (i) in any way questions the powers of the City, (iii) wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by the City Documents, (iii) which, in any way, could adversely affect the validity or enforceability of the City Resolution, the Bonds, or the City Documents, (iv) which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Series A Bonds for federal income tax purposes, or (vi) in any other way questions the status of the Bonds under State tax laws or regulations. (i) Certificates of the City. Any certificate signed by an official of any City authorized to execute such certificate and delivered to the Underwriter in connection with the transactions contemplated by this Purchase Agreement shall be deemed a representation and warranty by the City to the Underwriter as to the truth of the statements therein contained. VA (j) Security for Installment Pam. The payment of the Installment Payments will be paid from the proceeds received by the City of the Assessment Revenues and Ad Valorem Revenues levied within the District pursuant to the Act and other applicable law. (k) Lew of Assessments and Ad Valorem Tax. The Assessments have been and will be levied in accordance with the Act and the Ad Valorem Tax has been levied in accordance with applicable law, and are secured by a lien on the property on which they are levied. (1) Pledge of Assessments and Ad Valorem Tax. The Installment Purchase Agreement creates a valid pledge of, and first lien upon, the Assessments and Ad Valorem Tax deposited thereunder and the moneys in certain funds and accounts established thereunder, subject in all cases to the provisions of the Installment Purchase Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. (m) Prior Bonded Special Tax and Assessments Liens. Except as disclosed in the Final Official Statement, there are, to the best of the City's knowledge, after reasonable and diligent investigation of records made available by the County of Los Angeles, no entities with outstanding assessment or special tax liens against any of the properties within the District. (n) Continuing Disclosure. Based on a review of its prior undertakings, and except as disclosed in the Official Statement, the City has not failed to comply in all material respects with a continuing undertaking under Rule 15c2-12 during the previous five years. 7. Blue Sky. The Authority and the City covenant with the Underwriter that they will cooperate with the Underwriter (at the cost of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided, however, that the Authority shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The Authority consents to the use by the Underwriter of the Authority Documents in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds. 8. Closin4. At 8:30 A.M., Pacific Standard Time, on 2018 or at such other time or date as may be mutually agreed upon by the Authority and the Underwriter (the "Closing Date"), the Authority will deliver or cause to be delivered (i) through the facilities of The Depository Trust Company, New York, New York, the Bonds in definitive form (all Bonds being in book -entry form registered in the name of Cede & Co. and having the CUSIP numbers assigned to them printed thereon), duly executed by the officers of the Authority as provided in the Indenture, and (ii) to the Underwriter, at the offices of Norton Rose Fulbright US LLP, Los Angeles, California, or at such other place as shall be mutually agreed upon by the Authority, the City and the Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in immediately available cleared funds (such delivery and payment being herein referred to as the "Closing"). The Bonds will be delivered as fully registered Bonds initially in denominations of $5,000 each and any integral multiple thereof. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, and will be made available for checking by the Underwriter at such place as the Underwriter and the Trustee agree not less than 24 hours prior to the Closing. 9. Termination Events. The Underwriter has the right to cancel its obligations to purchase the Bonds if between the date hereof and the Closing Date any of the following events occurs: (a) the House of Representatives or the Senate of the Congress of the United States, or a committee of either, has pending before it, or passes or recommends favorably, legislation introduced previous to the date hereof, which legislation, if enacted in its form as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the Authority or by any similar body under the Resolution of Issuance, the Indenture or the Act, or upon interest received on obligations of the general character of the Bonds, or of causing interest on obligations of the general character of the Series A Bonds to be includable in gross income for purposes of federal income taxation, and such legislation, in the Underwriter's reasonable opinion, materially adversely affects the market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (b) a tentative decision with respect to legislation is reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation is favorably reported or re-reported by such a committee or introduced, by amendment or otherwise, in or passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States, or enacted or a decision by a federal court of the United States or the United States Tax Court is rendered, or a ruling, release, order, regulation or official statement (tentative, proposed or final) by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency is made or proposed to be made having the purpose or effect, or any other action or event occurs that has the purpose or effect, directly or indirectly, that (i) adversely affects the federal income tax consequences of owning the Series A Bonds, including causing interest on the Series A Bonds to be included in gross income for purposes of federal income taxation, or (ii) imposes federal income taxation upon revenues or other income of the general character to be derived by the Authority under the Resolution of Issuance or upon interest received on obligations of the general character of the Series A Bonds, or (iii) which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (c) legislation is enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States is rendered, the effect of which is that the Bonds, including any underlying obligations, or the Resolution of Issuance or the Indenture, as the case may be, is not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Indenture or the Installment Purchase Agreement as contemplated hereby or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (e) any event occurs or any information becomes known to the Underwriter that causes the Underwriter to reasonably believe that the Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (f) there occurs any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (g) there is in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (h) a general banking moratorium is declared by federal, New York or State authorities; or (i) any proceeding is pending or threatened by the Securities and Exchange Commission against the City or the Authority; or (j) additional material restrictions not in force as of the date hereof, including minimum or maximum prices for trading having been fixed and in force, or maximum ranges for prices for securities having been required and in force shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (k) the New York Stock Exchange or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, Underwriter; or (1) an amendment to the federal or State constitution is enacted or action is taken by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Authority, its property, income or securities (or interest thereon), or the ability of the City to execute the Installment Purchase Agreement, the validity or enforceability of the Assessments or the ability of the Authority to issue the Bonds, or the levy of any of the Assessments, as contemplated by the Resolution of Issuance, the Installment Purchase Agreement, the Indenture, this Purchase Agreement and the Final Official Statement; or (m) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or (n) there shall have occurred or any notice shall have been given of any intended downgrade, suspension, withdrawal or negative change in credit watch status by any national credit agency of the Bonds; or 10 (o) any fact or event shall exist or have existed that requires or has required an amendment of or supplement to the Official Statement, which in the reasonable judgment of the Underwriter, materially adversely affects the market price or marketability of the Bonds; or (p) there shall have occurred any materially adverse change in the affairs or financial condition of the Authority or the City; or (q) any rating of the Bonds shall have been downgraded, suspended or withdrawn or placed on negative outlook or negative watch by a national rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the marketability or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (r) the commencement of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body described in Section 50) and 6(h). 10. Conditions to Closing. The obligations of the Underwriter to purchase the Bonds shall be subject (i) to the performance by the Authority and the City of their respective obligations to be performed hereunder at and prior to the Closing, (ii) to the accuracy as of the date hereof and as of the time of the Closing of the representations and warranties of the Authority and the City herein, and (iii) to the following conditions, including the delivery by the Authority of such documents as are enumerated herein in form and substance satisfactory to the Underwriter: (a) At the time of Closing, (i) the Final Official Statement, the Resolution of Issuance, the Indenture, the Continuing Disclosure Certificate, the City Resolution, the Installment Purchase Agreement, and this Purchase Agreement shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and (ii) the District shall have been duly formed and there shall be in full force and effect such resolutions as, in the opinion of Norton Rose Fulbright US LLP, Los Angeles, California ("Bond Counsel"), are necessary in connection with the transactions contemplated hereby, including, but not limited to, the Resolution of Issuance. (b) The Underwriter shall receive the Bonds at or prior to the Closing. The terms of the Bonds delivered shall in all instances be as described in Final Official Statement. (c) At or prior to the Closing, the Underwriter shall receive the following documents in such number of counterparts as are mutually agreeable to the Underwriter and the Authority: (i) A final approving opinion of Bond Counsel dated the Closing Date in the form attached as an appendix to the Final Official Statement. (ii) A letter or letters of Bond Counsel addressed to the Underwriter, which includes a statement to the effect that Bond Counsel's final approving opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter, and further provides: (A) the statements contained on the cover and in the Official Statement under the captions "INTRODUCTION," "THE BONDS," "SECURITY FOR THE BONDS," "TAX MATTERS" and in APPENDIX A — "SUMMARY OF 11 PRINCIPAL LEGAL DOCUMENTS," insofar as such statements purport to summarize certain provisions of the Bonds, the Authority Documents or City Documents and their approving opinion, are accurate in all material respects; (B) the Purchase Agreement has been duly authorized, executed and delivered by the Authority and the City and, assuming due authorization, execution and delivery by the other party thereto (if any), constitute the valid and binding agreement of the Authority and the City, enforceable against the Authority and the City in accordance with its terms, except as the same may be limited by bankruptcy, moratorium, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by the limitation upon legal remedies against public agencies in the State; and (C) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. (iii) A letter of Norton Rose Fulbright US LLP, as disclosure counsel to the Authority, addressed to the Authority and the Underwriter, to the effect that without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Final Official Statement and making no representation that they have independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available to them in the course of their participation in the preparation of the Final Official Statement, nothing has come to such counsel's attention which would lead them to believe that the Final Official Statement, as of its date or as of the Closing Date (excluding therefrom any CUSIP numbers; Appendices A, B, C, and E to the Official Statement; financial, engineering, and statistical data or graphs; forecasts, projections, estimates, assumptions, and expressions of opinions; any determinations regarding feasibility, valuation, appraisals, absorption, real estate, and environmental matters, or any basis therefor; information about the book -entry only system and DTC; information about the Underwriter or underwriting; and statements relating to the treatment of the Bonds or the interest, discount or premium related thereto for tax purposes under the law of any jurisdiction; as to which no opinion need be expressed) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (iv) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, in form and substance acceptable to the Underwriter, to the following effect: (A) the Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State, including the Joint Powers Act. (B) The Authority has full legal right, power and authority to adopt the Resolution of Issuance and to execute the Authority Documents. The Resolution of Issuance was duly adopted at a meeting of the Authority Board that was called and held with all public notice required by law and at which a quorum was present and 12 acting throughout, and the Resolution of Issuance is in full force and has not been modified, amended or rescinded as of the Closing Date. (C) The City is duly organized and validly existing under the laws of the State. (D) The City has full legal right, power and authority to adopt the City Resolution, and to execute the City Documents. The City Resolution was duly adopted at a meeting of the City Council that was called and held with all public notice required by law and at which a quorum was present and acting throughout, and the City Resolution is in full force and has not been modified, amended or rescinded as of the Closing Date. (E) Except as is specifically disclosed in the Final Official Statement, and to the best of such counsel's knowledge, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the Authority has been served with process or threatened, which (i) questions the powers of the Authority or the Board of the Authority, or (ii) questions the validity of any proceeding taken by the Board of the Authority in connection with the issuance of the Bonds, or (iii) which questions the transactions contemplated by this Purchase Agreement, or (iv) which questions the validity or enforceability of the Authority Documents, or (v) which questions the exclusion from gross income of the recipients thereof of the interest on the Series A Bonds for federal income tax purposes, or (vi) which questions the status of the Bonds under State tax laws or regulations.. (F) Except as is specifically disclosed in the Final Official Statement, and to the best of such counsel's knowledge, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the City has been served with process or threatened, which (i) questions the powers of the City, or (ii) which questions the transactions contemplated by this Purchase Agreement, or (iv) which questions the validity or enforceability of the City Resolution or the City Documents. (G) To the best of such counsel's knowledge, neither the adoption of the City Resolution, the execution and delivery of this Purchase Agreement, nor the consummation of the transactions on the part of the City contemplated herein or therein or the compliance by the City with the provisions hereof or thereof, will conflict with, or constitute on the part of the City a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the City is a party or by which it is bound, (ii) any provision of the Act or the State Constitution or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the City (or the members of the City Council of the City or any of its officers in their respective capacities as such) is subject, that would have a material adverse effect on the ability of the City to perform its respective obligations under the City Documents; provided, however, that no opinion need be expressed as to financial capability or lack thereof. 13 (H) Neither the adoption of the City Resolution, the execution and delivery of this Purchase Agreement, nor the consummation of the transactions on the part of the City contemplated herein or therein or the compliance by the City with the provisions hereof or thereof, will conflict with, or constitute on the part of the City a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the City is a party or by which it is bound, (ii) any provision of the Act or the State Constitution or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the City (or the members of the City Council of the City or any of its officers in their respective capacities as such) is subject, that would have a material adverse effect on the ability of the City to perform its respective obligations under the City Documents; provided, however, that no opinion need be expressed as to financial capability or lack thereof. (v) The Final Official Statement executed on behalf of the Authority and the City by their respective duly authorized officer. (vi) Certified copies of the Resolution of Issuance and the City Resolution. (vii) Specimen Bonds. (viii) Evidence that Internal Revenue Service Form 8038-G has been executed by the Authority and will be filed with the Internal Revenue Service. (ix) Executed copies of the Authority Documents and the City Documents. (x) A non -arbitrage certificate executed by the Authority and the City in form and substance satisfactory to Bond Counsel. (xi) In connection with printing and distribution of the Preliminary Official Statement, an executed certificate of the Authority and the City deeming the Preliminary Official Statement final for purposes of Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. NO A closing certificate, in form and substance as set forth in Exhibit B hereto, of the Authority, dated as of the Closing Date. (xiii) A closing certificate, in form and substance as set forth in Exhibit C hereto, of the City, dated as of the Closing Date. (xiv) A certificate dated the Closing Date from the City's [Public Works Manager] (the "Assessment Engineer") addressed to the Underwriter to the effect that (i) the Engineer's Report complies with the requirements of the Act and, in the opinion of the Assessment Engineer, the Assessments, as set forth in the Engineer's Report, comply with the Act and (ii) the statements and information contained in the Official Statement under the heading "THE DISTRICT" to the Official Statement, insofar as such statements and information were provided by the Assessment Engineer or purport to summarize certain provisions of the Engineer's Report prepared with respect to the District, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements 14 contained therein, in light of the circumstances under which they were made, not misleading and no events or occurrences have been ascertained by the Assessment Engineer or have come to its attention that would substantially change such information set forth in the Official Statement. (xv) A certificate in form and substance acceptable to Bond Counsel and the Underwriter, dated as of the Closing Date, of the Trustee. (xvi) An opinion of Nossaman LLP, counsel to the Underwriter, dated as of the Closing Date, in form and substance satisfactory to the Underwriter. (xvii) An opinion of counsel to the Trustee, dated as of the Closing Date, in form and substance satisfactory to the Underwriter and Bond Counsel. (xviii) Evidence satisfactory to the Underwriter that the Bonds shall have received the rating as set forth in the Preliminary Official Statement and Official Statement, and that such rating has not been revoked or downgraded; (xix) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the Authority and the City with legal requirements, the truth and accuracy, as of the time of Closing, of the representations of the Authority and the City herein contained, and the due performance or satisfaction by the Authority and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Authority and the City. If the Authority or the City are unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase and accept delivery of the Bonds are terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter, the Authority nor the City shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 13 hereof shall continue in full force and effect. 11. Conditions to Authority's and the City's Obligations. The obligations of the Authority and the City hereunder are subject to the performance by the Underwriter of its obligations hereunder. 12. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements of the Authority and the City hereunder shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the Closing. 13. Expenses. The Authority shall pay or cause to be paid all reasonable expenses incident to the issuance of the Bonds and to the performance of its obligations and the obligations of the City under this Purchase Agreement, including, but not limited to, delivery of the Bonds, costs of printing the Bonds, the Preliminary Official Statement and the Final Official Statement, any amendment or supplement to the Preliminary Official Statement or Final Official Statement and this Purchase Agreement, fees and disbursements of Bond Counsel and Disclosure Counsel, any financial advisor and other consultants, including the fees and expenses of the Trustee. 15 The Underwriter shall pay all advertising expenses in connection with the public offering of the Bonds, and all other expenses incurred by it in connection with its public offering and distribution of the Bonds, including without limitation CUSIP Services Bureau charges and the fees and expenses of its counsel. The Authority acknowledges that the Underwriter will pay from the Underwriter's expense allocation of the underwriting discount certain fees, including the applicable per bond assessment charged by the California Debt and Investment Advisory Commission. 14. Establishment of Issue Price. (a) The Underwriter agrees to assist the Authority in establishing the issue price of the Series A Bonds and shall execute and deliver to the Authority at Closing an "issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit D, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel (as defined herein), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Series A Bonds. (b) Except as otherwise set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Series A Bonds (the "10% test") is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Series A Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Series A Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date (as defined herein) has occurred, until the 10% test has been satisfied as to the Series A Bonds of that maturity or until all Series A Bonds of that maturity have been sold to the public. (c) The Underwriter confirms that it has offered the Series A Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Series A Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed immediately after the execution of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold -the -offering -price rule"). So long as the hold -the -offering - price rule remains applicable to any maturity of the Series A Bonds, the Underwriter will neither offer nor sell unsold Series A Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Series A Bonds to the public at a price that is no higher than the initial offering price to the public. 16 The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the Series A Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. (d) The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the Series A Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Series A Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the Series A Bonds of that maturity or all Series A Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule, if applicable, in each case if and for so long as directed by the Underwriter. The Authority acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Series A Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the -offering -price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the Series A Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold -the -offering -price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. (e) The Underwriter acknowledges that sales of any Series A Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: (1) "public" means any person other than an underwriter or a related party; (2) "underwriter" means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Series A Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Series A Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Series A Bonds to the public); (3) a purchaser of any of the Series A Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and parties. (4) "sale date" means the date of execution of this Purchase Agreement by all 17 15. Notices. Any notice or other communication to be given to the Authority or the City under this Purchase Agreement may be given by delivering the same in writing at its address set forth above, and any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Piper Jaffray & Co., 2321 Rosecrans Avenue, Suite 3200, El Segundo, California 90245, Attention: Russell Reyes, Managing Director. 16. Benefit. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person, including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue hereof. 17. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State of California. 18. Effective Date. This Purchase Agreement shall become effective upon acceptance hereof by the Authority and the City. 19. Counterparts. This Purchase Agreement may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 18 20. Severability. If any provision of this Purchase Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. PIPER JAFFRAY & CO. Managing Director The foregoing is hereby agreed to and accepted as of the date first above written: SANTA CLARITA PUBLIC FINANCING AUTHORITY M. Authorized Officer Time of Execution: CITY OF SANTA CLARITA .0 Authorized Officer Time of Execution: p.m. California time p.m. California time [SIGNATURE PAGE - SANTA CLARITA PUBLIC FINANCING AUTHORITY 2018 REVENUE BONDS] S-1 EXHIBIT A SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) REVENUE BONDS, SERIES A MATURITY SCHEDULE Subject to 10% Test Hold -The - Maturity Principal Interest 10% Test Not Offering - September 1) Amount Rate Yield Price Satisfied* Satisfied Price Rule 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2029 2030 2031 2032 2033 2034 2035 20 (T) Term Bond. (') Priced to optional call at [par] on September 1, 20. * At the time of execution of this Purchase Agreement and assuming orders are confirmed immediately after the execution of this Purchase Agreement. A-1 SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) TAXABLE REVENUE BONDS, SERIES B Maturity (September 1) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2032 20 (T) Term Bond. MATURITY SCHEDULE Principal Interest Amount Rate Yield Price A-2 EXHIBIT B SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) 2018 REVENUE BONDS 2018 TAXABLE REVENUE BONDS SERIES A SERIES B ISSUER CLOSING CERTIFICATE The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the Santa Clarita Public Financing Authority (the "Authority"), and is duly authorized to execute and deliver this Certificate in connection with the offering and sale of the bonds captioned above, and further hereby certifies and reconfirms on behalf of the Authority as follows: (1) the representations, warranties and covenants of the Authority contained in that certain Bond Purchase Agreement by and among the Authority, the City of Santa Clarita and Piper Jaffray & Co., as underwriter, dated , 2018 (the "Purchase Agreement") are true and correct and in all material respects as of the date hereof as if made on the date hereof, (2) the representations and warranties of the Authority contained in the Authority Documents are true and correct in all material respects as of the date hereof as if made on the date hereof, (3) the Authority has complied with all agreements and covenants, and satisfied all conditions, on its part to be complied with or satisfied under the Purchase Agreement and under the Authority Documents at or prior to the date hereof, (4) to the best knowledge of the Authority, no event affecting the Authority has occurred since the date of the Final Official Statement which either makes untrue or incorrect in any material respect as of the date hereof the statements or information relating to the Authority contained in the Final Official Statement or is not reflected in the Final Official Statement but should be reflected therein in order to make such statements and information therein not misleading in any material respect. Capitalized terms not defined herein have the same meaning as is set forth in the Purchase Agreement. Dated: 12018 SANTA CLARITA PUBLIC FINANCING AUTHORITY M. Title: EXHIBIT C SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) 2018 REVENUE BONDS 2018 TAXABLE REVENUE BONDS SERIES A SERIES B CITY CLOSING CERTIFICATE The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Santa Clarita (the "City"), and is authorized to execute this Certificate on behalf of the City in connection with the issuance of the bonds captioned above (the `Bonds"), and further hereby certifies and reconfirms on behalf of the City as follows: (1) the representations, warranties and covenants of the City contained in that certain Bond Purchase Agreement by and among the Authority, the City of Santa Clarita and Piper Jaffray & Co., as underwriter, dated 2018 (the "Purchase Agreement"), are true and correct and in all material respects as of the date hereof as if made on the date hereof, (2) the City has complied with all agreements and covenants, and satisfied all conditions, on its part to be complied with or satisfied under the Purchase Agreement and under the City Documents at or prior to the date hereof, (3) the information regarding the City and the District in the Official Statement is true and correct and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; (4) to the best knowledge of the City, no event affecting the City has occurred since the date of the Final Official Statement which either makes untrue or incorrect in any material respect as of the date hereof the statements or information relating to the City or the District contained in the Final Official Statement or is not reflected in the Final Official Statement but should be reflected therein in order to make such statements and information therein not misleading in any material respect; and Capitalized terms not defined herein have the same meaning as is set forth in the Purchase Agreement. Dated: 12018 CITY OF SANTA CLARITA Title: C-1 EXHIBIT D FORM OF ISSUE PRICE CERTIFICATE SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) REVENUE BONDS, SERIES A ISSUE PRICE CERTIFICATE [TO COME] D-1 1/29/18 APPENDIX D CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this "Disclosure Certificate"), dated March _, 2018, is executed and delivered by the City of Santa Clarita (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)(1) 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)(1) of the Rule and specified in Section 3(b) of this Disclosure Certificate. "Bonds" mean collectively, the $[Series A principal amount] Santa Clarita Public Financing Authority 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program), Series A, and the $[Series B principal amount] Santa Clarita Public Financing Authority 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program), Series B. "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 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 Information to the Disclosure Dissemination Agent. "Disclosure Dissemination Agent" shall mean Digital Assurance Certification LLC, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. 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 http://emma.msrb.org. "Notice Event" means any of the events enumerated in paragraph (b)(5)(1)(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 March 2018, 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 March 1, 2018, by and between the Issuer and the Trustee, as amended and supplemented, providing for the issuance of the Bonds. D-2 SECTION 2. Provision of Annual Reborts 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 31 following the end of each fiscal year, commencing with the report for Fiscal Year 2017- 18. 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)(11) with the MSRB, identifying the Notice Event as instructed by the City pursuant to Section 4(a) or 4(b)(11) (being any of the categories set forth below) when filing pursuant to Section 4(c) of this Disclosure Certificate: D-3 1. "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)(11) 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 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 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) An update for the last fiscal year of the financial information in "Tables , and (but only with respect to the most recently ended fiscal year), located in the Official Statement; and (ii) An update on debt service coverage with respect to the most recently ended fiscal year, which information may be presented similarly to "Table 16 — Estimated Debt Service Coverage for the Installment Payments" located in the Official Statement. (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; D-5 6. 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; 7. Modifications to rights of Bond holders, if material; 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). F. (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 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). (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. D-7 SECTION 9. Disclosure Dissemination Agent. Digital Assurance Certification LLC 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 mandamus 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, 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 but not the duty 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). 1 • The City has caused this Disclosure Certificate to be executed, on the date first written above. CITY OF SANTA CLARITA ME ACCEPTED AND AGREED TO: DIGITAL ASSURANCE CERTIFICATION LLC, as Disclosure Dissemination Agent By: Name: Title: Kenneth W. Striplin, Ed.D, City Manager 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: $[Series A principal amount] Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A, and $[Series B principal amount] Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B Date of Issuance: March , 2018 NOTICE IS HEREBY GIVEN that the City to the Redevelopment Agency of 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: 120 Digital Assurance Certification LLC, as Disclosure Dissemination Agent D-11 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 March 1, 2018 Relating to the SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) $[Series A principal amount] 2018 REVENUE BONDS, SERIES A and $[Series B principal amount] 2018 TAXABLE REVENUE BONDS, SERIES B 42580846.3 1/9/18 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY............................................................ 2 Section1.1. Definitions............................................................................................ 2 Section 1.2. Equal Security.................................................................................... 14 ARTICLE II THE BONDS................................................................................................. 15 Section 2.1. Authorization and Terms of Bonds .................................................... 15 Section 2.2. Form of Bonds................................................................................... 16 Section 2.3. Application of Proceeds of Sale of Bonds ......................................... 16 Section 2.4. Redemption of Bonds........................................................................ 16 Section 2.5. Execution of Bonds............................................................................ 18 Section 2.6. Transfer and Registration of Bonds ................................................... 19 Section 2.7. Exchange of Bonds............................................................................ 19 Section 2.8. Bond Registration Books................................................................... 19 Section 2.9. Mutilated, Destroyed, Stolen or Lost Bonds ...................................... 20 Section 2.10. Temporary Bonds............................................................................... 20 Section 2.11. Validity of Bonds............................................................................... 21 Section 2.12. Book -Entry System for Bonds........................................................... 21 ARTICLE III SECURITY; CREATION OF FUNDS......................................................... 22 Section 3.1. Pledge of Revenues; Assignment of Installment Payments; Performance Under Installment Purchase Agreement ....................... 22 Section 3.2. Fund; Receipt and Deposit of Revenues ............................................ 23 Section 3.3. Establishment and Maintenance of Funds for Use of Money in theRevenue Fund.............................................................................. 24 Section 3.4. Costs of Issuance Fund...................................................................... 25 Section 3.5. Acquisition Fund................................................................................ 25 ARTICLE IV COVENANTS OF THE AUTHORITY........................................................ 26 Section 4.1. Punctual Payment............................................................................... 26 Section 4.2. Legal Existence.................................................................................. 26 Section 4.3. Against Encumbrances....................................................................... 26 Section4.4. Tax Covenants................................................................................... 26 Section 4.5. Continuing Disclosure....................................................................... 29 Section 4.6. Further Assurances............................................................................. 30 ARTICLE V THE TRUSTEE............................................................................................. 30 Section5.1. The Trustee........................................................................................ 30 Section 5.2. Liability of Trustee............................................................................ 31 Section 5.3. Notice to Trustee................................................................................ 32 ARTICLE VI AMENDMENT OF THE INDENTURE....................................................... 32 Section 6.1. Procedure for Amendment of the Indenture ...................................... 32 Section 6.2. Disqualified Bonds............................................................................. 33 Section 6.3. Endorsement or Replacement of Bonds After Amendment .............. 34 42580846.3 -1- TABLE OF CONTENTS (continued) Page Section 6.4. Amendment by Mutual Consent........................................................ 34 Section 6.5. Opinion of Counsel............................................................................ 34 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF OWNERS ........................ 34 Section 7.1. Events of Default............................................................................... 34 Section7.2. Non-Waiver........................................................................................ 34 Section 7.3. Actions by Trustee as Attorney -in -Fact ............................................. 35 Section 7.4. Remedies Not Exclusive.................................................................... 35 ARTICLE VIII DEFEASANCE.............................................................................................. 35 Section 8.1. Discharge of Bonds............................................................................ 35 Section 8.2. Unclaimed Money.............................................................................. 36 ARTICLE IX MISCELLANEOUS...................................................................................... 37 Section 9.1. Liability of Authority Limited to Revenues and Other Funds ........... 41 Section 9.2. Benefits of Indenture Limited to Certain Parties ............................... 41 Section 9.3. Successor Is Deemed Included in All References to Predecessor........................................................................................ 41 Section 9.4. Execution of Documents by Owners ................................................. 41 Section 9.5. Waiver of Personal Liability.............................................................. 42 Section 9.6. Acquisition of Bonds by Authority .................................................... 42 Section 9.7. Content of Certificates and Reports ................................................... 42 Section 9.8. Investment of Money in Funds and Accounts ................................... 42 Section 9.9. Accounts and Funds........................................................................... 43 Section 9.10. Article and Section Headings, Gender and References ..................... 44 Section 9.11. Partial Invalidity................................................................................. 44 Section 9.12. Execution in Several Counterparts..................................................... 44 Section 9.13. Business Days.................................................................................... 44 Section 9.14. Governing Law.................................................................................. 44 Section9.15. Notices............................................................................................... 45 EXHIBIT A — FORM OF BONDS............................................................................................ A-1 EXHIBIT B — FORM OF REQUISITION................................................................................ B-1 42580846.3 -ii- INDENTURE This INDENTURE is made and entered into as of March 1, 2018 (the "Indenture"), by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and existing under and by virtue of 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 and by virtue of the laws of the United States of America, as Trustee (the "Trustee"); WITNESSETH: WHEREAS, the Authority is a joint exercise of 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 10, 2016 (the "Agreement"), by and among the City of Santa Clarita, California (the "City"), the City as successor agency to the Redevelopment Agency of the City of Santa Clarita, and the Santa Clarita Parking Authority, and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Law") and is authorized pursuant to Article 4 (commencing with Section 6584) of the Law to issue bonds for the purposes of financing and refinancing the acquisition and construction of public capital improvements; and WHEREAS, the City desires to finance the purchase of approximately 16,925 streetlight facilities located in the City from Southern California Edison, LED light retrofit program and certain improvements thereto (the "Project"); and WHEREAS, the Authority has determined to issue its (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A and (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B (collectively, the "Bonds") to finance the costs of the Project, and to secure the Bonds in the manner provided herein; and WHEREAS, the Bonds will be secured ratably and without preference from the Installment Payments (defined herein) to be paid by the City under an Installment Purchase Agreement (defined herein); and WHEREAS, such Installment Payments having been irrevocably assigned without recourse to the Trustee; and WHEREAS, the Authority hereby determines that all things necessary to cause the Bonds, when duly authenticated by the Trustee and issued as provided herein, to be legally valid special obligations of the Authority, enforceable in accordance with their terms, and to constitute this Indenture a valid agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery hereof and the execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the interest on and principal of and redemption premiums, if any, on all Bonds at any time issued and delivered hereunder according to their tenor, and to secure the observance and performance of all the agreements, conditions, covenants and terms therein and herein set forth, 42580846.3 1 and to declare the conditions and terms upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual agreements and covenants herein contained and of the purchase and acceptance of the Bonds by the respective registered owners thereof from time to time, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does hereby agree and covenant with the Trustee, for the benefit of the respective registered owners from time to time of the Bonds, as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of the Bonds and of any certificate, opinion, report, request or other document herein or therein mentioned have the meanings herein specified, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: Acauisition Fund "Acquisition Fund" means the fund by that name established pursuant to Section 3.5 hereof that is held by the Trustee. Agreement "Agreement" means the Joint Exercise of Powers Agreement relating to the Santa Clarita Public Financing Authority, dated as of July 9, 1991, as amended on May 10, 2016, by and among the City, the City as successor agency to the Redevelopment Agency of the City of Santa Clarita, and the Santa Clarita Parking Authority, as such Agreement may be amended or supplemented from time to time. Authority "Authority" means the Santa Clarita Public Financing Authority, a joint exercise of powers authority, duly organized and existing under and pursuant to the Law. Authorized Investments "Authorized Investments" means any of the following obligations which at the time of investment are legal investments of funds of the City under the laws of the State of California for the money proposed to be invested under this Indenture but only to the extent that investments relating to the Bonds are acquired at Fair Market Value (provided the Trustee may rely upon any investment direction from the Agency as a certification to it that such investment constitutes a Permitted Investment and the Trustee shall not be responsible to determine Fair Market Value): (a) Federal Securities; (b) Federal Housing Administration debentures; 42580846.3 2 (c) The following listed obligations government-sponsored agencies which are not backed by the full faith and credit of the United States of America: (i) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts), (ii) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and notes, (iii) Federal Home Loan Banks (FHL Banks) consolidated debt obligations, and (iv) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (d) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated "A-1+" or better by S&P and "Prime -1" by Moody's. (e) Deposits the aggregate amount of which are fully insure by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million. (f) Commercial paper (having original maturities of not more than 270 days) rated "A-1+" by S&P and "Prime -1" by Moody's. (g) Money market funds rated "Aam" by S&P, or better and if rated by Moody's rated "Aa2" or better; including such funds advised, managed, or sponsored by the Trustee or any of its affiliates. (h) "State Obligations," which means: (i) Direct general obligations of any state of the United States of America or any subdivision of agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at least "A-" by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated, (ii) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated "A-1" by S&P and "MIG - 1" by Moody's, and 42580846.3 3 (iii) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency described in (b) above and rated "AA-" or better by S&P and "Aa3" or better by Moody's; (i) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (i) the municipal obligations are (A) not subject to redemption prior to maturity or (B) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions, (ii) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations, (iii) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, inters, and premium, if any, due and to become due on the municipal obligations ("Verification Report"), (iv) the case of U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations (v) no substitution of a U.S. Treasury Obligation shall be permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification Report, and (vi) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent. 0) Repurchase agreements with: (i) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least "A-" by S&P and "A3" by Moody's; or (ii) any broker-dealer with "retail customers" or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the provider) of which has, long-term debt rated at least "A-" by S&P and "A3" by Moody's, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corporation, or (iii) any other entity rated at least "A-" by S&P and "A3" Moody's (each an "Eligible Provider"), provided that: 42580846.3 4 a) (1) permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FBLMC (no collateralized mortgage obligations shall be permitted for these providers), and (2) collateral levels must be at least 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMA's and 104% of the total principal when the collateral type is FNMA and FBLMC ("Eligible Collateral"), b) the trustee or a third party acting solely as agent therefore or for the issuer (the "Custodian") has possession of the collateral or the collateral has been transferred to the Custodian in accordance with applicable state and federal laws (other than by means of entries on the transferor's books) and such collateral shall be marked to market, c) the collateral shall be marked to market on a daily basis and the provider or Custodian shall send monthly reports to the Trustee and the Authority setting forth the type of collateral, the collateral percentage required for that collateral type, the market value of the collateral on the valuation date and the name of the Custodian holding the collateral, d) the repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Custodian has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof, e) the repurchase agreement shall provide that if during its term the provider's rating by either Moody's or S&P is withdrawn or suspended or falls below "A-" by S&P or "A3" by Moody's, as appropriate, the provider must, notify the Authority and the Trustee within five (5) days of receipt of such notice. Within ten (10) days of receipt of such notice, the provider shall either: (1) post Eligible Collateral, or (2) assign the agreement to an Eligible Provider. If the provider does not perform a remedy within ten (10) business days, the provider shall, at the direction of the trustee repurchase all collateral and terminate the repurchase agreement, with no penalty or premium to the issuer or the Trustee. (k) Investment agreements: with a domestic or foreign bank or corporation the long- term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, or the guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's (each an "Eligible Provider"); provided that: (i) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service (or, if the investment agreement is for the acquisition fund, acquisition draws) on the Bonds, (ii) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven (7) days' prior notice; the issuer and the Trustee hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid, (iii) the provider shall send monthly reports to the Trustee and the Authority setting forth the balance the Authority or Trustee has invested with the 42580846.3 5 provider and the amounts and dates of interest accrued and paid by the provider, (iv) the investment agreement shall state that is an unconditional and general obligation of the provider, and is not subordinated to any other obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated creditors, (v) the Authority and the Trustee shall receive an opinion of domestic counsel to the provider that such investment agreement is legal, valid, binding and enforceable against the provider in accordance with its terms, (vi) the Authority and the Trustee shall receive an opinion of foreign counsel to the provider (if applicable) that (i) the investment agreement has been duly authorized, executed and delivered by the provider and constitutes the legal, valid and binding obligation of the provider, enforceable against the provider in accordance with its terms, (ii) the choice of law of the state set forth in the investment agreement is valid under that country's laws and a court in such country would uphold such choice of law, and (iii) any judgment rendered by a court in the United States would be recognized and enforceable in such country; (vii) the investment agreement shall provide that if during its term: a) the provider's rating by either S&P or Moody's falls below "AA-" or "Aa3", the provider shall, at its option, within ten (10) days of receipt of publication of such downgrade, either (i) post Eligible Collateral with the Issuer, the trustee or a third party acting solely as agent therefore (the "Custodian") free and clear of any third party liens or claims, or (ii) assign the agreement to an Eligible Provider, or (iv) repay the principal of and accrued but unpaid interest on the investment, and b) the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below "A-" or "A3", the provide must, at the direction of the issuer or the trustee, within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the issuer or trustee, (viii) in the event the provider is required to collateralize, permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no collateralized mortgage obligations shall be permitted for these providers) and collateral levels must be 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMA's and 104% of the total principal when the collateral type is FNMA and FHLMC ("Eligible 42580846.3 6 RnndQ Collateral"). In addition, the collateral shall be marked to market on a daily basis and the provider or Custodian shall send monthly reports to the trustee and the issuer setting forth the type of collateral, the collateral percentage required for that collateral type, the market value of the collateral on the valuation date and the name of the Custodian holding the collateral; (ix) the investment agreement shall state and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provide under the terms of the investment agreement, at the time such collateral is delivered, that the Custodian has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof, and (x) the investment agreement must provide that if during its term: (i) the provided shall default in its payment obligations, the provider's obligations under the investment agreement shall, at the direction of the issuer of the trustee, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the issuer or trustee, as appropriate, and (ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("event of insolvency"), the provider's obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the issuer or trustee, as appropriate; (xi) the Local Agency Investment Fund of the State of California, 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; and (xii) In addition to the authority to invest funds in certificates of deposit set forth in subsection (e) above, an investment in non-negotiable certificates of deposit made in accordance with the following conditions is an authorized investment: (1) the financial institution selected by the Authority or the City arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the Authority; (2) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States of America or an instrumentality of the United States of America; (3) the financial institution selected by the Authority or the City acts as custodian for the Authority with respect to the certificates of deposit issued for the account of the Authority. "Bonds" means collectively, the Tax -Exempt Bonds and the Taxable Bonds. 42580846.3 7 Bond Year "Bond Year" means any twelve-month period commencing on September 2 in a year and ending on the next succeeding September 1, both dates inclusive; except that the first Bond Year shall commence on the Closing Date and end on September 1, 2018. Book -Entry Bonds "Book -Entry Bonds" means Bonds registered in the name of the Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of Section 2.12 hereof. Business Day "Business Day" means any day other than a Saturday, a Sunday or a day on which banks located in the city where the Corporate Trust Office is located, are required or authorized to remain closed. Certificate of the Authority "Certificate of the Authority" means an instrument in writing signed by the Chairman, the Vice Chairman, or any member of the Board of Directors of the Authority, or by any other officer of the Authority duly authorized by the Authority for that purpose, such authorization to be evidenced by a certificate verifying the specimen signatures of such officers at the request of the Trustee. City "City" means the City of Santa Clarita, California, a municipal corporation and general law city duly form and existing under the laws of the State of California. Closing Date. "Closing Date" means the date of initial delivery of the Bonds to the Original Purchaser. were "Code" means the Internal Revenue Code of 1986, as amended, and the regulations of the United States Department of the Treasury issued thereunder, and in this regard reference to any particular section of the Code shall include reference to all successors to such section of the Code. Comparable Treasury Issue "Comparable Treasury Issue" means, with respect to any redemption date for a particular Taxable Bond, the U.S. Treasury security or securities selected by the Designated Investment Banker that has an actual or interpolated maturity comparable to the remaining average life of the Taxable Bonds to be redeemed, and that would be utilized in accordance with customary 42580846.3 8 financial practice in pricing new issues of debt securities of comparable maturity to the remaining average life of such Taxable Bonds to be redeemed. Comparable Treasury Price "Comparable Treasury Price" means, with respect to any redemption date for a particular Taxable Bond, (i) the most recent yield data for the applicable U.S. Treasury maturity index from the Federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m. New York City time, on the Valuation Date; or (ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the average of five Reference Treasury Dealer Quotations for that redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or if the Designated Investment Banker obtains fewer than five Reference Treasury Dealer Quotations, the average of all such quotations. Continuing Disclosure Agreement "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement executed by the City with respect to the Bonds. Corporate Trust Office "Corporate Trust Office" means the corporate trust office of the Trustee, located 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 exchange, transfer, cancellation, payment, redemption and surrender of Bonds the corporate trust operations or agency office designated by the Trustee. Costs of Issuance "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Authority and related to the authorization, execution, sale and delivery of the Bonds, including but not limited to advertising and printing costs, costs of preparation and reproduction of documents, filing and recording fees, travel expenses and costs relating to rating agency meetings and other meetings concerning the Bonds, initial fees and charges of any Trustee, legal fees and charges, fees and disbursements of consultants, lawyers and other professionals, financial advisor fees and expenses, rating agency fees, fees and charges for preparation, execution, transportation and safekeeping of Bonds, surety, insurance and credit enhancement costs, and any other cost, charge or fee in connection with the- delivery of the Bonds. Costs of Issuance Fund "Costs of Issuance Fund" means the Fund established pursuant to Section 3.4 hereof. Depository "Depository" means the securities depository acting as Depository for the Bonds pursuant to Section 2.12 hereof. 42580846.3 9 Designated Investment Banker "Designated Investment Banker" means one of the Reference Treasury Dealers appointed by the City. DTC "DTC" means The Depository Trust Company, New York, New York, and its successors or assigns. DTC Representative "DTC Representative" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Book -Entry Bonds as a securities depository. Event of Default "Event of Default" means any event described as such in Section 7.1 hereof. Excess Investment Earnings "Excess Investment Earnings" means an amount required to be rebated to the United States of America under Section 148(f) of the Code due to investment of gross proceeds of the Bonds at a yield in excess of the yield on the Bonds. Fair Market Value "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 that is acquired 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) that is acquired 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) any commingled investment fund in which the Authority, the City and related parties do not own more than a ten percent (10%) beneficial interest if the return paid by the fund is without regard to the source of investment. Federal Securities "Federal Securities" means (a) any direct general 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 (other than an obligation subject to variation in 42580846.3 10 principal payment), for which the full faith and credit of the United States of America are pledged; and (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are backed by the full faith and credit of the United States of America. Indenture "Indenture" means this Indenture and any Supplemental Indentures. Independent Certified Public Accountant "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the Authority, and who, or each of whom: (1) is in fact independent and not under the domination of the Authority; (2) does not have any substantial interest, direct or indirect, with the Authority; and (3) is not connected with the Authority as a director, officer or employee of the Authority, but who may be regularly retained to make annual or other audits of the books of or reports to the Authority. Information Services "Information Services" means Electronic Municipal Market Access system (referred to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at www.emma.msrb.org; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other information services providing information with respect to called bonds as the Authority may designate in to the Trustee. Installment Payments "Installment Payments" means the installment payments due under the Installment Purchase Agreement. Installment Purchase Agreement "Installment Purchase Agreement" means the Installment Purchase Agreement, dated as of the date hereof, entered into by the City with the Authority and assigned by the Authority to secure the Bonds. Interest Fund "Interest Fund" means the fund by that name established pursuant to Section 3.3 hereof that is held by the Trustee. 42580846.3 11 Interest Payment Date "Interest Payment Date" means any March 1 or September 1, commencing September 1, 2018. Law "Law" means Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, as amended, and all laws amendatory thereof or supplemental thereto. Letter of Representations "Letter of Representations" means a letter of the Authority and the Trustee delivered to and accepted by the Depository at or prior to the issuance of any Book -Entry Bonds setting forth the basis on which the Depository serves `as depository for such Book -Entry Bonds, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute depository. Moody's "Moody's" means Moody's Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the services of a municipal securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized municipal securities rating agency selected by the Authority. Nominee "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.12 hereof. Official Statement "Official Statement" means the Official Statement of the Authority, dated March 2018, relating to the Bonds. Original Purchaser "Original Purchaser" means Piper Jaffray & Co., as the original purchaser of the Bonds. Outstanding "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 6.2 hereof) all Bonds issued and delivered hereunder except - (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; 42580846.3 12 (2) Bonds paid or deemed to have been paid within the meaning of Section 8.1 hereof, and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the Authority pursuant hereto. Owner "Owner" means the registered owner of any Outstanding Bond as per the registration books required to be maintained pursuant to Section 2.8 hereof. Principal Fund "Principal Fund" means the fund by that name, established pursuant to Section 3.3 hereof that is held by the Trustee. Principal Payment Date "Principal Payment Date" means any September 1 on which the principal of the Bonds is scheduled to be paid. Ratings Agency "Ratings Agency" means each of Moody's and S&P, or such other nationally recognized rating agency then rating the Bonds. Record Date "Record Date" means the close of business on the 15th day of the month preceding any Interest Payment Date, whether or not such day is a Business Day. Reference Treasury Dealer "Reference Treasury Dealer" means each of five firms, specified by the City from time to time, that are primary U.S. Government securities dealers in the City of New York (each, a "Primary Treasury Dealer"); provided, however, that if any of them ceases to be a Primary Treasury Dealer, City will substitute another Primary Treasury Dealer. Reference Treasury Dealer Quotations "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date for a particular Taxable Bond, the average, as determined by the Designated Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the City and the Trustee by such Reference Treasury Dealer at 3:30 p.m. (New York City time) on the Valuation Date. 42580846.3 13 Revenue Fund "Revenue Fund" means the fund by that name established pursuant to Section 3.2 hereof that is held by the Trustee. Revenues "Revenues" means all Installment Payments received or receivable by the Authority. Securities Depositories "Securities Depositories" means the Depository Trust Company, 55 Water Street, New York, New York 10041, Fax: (212) 855-1000 or 7320; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Written Request of the Authority delivered to the Trustee. "S&P" means S&P Global Ratings and its successors or assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a municipal securities rating agency, then the term "S&P" shall be deemed to refer to any other nationally recognized municipal securities rating agency selected by the Authority. Supplemental Indenture "Supplemental Indenture" means any indenture then in full force and effect which has been entered into by the Authority and the Trustee, amendatory of or supplemental hereto; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. Tax -Exempt Bonds "Tax -Exempt Bonds" means the Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A, authorized, executed and delivered hereunder. Taxable Bonds "Taxable Bonds" means the Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B, authorized, executed and delivered hereunder. Trustee "Trustee" means 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 of America, appointed by the Authority and acting as an independent trustee with the duties and powers 42580846.3 14 herein provided, and its successors or assigns, or any other corporation or association which may at any time be substituted in its place as provided in Section 5.1 hereof. Valuation Date "Valuation Date" means a date that is no earlier than forty-five (45) days prior to the redemption date. Written Request of the Authority "Written Request of the Authority" means an instrument in writing signed by the Chairman, the Vice -Chairman, or any member of the Board of Directors of the Authority or their designee, or by any other officer of the Authority duly authorized by the Authority for that purpose, such authorization to be evidenced at the request of the Trustee by a certificate verifying the specimen signatures of such officers. Section 1.2. 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 Trustee for the benefit of the owners from time to time of all the Bonds issued hereunder and then Outstanding to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed on behalf of the Authority shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds from time to time without preference, priority or distinction as to security or otherwise of any Bonds over any other Bonds. ARTICLE II THE BONDS Section 2.1. Authorization and Terms of Bonds. The Tax -Exempt Bonds in a principal amount of $[Series A principal amount] and the Taxable Bonds in a principal amount of $[Series B principal amount] are hereby authorized to be issued by the Authority subject to the terms hereof in order to finance the acquisition and installation of public capital improvements. The Tax -Exempt Bonds shall be designated the "Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A" and the Taxable Bonds shall be designated the "Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B." The Bonds shall be dated as of their date of delivery, shall bear interest (computed on the basis of a 360 -day year consisting of twelve 30 -day months) at the rates per annum (payable semiannually on March 1 and September 1 in each year, commencing on September 1, 2018) and shall mature and become payable on September 1 in each of the years in the principal amounts set forth in the following schedule: 42580846.3 15 Tax -Exempt Bonds Maturity Date Principal Interest (September 1) Amount Rate Taxable Bonds Maturity Date Principal Interest (September 1) Amount Rate The Bonds shall be issued as fully registered bonds in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). The Bonds shall be numbered sequentially. Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is during the period from and including the Record Date 42580846.3 16 next preceding an Interest Payment Date to and including such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless such date of registration is on or before the Record Date next preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, that if at the time of registration of any Bond interest is then in default on the Outstanding Bonds, such Bond shall bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment on the Outstanding Bonds. Payment of interest on the Bonds due on or before the maturity or prior redemption of the Bonds shall be made to the person whose name appears in the registration books maintained under Section 2.8 hereof as the Owner thereof as of the close of business on the Record Date next preceding each Interest Payment Date, such interest to be paid by check mailed by first class mail, postage prepaid, on each Interest Payment Date to such Owner at his address as it appears in the registration books maintained under such Section 2.8 hereof, or, upon written request received prior to the Record Date next preceding an Interest Payment Date of an Owner of at least one million dollars ($1,000,000) in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account within the continental United States of America designated by such Owner. The principal of and redemption premiums, if any, on the Bonds shall be payable upon the surrender thereof at maturity or the prior redemption thereof at the Corporate Trust Office of the Trustee. The interest on and principal of and redemption premiums, if any, on the Bonds shall be paid in lawful money of the United States of America. Section 2.2. Form of Bonds. The Bonds, the authentication and registration endorsement and the assignment to appear thereon shall be substantially in the forms attached hereto as Exhibit A, which is incorporated herein and made a part hereof, with necessary or appropriate variations, omissions and insertions as permitted or required hereby. Section 2.3. Application of Proceeds of Sale of Bonds. (a) Upon receipt of payment for the Tax -Exempt Bonds in the amount of $ (which amount is the par amount of the Tax -Exempt Bonds (i) plus/less net original issue premium/discount in the amount of $ , and (ii) less underwriter's discount in the amount of $ ), the Trustee shall set aside and deposit such proceeds, together with any other amounts received from the Authority or the City, in the manner described below: (i) The Trustee shall deposit in the Costs of Issuance Fund an amount equal to $ ; and (ii) The Trustee shall deposit in the Acquisition Fund an amount equal to (b) Upon receipt of payment for the Taxable Bonds in the amount of $ (which amount is the par amount of the Taxable Bonds (i) plus/less net original issue premium/discount in the amount of $ , and (ii) less underwriter's discount in the amount of $ ,) the Trustee shall set aside and deposit such 42580846.3 17 proceeds, together with any other amounts received from the Authority or the City, in the manner described below: (i) The Trustee shall deposit in the Costs of Issuance Fund an amount equal to $ ; and (ii) The Trustee shall deposit in the Acquisition Fund an amount equal to Section 2.4. Redemption of Bonds. (a) Optional Redemption. (i) Tax -Exempt Bonds. The Tax -Exempt Bonds maturing by their terms on or after September 1, 2028, are subject to optional redemption by the Authority on any date on or after September 1, 2027, to their respective stated maturity dates, as a whole or in part in such principal amounts and from such maturity dates as selected by the Authority, from funds derived by the Authority at the direction of the City from any lawful source and deposited with the Trustee not later than the date of redemption, upon mailed notice as provided in Section 2.4(c) hereof, at a redemption price equal to the principal amount of the Bonds or the portions thereof, together with interest accrued thereon to the date fixed for redemption without premium. (ii) [[Optional Redemption of Taxable Bonds at Make Whole Redemption Price Make and Hold. The Taxable Bonds may be redeemed, at the written direction of the Authority, in whole or in part in integral multiples of $5,000, on any Business Day, from funds provided by the Authority for such purpose, upon mailed notice as provided in Section 2.4(c) hereof, at the "Make -Whole Redemption Price" for such Taxable Bonds to be redeemed determined by the Designated Investment Banker equal to the greater of (i) the issue price as shown on the inside cover page of the Official Statement (but not less than 100% of the principal amount of the Taxable Bonds to be redeemed), or (ii) an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest on the Taxable Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Taxable Bonds are to be redeemed, discounted to the date on which such Taxable Bonds are to be redeemed on a semi-annual basis, assuming a 360 -day year consisting of twelve 30 -day months, at the "Treasury Rate" plus: (A) 10 basis points with respect to the Taxable Bonds maturing on September 1, 2018 through September 1, 20, inclusive; (B) 15 basis points with respect to the Taxable Bonds maturing on September 1, 20 through September 1, 20, inclusive and (C) 20 basis points with respect to the Taxable Bonds maturing on September 1, 20 and September 1, 20, plus accrued and unpaid interest on the Taxable Bonds to be redeemed on the redemption date.]] (b) Mandatory Sinking Fund Redemption. The Tax -Exempt Bonds maturing September 1, 20 (the "Tax -Exempt Term Bonds") are subject to mandatory redemption, in part by lot, on September 1 in each year shown below until maturity, from sinking account payments made by the Authority, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on the 42580846.3 18 respective dates as set forth in the following table; provided, however, that in lieu of redemption thereof, such Tax -Exempt Term Bonds may be purchased by the Authority and tendered to the Trustee. Tax -Exempt Term Bonds Redemption Date Principal Amount (September 1) To be Redeemed *Maturity. The Taxable Bonds maturing September 1, 20 (the "Taxable Term Bonds") are subject to mandatory redemption, in part by lot, on September 1 in each year shown below until maturity, from sinking account payments made by the Authority, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that in lieu of redemption thereof, such Taxable Term Bonds may be purchased by the Authority and tendered to the Trustee. Taxable Term Bonds Redemption Date Principal Amount (September 1) To be Redeemed *Maturity. If some but not all of the Term Bonds have been redeemed pursuant to optional redemption, 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 which shall include a revised sinking fund schedule filed by the Authority with the Trustee. (c) Terms of Redemption. Whenever less than all the Outstanding Bonds of a series maturing on any one date are called for redemption at any one time, the Trustee shall 42580846.3 19 select the Bonds to be redeemed (from the Outstanding Bonds of such series maturing on such date not previously selected for redemption) by lot in any manner which the Trustee deems fair. Except for the redemption of Bonds at maturity, the Authority shall, at least forty-five (45) days prior to the redemption date, notify the Trustee of the redemption date and the principal amount of Bonds to be redeemed. Notice of redemption of any Bonds or any portions thereof shall be mailed by first class mail, postage prepaid, by the Trustee not less than 30 days nor more than 60 days prior to the redemption date of such Bonds (i) to the respective Owners of the Bonds designated for redemption at their addresses appearing on the bond registration books kept by the Trustee, (ii) to the Information Services and (iii) to the Securities Depositories. Each notice of redemption shall state the date of such notice, the Bonds to be redeemed, the date of issue of such Bonds, the redemption date, the redemption price, whether funds are then on deposit sufficient to pay the redemption price, the place of redemption (including the name and appropriate address), the CUSIP number (if any) of the maturity or maturities, and, if less than all Bonds of any such maturity are to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on such redemption date there will become due and payable on each of such Bonds the redemption price thereof or of the specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the Corporate Trust Office of the Trustee specified in the redemption notice as the place of redemption; provided, that failure by the Trustee to give notice pursuant to this Section 2.4 to any one or more of the Information Services or Securities Depositories, or the insufficiency of any such notice or the failure of any Owner to receive any redemption notice mailed to such Owner or any immaterial defect in the notice so mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds. With respect to any notice of any optional redemption of Bonds, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of Section 8.1 hereof, such notice shall state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the redemption price of, and accrued interest on, the Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Authority shall not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption. Upon surrender of any Bond redeemed in part only, the Authority shall execute and the Trustee shall (upon receipt of a Written Request of the Authority) authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered and of the same maturity and like series. 42580846.3 20 From and after the date fixed for redemption of any Bonds or any portions thereof, if notice of such redemption shall have been duly given and funds available for the payment of such redemption price of the Bonds or such portions thereof so called for redemption shall have been duly provided, no additional interest shall accrue on such Bonds or such portions thereof from and after the redemption date specified in such notice. All Bonds redeemed or purchased in lieu of redemption pursuant to the provisions of this Section 2.4 shall be cancelled and destroyed by the Trustee in accordance with its retention policy then in effect and the Trustee shall deliver a certificate of destruction to the Authority. As provided in Section 7.1 of the Installment Purchase Agreement, the City may prepay their Installment Payments in accordance with this Section. The principal component of the Installment Payments to be prepaid shall correspond in amount, series and maturity date to the Bonds related to such Installment Purchase Agreement. Section 2.5. Execution of Bonds. The Chairman, the Vice -Chairman or the Executive Director of the Authority are hereby authorized and directed to execute each of the Bonds on behalf of the Authority and the Secretary of the Authority is hereby authorized and directed to attest each of the Bonds on behalf of the Authority and to impress or imprint by facsimile the official seal of the Authority, if any, thereon. Any of such signatures may be by manual subscription or by printed, lithographed or facsimile reproduction. In case any officer whose signature appears on the Bonds shall cease to be such officer before the delivery of the Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes the same as though he had remained in office until the delivery of such Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication, manually executed and dated by the Trustee, shall be entitled to any benefits hereunder or shall be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so registered have been duly issued and delivered hereunder and are entitled to the benefits hereof. Section 2.6. Transfer and Registration of Bonds. Any Bond may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.8 hereof by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the Corporate Trust Office of the Trustee accompanied by delivery of a duly executed written instrument of transfer in a form as provided by this Indenture. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall (upon receipt of a Written Request of the Authority) authenticate and deliver a new Bond or Bonds for a like aggregate principal amount, series and maturity date. 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 cost of any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the Authority. 42580846.3 21 The Trustee shall not be required to register the transfer of (i) any Bond during the fifteen (15) day period preceding any date established by the Trustee for selection of Bonds for redemption, (ii) any Bonds which have been selected for redemption (except for any unredeemed portion of any of such Bonds) or (iii) any Bonds during the period from any Record Date to any Interest Payment Date. Section 2.7. Exchange of Bonds. The Bonds may be exchanged at the Corporate Trust Office of the Trustee for a like aggregate principal amount of Bonds of the same series and maturity of other authorized denominations. 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 cost of any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the Authority. No such exchange shall be required to be made (i) during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption, (ii) of any Bonds which have been selected for redemption (except for any unredeemed portion of any of such Bonds) or (iii) of any Bonds during the period from any Record Date to any Interest Payment Date. Section 2.8. Bond Registration Books. The Trustee will keep, in accordance with its general practices and procedures in effect from time to time, at its Corporate Trust Office, sufficient books for the registration, transfer and exchange of the Bonds, which shall be open to inspection by the Authority during regular business hours upon reasonable prior written notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register, transfer or exchange the Bonds on such books as hereinbefore provided. The ownership of the Bonds and the series, amount, maturity, number and date of holding the same shall be proved by the registration books maintained under this Section. Section 2.9. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond shall become mutilated in respect of the body of such Bond, or shall be believed by the Authority to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Trustee, and upon the surrender of such mutilated Bond at the Corporate Trust Office of the Trustee, or upon the receipt of evidence satisfactory to the Trustee of such destruction, theft or loss, and upon receipt also of security or indemnity satisfactory to the Authority and the Trustee, and upon payment of a sum sufficient to cover any tax or governmental charge and all fees and expenses incurred by the Authority and the Trustee in the premises, the Authority shall execute and the Trustee shall (upon receipt of a Written Request of the Authority) authenticate and deliver at the Corporate Trust Office, a new Bond or Bonds of the same series, maturity date and of the same aggregate principal amount of authorized denominations, of like tenor and date, with such notations as the Authority shall determine, in exchange and substitution for and upon cancellation of the mutilated Bond, or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond shall have matured or shall have been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt by the Trustee and the Authority of like proof, security or indemnity and payment of any taxes, fees and expenses. 42580846.3 22 Any such replacement Bonds issued pursuant to this Section shall be entitled to equal and proportionate benefits with all other Bonds issued. hereunder, and the Authority and the Trustee shall not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. Section 2.10. Temporary Bonds. Until definitive Bonds shall be prepared, the Authority may cause to be executed and delivered in lieu of such definitive Bonds, and subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the Authority, one or more temporary typed, printed, lithographed or engraved Bonds in fully registered form, as may be authorized by the Authority, substantially of the same tenor and, until exchanged for definitive Bonds, entitled and subject to the same benefits and provisions hereof as definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without unnecessary delay and thereupon the temporary Bonds may be surrendered to the Trustee at the Corporate Trust Office, without expense to the Owner in exchange for such definitive Bonds. The costs of printing any definitive Bonds and any services rendered by the Trustee in connection with the authentication and delivery thereof shall be paid by the Authority. All temporary Bonds so surrendered shall be cancelled by the Trustee and shall not be reissued. Section 2.11. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any proceedings taken by the Authority, or the City for the financing or refinancing of the acquisition and installation of any additions, betterments, extensions or improvements to the Project, or by any contracts made by the Authority or the City in connection therewith, and shall not be dependent upon the completion of the financing or refinancing of the acquisition and installation of any additions, betterments, extensions or improvements to the Project or upon the performance by any person of his obligation with respect to the acquisition and installation of any additions, betterments, extensions or improvements to the Project, and the recitals contained in the Bonds that the same are issued pursuant to the Law or other applicable laws and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance. Section 2.12. Book -Entry System for Bonds. The Bonds shall be initially issued as Book -Entry Bonds, and each maturity of the Bonds shall be in the form of a separate single fully registered Bond (which may be typewritten), and upon initial issuance, the ownership of each such Bond shall be registered in the registration books maintained under Section 2.8 hereof in the name of the Nominee, as nominee of the Depository. With respect to Book -Entry Bonds, the Authority and the Trustee shall have no responsibility or obligation to any DTC Participant or to any person on behalf of which such a DTC Participant holds an interest in such Book -Entry Bonds. Without limiting the immediately preceding sentence, the Authority and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any DTC Participant with respect to the owners of beneficial interests in Book -Entry Bonds, (ii) the delivery to any DTC Participant or any other person, other than an Owner as shown in the registration books maintained under Section 2.8 hereof, of any notice with respect to Book -Entry Bonds, including 42580846.3 23 any notice of redemption, (iii) the selection by the Depository and its DTC Representative of the beneficial interests in Book -Entry Bonds to be redeemed in the event the Authority redeems any Book -Entry Bonds in part or (iv) the payment of any DTC Participant or any other person, other than an owner as shown in the registration books maintained under Section 2.8 hereof, of any amount with respect to the interest on or principal of or redemption premiums, if any, on Book - Entry Bonds. The Authority and the Trustee may treat and consider the person in whose name each Book -Entry Bond is registered in the registration books maintained under Section 2.8 hereof as the absolute Owner of such Book -Entry Bond for the purpose of payment of the interest on and the principal of and the redemption premium, if any, with respect to such Book - Entry Bond, for the purpose of giving notices of redemption and other matters with respect to such Book -Entry Bond, for the purpose of registering transfers with respect to such Book -Entry Bond and for all other purposes whatsoever. The Trustee shall pay the interest on and the principal of and the redemption premiums, if any, on the Book -Entry Bonds only to or upon the order of the respective Owners, as shown in the registration books maintained under Section 2.8 hereof, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to payment of the interest on and the principal of and the redemption premiums, if any, on the Book -Entry Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the registration books maintained under Section 2.8 hereof, shall receive a Bond evidencing the obligation of the Authority to make payments of the interest on and principal of and redemption premium, if any, on any Book -Entry Bond pursuant hereto. Upon delivery by the Depository to the Owner, 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 term Nominee herein shall refer to such new nominee of the Depository. In order to qualify the Book -Entry Bonds for the Depository's book -entry system, the Authority and the Trustee (upon receipt of a Written Request of the Authority) shall execute and deliver to the Depository a Letter of Representations with respect to such Bonds; provided, that the execution and delivery of a Letter of Representations shall not in any way impose upon the Authority or the Trustee any obligation whatsoever with respect to persons having beneficial interests in such Book -Entry Bonds other than the Owners, as shown in the registration books maintained under Section 2.8 hereof. In addition to the execution and delivery of a Letter of Representations, the Authority and the Trustee (upon receipt of a Written Request of the Authority) shall take such other actions, not inconsistent herewith, as are reasonably necessary to qualify Book -Entry Bonds for the Depository's book -entry program. In the event (i) the Depository determines not to continue to act as securities depository for any Book -Entry Bonds or (ii) the Depository shall no longer so act and gives written notice to the Trustee of such determination, then the Authority will discontinue the book -entry system for such Bonds with the Depository. If the Authority determines to replace the Depository with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate, fully registered Bond for each of the maturities of such Book -Entry Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee; provided, that if the Authority fails to identify another qualified securities depository to replace the Depository, then the Bonds shall no longer be restricted to being registered in the registration books maintained under Section 2.8 hereof in the name of the Nominee, but shall be 42580846.3 24 registered in whatever name or names Owners transferring or exchanging such Bonds shall designate, in accordance with provisions of Sections 2.6 and 2.7 hereof. Notwithstanding any other provision hereof to the contrary, so long as any Book -Entry Bond is registered in the name of the Nominee, all payments with respect to the interest on and the principal of and the redemption premium, if any, on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed in writing by the Depository. ARTICLE III SECURITY; CREATION OF FUNDS Section 3.1. Pledge of Revenues; Assignment of Installment Payments; Performance Under Installment Purchase Agreement. All the Revenues and all money in the Revenue Fund, the Interest Fund and the Principal Fund are hereby irrevocably pledged by the Authority to the punctual payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Revenues and such other money shall not be used for any other purpose while any of the Bonds remain Outstanding; subject to the provisions hereof permitting the application thereof for the purposes and on the conditions and terms set forth herein. This pledge shall constitute a first and exclusive lien on the Revenues and such other money for the payment of the Bonds in accordance with the terms hereof. As further security for the fulfillment by the Authority of its obligations hereunder, the Authority hereby irrevocably transfers, assigns and sets over to the Trustee without recourse all of the Installment Payments and any and all rights and privileges it has under the Installment Purchase Agreement, including, without limitation, the right to collect and receive directly all of the Installment Payments and the right to hold and enforce any security interest, subject only to the provisions of this Indenture and the Installment Purchase Agreement, but excluding the Authority's rights to indemnification and payment of fees and expenses by the City under Sections 4.2 and 10.11 of the Installment Purchase Agreement, in trust nonetheless and provided that if the Authority well and fully satisfies its obligations under the Bonds, then the interest of the Trustee in the Installment Purchase Agreement, including in all Installment Payments to be made thereunder, shall cease and be terminated, and all such interest shall revert to the Authority. Any Installment Payments collected or received by the Authority shall forthwith be paid by the Authority to the Trustee. Subject to the provisions hereof, the Trustee also shall take all steps, actions and proceedings required to be taken as provided in any opinion of nationally recognized bond counsel delivered to it necessary to maintain in force for the benefit of the Owners of the Bonds the Trustee's rights in and priority to the security granted to it for the payment of the Bonds including but not limited to: the Trustee's rights as assignee of the Installment Payments, interest and other income, and all other rights as assignee of the Installment Payments, interest and other income and all other rights to security for the Bonds which the Trustee may receive in the future. The Authority covenants and agrees with the Owners of the Bonds to perform all obligations and duties imposed on it under the Installment Purchase Agreement and, together with the Trustee (subject to the provisions hereof), to enforce such Installment Purchase Agreement against the other party thereto in accordance with its terms. The Authority will in all 42580846.3 25 respects promptly and faithfully keep, perform and comply with all the terms, provisions, covenants, conditions and agreements of the Installment Purchase Agreement to be kept, performed and complied with by it. The Authority agrees not to do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Installment Purchase Agreement. The Trustee shall promptly notify the City of any Installment Payments not received in full by the applicable Installment Payment Date. Section 3.2. Fund, Receipt and Deposit of Revenues. There is hereby established a special fund to be known as the "Revenue Fund," which fund shall be held by the Trustee. Beginning on the date the Bonds become Outstanding and continuing until no Bonds are Outstanding, the Trustee shall deposit all Installment Payments as and when received by it in the Revenue Fund and the Authority agrees and covenants that all Revenues deposited by it in the Revenue Fund will be accounted for through and held in trust in the Revenue Fund, and the Trustee shall have no beneficial right or interest in such Revenues, except only as provided herein, and all such Revenues shall be disbursed, allocated and applied solely to the uses and purposes herein set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Trustee. Section 3.3. Establishment and Maintenance of Funds for Use of Money in the Revenue Fund. Amounts in the Revenue Fund shall be transferred by the Trustee for deposit in the following respective funds (each of which is hereby created and each of which the Trustee hereby covenants and agrees to cause to be maintained) at the following times and in the following order of priority: (1) Interest Fund; and (2) Principal Fund. All Revenues shall be applied, used and withdrawn only for the purposes hereinafter authorized in this Section. In addition to the funds identified in this Section, the Trustee is hereby authorized to establish and create from time to time such other funds and accounts or subaccounts as may be necessary for the deposit of moneys (including without limitation, bond proceeds related to the purpose of refunding outstanding obligations of the Authority or City, insurance proceeds and/or condemnation awards) received by the Trustee pursuant to the terms hereof. (a) Interest Fund. The Trustee shall transfer from the Revenue Fund and deposit in the Interest Fund for receipt before March 1 and September 1 of each year (and on such other dates as provided in a Supplemental Indenture), beginning on September 1, 2018, an amount of money from the Revenue Fund which is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. No deposit need be made into the Interest Fund if the amount contained therein is at least equal to the amount of the interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. All money in the Interest Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Outstanding Bonds (including accrued interest on 42580846.3 26 any Bonds (or portions thereof) purchased or redeemed prior to maturity); provided that any earnings on deposit in the Interest Fund after payment of interest on Bonds on an Interest Payment Date shall be transferred to the Revenue Fund for credit to the next occurring Installment Payment. (b) Principal Fund. The Trustee shall deposit in the Principal Fund before September 1 of each year (and on such other dates as provided in a Supplemental Indenture) an amount of money from the Revenue Fund which, together with any money contained in the Principal Fund, is equal to the aggregate amount of the principal (including sinking fund payments) becoming due and payable on all Outstanding Bonds on such Principal Payment Date. No deposit need be made into the Principal Fund if the amount contained therein is at least equal to the aggregate amount of the principal of all Outstanding Bonds on such Principal Payment Date. All money in the Principal Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Outstanding Bonds as they shall become due and payable; provided that any earnings on deposit in the Principal Fund after payment of principal of the Bonds on a Principal Payment Date shall be transferred to the Revenue Fund. Section 3.4. Costs of Issuance Fund. There shall be established a fund with the Trustee to be known as the "Costs of Issuance Fund." Except as otherwise provided herein, moneys in the Costs of Issuance Fund shall be used solely for the payment of Costs of Issuance. The Trustee shall disburse moneys in the Costs of Issuance Fund from time to time to pay Costs of Issuance (or to reimburse the City for payment of Costs of Issuance) upon receipt by the Trustee of a Written Requisition of the City, substantially in the form attached hereto as Exhibit B, for the payment of Costs of Issuance. Upon receipt of each such Written Requisition of the City, the Trustee shall pay the amount set forth in such Written Requisition as directed by the terms thereof. Each such Written Requisition of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On June —, 2018, all amounts on deposit in the Costs of Issuance Fund shall be transferred to the City to be used for any lawful purpose, including the payment of unpaid Costs of Issuance, and the Costs of Issuance Fund shall be closed. Section 3.5. Acquisition Fund. There shall be established a fund with the Trustee to be known as the "Acquisition Fund." Except as otherwise provided herein, moneys in the Acquisition Fund shall be used solely for the payment of Acquisition Costs. The Trustee shall disburse moneys in the Acquisition Fund from time to time to pay Acquisition Costs (or to reimburse the City for payment of Acquisition Costs) upon receipt by the Trustee of a Written Requisition of the City, substantially in the form attached hereto as Exhibit B, for the payment of Acquisition Costs. Upon receipt of each such Written Requisition of the City, the Trustee shall pay the amount set forth in such Written Requisition as directed by the terms thereof. Each such Written Requisition of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon the filing with the Trustee of a Written Certificate of the City stating that the Project has been completed or that all Written Requisitions intended to be filed by the City have been filed, the Trustee shall withdraw all amounts then on deposit in the Acquisition Fund (other than the amount, if any, specified by the City in the Written Certificate to hold on deposit in the Acquisition Fund for payments of Acquisition Costs thereafter intended to be requisitioned by the City) and transfer such amounts to the Interest Fund. 42580846.3 27 ARTICLE IV COVENANTS OF THE AUTHORITY Section 4.1. Punctual Payment. The Authority will punctually pay the interest on and principal of and redemption premiums, if any, to become due with respect to the Bonds in strict conformity with the terms hereof and of the Bonds, and will faithfully satisfy, observe and perform all agreements, conditions, covenants and terms hereof and of the Bonds. Section 4.2. Legal Existence. The Authority will use all means legally available to maintain its existence so long as any of the Bonds are Outstanding. Section 4.3. Against Encumbrances. The Authority will not mortgage or otherwise encumber, pledge or place any charge upon any of the Revenues except as provided herein. Section 4.4. Tax Covenants. (a) Special Definitions. When used in this Section, the following terms have the following meanings: "Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds), and any replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Tax -Exempt Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Tax -Exempt Bonds are invested and that is not acquired to carry out the governmental purposes of the Tax -Exempt Bonds. "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. "Yield" of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations; and (ii) the Tax -Exempt Bonds has the meaning set forth in section 1.148-4 of the Tax Regulations. (b) Not to Cause Interest to Become Taxable. The Authority shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition or improvement of which is to be financed directly or indirectly with Gross Proceeds) 42580846.3 28 in a manner that if made or omitted, respectively, would cause the interest on any of the Tax - Exempt Bonds to become includable in the gross income, as defined in section 61 of the Code, 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 Tax -Exempt Bond, the Authority, as the case may be, shall comply with each of the specific covenants in this Section. (c) No Private Use or Private Payments. Except as would not cause any Tax - Exempt 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 shall at all times prior to the payment and cancellation of the last Tax -Exempt Bond to be paid and canceled: (i) use their best efforts to ensure that the City exclusively own, operate and possess all property the acquisition or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Tax -Exempt Bonds, and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (ii) not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Tax -Exempt Bonds or any property the acquisition or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of general application within the jurisdiction of the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except as would not cause any Tax -Exempt 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 shall not use Gross Proceeds of any Tax - Exempt Bond to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (a) property acquired or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (b) capacity in or service from such property is committed to such person or entity under a take -or -pay, output or similar contract or arrangement; or (c) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired 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 Tax -Exempt 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 Tax -Exempt 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 42580846.3 29 then held or previously disposed of, would materially exceed the Yield of such Tax -Exempt Bond within the meaning of said section 148. (f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, the Authority shall not take or omit to take any action that would cause any Tax -Exempt 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 shall timely file any information required by section 149(e) of the Code with respect to the Tax -Exempt Bonds with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Tax Regulations and rulings thereunder: a) The Authority shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Tax -Exempt Bond is discharged. However, to the extent permitted by law, the Authority may commingle Gross Proceeds of the Tax -Exempt Bonds with its other money, provided that the Authority, as the case may be, separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. b) Not less frequently than each Computation Date, the Authority shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and rulings thereunder. The 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 or determination or to review the Authority's calculations hereunder. The Authority shall maintain a copy of the calculation with its official transcript of proceedings relating to the issuance of the Tax -Exempt Bonds until six years after the final Computation Date. C) In order to assure the excludability of the interest on the Tax - Exempt Bonds from the gross income of the owners thereof for federal income tax purposes, the Authority, jointly and severally but without duplication, shall pay to the United States the amount that when added to the future value of previous rebate payments made for the Tax - Exempt 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 date. In all cases, such rebate payments shall be made by the Authority or the City at the times and in the amounts as are or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder for execution and filing by the Authority. 42580846.3 30 d) The Authority shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (i) and (ii) 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. Except to the extent permitted by 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 Tax -Exempt Bonds, enter into any transaction that reduces the amount required to be paid to the United States pursuant to paragraph (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield on the Tax -Exempt Bonds not been relevant to either party. 0) Tax -Exempt Bonds Not Hedge Bonds. a) The Authority and the City each represents that none of the Tax - Exempt Bonds are or will become "hedge bonds" within the meaning of section 149(g) of the Code. b) Without limitation of paragraph (i) above, with respect to the Tax - Exempt Bonds, either: (I) on the date of issuance of the Tax -Exempt Bonds, the Authority reasonably expected that at least 85% of the spendable proceeds of the Tax -Exempt Bonds would be expended within the three-year period commencing on such date of issuance, and (11) no more than 50% of the proceeds of the Tax -Exempt Bonds will be 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 Authorized Authority Representative hereby directs and authorizes any Authorized Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Authorized Authority Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Bonds, in the Tax Certificate relating to the Tax - Exempt Bonds or similar or other appropriate certificate, form or document. Section 4.5. Continuing Disclosure. Pursuant to Section 6.11 of the Installment Purchase Agreement, the City has undertaken all responsibility for compliance with continuing disclosure requirements, and the Authority shall have no liability to the Owners of the Bonds or any other person with respect to such disclosure matters. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default. However, any Participating Underwriter or any Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the City, including seeking mandate or specific performance by court order. 42580846.3 31 The Trustee hereby agrees to inform the City and the Authority within three (3) Business Days after obtaining knowledge that any of the events listed in Section 5(a) of the Continuing Disclosure Agreement relating to the Bonds has occurred or as soon as reasonably practicable thereafter, and in any event in sufficient time for the City to file a notice of such event within ten (10) Business Days after the occurrence of the event. Section 4.6. Further Assurances. The Authority will adopt, make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided herein. ARTICLE V THE TRUSTEE Section 5.1. The Trustee. The Bank of New York Mellon Trust Company, N.A. is hereby appointed Trustee hereunder for the purpose of receiving all money which the Authority is required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided herein. The Authority at any time may (prior to the occurrence of an Event of Default which shall then be continuing) remove the Trustee initially appointed and any successor thereto upon thirty (30) days written notice to the Trustee, and the Authority shall appoint a successor or successors thereto; provided, that any such successor shall be a bank or trust company doing business in California that has a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000) and is subject to supervision or examination by federal or state authority. If such bank or trust company 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 purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice to the Authority and by giving to the Owners notice of such resignation, which notice shall be mailed to the Owners at their addresses appearing in the registration books maintained under Section 2.8 hereof. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing; provided, that if no such successor shall have been appointed by the Authority within thirty (30) days after the receipt by the Authority of such notice, the Trustee may petition any court of competent jurisdiction to appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the appointment of and the acceptance of appointment by the successor Trustee. The Trustee is hereby authorized to pay or redeem the Bonds when duly presented for payment at maturity or on redemption prior to maturity. The Trustee shall destroy all Bonds in accordance with its then current retention policy upon payment thereof or upon the surrender thereof by the Authority and shall, upon receipt of a Written Request of the Authority, deliver a certificate of such destruction to the Authority; provided, that the Trustee may require the 42580846.3 32 Authority to pay all reasonable costs for copying the cancelled Bonds. The Trustee shall keep accurate records of all Bonds paid and discharged and destroyed by it. The Authority shall from time to time, subject to any agreement between the Authority and the Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including but not limited to advances to and fees and expenses of independent accountants, counsel (both in-house and outside) and engineers or other experts employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and save the Trustee and its officers, directors, officials, employees and agents harmless against any costs, expenses, losses and liabilities not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties hereunder. The Trustee's rights to indemnification and protection from liability hereunder and its rights to payment of its fees, charges and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. Section 5.2. Liability of Trustee. The recitals of facts, agreements and covenants contained herein and in the Bonds shall be taken as statements, agreements and covenants of the Authority, and the Trustee does not assume any responsibility for the correctness of the same, or make any representation as to the validity or sufficiency hereof or of the Bonds, the adequacy of any security afforded thereunder, or the correctness or completeness of any information contained in any offering materials distributed in connection with the sale of the Bonds, or incur any responsibility in respect of any of the foregoing, other than in connection with the duties or obligations herein or in the Bonds explicitly assigned to or imposed upon it. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it hereunder at the request or direction of any Owner pursuant hereto unless such Owner shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. Except during the continuance of an Event of Default, (a) the Trustee undertakes to perform such duties and only such duties as are specifically set forth herein and no implied covenants or obligations shall be read herein against the Trustee; and (b) in the absence of negligence or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements hereof, and shall be under no duty to make any investigation or inquiry into such matters. In case an Event of Default has occurred and is then continuing, the Trustee shall exercise such rights and powers vested in it hereby, and use the same degree of care and skill in their 42580846.3 33 exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. The Trustee in its individual or other capacity may become the owner or pledgee of the Bonds with the same rights it would have if it were not the Trustee. The Trustee shall not be deemed to have knowledge of any Event of Default (other than a payment default hereunder) until it has actual knowledge at its Corporate Trust Office that an Event of Default has occurred. The Trustee shall not be bound to ascertain or inquire as to the performance or observance by any other party of any of the agreements, conditions, covenants or terms hereof or of any of the documents executed in connection with the Bonds. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any duties hereunder. The Trustee may execute any of the trusts or powers hereof and perform the duties of it required hereunder by or through attorneys, accountants, agents or receivers, and may, in all cases, pay, and be reimbursed for, the reasonable fees and expenses thereof. Section 5.3. Notice to Trustee. The Trustee shall be protected in acting upon any notice, indenture, request, requisition, consent, order, certificate, report, bond 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 Trustee may. consult with counsel, who may be counsel to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted hereunder in good faith and in accordance therewith. Whenever in the administration of its duties hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by a Certificate of the Authority and the Trustee is under no obligation to independently investigate or verify such matter, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, but is not required to, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. ARTICLE VI AMENDMENT OF THE INDENTURE Section 6.1. Procedure for Amendment of the Indenture. Subject to Section 9.8, this Indenture and the rights and obligations of the Authority and of the Owners hereunder and any Installment Purchase Agreement and the rights and obligations of the City and Authority thereunder may be amended at any time by a Supplemental Indenture or Supplemental Agreement which shall become binding when the written consents of the Owners of a majority of the aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 6.2 hereof). No such amendment shall (1) extend the 42580846.3 34 maturity of or reduce the interest rate on, or otherwise alter or impair the obligation of the Authority to pay the interest or principal or redemption premium, if any, of any Bond or reduce the scheduled Installment Payments to come due, without the express written consent of the Owner of the affected Bond, or (2) permit the creation by the Authority of any mortgage, pledge or lien upon the Revenues superior to or on a parity with the pledge and lien created herein for the benefit of the Bonds, or (3) permit the creation by the city of any mortgage, pledge or lien upon the Streetlighting Revenues (as defined in the Installment Purchase Agreement) superior to or on a parity with the pledge and lien created by an Installment Purchase Agreement, or (4) reduce the percentage of Bonds required for the written consent to any such amendment, or (5) modify the rights or obligations of the Trustee without its prior written assent thereto. This Indenture and the rights and obligations of the Authority and of the Owners and any Installment Purchase Agreement and the rights and obligations of the City and the Authority thereunder may also be amended at any time by a Supplemental Indenture or Supplemental Agreement which shall become binding upon execution, but without the consent 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 and covenants of the Authority other agreements and covenants thereafter to be observed, or to surrender any right or power herein reserved to or conferred upon the Authority or the City; (b) To make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision, or in regard to questions arising hereunder or thereunder, as may deem necessary or desirable and not inconsistent herewith or therewith, and which shall not materially adversely affect the interests of the Owners of the Outstanding Bonds; (c) To modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds; (d) To maintain the exclusion under the Code of interest on the Tax -Exempt Bonds from gross income for federal income tax purposes; (e) To the extent necessary to maintain any then existing rating by S&P (if S&P is then rating the Bonds) or; (f) For any other purpose that does not materially adversely affect the interests of the Owners of the Outstanding Bonds. Section 6.2. Disqualified Bonds. Bonds owned or held by or for the account of the Authority shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided for herein, and shall not be entitled to consent to, or take any other action provided for herein. 42580846.3 35 Section 6.3. 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 may bear a notation, by endorsement in form approved by the Authority, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for the purpose at the Corporate 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 action shall be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at the Corporate Trust Office of the Trustee, without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds. The cost of any services rendered or expenses incurred by the Trustee in connection with any endorsement or replacement of Bonds shall be paid by the Authority. Section 6.4. Amendment by Mutual Consent. The provisions of this Article VI shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. Section 6.5. Opinion of Counsel. The Trustee may conclusively rely upon and accept an opinion of counsel to the Authority that an amendment hereof is in conformity with the provisions of this Article VI without independent investigation. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF OWNERS Section 7.1. Events of Default. If one or more of the following events (herein an "Event of Default") shall happen, that is to say: (a) If default shall be made in the due and punctual payment of the interest on any Bond or when and as the same shall become due and payable; or (b) If an Event of Default shall occur under the Installment Purchase Agreement; then, and in each and every such case during the continuance of such Event of Default, any Owner shall have the right for the equal benefit and protection of all Owners similarly situated: (i) By mandamus or other suit or proceeding at law or in equity to enforce his rights hereunder or; (ii) By suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Owners. Section 7.2. Non -Waiver. A waiver of -any default or breach of duty or contract by any Owner 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, and no delay or omission by 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 42580846.3 36 and remedy conferred upon the Owners by this Article VII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners. If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the Trustee, the Authority and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. Section 7.3. Actions by Trustee as Attorney -in -Fact. 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, and the Trustee is hereby appointed (and the successive respective Owners of the Bonds 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 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 Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact; provided, that the Trustee shall have no duty or obligation to enforce any right or remedy unless it has been indemnified by the Owners from any liability or expense including without limitation fees and expenses of its attorneys (both in-house and outside); and provided further, that notwithstanding any other provision contained herein, in determining whether the rights of the Owners will be adversely affected by any action taken pursuant hereto, the Trustee shall consider the effect on the Owners as if there were no Bond Insurance Policy on the Bonds. Section 7.4. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by law. ARTICLE VIII DEFEASANCE Section 8.1. Discharge of Bonds. If there shall be paid, to the Owners of all or a portion of the Outstanding Bonds the interest thereon and principal thereof and redemption premiums, if any, thereon at the times and in the manner stipulated therein and herein, then the owners of such Bonds shall cease to be entitled to the pledge of Revenues as provided herein, and all agreements, covenants and other obligations of the Authority to the Owners of such. Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which secure only such Bonds (or are properly allocable under the terms hereof to such Bonds to be defeased) which are not required for the payment of such interest, principal and redemption premiums, if any, on such Bonds. Any Outstanding Bonds for the payment of which money shall have been set aside to be held in trust by the Trustee for such payment at the maturity or redemption date thereof shall be 42580846.3 37 deemed, as of the date of such setting aside, to have been paid within the meaning and with the effect expressed in the first paragraph of this Section. Any Outstanding Bonds shall prior to the maturity date thereof be deemed to have been paid within the meaning and with the effect expressed in the first paragraph of this Section if (1) there shall have been deposited with the Trustee either money in an amount which shall be sufficient, or Federal Securities which are not subject to redemption prior to maturity the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be sufficient (as evidenced by a report of an Independent Certified Public Accountant obtained by the Authority and filed with the Trustee) to pay when due the interest due and to become due on such Bonds on and prior to the maturity date or redemption date thereof, and the principal of and redemption premiums, if any, on such Bonds on the maturity date or redemption date thereof, and (2) the Authority shall have given the Trustee a Written Request of the Authority containing irrevocable instructions to mail, as soon as practicable, a notice to the Owners of such Bonds that the deposit required by (1) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds; provided, that neither the Federal Securities nor any money deposited with the Trustee pursuant to this Section nor any interest or principal payments on any such Federal Securities shall be withdrawn or used for any purpose other than, and such Federal Securities shall be held in trust for, the payment of the interest on and principal of and redemption premiums, if any, on such Bonds as provided herein; and provided further, that any cash received from such interest or principal payments on such Federal Securities deposited with the Trustee, if not then needed for such purpose, shall, to the extent practicable, be reinvested as specified in a Written Request of the Authority in Federal Securities maturing at times and in amounts sufficient to pay when due the interest on and principal of and redemption premiums, if any, on such Bonds on and prior to such maturity date or redemption date thereof, and interest earned from such reinvestments shall be deposited in the Revenue Fund. As provided in Section 9.1 of the Installment Purchase Agreement, the Installment Purchase Agreement will be discharged to the extent the Bonds are discharged under this Section. The principal components of the Installment Payments to be discharged shall correspond in amount and maturity date to the Bonds related to such Installment Purchase Agreement. Section 8.2. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee for the payment and discharge of the interest on or principal of or redemption premiums, if any, on any of the Bonds (shall be held uninvested) and such money which remains unclaimed for two (2) years after the date when such payments have become due and payable, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such payments became 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 making of such payments; provided, that before being required to make any such payment to the Authority, the Trustee shall, upon receipt of a Written Request of the Authority, cause to be mailed to the 42580846.3 38 Owners of such Bonds (at the expense of the Authority) at their addresses as they appear in the registration books maintained under Section 2.8 hereof a notice that such money remains unclaimed and that, after a date named in such notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the Authority. Any such moneys will be held uninvested by the Trustee. ARTICLE IX MISCELLANEOUS Section 9.1. Liability of Authority Limited to Revenues and Other Funds. Notwithstanding anything contained herein, the Authority shall not be required to advance any money derived from any source of income other than the Revenues and the other funds as provided herein for the payment of the interest on or the principal of or the redemption premiums, if any, on the Bonds or for the observance or performance of any agreements, conditions, covenants or terms contained herein. The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof and redemption premiums, if any, thereon, exclusively from the Revenues and such other funds as provided hereunder, and the Authority is not obligated to pay them except from the Revenues and such other funds. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and the principal of and redemption premiums, if any, on the Bonds as provided herein. Neither the faith and credit nor the taxing power of the State of California or the City or any member of the Authority is pledged to the payment of the Bonds. The Bonds do not constitute a debt, liability or obligation of the State of California or any public agency thereof (other than the Authority) or any member of the Authority, and neither the governing board of the Authority nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Section 9.2. Benefits of Indenture Limited to Certain Parties. Nothing herein, expressed or implied, is intended to give to any person other than the Authority, the Trustee and the Owners any right, remedy or claim under or by reason hereof. Any agreements, conditions, covenants or terms hereof required to be observed or performed by and on behalf of the Authority or any director, officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 9.3. Successor Is Deemed Included in All References to Predecessor. Whenever herein either the Authority or any director, officer or employee thereof 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 or such director, officer or employee, and all the agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Authority or any director, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. 42580846.3 39 Section 9.4. Execution of Documents by Owners. Any request, declaration or other instrument which this Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Authority in good faith and in accordance therewith. Section 9.5. Waiver of Personal Liability. No director, officer or employee of the Authority shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds; but nothing contained herein shall relieve any director, officer or employee of the Authority from the performance of any official duty provided by law. Section 9.6. Acquisition of Bonds by Authority. All Bonds acquired by the Authority, whether by purchase or gift or otherwise, shall be surrendered promptly to the Trustee for cancellation. Section 9.7. Content of Certificates and Reports. Every certificate (other than a certificate of destruction of Bonds) or report with respect to compliance with an agreement, condition, covenant or term contained herein shall include (a) a statement that the person or persons making or giving such certificate or report have read such covenant or condition 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 report 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 representation by counsel, unless such officer knows that the certificate or opinion or representation 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 and information with respect to which is in the possession of the Authority, upon the opinion of or representation by an officer or officers of the Authority, unless such counsel knows 42580846.3 40 that the opinion or representation with respect to the matters upon which his opinion or representation may be based, as aforesaid, are erroneous, or in exercise of reasonable care should have known that the same were erroneous. Section 9.8. Investment of Money in Funds and Accounts. Unless otherwise directed by the Authority or the City, the Trustee is hereby directed to invest all money in the Costs of Issuance Fund, the Interest Fund or the Principal Fund in the Authorized Investments described in subparagraph (g) of the definition thereof. Upon receipt of a Written Request of the Authority or a Written Request of the City by the Trustee at least two (2) Business Days prior to the date of such investment, moneys in such Funds shall be invested by the Trustee in those Authorized Investments specified in such Written Request of the Authority. Such Written Request shall contain a statement that each investment so designated constitutes an Authorized Investment and can be made without violation of any provision hereof. The Trustee shall be entitled to rely on such Written Request without independent investigation and shall not be responsible or liable for any loss incurred in connection with any investment of funds made by it in accordance with the express provisions of this Indenture. If, at any time, the Trustee shall not receive such Written Request in a timely manner, the Trustee shall only acquire or invest in those Authorized Investments described in subparagraph (g) of the definition thereof. The Trustee shall not be responsible for monitoring the ratings of any Authorized Investment subsequent to its initial purchase; provided that if the Trustee has actual knowledge of a downgrading of the ratings on any Authorized Investment held hereunder then it shall notify the Authority in writing as soon as practicable. Any interest, income or profits from the deposits or investments of money in the funds and accounts hereunder shall be credited to such funds and accounts. For purposes of determining the amount on deposit in any fund or account held hereunder, all Authorized Investments or Federal Securities credited to such fund or account shall be valued at the market value thereof, and except as otherwise provided in this Section, Authorized Investments or Federal Securities representing an investment of money attributable to any account or fund and all investment profits or losses thereon shall be deemed at all times to be a part of such account or fund. Notwithstanding the foregoing, investment agreements shall be valued at the notional or face amount thereof. The Trustee is authorized to utilize computer pricing services including the valuation system utilized in its regular accounting system when valuing any fund or account held by it hereunder. The Trustee or an affiliate may act as principal or agent in the making or disposing of any Authorized Investment and shall be entitled to its customary fee therefore. If at any time there is no rating agency rating the Bonds, the provisions herein which make reference to rating categories of rating agencies "then rating the Bonds" shall be deemed to mean that at least one of such rating agencies shall have a rating as indicated in such provision. The Authority and the City (by its execution of the Agreement) acknowledges 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 Trustee will furnish the Authority and the City periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder. 42580846.3 41 Section 9.9. Accounts and Funds. Any account or fund required hereby to be established and maintained the Trustee may be established and maintained in the accounting records or the Trustee either as an account or fund, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or as a fund; but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with sound accounting practices and with due regard for the protection of the security of the Bonds and the rights of the Owners. Section 9.10. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders, and all references herein to "articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof, and the words "hereby," "herein," "hereto," "herewith," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular article, section, subdivision or clause hereof. Section 9.11. Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms or portions thereof provided herein to be observed or performed on the part of the Authority or of the Trustee should be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants, such term or terms or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements, conditions, covenants and terms or portions thereof and shall in no way affect the validity hereof or of the Bonds; but the Owners shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of law. The Authority hereby declares that it would have adopted this Indenture and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 9.12. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. Section 9.13. Business Days. When any action is provided for herein to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day that is not a Business Day, such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the specified period. Section 9.14. Governing Law. This Indenture shall be governed and construed in accordance with the laws of the State of California. 42580846.3 42 Section 9.15. Notices. Whenever any notice is required to be given hereunder, such notice shall be mailed, first class mail, postage prepaid, to the following parties at the following addresses: 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 Trustee: The Bank of New York Mellon Trust Company, N.A. 400 S. Hope Street, Suite 500 Los Angeles, California 90071 Attention: Corporate Trust Department Ref: Santa Clarita Public Financing Authority 42580846.3 43 IN WITNESS WHEREOF, the Santa Clarita Public Financing Authority has caused this Indenture to be signed in its name by its duly authorized officer, and The Bank of New York Mellon Trust Company, N.A., as Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written. ATTEST: IM Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY IM Chairperson THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee IM Authorized Officer 42580846.3 44 No. EXHIBIT A-1 FORM OF TAX-EXEMPT BONDS SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) 2018 REVENUE BOND SERIES A INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP September 1, 20 March _, 2018 Registered Owner: CEDE & CO. Principal Amount: DOLLARS The Santa Clarita Public Financing Authority, a joint exercise of powers authority, duly organized and existing under and pursuant to the laws of the State of California (the "Authority"), for value received hereby promises to pay (but only from the Revenues and other funds hereinafter referred to) to the registered owner specified above, or registered assigns, on the maturity date specified above, the principal amount specified above, together with interest thereon from the interest payment date next preceding the date of registration of this Tax -Exempt Bond (unless this Bond is registered during the period from and including the Record Date (as that term is defined in the Indenture hereinafter referred to, and herein a "Record Date") next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Tax -Exempt Bond is registered on or before the Record Date next preceding the first interest payment date, in which event it shall bear interest from the Dated Date specified above) until the principal hereof shall have been paid, at the rate of interest specified above, payable semiannually on March 1 and September 1 in each year, commencing on September 1, 2018. Both the interest hereon and principal hereof and redemption premium, if any, hereon are payable in lawful money of the United States of America. The interest hereon is payable by check mailed by first class mail, postage prepaid, on each interest payment date to the person in whose name this Tax -Exempt Bond is registered at the close of business on the Record Date next preceding the applicable interest payment date at such person's address as it appears on the registration books of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") kept at the Corporate Trust Office (as that term is defined in the Indenture) or upon written request of an owner received prior to the Record Date preceding an interest payment date of at least one million dollars ($1,000,000) in aggregate principal amount of Tax -Exempt Bonds, by wire transfer in immediately available funds to an account designated by such owner within the continental United States of America, and the principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the Corporate Trust Office of the Trustee. This Tax -Exempt Bond is one of a duly authorized issue of Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, 42580846.3 EXHIBIT A-1-1 Series A (the "Tax -Exempt Bonds"), limited in aggregate principal amount to $[Series A principal amount], all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions), all issued under the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California and all laws amendatory thereof or supplemental thereto (the "Bond Law"), and pursuant to the provisions of the Indenture, dated as of March 1, 2018, (the "Indenture"), by and between the Authority and the Trustee. Concurrently with the issuance of the Tax -Exempt Bonds, the Authority is also issuing the $[Series B principal amount] Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds"), issued under the Bond Law and pursuant to the Indenture. The Bonds are principally secured by Installment Payments (as defined in the Indenture) to be made by City (as defined in the Indenture) under the Installment Purchase Agreement (as defined in the Indenture). Under the Indenture, the Authority has assigned as security for the fulfillment of its obligations under the Indenture all of its rights to receive Installment Payments to the Trustee. All the Bonds are equally and ratably secured in accordance with the terms and conditions of the Indenture, and reference is hereby made to the Indenture, to any indentures supplemental thereto and to the Bond Law for a description of the terms on which the Bonds are issued, for the provisions with regard to the nature and extent of the security provided for the Bonds and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of the registered owners of the Bonds; and all the terms of the Indenture and the Bond Law are hereby incorporated herein and constitute a contract between the Authority and the registered owner from time to time of this Tax -Exempt Bond, and to all the provisions thereof the registered owner of this Tax -Exempt Bond, by his acceptance hereof, consents and agrees; and each registered owner hereof shall have recourse to all the provisions of the Bond Law and the Indenture and shall be bound by all the terms and conditions thereof. The Bonds are special obligations of the Authority and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Revenues (as that term is defined in the Indenture) and other funds as provided in the Indenture, and the Authority is not obligated to pay them except from the Revenues and such other funds. The Bonds are equally secured by a pledge of, and charge and lien upon, the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Neither the faith and credit nor the taxing power of the State of California or any public agency thereof or any member of the Authority is pledged to the payment of the Bonds. The Bonds do not constitute a debt, liability or obligation of the State of California or any public agency thereof (other than the Authority) or any member of the Authority, and neither the directors of the Authority nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. The Authority hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Indenture when due, there has been created and will be maintained by the Authority a special fund (the "Revenue Fund") into which all Revenues shall be deposited, and as an irrevocable 42580846.3 EXHIBIT A-1-2 charge the Authority has allocated the Revenues to the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Authority will pay promptly when due the interest on and principal of and redemption premium, if any, on this Tax -Exempt Bond and all other Bonds of this issue out of the Revenue Fund and such other funds, all in accordance with the terms and provisions set forth in the Indenture. The Tax -Exempt Bonds are subject to redemption as provided in the Indenture. As provided in the Indenture, notice of redemption of this Tax -Exempt Bond or any portion thereof shall be mailed by first class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof and to those information services and securities depositories required by the Indenture, but failure to receive such notice shall not affect the sufficiency of such proceedings for redemption. If notice of redemption has been duly given as aforesaid and money for payment of the above-described redemption price is held by the Trustee, then such Tax -Exempt Bonds or such portions thereof shall, on the redemption date designated in such notice, become due and payable at the above- described redemption price; and from and after the date so designated interest on such Tax - Exempt Bonds or such portions thereof so called for redemption shall cease to accrue and registered owners of such Tax -Exempt Bonds or such portions thereof shall have no rights in respect thereof except to receive payment of such redemption price thereof. If an event of default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture; except that the Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then outstanding. The Bonds are issuable only in the form of fully registered Bonds in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). The owner of any Bond or Bonds may surrender the same at the Corporate Trust Office of the Trustee, in exchange for an equal aggregate principal amount of Bonds of any other authorized denominations and of the same maturity date, in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture. This Tax -Exempt Bond is transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the Corporate Trust Office of the Trustee, by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Tax -Exempt Bond together with a written instrument of transfer in substantially the form attached hereto duly executed by the registered owner or his duly authorized attorney, and thereupon a new Tax - Exempt Bond or Tax -Exempt Bonds, in the same aggregate principal amount and of the same maturity date, shall be issued to the transferee in exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The Authority and the Trustee may deem and treat the person in whose name this Tax -Exempt Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. 42580846.3 EXHIBIT A-1-3 The rights and obligations of the Authority, the City and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture. Unless this Tax -Exempt Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Authority or its agent 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 DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), 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. This Tax -Exempt Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee upon receipt of a Written Request of the Authority. It is hereby certified that all of the acts, conditions and things required to exist, to have happened or to have been performed precedent to and in the issuance of this Tax -Exempt Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Tax -Exempt Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture. IN WITNESS WHEREOF, the Santa Clarita Public Financing Authority has caused this Tax -Exempt Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Chairperson and attested to by the manual or facsimile signature of its Secretary, and has caused this Tax -Exempt Bond to be dated as of the Dated Date specified above. SANTA CLARITA PUBLIC FINANCING AUTHORITY Chairperson Attest: Secretary 42580846.3 EXHIBIT A-1-4 [FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within -mentioned Indenture. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee LM Authorized Officer Dated: 42580846.3 EXHIBIT A-1-5 (FORM OF ASSIGNMENT) For value received the undersigned do(es) hereby sell, assign and transfer unto the within -mentioned registered Bond and hereby irrevocably constitutes and appoint(s) attorney to transfer the same on the books of the Trustee, with full power of substitution in the premises. Dated: SIGNATURE GUARANTEED BY: Note: The signatures to 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, and the signatures must be guaranteed by an eligible guarantor institution., Social Security Number, Taxpayer Identification Number or other Identifying Number of Assignee: Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Authority or its agent 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 DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), 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. 42580846.3 EXHIBIT A-1-6 EXHIBIT A-2 FORM OF TAXABLE BONDS No. $ SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION AND RETROFIT PROGRAM) 2018 TAXABLE REVENUE BOND SERIES B INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP September 1, 20 March _, 2018 Registered Owner: CEDE & CO. Principal Amount: DOLLARS The Santa Clarita Public Financing Authority, a joint exercise of powers authority, duly organized and existing under and pursuant to the laws of the State of California (the "Authority"), for value received hereby promises to pay (but only from the Revenues and other funds hereinafter referred to) to the registered owner specified above, or registered assigns, on the maturity date specified above, the principal amount specified above, together with interest thereon from the interest payment date next preceding the date of registration of this Taxable Bond (unless this Bond is registered during the period from and including the Record Date (as that term is defined in the Indenture hereinafter referred to, and herein a "Record Date") next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Taxable Bond is registered on or before the Record Date next preceding the first interest payment date, in which event it shall bear interest from the Dated Date specified above) until the principal hereof shall have been paid, at the rate of interest specified above, payable semiannually on March 1 and September 1 in each year, commencing on September 1, 2018. Both the interest hereon and principal hereof and redemption premium, if any, hereon are payable in lawful money of the United States of America. The interest hereon is payable by check mailed by first class mail, postage prepaid, on each interest payment date to the person in whose name this Taxable Bond is registered at the close of business on the Record Date next preceding the applicable interest payment date at such person's address as it appears on the registration books of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") kept at the Corporate Trust Office (as that term is defined in the Indenture) or upon written request of an owner received prior to the Record Date preceding an interest payment date of at least one million dollars ($1,000,000) in aggregate principal amount of Taxable Bonds, by wire transfer in immediately available funds to an account designated by such owner within the continental United States of America, and the principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the Corporate Trust Office of the Trustee. This Taxable Bond is one of a duly authorized issue of Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series 42580846.3 EXHIBIT A-2-1 B (the "Taxable Bonds"), limited in aggregate principal amount to $[Series A principal amount], all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions), all issued under the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California and all laws amendatory thereof or supplemental thereto (the "Bond Law"), and pursuant to the provisions of the Indenture, dated as of March 1, 2018, (the "Indenture"), by and between the Authority and the Trustee. Concurrently with the issuance of the Taxable Bonds, the Authority is also issuing the $[Series A principal amount] Santa Clarita Public Financing Authority (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A (the "Tax -Exempt Bonds," and together with the Taxable Bonds, the "Bonds"), issued under the Bond Law and pursuant to the Indenture. The Bonds are principally secured by Installment Payments (as defined in the Indenture) to be made by City (as defined in the Indenture) under the Installment Purchase Agreement (as defined in the Indenture). Under the Indenture, the Authority has assigned as security for the fulfillment of its obligations under the Indenture all of its rights to receive Installment Payments to the Trustee. All the Bonds are equally and ratably secured in accordance with the terms and conditions of the Indenture, and reference is hereby made to the Indenture, to any indentures supplemental thereto and to the Bond Law for a description of the terms on which the Bonds are issued, for the provisions with regard to the nature and extent of the security provided for the Bonds and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of the registered owners of the Bonds; and all the terms of the Indenture and the Bond Law are hereby incorporated herein and constitute a contract between the Authority and the registered owner from time to time of this Taxable Bond, and to all the provisions thereof the registered owner of this Taxable Bond, by his acceptance hereof, consents and agrees; and each registered owner hereof shall have recourse to all the provisions of the Bond Law and the Indenture and shall be bound by all the terms and conditions thereof. The Bonds are special obligations of the Authority and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Revenues (as that term is defined in the Indenture) and other funds as provided in the Indenture, and the Authority is not obligated to pay them except from the Revenues and such other funds. The Bonds are equally secured by a pledge of, and charge and lien upon, the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Neither the faith and credit nor the taxing power of the State of California or any public agency thereof or any member of the Authority is pledged to the payment of the Bonds. The Bonds do not constitute a debt, liability or obligation of the State of California or any public agency thereof (other than the Authority) or any member of the Authority, and neither the directors of the Authority nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. The Authority hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Indenture when due, there has been created and will be maintained by the Authority a special fund (the "Revenue Fund") into which all Revenues shall be deposited, and as an irrevocable charge the Authority has allocated the Revenues to the payment of the interest on and principal 42580846.3 EXHIBIT A-2-2 of and redemption premiums, if any, on the Bonds, and the Authority will pay promptly when due the interest on and principal of and redemption premium, if any, on this Taxable Bond and all other Bonds of this issue out of the Revenue Fund and such other funds, all in accordance with the terms and provisions set forth in the Indenture. The Taxable Bonds are subject to redemption as provided in the Indenture. As provided in the Indenture, notice of redemption of this Taxable Bond or any portion thereof shall be mailed by first class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof and to those information services and securities depositories required by the Indenture, but failure to receive such notice shall not affect the sufficiency of such proceedings for redemption. If notice of redemption has been duly given as aforesaid and money for payment of the above-described redemption price is held by the Trustee, then such Taxable Bonds or such portions thereof shall, on the redemption date designated in such notice, become due and payable at the above- described redemption price; and from and after the date so designated interest on such Taxable Bonds or such portions thereof so called for redemption shall cease to accrue and registered owners of such Taxable Bonds or such portions thereof shall have no rights in respect thereof except to receive payment of such redemption price thereof. If an event of default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture; except that the Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then outstanding. The Bonds are issuable only in the form of fully registered Bonds in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). The owner of any Bond or Bonds may surrender the same at the Corporate Trust Office of the Trustee, in exchange for an equal aggregate principal amount of Bonds of any other authorized denominations and of the same maturity date, in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture. This Taxable Bond is transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the Corporate Trust Office of the Trustee, by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Taxable Bond together with a written instrument of transfer in substantially the form attached hereto duly executed by the registered owner or his duly authorized attorney, and thereupon a new Taxable Bond or Taxable Bonds, in the same aggregate principal amount and of the same maturity date, shall be issued to the transferee in exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The Authority and the Trustee may deem and treat the person in whose name this Taxable Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. 42580846.3 EXHIBIT A-2-3 The rights and obligations of the Authority, the City and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture. Unless this Taxable Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Authority or its agent 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 DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), 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. This Taxable Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee upon receipt of a Written Request of the Authority. It is hereby certified that all of the acts, conditions and things required to exist, to have happened or to have been performed precedent to and in the issuance of this Taxable Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Taxable Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture. IN WITNESS WHEREOF, the Santa Clarita Public Financing Authority has caused this Taxable Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Chairperson and attested to by the manual or facsimile signature of its Secretary, and has caused this Taxable Bond to be dated as of the Dated Date specified above. SANTA CLARITA PUBLIC FINANCING AUTHORITY LIM Chairperson Attest: Secretary 42580846.3 EXHIBIT A-2-4 [FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within -mentioned Indenture. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee LM Authorized Officer Dated: 42580846.3 EXHIBIT A-2-5 (FORM OF ASSIGNMENT) For value received the undersigned do(es) hereby sell, assign and transfer unto the within -mentioned registered Bond and hereby irrevocably constitutes and appoint(s) attorney to transfer the same on the books of the Trustee, with full power of substitution in the premises. Dated: SIGNATURE GUARANTEED BY: Note: The signatures to 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, and the signatures must be guaranteed by an eligible guarantor institution., Social Security Number, Taxpayer Identification Number or other Identifying Number of Assignee: Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Authority or its agent 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 DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), 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. 42580846.3 EXHIBIT A-2-6 EXHIBIT B FORM OF [ACQUISITION FUND] [COSTS OF ISSUANCE FUND] REQUISITION [Trustee] Re: [Acquisition Fund ("Acquisition Fund")][Cost of Issuance Fund ("Cost of Issuance Fund")] held under an Indenture (the "Indenture") relating to the Santa Clarita Public Financing Authority (the "Authority") 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) (the "Bonds") The undersigned hereby states and certifies (i) That I am the duly qualified [Authorized Officer] of the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a public body, corporate and politic, duly organized and existing under the laws of the State of California (the "Authority"), and as such, is familiar with the facts herein certified and is authorized and qualified to execute and deliver this certificate; (ii) I have been authorized to execute this requisition pursuant to the Indenture, dated as of March 1, 2018 (the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee") for the Authority's 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) (the "Bonds"); and (iii) The Trustee is hereby directed to disburse this date from the [Acquisition Fund] [Costs of Issuance Fund] established pursuant to the Indenture to the payees, designated on Exhibit A attached hereto and by this reference incorporated herein, at the address set forth below such payee name, the respective sums set forth opposite such payees, in payment of the [Acquisition Costs][Costs of Issuance] related to the Bonds described on said Exhibit A; (iv) That each obligation shown on said Exhibit A has been properly incurred and is a proper charge against the [Acquisition Fund] [Costs of Issuance Fund]; (v) That no item to be paid pursuant to this Requisition has been previously paid or reimbursed from the [Acquisition Fund] [Costs of Issuance Fund]; and (vi) That capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Indenture. Date: SANTA CLARITA PUBLIC FINANCING AUTHORITY By: Authorized Officer 42580846.3 EXHIBIT B -I INSTALLMENT PURCHASE AGREEMENT by and between CITY OF SANTA CLARITA and SANTA CLARITA PUBLIC FINANCING AUTHORITY Dated as of March 1, 2018 relating to SANTA CLARITA PUBLIC FINANCING AUTHORITY (STREETLIGHTS ACQUISITION) $[Series A principal amount] 2018 REVENUE BONDS, SERIES A and $[Series B principal amount] 2018 TAXABLE REVENUE BONDS, SERIES B 42580845.5 1/30/18 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS................................................................................................. 1 Section1.1. Definitions............................................................................................ 1 ARTICLE II REPRESENTATIONS AND WARRANTIES ................................................ 8 Section 2.1. Representations by the City................................................................. 8 Section 2.2. Representations and Warranties by the Authority ............................... 9 ARTICLE III SALE AND PURCHASE OF THE PROJECT; ACQUISITION OF THEPROJECT................................................................................................ 9 Section 3.1. Sale and Purchase of the Project.......................................................... 9 Section3.2. Reserved............................................................................................... 9 Section 3.3. Acquisition of the Project.................................................................... 9 Section 3.4. Grant of Easements............................................................................ 10 Section 3.5. Appointment of City as Agent of Authority ...................................... 10 Section3.6. Title.................................................................................................... 10 ARTICLE IV INSTALLMENT PAYMENTS..................................................................... 10 Section 4.1. Purchase Price.................................................................................... 10 Section 4.2. Installment Payments and Additional Payments ................................ 10 ARTICLE V SECURITY.................................................................................................... 11 Section 5.1. Pledge of Streetlighting Revenues ..................................................... 11 Section 5.2. Allocation of Streetlighting Revenues ............................................... 12 Section 5.3. Additional Obligations....................................................................... 13 ARTICLE VI COVENANTS OF THE CITY...................................................................... 13 Section 6.1. Punctual Payment............................................................................... 13 Section 6.2. Legal Existence.................................................................................. 13 Section 6.3. Against Encumbrances....................................................................... 13 Section 6.4. Protection of Security and Rights of Owners .................................... 13 Section 6.5. Collection of Assessment Revenues .................................................. 14 Section 6.6. Reduction of Assessment Revenues .................................................. 14 Section 6.7. Covenants to Defend.......................................................................... 14 Section 6.8. Payment of Claims............................................................................. 14 Section 6.9. Books of Record and Accounts; Financial Statements ...................... 14 Section 6.10. Tax Covenants................................................................................... 15 Section 6.11. Continuing Disclosure....................................................................... 19 Section 6.12. Further Assurances............................................................................. 19 Section 6.13. Covenants Contained in the Indenture ............................................... 19 ARTICLE VII PREPAYMENT OF INSTALLMENT PAYMENTS ................................... 19 Section7.1. Prepayment........................................................................................ 19 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY......... 20 Section 8.1. Events of Default............................................................................... 20 42580845.5 1 TABLE OF CONTENTS (cont'd) Page Section8.2. Non-Waiver........................................................................................ 21 Section 8.3. Remedies Not Exclusive.................................................................... 21 ARTICLE IX DISCHARGE OF OBLIGATIONS............................................................... 21 Section 9.1. Discharge of Obligations................................................................... 21 ARTICLE X MISCELLANEOUS...................................................................................... 21 Section 10.1. Liability of City Limited to Streetlighting Revenues ........................ 21 Section 10.2. Successor Is Deemed Included in all References to Predecessor ...... 22 Section 10.3. Waiver of Personal Liability.............................................................. 22 Section 10.4. Article and Section Headings, Gender and References ..................... 22 Section 10.5. Partial Invalidity................................................................................. 22 Section 10.6. Assignment; Third Party Beneficiary ................................................ 22 Section 10.7. Net Contract....................................................................................... 23 Section 10.8. California Law................................................................................... 23 Section 10.9. Effective Date.................................................................................... 23 Section 10.10. Execution in Counterparts.................................................................. 23 Section 10.11. Indemnification of Authority............................................................. 23 Section 10.12. Amendments...................................................................................... 25 EXHIBIT A — SCHEDULE OF INSTALLMENT PAYMENTS ............................................. A-1 42580845.5 11 INSTALLMENT PURCHASE AGREEMENT This INSTALLMENT PURCHASE AGREEMENT, made and entered into as of March 1, 2018, by and between the CITY OF SANTA CLARITA, a municipal corporation and a charter city duly organized and existing under and by virtue of the laws of the State of California (the "City"), and the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency duly organized and existing under and by virtue of the laws of the State of California (the "Authority"). WITNESSETH: WHEREAS, the City desires to finance the purchase of approximately 16,925 streetlight facilities located in the City from Southern California Edison, LED lighting retrofit program and certain improvements related thereto (the "Project"); and WHEREAS, the Authority has agreed to assist the City in financing the Project by the issuance of its $[Series A principal amount] (Streetlights Acquisition and Retrofit Program) 2018 Revenue Bonds, Series A (the "Authority Tax -Exempt Bonds") and its $[Series B Principal Amount] (Streetlights Acquisition and Retrofit Program) 2018 Taxable Revenue Bonds, Series B (the "Authority Taxable Bonds," and together with the Authority Tax -Exempt Bonds, the "Authority Bonds") to be secured by the Installment Payments payable by the City to the Authority as provided herein; WHEREAS, the Authority will assign its right to receive the Installment Payments hereunder to The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") under that certain Indenture, dated as of March 1, 2018, by and between the Authority and the Trustee; 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 delivery of this Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Installment Purchase Agreement; NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: ARTICLE I DEFINITIONS Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Unless the context otherwise requires, all capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Indenture. 42580845.5 1 Act The term "Act" means the Landscaping and Lighting Act of 1972, being Sections 22500 et seq. of the California Streets and Highways Code. Acquisition The term "Acquisition" means, with respect to any part of the Project, the acquisition, installation, improvement, equipping, renovation or remodeling thereof. Ad Valorem Revenues The term "Ad Valorem Revenues" means, to the extent permitted by law, the ad valorem streetlighting tax revenues derived from the Streetlighting Maintenance District No. 2 formed by the County of Los Angeles pursuant to the Improvement Act of 1911, and deposited into the City accounting fund 354 or other such successor fund. Additional Obligation Payments The term "Additional Obligation Payments" means the payments scheduled to be paid by the City under and pursuant to the Additional Obligations, which payments are secured by a pledge of Streetlighting Revenues on a parity with the Installment Payments as provided herein. Additional Obligations The term "Additional Obligations" means all obligations of the City authorized and executed by the City, other than the Installment Payments, which are secured by a pledge of the Streetlighting Revenues on a parity with the Installment Payments as provided herein, including but not limited to any Repayment Obligations secured by Streetlighting Revenues on a parity with the Installment Payments. Additional Payments The term "Additional Payments" means the administrative fees and payments referenced in Section 4.2 hereof. Acquisition Costs The term "Acquisition Costs" means, with respect to any part of the Project, all costs of the Acquisition thereof which are paid from moneys on deposit in the Acquisition Fund, including but not limited to: a) all costs required to be paid to any person under the terms of any agreement for or relating to the Acquisition of the Project; b) obligations incurred for labor and materials in connection with the Acquisition of the Project; 42580845.5 2 c) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect in connection with the Acquisition of the Project; d) all costs of engineering and architectural services, including the actual out-of- pocket costs for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising installation, as well as for the performance of all other duties required by or consequent to the proper Acquisition of the Project; e) any sums required to reimburse the Authority or the City for advances made for any of the above items or for any other costs incurred and for work done which are properly chargeable to the Acquisition of the Project; and f) all financing costs incurred in connection with the Acquisition of the Project, including but not limited to Costs of Issuance and Acquisition of other costs incurred in connection with this Agreement and the financing of the Project. Agreement The term "Agreement" means this Installment Purchase Agreement, by and between the City and the Authority, dated as of the date hereof, as originally executed and as it may from time to time be amended or supplemented in accordance herewith. Annual Debt Service The term "Annual Debt Service" means, for any Fiscal Year, the sum of (1) the Installment Payments due during such Fiscal Year plus (2) the interest accruing on all Additional Obligations during such Fiscal Year, assuming that all Additional Obligations are retired as scheduled, plus (3) the principal amount (including principal due as sinking fund installment payments) allocable to all Additional Obligations in such Fiscal Year, calculated as if such principal amounts were deemed to accrue daily during such Fiscal Year in equal amounts from, in each case, each payment date for principal or the date of delivery of such Additional Obligations (provided that principal shall not be deemed to accrue for greater than a 365 -day period prior to any payment date), as the case may be, to the next succeeding payment date for principal, provided, that the following adjustments shall be made to the foregoing amounts in the calculation of Annual Debt Service: (A) with respect to any such Additional Obligation bearing or comprising interest at other than a fixed interest rate, the rate of interest used to calculate Annual Debt Service shall be (i) with respect to such Additional Obligation then outstanding, one hundred ten percent (110%) of the greater of (1) the daily average interest rate on such Additional Obligation during the twelve (12) calendar months next preceding the date of such calculation (or the portion of the then current Fiscal Year that such Additional Obligation has borne interest) or (2) the most recent effective interest rate on such Additional Obligation prior to the date of such calculation or (ii) with respect to such Additional Obligation then proposed to be issued, the then current 20 - Bond GO Index rate as published in The Bond Buyer (or if The Bond Buyer or such index is no longer published, such other published similar index); 42580845.5 3 (B) with respect to any such Additional Obligation having twenty-five percent (25%) or more of the aggregate principal amount thereof due in any one Fiscal Year, Annual Debt Service shall be calculated for the Fiscal Year of determination as if the interest on and principal of such Additional Obligation were being paid from the date of incurrence thereof in substantially equal annual amounts over a period of twenty (20) years from the date of such Additional Obligation provided, however that the full amount of such Additional Obligation shall be included in Annual Debt Service if the date of calculation is within 24 months of the actual maturity of the payment; (C) with respect to any such Additional Obligation or portions thereof bearing no interest but which are sold at a discount and which discount accretes with respect to such Additional Obligation or portions thereof, such accreted discount shall be treated as due when scheduled to be paid; (D) Annual Debt Service shall not include interest on Additional Obligation which is to be paid from amounts constituting capitalized interest; (E) if an interest rate swap agreement is in effect with respect to, and is payable on a parity with, any Additional Obligation to which it relates, no amounts payable under such interest rate swap in excess of debt service payable under such Additional Obligation agreement shall be included in the calculation of Annual Debt Service unless the sum of (i) the interest payable on such Additional Obligation, plus (ii) the amounts payable by the City under such interest rate swap agreement, less (iii) the amounts receivable by the City under such interest rate swap agreement, are greater than the interest payable on such Additional Obligation, in which case the amount of such payments to be made that exceed the interest to be paid on such Additional Obligation shall be included in such calculation, and for this purpose, the variable amount under any such interest rate swap agreement shall be determined in accordance with the procedure set forth in subparagraph (A) of this definition; and (F) Repayment Obligations proposed to be entered into as Additional Obligation shall be deemed to be payable at the scheduled amount due under such Repayment Obligation as calculated under this definition. Assessment Revenues The term "Assessment Revenues" means (a) the proceeds of the Assessments received by the City, (b) income and gains with respect to the investment of amounts on deposit in the funds and accounts established hereunder for the Authority Bonds, and (c) proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Assessments. Notwithstanding the foregoing, "Assessment Revenues" does not include any penalties or interest in excess of the interest payable on the Authority Bonds collected in connection with delinquent Assessments. Assessments The term "Assessments" means the Streetlighting Levy A and Levy B assessments levied within the District pursuant to the Act and deposited into the City accounting fund 359 or such other successor fund. 42580845.5 4 Authority The term "Authority" means the Santa Clarita Public Financing Authority, a joint exercise of powers agency duly organized and existing under and by virtue of the laws of the State of California. Authoritv Bonds The term "Authority Bonds" means the Santa Clarita Public Financing Authority 2018 Assessment Revenue Bonds (Streetlights Acquisition) issued by the Authority, and at any time Outstanding pursuant to the Indenture. Authorized Authority Representative "Authorized Authority Representative" means any member of the Board of Directors of the Authority, the Executive Director or the Treasurer of the Authority, and any other person authorized by the Board of Directors of the Authority or either of the Executive Director or the Treasurer of the Authority to act on behalf of the Authority under or with respect to this Agreement. Authoritv Bonds "Authorized City Representative" means the Mayor, the City Manager or the Director of Administrative Services of the City or any authorized deputy or designee thereof, and any other Person authorized by the City Council of the City or by any of Mayor, the City Manager or the Director of Administrative Services of the City to act on behalf of the City under or with respect to this Agreement. Business Day The term "Business Day" means any day other than a Saturday, a Sunday or a day on which banks located in the city where the Corporate Trust Office is located, are required or authorized to remain closed. Certificate of the Cit The term "Certificate of the City" means an instrument in writing signed by the chief executive officer or chief financial officer of the City, or by any other officer of the City duly authorized by the City for that purpose, such authorization to be evidenced by a certificate verifying the specimen signatures of such officers at the request of the Trustee. City The term "City" means the City of Santa Clarita, California, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California. 42580845.5 5 •0: The term "Code" means the Internal Revenue Code of 1986, as amended, and the regulations of the United States Department of the Treasury issued thereunder, and in this regard reference to any particular section of the Code shall include reference to all successors to such section of the Code. Continuing Disclosure Agreement The term "Continuing Disclosure Agreement" means any Continuing Disclosure Agreement executed by the City with respect to the Authority Bonds. District The term "District" means the area within the City designated "Santa Clarita Landscaping and Lighting Maintenance District" formed by the City under the Act. Event of Default The term "Event of Default" means an event described in Section 8.1 hereof. Fiscal Year The term "Fiscal Year" means the period beginning on July 1 of each year and ending on the last day of June of the next succeeding year, or any other twelve-month period selected and designated as the official Fiscal Year of the City. Generally Accepted Accounting Principles The term "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. Indenture The term "Indenture" means the Indenture, dated as of March 1, 2018, by and between the Authority and the Trustee, as it may from time to time be amended or supplemented in accordance with its terms. Indebendent Certified Public Accountant The term "Independent Certified Public Accountant" means any firm of certified public accountants appointed by the City; which is (1) independent of the City and the Authority pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants; (2) does not have any substantial interest, direct or indirect, with the Authority and the City; and (3) is not connected with the Authority or the City as a director, 42580845.5 6 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. Installment Payment Date The term "Installment Payment Date" means the fifteenth day of the month prior to each related Interest Payment Date, or if said date is not a Business Day, then the preceding Business Day. Installment Payments The term "Installment Payments" means the Installment Payments of interest and principal scheduled to be paid by the City under and pursuant hereto as provided in Exhibit B hereto. Interest Payment Date The term "Interest Payment Date" means the payment dates of the Authority Bonds identified in the Indenture. Maximum Annual Debt Service The term "Maximum Annual Debt Service" means, as of any date of calculation, the largest Annual Debt Service during the period from the date of such calculation through the final Installment Payment Date or final maturity date of all Additional Obligations, whichever is later. Participating Underwriter The term "Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Agreement. Pro, ect The term "Project" means the streetlight facilities located in the City acquired by the City from Southern California Edison, the LED lighting retrofit program and any related improvements thereto. Purchase Price The term "Purchase Price" means the principal amount plus interest thereon owed by the City to the Authority under the terms hereof as provided in Section 4.1. Repayment Obligation "Repayment Obligation" means the reimbursement obligation or any other payment obligation of the City under a written agreement between the City and a credit provider to reimburse the credit provider for amounts paid pursuant to a credit facility for the payment of the principal amount or purchase price of and/or interest on the Authority Bonds or any Additional Obligation. 42580845.5 7 Streetlighting Revenue Fund The term "Streetlighting Revenue Fund" means the fund established under Section 5.2 hereof by the City and held by the Trustee of the Authority Bonds. Streetlighting Revenues The term "Streetlighting Revenues" means the Assessments and the Ad Valorem Revenues. Subordinate Obligations The term "Subordinate Obligations" means the obligations of the City secured by or payable from Streetlighting Revenues that are subordinate in payment to the Installment Payments. Supplemental Agreement The term "Supplemental Agreement" means any agreement then in full force and effect which has been entered into by the City and the Authority, amendatory of or supplemental hereto; but only if and to the extent that such Supplemental Agreement is specifically authorized hereunder. Trustee The term "Trustee" means The Bank of New York Mellon Trust Company, N.A., acting in its capacity as Trustee under and pursuant to the Indenture, and its successors and assigns. Written Request of the City "Written Request of the City" means an instrument in writing signed by the City Manager or Director of Administrative Services of the City or duly authorized by the City for that purpose. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations by the City. The City makes the following representations: (a) The City is a municipal corporation and charter city duly organized and existing under and pursuant to the Constitution and the laws of the State of California. The City has full legal right, power and authority to enter into this Agreement and carry out its obligations hereunder, and to carry out and consummate all transactions contemplated by this Agreement. By proper action, the City has duly authorized the execution, delivery and due performance of this Agreement. 42580845.5 8 (b) The City will not take or permit any action to be taken which results in the interest paid for the installment purchase of the Project under the terms of this Agreement being included in the gross income of the Authority or its assigns for purposes of federal or State of California income taxation. (c) The City has reviewed the Indenture and accepts its terms. Section 2.2. Representations and Warranties by the Authority. The Authority represents and warrants that the Authority is a joint exercise of powers agency duly organized and in good standing under the laws of the State of California, has full legal right, power and authority to enter into this Agreement and to carry out and consummate all transactions contemplated by this Agreement and by proper action has duty authorized the execution, delivery and due performance of this Agreement. ARTICLE III SALE AND PURCHASE OF THE PROJECT; ACQUISITION OF THE PROJECT Section 3.1. Sale and Purchase of Project. As consideration for the issuance of the Authority Bonds, the City hereby agrees to sell, and the Authority hereby agrees to purchase, the Project. Simultaneously therewith, as consideration for the Purchaser's agreement to make Installment Payments in accordance with Section 4.2 hereof, the Authority hereby agrees to sell, and the City hereby agrees to purchase, the Project. Section 3.2. Reserved. Section 3.3. Acquisition of the Project. The Authority hereby agrees with due diligence to supervise and provide for, or cause to be supervised and provided, for the Acquisition of the Project in accordance with plans and specifications, installation contracts and other documents relating thereto and approved by the City pursuant to all applicable requirements of law. Direct payment of the Acquisition Costs shall be made from amounts on deposit in the Acquisition Fund, pursuant to Section 3.5 of the Indenture. All contracts for, and all work relating to, the Acquisition of the Project shall be subject to all applicable provisions of law relating to the acquisition of public works by the City. The Authority expects that the Acquisition of the Project will be completed on or before three years from the date of issuance of the Authority Bonds; provided, however, that the failure to complete the Acquisition of the Project by the estimated completion date thereof shall not constitute an Event of Default hereunder or a grounds for termination hereof, nor shall such failure result in the diminution, abatement or extinguishment of the obligations of the City hereunder to pay the Installment Payments. Upon the completion of the Acquisition of the Project, but in any event not later than thirty (30) days following such completion, the City shall execute and deliver to the Authority and the Trustee a Written Request which (a) states that the Acquisition of such Project have been substantially completed, (b) identifies the total Acquisition Costs thereof, and (c) identifies (i) the amounts, if any, to remain on deposit in the Acquisition Fund for payment of Acquisition Costs thereafter intended to be requisitioned by the Authority and (ii) the amounts to be transferred to the Interest Fund. 42580845.5 9 Section 3.4. Grant of Easements. The City hereby grants to the Authority all necessary easements, rights of way and rights of access in and to all real property or interests therein now or hereafter acquired and owned by the City, as may be necessary or convenient to enable the Authority to acquire and install the Project thereon or thereabouts. The City covenants that it will execute, deliver and record any and all additional documents as may be required to be executed, delivered and recorded to establish such easements, rights of way and rights of access. Section 3.5. Appointment of City as Agent of Authority. The Authority hereby appoints the City as its agent to carry out all phases of the Acquisition of the Project pursuant to and in accordance with the provisions hereof. The City hereby accepts such appointment and assumes all rights, liabilities, duties and responsibilities of the Authority regarding the Acquisition of the Project. The Authority, or the City as agent of the Authority hereunder, shall enter into, administer and enforce all purchase orders or other contracts relating to the Acquisition of the Project. All contracts for, and all work relating to, the Acquisition of the Project shall be subject to all applicable provisions of law relating to the acquisition, installation, improvement, and equipping of like facilities and property by the City. Section 3.6. Title. All right, title and interest in the Project shall vest in the City immediately upon execution of this Agreement. Such vesting shall occur without further action by the Authority or the City; and the Authority shall, if requested by the City or if necessary to assure such automatic vesting, deliver any and all documents required to assure such vesting. ARTICLE IV INSTALLMENT PAYMENTS Section 4.1. Purchase Price. (a) The Purchase Price to be paid by the City hereunder to the Authority is the sum of the principal amount of the City's obligations hereunder plus the interest to accrue on the unpaid balance of such principal amount from the effective date hereof over the term hereof, subject to prepayment as provided in Article VII. (b) The principal amount of the payments to be made by the City hereunder is set forth in Exhibit B hereto. (c) The interest to accrue on the unpaid balance of such principal amount is as specified in Section 4.2 and Exhibit B hereto, and shall be paid by the City as and constitutes interest paid on the principal amount of the City's obligations hereunder. Section 4.2. Installment Payments and Additional Payments. The City shall, subject to any rights of prepayment provided in Article VII, pay the Authority the Purchase Price in installment payments of interest and principal in the amounts and on the Installment Payment Dates as set forth in Exhibit B hereto. Each Installment Payment shall be paid to the Authority in lawful money of the United States of America. In the event the City fails to make any of the payments required to be made by it under this Section, such payment shall continue as an obligation of the City until such 42580845.5 10 amount shall have been fully paid; and the City agrees to pay the same with interest accruing thereon at the rate or rates of interest then applicable to the remaining unpaid principal balance of the Installment Payments if paid in accordance with their terms. The obligation of the City to make the Installment Payments is absolute and unconditional, and until such time as the Purchase Price shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IX), the City will not discontinue or suspend any Installment Payments required to be made by it under this Section when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. The City shall not be obligated to make payments hereunder or incur any liability as a result of the default of any other public agency under this Agreement, the obligations under which have been assigned to the Trustee under the Indenture in connection with the Authority Bonds. In addition to the Installment Payments, the City shall also pay such amounts ("Additional Payments") as shall be required for the payment of all fees and administrative costs of the Authority and the Trustee relating to the Authority Bonds and allocable to the City, including without limitation, all expenses, compensation and indemnification of the Authority and the Trustee payable by the City hereunder and under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms hereof (including the fees of the disclosure consultant and arbitrage calculations service provided in Section 4.4 of the Indenture), of the Authority Bonds or of the Indenture or to indemnify the Authority and its employees, officers and directors and the Trustee; provided that the foregoing obligation shall be limited to those amounts reasonably allocable to the City. ARTICLE V SECURITY Section 5.1. Pledge of Streetlighting Revenues. All Streetlighting Revenues and all amounts on deposit in the Streetlighting Revenue Fund are hereby irrevocably pledged to the payment of the Installment Payments and Additional Payments as provided herein; provided that out of the Streetlighting Revenues there may be apportioned such sums for such purposes as are expressly permitted herein. This pledge, together with the pledge created by all other Additional Obligations, shall constitute a first lien on Streetlighting Revenues and, subject to application of amounts on deposit therein as permitted herein, the Streetlighting Revenue Fund and other funds and accounts created hereunder for the payment of the Installment Payments, Additional Payments and all other Additional Obligations in accordance with the terms hereof and of the Indenture. Section 5.2. Allocation of Streetlighting Revenues. In order to carry out and effectuate the pledge and lien contained herein, the City agrees and covenants that all Assessment 42580845.5 11 Revenues and Ad Valorem Revenues be received by the City in trust hereunder and shall be transferred not later than two (2) business days from receipt thereof for deposit into a special fund designated as the "Streetlighting Revenue Fund," until such time as amounts therein for the then current Bond Year equal the Installment Payments, Additional Obligation Payments and Additional Payments due for such Bond Year. The Streetlighting Revenue Fund is hereby established by the City and the City agrees and covenants to maintain and to hold such fund separate and apart from other funds so long as any Installment Payments remain unpaid. The City may maintain separate accounts within the Streetlighting Revenue Fund. The amounts in the Streetlighting Revenue Fund shall be invested in Authorized Investments. Moneys in the Streetlighting Revenue Fund shall be used and applied by the City as provided in this Agreement. Assessment Revenues and Ad Valorem Revenues not required to be deposited in the Streetlighting Revenue Fund may be expended by the City once the City's Installment Payment obligation has been funded for the applicable Bond Year, for any purpose permitted by law, including the costs of maintaining, operating, and servicing the Project and other lighting facilities authorized for the District and the City. For each Fiscal Year, all moneys in the Streetlighting Revenue Fund shall be set aside by the City at the following times for the transfer to the following respective special funds in the following order of priority; and all moneys in each of such funds shall be held in trust and shall be applied, used and withdrawn only for the purposes set forth in this Section. (a) Installment Payments. As soon as sufficient moneys are available in the Streetlighting Revenue Fund to make the Installment Payments due in the current Bond Year, but in no event later than the applicable Installment Payment Date, the City shall, from the moneys in the Streetlighting Revenue Fund, transfer to the Trustee the Installment Payments due and payable for deposit to the Revenue Fund. The City shall also, from the moneys in the Streetlighting Revenue Fund, transfer to the applicable trustee for deposit in the respective funds, without preference or priority, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, any other Additional Obligation Payments in accordance with the provisions of any Additional Obligation. (b) Surplus. Moneys on deposit in the Streetlighting Revenue Fund not necessary to make any of the payments required above, may be expended by the City at any time for any purpose permitted by law, including but not limited to payments with respect to Subordinate Obligations and the costs of maintaining, operating, and servicing the Project and other lighting facilities authorized for the District and the City. Section 5.3. Additional Obligations. The City may at any time enter into any Additional Obligation solely for refunding purposes resulting in debt service savings where the Annual Debt Service for each Fiscal Year during which such Additional Obligation is outstanding will not be increased by reason of the issuance of such Additional Obligation. The City may at any time enter into any Additional Obligation, provided that each of the following conditions has been satisfied: 42580845.5 12 (a) The City shall be in compliance with all agreements, conditions, covenants and terms contained herein and in all Supplemental Agreements required to be observed or performed by it, and a Certificate of the City to that effect shall have been filed with the Trustee (this condition shall not apply where the purpose of the proposed Additional Obligation is to cure such non-compliance); and (b) The Additional Obligation shall have been duly authorized pursuant to all applicable laws. Furthermore, nothing contained in this Section shall limit the issuance of any Subordinate Obligations. ARTICLE VI COVENANTS OF THE CITY Section 6.1. Punctual Payment. The City will punctually pay the Installment Payments in strict conformity with the terms hereof and will faithfully satisfy, observe and perform all agreements, conditions, covenants and terms hereof and of any Supplemental Agreements. Section 6.2. Legal Existence. The City will use all means legally available to maintain its existence and the existence of the District. Section 6.3. Against Encumbrances. The City will not mortgage or otherwise encumber, pledge or place any charge upon any of the Streetlighting Revenues except as provided herein, and will not issue any obligations secured by Streetlighting Revenues senior to the Installment Payments or other Additional Obligations; provided, that the City may at any time issue any Subordinate Obligations. Section 6.4. Protection of Security and Rights of Owners. The City will preserve and protect the security of the Authority Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Authority Bonds by the City, the Authority Bonds shall be incontestable by the City. Section 6.5. Collection of Assessment Revenues. The City shall comply with all requirements of the Act and this Agreement to assure the timely collection of the Assessments. Any funds received by the City in and for the District, including, but not limited to, collections of Assessments upon the secured tax rolls, collections of delinquent Assessments and interest thereon, shall be immediately deposited into the funds and accounts herein specified. Section 6.6. Reduction of Assessment Revenues. To the maximum extent that the law permits it to do so, the City hereby does covenant, that it shall not initiate proceedings to reduce the annual Assessments levied within the District, unless, in connection therewith, the City receives a certificate from its City Engineer which certifies that the total amount of Streetlighting Revenues for each Bond Year for any Authority Bonds Outstanding will equal at least [200%] of the sum on the debt service in that Bond Year on all Authority Bonds to remain Outstanding after the reduction is approved. 42580845.5 13 Section 6.7. Covenants to Defend. The City hereby covenants that in the event that any initiative is adopted by those subject to the Assessments in the District which purports to reduce the annual Assessments being levied below the levels specified in Section 6.6 above or to limit the power of the City to levy the annual Assessments for the purposes set forth in Section 6.5 above, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. Section 6.8. Payment of Claims. The City will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Streetlighting Revenues, or upon any funds held by the Trustee, or which might impair the security of the Installment Payments; provided, that nothing herein contained shall require the City to make any such payments so long as the City in good faith shall contest the validity of any such claims and such nonpayment will not materially adversely affect the City's ability to perform its obligations hereunder. Section 6.9. Books of Record and Accounts; Financial Statements. The City will keep proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the Streetlighting Revenue Fund, and upon request will provide information concerning such books of record and accounts to the Trustee. The City will prepare annually, not later than two hundred ten (210) days after the close of each Fiscal Year, so long as any Installment Payments or Additional Payments remain unpaid, an audited financial statement of the City relating to the Streetlighting Revenue Fund and all other accounts or funds established pursuant hereto for the preceding Fiscal Year prepared by an Independent Certified Public Accountant, showing the balances in each such account or fund as of the beginning of such Fiscal Year and all deposits in and withdrawals from each such account or fund during such Fiscal Year and the balances in each such account or fund as of the end of such Fiscal Year, which audited financial statement shall include a statement as to the manner and extent to which the City has complied with the provisions hereof and of any Supplemental Agreement as it relates to such accounts and funds. The City will furnish a copy of such audited financial statement to the Trustee and to the Information Services upon request, and will furnish such reasonable number of copies thereof to investment bankers, security dealers and others interested in the Authority Bonds. Section 6.10. Tax Covenants (a) Special Definitions. When used in this Section, the following terms have the following meanings: "Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds), and any replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Authority Tax -Exempt Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. 42580845.5 14 "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 Authority Tax -Exempt Bonds are invested and that is not acquired to carry out the governmental purposes of the Authority Tax - Exempt Bonds. "Original Facilities " means any property the acquisition, installation or improvement of which was financed directly or indirectly with Gross Proceeds. "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. "Yield" of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations; and (ii) the Authority Tax -Exempt Bonds has the meaning set forth in section 1.148-4 of the Tax Regulations. (b) Not to Cause Interest to Become Taxable. The Authority and the City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition 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 Authority Tax -Exempt 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 or 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 Authority Tax - Exempt Bond, the Authority or the City, as the case may be, shall comply with each of the specific covenants in this Section 6.10. (c) No Private Use or Private Payments. Except as would not cause any Authority Tax -Exempt 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 and the City shall at all times prior to the payment and cancellation of the last Authority Tax -Exempt Bond to be paid and canceled: 42580845.5 15 (i) use their best efforts to ensure that the City exclusively own, operate and possess all of the Original Facilities that are to be refinanced directly or indirectly with Gross Proceeds of the Authority Tax -Exempt Bonds, and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (ii) 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 Authority Tax -Exempt Bonds, or any of the Original Facilities, other than taxes of general application within the jurisdiction of the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. Without limiting the foregoing, except as would not cause any Tax -Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, neither of the City nor the Authority will: (i) permit any Nongovernmental Person to hold any ownership, proprietary or possessory interest in the financed property; (ii) contract with any Nongovernmental Person for the provision of operating or other services with respect to any function of the financed property (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 financed property); or (iii) contract with any Nongovernmental Person for the sale of output or capacity of the financed property 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). Except as would not cause any Authority Tax -Exempt Bond to be a "private activity bond", no portion of the Gross Proceeds will be used (directly or indirectly) for the acquisition of any interest in any Nongovernmental Output Property. (d) No Private Loan. Except as would not cause any Authority Tax -Exempt 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 and the City shall not use Gross Proceeds of any Authority Tax -Exempt 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: (a) property acquired or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (b) capacity in or service from such property is committed to such person or entity under a take -or - pay, output or similar contract or arrangement; or (c) indirect benefits of such Gross Proceeds, or 42580845.5 16 burdens and benefits of ownership of any property acquired 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 Authority Tax -Exempt Bond to become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the Authority and the City shall not at any time prior to the final maturity of the Authority Tax -Exempt 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 Authority Tax -Exempt Bond within the meaning of said section 148. (f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, the Authority and the City shall not take or omit to take any action that would cause any Authority Tax -Exempt 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 shall timely file any information required by section 149(e) of the Code with respect to the Authority Tax -Exempt Bonds with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Tax Regulations and rulings thereunder: (i) The Authority and the City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Authority Tax -Exempt Bond is discharged. However, to the extent permitted by law, the Authority or the City may commingle Gross Proceeds of the Authority Tax -Exempt Bonds with its other money, provided that the Authority or the City, as the case may be, separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (ii) Not less frequently than each Computation Date, the Authority and the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and rulings thereunder. The Authority and the City shall maintain a copy of the calculation with its official transcript of proceedings relating to the issuance of the Authority Tax -Exempt Bonds until six years after the final Computation Date. (iii) In order to assure the excludability of the interest on the Authority Tax -Exempt Bonds from the gross income of the owners thereof for federal income tax purposes, the Authority and the City, jointly and severally but without duplication, shall pay to the United States the amount that when added to the future value of previous rebate payments made for the Authority Tax -Exempt 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 42580845.5 17 Rebate Amount on such date. In all cases, such rebate payments shall be made by the Authority or the City at the times and in the amounts as are or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and shall be accompanied by Form 8038- T or such other forms and information as is or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder for execution and filing by the Authority or the City. (iv) The Authority and the City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (i) and (ii) 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. Except to the extent permitted by 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 Authority Tax -Exempt Bonds, enter into any transaction that reduces the amount required to be paid to the United States pursuant to paragraph (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield on the Authority Tax -Exempt Bonds not been relevant to either party. 0) Authority Tax -Exempt Bonds Not Hedge Bonds. (i) The Authority and the City each represents that none of the Authority Tax -Exempt Bonds are or will become "hedge bonds" within the meaning of section 149(g) of the Code. (ii) Without limitation of paragraph (i) above, with respect to the Authority Tax -Exempt Bonds, either: (I) on the date of issuance of the Authority Tax -Exempt Bonds, the Authority or the City reasonably expects that at least 85% of the spendable proceeds of the Authority Tax -Exempt Bonds would be expended within the three-year period commencing on such date of issuance, and (II) no more than 50% of the proceeds of the Authority Tax -Exempt Bonds will be 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 Authorized Authority Representative and the City hereby directs and authorizes any Authorized City Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Authorized Authority Representative or Authorized City Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Authority Tax -Exempt Bonds, in the Tax Certificate relating to the Authority Tax -Exempt Bonds or similar or other appropriate certificate, form or document. Section 6.11. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Agreement, failure of the City to comply with the 42580845.5 18 Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Participating Underwriter or any holder or beneficial owner of the Authority Bonds may take such actions as described under the Continuing Disclosure Agreement to cause the City to comply with its obligations under this Section. Section 6.12. Further Assurances. The City will adopt, make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof. ARTICLE VII PREPAYMENT OF INSTALLMENT PAYMENTS Section 7.1. Prepayment. The City may prepay the Installment Payments in accordance with the provisions of the Indenture applicable to the redemption prior to maturity of the Authority Bonds. Before making any prepayment pursuant to this Section, the City shall give the Authority and the Trustee not less than sixty (60) days prior notice of such prepayment. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY Section 8.1. Events of Default. If one or more of the following Events of Default shall happen, that is to say - (1) if default shall be made by the City in the due and punctual payment of any Installment Payment or any other Additional Obligation when and as the same shall become due and payable; (2) if default shall be made by the City in the performance of any of the other agreements or covenants required herein to be performed by it, and such default shall have continued for a period of thirty (30) days after the City shall have been given notice in writing of such default by the Authority or the Trustee; provided that such default shall not constitute an Event of Default hereunder, if the City shall commence to cure such default within such thirty (30) day period and thereafter diligently and in good faith shall proceed to cure such default within a reasonable period of time; provided, such period shall not extend beyond a total of ninety (90) days; or (3) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent 42580845.5 19 jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; then, and in each and every such case during the continuance of such Event of Default specified in clauses (2) and (3) above, the Authority shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any director, officer or employee thereof, and to compel the City or any such director, officer or employee to perform and carry out its or his duties under the agreements and covenants required to be performed by it or him contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority; or (c) by suit in equity upon the happening of an Event of Default to require the City and its directors, officers and employees to account as the trustee of an express trust. Notwithstanding anything contained herein, the Authority shall have no security interest in or mortgage on the Project or other facilities of the City or any other real property of the City and no default hereunder shall result in the loss of the Project or other facilities of the City or any other real property of the City. Section 8.2. Non -Waiver. Nothing in this article or in any other provision hereof shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the Installment Payments to the Authority at the respective due dates or upon prepayment from the Streetlighting Revenues, the Streetlighting Revenue Fund and the other funds herein pledged for such payment, or shall affect or impair the right of the Authority, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Authority 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 of duty or contract. No delay or omission by the Authority to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Authority by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Authority. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Authority, the City and the Authority shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 8.3. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive of any other remedy, and each such remedy shall be 42580845.5 20 cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. ARTICLE IX DISCHARGE OF OBLIGATIONS Section 9.1. Discharge of Obligations. The obligations hereunder may be discharged as provided in Article VIII of the Indenture. ARTICLE X MISCELLANEOUS Section 10.1. Liability of City Limited to Streetlighting Revenues. Notwithstanding anything contained herein, the City shall not be required to advance any moneys derived from any source of income other than the Streetlighting Revenues, the Streetlighting Revenue Fund and the other funds provided herein for the payment of the Installment Payments or for the performance of any agreements or covenants required to be performed by it contained herein. The City may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose. The obligation of the City to make the Installment Payments is a special obligation of the City payable solely from the Streetlighting Revenues, and does not constitute a debt of the City or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. Section 10.2. Successor Is Deemed Included in all References to Predecessor. Whenever either the City or the Authority is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the City or the Authority, and all agreements and covenants required hereby to be performed by or on behalf of the City or the Authority shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 10.3. Waiver of Personal Liability. No director, officer or employee of the City shall be individually or personally liable for the payment of the Installment Payments or be subject to any personal liability by reason of the execution of this Agreement or the issuance of the Authority Bonds. Section 10.4. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof, and the words "hereby," "herein," "hereof," "hereto," "herewith" and other words of similar import refer to this Agreement as a whole and not to any particular article, section, subdivision or clause hereof. 42580845.5 21 Section 10.5. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the City or the Authority shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The City and the Authority hereby declare that they would have executed this Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 10.6. Assignment, Third Party BeneficiM. This Agreement and any rights hereunder may be assigned by the Authority, as a whole or in part, without the necessity of obtaining the prior consent of the City. The City acknowledges and agrees that the Installment Payments will be assigned to the Trustee and pledged under the Indenture to the payment of the Authority Bonds. Section 10.7. Net Contract. This Agreement shall be deemed and construed to be a net contract, and the City shall pay absolutely net during the term hereof the Installment Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off whatsoever. Section 10.8. California Law. THE INSTALLMENT PURCHASE AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. Section 10.9. Effective Date. This Agreement shall become effective upon its execution and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for the payment thereof shall have been made to the satisfaction of the Authority). Section 10.10. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. Section 10.11. Indemnification of Authority. To the fullest extent permitted by law, the City agrees to indemnify, hold harmless and defend the Authority and the Trustee, and each of their respective officers, governing board members, directors, officials, employees, attorneys and agents (collectively, the "Indemnified Parties"), against any and all losses, damages, claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise arising out of or based upon or in any way relating to: (i) the Indenture, this Agreement or the execution or amendment thereof or in connection with transactions contemplated thereby, including the sale, resale or remarketing of the Authority Bonds; 42580845.5 22 any act or omission of the City or any of its agents, contractors, servants, employees or licensees in connection with this Agreement or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or development of, the Project or any part thereof, (iii) any lien or charge upon payments by the City to the Authority and the Trustee hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Authority or the Trustee in respect of any portion of the Proj ect; (iv) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Project or any part thereof, (v) the defeasance and/or redemption, in whole or in part, of the Authority Bonds; (vi) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact furnished in writing by the City contained in any offering statement or document for the Authority Bonds or any of the documents relating to the Authority Bonds to which the City is a party, or any omission or alleged omission from any offering statement or document for the Authority Bonds of any material fact necessary to be stated therein in order to make the statements made therein by the City, in the light of the circumstances under which they were made, not misleading; and (vii) the Trustee's acceptance or administration of the trust of the Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Authority Bonds to which it is a party. Notwithstanding the foregoing provisions of this Section 10.11 to the contrary, the City's obligation to indemnify, hold harmless and defend as provided in this Section 10.11 does not apply (a) in the case of the foregoing indemnification of the Trustee or any of its officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the negligence or willful -misconduct of such Indemnified Party; or (b) in the case of the foregoing indemnification of the Authority or any of its officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the willful misconduct of such Indemnified Party; provided that the foregoing indemnification shall be strictly limited to defaults or other actions by the City. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the City, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power 42580845.5 23 to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the City shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the City if in its judgment a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel. The rights of any persons to indemnify hereunder and rights to payment of fees and reimbursement of expenses pursuant to Section 4.2, hereof shall survive the final payment or defeasance of the Authority Bonds and in the case of the Trustee any resignation or removal. The provisions of this Section shall survive the termination of this Agreement. Section 10.12. Amendments. This Agreement may only be amended in accordance with the terms of Indenture. Any Ratings Agency rating the Authority Bonds shall receive notice of each amendment to this Agreement and a copy thereof at least fifteen (15) days in advance of its execution. IN WITNESS WHEREOF, the parties hereto have executed and attested this Agreement by their officers thereunto duly authorized as of the day and year first written above. ATTEST: CITY OF SANTA CLARITA IM ATTEST: IM City Clerk By: Mayor SANTA CLARITA PUBLIC FINANCING AUTHORITY Secretary By: Executive Director 42580845.5 24 EXHIBIT A SCHEDULE OF INSTALLMENT PAYMENTS The aggregate principal amount of payments to be made by the City hereunder is The installment payments of principal and interest are payable in the amounts and on the Installment Payment Dates (dates shown are the second day of the month after the Installment Payment Dates which are due on the 15th day of the prior month) as shown as follows: Date Principal Interest Total 09/02/2018 03/02/2019 09/02/2019 03/02/2020 09/02/2020 03/02/2021 09/02/2021 03/02/2022 09/02/2022 03/02/2023 09/02/2023 03/02/2024 09/02/2024 03/02/2025 09/02/2025 03/02/2026 09/02/2026 03/02/2027 09/02/2027 03/02/2028 09/02/2028 03/02/2029 09/02/2029 03/02/2030 09/02/2030 03/02/2031 09/02/2031 03/02/2032 09/02/2032 03/02/2033 09/02/2033 03/02/2034 09/02/2034 03/02/2035 09/02/2035 03/02/2036 09/02/2036 03/02/2037 09/02/2037 Total 42580845.5 A- I