HomeMy WebLinkAbout2019-05-28 - AGENDA REPORTS - SDC PFA LEASE REVENUE BONDS - SHERIFF'S STATION SE (2)Agenda Item: 15
DATE: May 28, 2019
SUBJECT: SANTA CLARITA PFA LEASE REVENUE BONDS - SHERIFF'S
STATION SERIES 2019 AND FORM OF COUNTY LEASE
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
Lease Revenue Bonds (Sheriff Station Project), Series 2019, in the aggregate principal
amount not to exceed $30,000,000; approving the execution and delivery of a Site Lease, a
Lease Agreement, a Continuing Disclosure Certificate, a Preliminary Official Statement, a
Final Official Statement and Sale Documents; approving the retention of certain professional
firms; and authorizing the taking of certain actions in connection therewith.
3. Adopt a resolution approving the execution and delivery of a County Lease relating the
proposed new Sheriff Station Facilities and authorizing the taking of certain actions in
connection therewith.
Public Financing Authority:
Adopt a resolution approving the issuance of the Santa Clarita Public Financing Authority
Lease Revenue Bonds (Sheriff Station Project), Series 2019, in the aggregate principal
amount not to exceed $30,000,000; approving the execution and delivery of an Indenture, a
Site Lease, a Lease Agreement, an Assignment Agreement, a Preliminary Official Statement,
a Final Official Statement and Sale Documents; and authorizing the taking of certain actions
in connection therewith.
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BACKGROUND
In May 2016, the City of Santa Clarita (City) and Los Angeles County (County) entered into a
Memorandum of Understanding (MOU) to construct a new sheriff station, along with a vehicle
maintenance facility to serve the Santa Clarita Valley. The current station, located at 23740
Magic Mountain Parkway, was built in 1972 and is no longer adequate to effectively serve the
needs of the community. A new Santa Clarita Valley Sheriff Station (Sheriff Station) is
identified under the Public Safety theme of the City's five-year strategic plan, Santa Clarita
2020.
In November 2016, the City Council awarded contracts for Phase I of the project, which included
the preparation of the environmental and geotechnical studies, and concept design. Subsequently,
in June 2017, the initial study and Mitigated Negative Declaration (MND) for the project was
completed in compliance with the California Environmental Quality Act as part of Phase L The
final MND was approved and certified by the City Council on August 22, 2017.
In October 2017, the City Council awarded an architectural and civil design contract for Phase II
of the project, which included finalizing the concept design developed in Phase I and the
preparation of all associated architectural, structural, and civil engineering drawings and
specifications necessary for the construction of the project.
Phase III construction activities for the Sheriffs Station have been divided into the following
three sub phases:
Phase III A - Onsite Improvements
In June 2018, the City Council awarded contracts for the Phase III A onsite improvements. This
phase has been completed.
Phase III B - Onsite Construction
This phase includes the main station building, detention facility, helipad, vehicle maintenance
building, visitor parking, staff parking, generator, fuel station, wet utilities, dry utilities, radio
antenna tower, perimeter walls, landscaping, furnishings, fixtures, and equipment. Bids have
been received by the City for the final construction contract, and the contract award will be
considered at the May 28, 2019, meeting.
Phase III C - Golden Valley Road Right -of -Way Improvements
In January 2019, the City Council awarded contracts for the Phase III C right-of-way
improvements. This phase is currently in construction and work is anticipated to be completed by
fall 2019.
Based on contracts awarded or to be awarded, the total cost of construction of the project is
approximately $67.3 million. Funding includes $18 million contributed by the County, $24.3
million from City funds on hand, and $25 million in net proceeds from a proposed tax-exempt
bond issuance. The total City contribution to the cost of construction is $49.3 million. The
City's Public Financing Authority (PFA) will issue its Lease Revenue Bonds (Sheriff Station
Project) Series 2019 (Bonds). The City's PFA is currently expected to realize $25 million in net
proceeds from the sale of its Bonds for the project. The Bonds will also fund the rating agency -
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required capitalized interest of approximately $1.84 million through the construction period and
the costs of the bond issuance. As a result of the capitalized interest, the City's first debt service
payment will be on December 2, 2021. Base Rental Payments through June 2021 are expected to
be funded with proceeds of the Bonds (capitalized interest).
Proceeds of the Bonds will be put into a project fund and a capitalized interest fund held by the
bond trustee. Proceeds will be used to finance a portion of the costs of construction of the project
and to make interest payments through June 1, 2021. Under the PFA bond structure, the City will
lease the City -owned land to the PFA pursuant to a Site Lease, and the PFA will leaseback the
land and the project to the City pursuant to a Lease Agreement. The City will make Base Rental
Payments from the City's General Fund for use of the project. The Base Rental Payments will be
equal to the debt service on the Bonds. The PFA transfers the Base Rental Payments to the bond
trustee to pay bond holders. No bond reserve fund is contemplated for the bond issue. The PFA
bond structure is widely used in California and is identical to the structure used in the City's
other general fund financings.
Pursuant to the MOU, upon completion of the project, the City and the County will enter into a
sublease of the site and project in the form of the "County of Los Angeles Chief Executive
Office Lease Agreement" (County Lease), presented at this meeting, for no rent so long as the
County provides sheriff services to the City. Pursuant to the MOU and the County Lease, if the
County Lease is terminated within the first 15 years, the County is entitled to a refund of its
contribution.
The costs of undertaking this financing will be funded entirely by the proposed bond issue. The
proposed Bonds have been rated by Standard and Poor's Corporation and will be sold with a
"AA+" bond rating. The Bonds will be sold through a competitive sale in early -June with closing
scheduled for late -June. The proposed term of the bonds is 30 years and the payments are
expected to be level. The final interest cost will depend on market interest rates at time of sale.
As of April 24, the currently estimated all -in -true interest cost is 3.16 percent. The bond markets
have been relatively stable, but final bond interest rates may be higher or lower depending on
interest rates at time of sale. The bonds are expected to be sold with the standard 10 years of
bond call protection and will be redeemable beginning in 2029.
The public disclosures required under SB 450, effective January 1, 2018, are incorporated herein.
The estimates have been determined as of April 24, 2019. 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 estimated to be 3.16 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 $432,350. Bond insurance 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.
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 $25, 000, 000.
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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 of the bonds not paid with the
proceeds of the bonds. The total payment amount calculated to the final maturity of the
bonds is estimated to be $42,387,771.
The action today by the City is to hold a public hearing relating to the issuance of the Bonds and
for the 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, the City Council and the PFA will consider adoption of
the resolutions authorizing the issuance of the Bonds. A resolution for each of the City and the
PFA is attached and would authorize the issuance of a not to exceed amount of $30,000,000 in
Bonds. Final sizing will be determined based on bids received at time of bond sale. The Bonds
will be sold on a competitive basis, and more than three bids are expected. The resolution
approves the various documents in connection with the issuance of the Bonds. The City
resolution also approves the appointment of a) Columbia Capital Management LLC, as
Municipal Advisor, b) Norton Rose Fulbright US LLP, as Bond and Disclosure Counsel, and c)
The Bank of New York Mellon Trust Company, N.A., as Trustee.
Additionally, the City will consider the adoption of a resolution approving the form of the
County Lease and authorizing the City Manager or designee to finalize and execute the terms of
the County Lease, with the approval of the City Attorney.
Security and Financing Documents Summary
General Summary of Security: The Bonds are secured by the revenues from the Base Rental
Payments payable from the City's General Fund. The City covenants in the Lease to make
annual appropriations for the Base Rental Payments, subject to abatement for nonuse of the
project. Potential investors will look closely at the strengths and weaknesses of the City's
General Fund and essentiality of the project. 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 Lease Agreement are assigned to the trustee to make debt
service payments on the Bonds. The Indenture specifies payment and 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.
Site Lease: Document in which the City leases the site to the PFA. The document is drafted by
Bond Counsel and executed by the City and PFA.
Lease Agreement: Document in which the City agrees to leaseback the site and the project from
the PFA. It specifies amount and dates of the Base Rental Payments, covenant to appropriate the
Base Rental 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
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Base Rental Payments. The document is drafted by Bond Counsel and executed by the City and
PFA.
Assignment Agreement: Document in which the PFA assigns certain of its rights under the Lease
to the trustee. The document is drafted by Bond Counsel and executed by the PFA and the
trustee.
Continuing Disclosure Certificate: This undertaking outlines the updated information related to
the security the City will agree to provide to the bond markets. Disclosure is required annually
and on an exceptional basis for any major "material" event, which now includes disclosure of
material "financial obligations" of the City. 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. While the City's legal counsel, consultants, and the staff have
participated in preparing the POS, the City and PFA staff are ultimately responsible for ensuring
that the POS is accurate, contains no misleading information, and does not omit any necessary
information.
Official Notice Inviting Bids: The Bonds have a term ending on June 1, 2049, and will be sold on
a competitive basis at an interest rate of not -to -exceed 4.0 percent. The sale of the Bonds is
scheduled for mid-June, at which time the City Manager or City Treasurer will award the Bonds
to the best bidder. The bids are submitted by potential underwriters on the day of the bond sale,
and specifies the actual principal amounts, interest rates, and prices at which the Bonds will be
purchased. In it, the underwriter commits to purchase the Bonds at closing at the agreed upon
prices and amounts subject to certain closing conditions. The underwriter will also provide a
good faith deposit of $500,000.
County Lease: Document in which the City agrees to sublease the site and project to the County
for an initial term of 15 years at $0 rent to be used for law enforcement activities pursuant to a
sheriff services agreement.
More specific details of the financing and the County Lease 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.
ALTERNATIVE ACTION
Other action as determined by the City Council.
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FISCAL IMPACT
Under current bond market conditions, annual debt service payments are anticipated to be
approximately $1,450,000, beginning December 2021, through June 30, 2049, payable from the
City's General Fund.
ATTACHMENTS
Public Hearing Notice
City Resolution Approving Bond Issuance
Authority Resolution Approving Bond Issuance
City Resolution Approving Form of County Lease
Form of Indenture (available in City Clerk's Reading File)
Form of Site Lease (available in City Clerk's Reading File)
Form of Assignment Agreement (available in City Clerk's Reading File)
Form of Lease Agreement (available in City Clerk's Reading File)
Form of Official Notice of Sale (available in City Clerk's Reading File)
Form of County Lease (available in City Clerk's Reading File)
Form of Preliminary Official Statement & Continuing Disclosure Certificate (available in City
Clerk's Reading File)
Page 6
CITY OF SANTA CLARITA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that at or after 6:00 p.m. on May 28, 2019, at the regular
meeting place of the City Council of the City of Santa Clarita (the "City"), City Council
Chambers, 23920 Valencia Boulevard, Santa Clarita, CA, 91355, the City will hold a public
hearing pursuant to Section 6586.5(a)(2) of the Government Code of the State of California
regarding the proposed issuance of lease revenue bonds (the "Series 2019 Bonds") by the Santa
Clarita Public Financing Authority.
The Series 2019 Bond proceeds are expected to be applied to finance a portion of the
construction and improvement of an approximately 46,500 square foot sheriff station building,
approximately 4,100 square foot service maintenance building, and related improvements. The
sheriff station facilities will be located on approximately 7.6 net acres of City property at 26201
Golden Valley Road, Santa Clarita, CA 91350.
At the hearing, the testimony of all interested persons will be heard. Persons who require
accommodation for any audio, visual, or other disability in order to participate in a public
hearing of the City Council may obtain assistance by requesting such accommodation in writing
addressed to the City Clerk, 23920 Valencia Boulevard, Santa Clarita, CA 91355, or by calling
(661) 255-4391. Any such request for accommodation should be made at least 48 hours prior to
the scheduled meeting.
Dated: May 15, 2019
Mary Cusick, MMC
City Clerk
Publish Date: May 22, 2019
RESOLUTION NO. 19 -
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
CLARITA, CALIFORNIA, APPROVING THE ISSUANCE OF THE SANTA
CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS
(SHERIFF STATION PROJECT), SERIES 2019, IN THE AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000, APPROVING THE
EXECUTION AND DELIVERY OF A SITE LEASE, A LEASE AGREEMENT,
A CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY
OFFICIAL STATEMENT, A FINAL OFFICIAL STATEMENT AND SALE
DOCUMENTS; APPROVING THE RETENTION OF CERTAIN
PROFESSIONAL FIRMS; AND AUTHORIZING THE TAKING OF CERTAIN
ACTIONS IN CONNECTION THEREWITH
WHEREAS, pursuant to Articles 1 through 4 (commencing with Section 6500) of
Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the "Act"), the
City of Santa Clarita, California (the "City"), and the Redevelopment Agency of the City of
Santa Clarita have heretofore entered into that certain Joint Exercise of Powers Agreement, dated
as of July 9, 1991, and as amended on May 10, 2016, by and among the City, the City as
successor agency to the Redevelopment Agency of the City of Santa Clarita, and the Santa
Clarita Parking Authority, relating to the Santa Clarita Public Financing Authority (the
"Authority"), for the purpose, among other things, of issuing its bonds to be used to provide
financing and refinancing for public capital improvements of the City; and
WHEREAS, the City desires to construct an approximately 46,500 square foot
sheriff station building and approximately 4,100 square foot service maintenance building to be
located on approximately 7.6 net acres of City property at 26201 Golden Valley Road within the
City (the "Project"); and
WHEREAS, the City has requested that the Authority issue its Lease Revenue
Bonds (Sheriff Station Project) Series 2019 (the "Bonds") for the purpose of financing a portion
of the costs of the Project, to pay for capitalized interest and to pay for the costs of issuing the
Bonds; and
WHEREAS, the Bonds are to be issued pursuant an Indenture (the "Indenture"),
by and between the Authority and a trustee, and pursuant to the Marks -Roos Local Bond Pooling
Act of 1985 (the "Bond Law"), constituting Article 4 (commencing with Section 6584) of the
Act; and
WHEREAS, the City has heretofore held a noticed public hearing pursuant to
Section 6586.5(a)(2) of the Act; and
WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the
California Legislature) ("SB 450") requires that the governing body of a public body obtain prior
to authorizing the issuance of bonds with a term of greater than 13 months, good faith estimates
of the following information in a meeting open to the public: (a) the true interest cost of the
bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the
amount of proceeds of the bonds expected to be received net of the fees and charges paid to third
parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d)
the sum total of all debt service payments on the bonds calculated to the final maturity of the
bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and
WHEREAS, it is proposed that the Bonds be sold on a competitive basis in
accordance with the terms and provisions of an Official Notice Inviting Bids (the "Official
Notice Inviting Bids"), the proposed form of which has been presented to this City Council; and
WHEREAS, it is proposed that the City and the Authority enter into a Site Lease
(the "Site Lease") pursuant to which the City will lease the net 7.6 acre City property located at
26201 Golden Valley Road in the City (the "Site") to the Authority; and
WHEREAS, it is proposed that the City and the Authority enter into a Lease
Agreement (the "Lease") pursuant to which City will lease back the Site and the Project
(collectively, the "Leased Property") from the Authority, the form of which is on file with the
City Clerk of the City; and
WHEREAS, under the Lease, the City will be obligated to make base rental
payments to the Authority which the Authority will use to pay debt service on the Bonds; and
WHEREAS, to fulfill the requirements of Rule 15c2-12 (as defined herein), the
City will enter into a Continuing Disclosure Certificate (the "Continuing Disclosure
Certificate"), with respect to the Bonds, whereby the City will agree to provide disclosure reports
and notices of certain enumerated events pursuant to the Rule; and
WHEREAS, there have been presented to this meeting the proposed forms of the
following documents:
(a) the Site Lease;
(b) the Lease;
(c) the Continuing Disclosure Certificate;
(d) the Preliminary Official Statement;
(e) the Official Notice Inviting Bids; and
WHEREAS, the City Council has reviewed the documentation related to the
issuance of the Bonds, which documentation is on file with the City Clerk of the City.
NOW, THEREFORE, the City Council of the City of Santa Clarita, California,
does hereby resolve as follows:
SECTION 1. Recitals. All of the above recitals are true and correct and the City
Council so finds.
SECTION 2. Public Benefit. City Council hereby finds and determines that the
issuance of the Bonds will result in significant public benefits within the contemplation of
Section 6586 of the Act.
SECTION 3. Approval of Bonds. The City hereby approves the issuance by the
Authority of the Bonds. The Bonds are hereby approved to finance a portion of the costs of the
Project, to pay for capitalized interest and to pay for the costs of issuing the Bonds.
SECTION 4. Approval of Site Lease. The Site Lease, in substantially the form
on file with the City Clerk of the City and presented to the City Council at this meeting, is hereby
approved. Any one of the Mayor, the City Manager of the City, the Assistant City Manager or
City Treasurer (each, an "Authorized Officer"), is hereby authorized and directed, for and in the
name and on behalf of the City, to execute and deliver the Site Lease, with such revisions,
amendments and completions as shall be approved by an Authorized Officer, with the advice of
Bond Counsel in consultation with the City Attorney, such approval to be conclusively
evidenced by such execution and delivery, and the City Clerk is hereby authorized to attest to
such execution.
SECTION 5. Approval of the Lease. The Lease, in substantially the form on file
with the City Clerk of the City and presented to the City Council at this meeting, is hereby
approved. Any Authorized Officer is hereby authorized to execute the Lease in substantially the
form on file, with such revisions, amendments and completions as shall be approved by an
Authorized Officer, with the advice of Bond Counsel in consultation with the City Attorney,
such approval to be conclusively evidenced by the execution and delivery thereof, and the City
Clerk is hereby authorized to attest to such execution.
SECTION 6. Approval of the Preliminary Official Statement and the Official
Statement. The Preliminary Official Statement, in substantially the form on file with the City
Clerk of the City and presented to the City Council at this meeting, is hereby approved with such
revisions, amendments and completions as shall be approved by an Authorized Officer to make
the Preliminary Official Statement final as of its date, except for the omission of certain
information, as permitted by Section 240.15c2 -12(b)(1) of Title 17 of the Code of Federal
Regulations ("Rule 15c2-12"). Any Authorized Officer is authorized to execute a certificate
relating to the finality of the Preliminary Official Statements under Rule 15c2-12. An Authorized
Officer is authorized and directed to execute and deliver the final Official Statement in
substantially the form of the Preliminary Official Statement, with such additions and changes as
may be approved by an Authorized Officer executing the same with the advice of Disclosure
Counsel in consultation with the City Attorney, such approval to be conclusively evidenced by
the execution and delivery thereof.
SECTION 7. Approval of the Continuing Disclosure Certificate. The Continuing
Disclosure Certificate, in substantially the form on file with the City Clerk of the City and
presented to the City Council at this meeting, are hereby approved. Any Authorized Officer is
hereby authorized to execute the Continuing Disclosure Certificate in substantially the form on
file, with such revisions, amendments and completions as shall be approved by an Authorized
Officer, with the advice of Bond Counsel in consultation with the City Attorney, such approval
to be conclusively evidenced by the execution and delivery thereof.
SECTION 8. Approval of Official Notice Inviting Bids. The City hereby
authorizes and directs that the Bonds be sold on a competitive basis. Any Authorized Officer is
hereby authorized to undertake all appropriate steps to implement the sale of the Bonds. The total
principal amount of Bonds shall not exceed $30,000,000 and the true interest cost of the Bonds
shall not exceed 4.00%. The Official Notice Inviting Bids, in substantially the form on file with
the City Clerk of the City and presented to the City Council at this meeting, is hereby approved.
The terms and conditions of the offering and sale of the Bonds shall be as specified in the
Official Notice Inviting Bids. Bids for the purchase of the Bonds shall be received at the time
and place set forth in the Official Notice Inviting Bids.
SECTION 9. Good Faith Estimates. In accordance with SB 450, good faith
estimates of the following have been presented to this meeting: (a) the true interest cost of the
Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the
amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third
parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and
(d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the
Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds.
SECTION 10. Official Actions. The Authorized Officers, the City Clerk and all
other officers of the City are hereby authorized and directed, for and in the name and on behalf
of the City, to do any and all things and take any and all other actions, including the publication
of any notices necessary or desirable in connection with the financing of the Project, the sale of
the Bonds, procurement of municipal bond insurance and/or a reserve surety, and execution and
delivery of any and all assignments, certificates, requisitions, agreements, notices, consents,
instruments of conveyance, warrants, escrow instructions and other documents, which they, or
any of them, deem necessary or advisable to consummate the lawful issuance and sale of the
Bonds and the consummation of the transactions as described herein.
SECTION 11. Approval of Certain Financing Team Members. The City Council
hereby approves the appointment of (a) Norton Rose Fulbright US LLP, to provide Bond
Counsel and Disclosure Counsel services in connection with the Bonds, (b) Columbia Capital
Management, LLC, as Municipal Advisor in connection with the Bonds, (c) The Bank of New
York Mellon Trust Company, N.A., as Trustee, and Digital Assurance Certification LLC, as
Dissemination Agent, in connection with the Bonds, upon such terms and conditions as approved
by any Authorized Officer.
SECTION 12. Ratification. All actions heretofore taken by any Authorized
Officer or any officer, employee or agent of the City with respect to the issuance, delivery and
sale of the Bonds or in connection with or related to any of the agreements referred to herein, are
hereby approved, confirmed and ratified.
SECTION 13. Effective Date of Resolution. This Resolution shall take effect
immediately upon its adoption.
SECTION 14. The City Clerk shall certify to the adoption of this resolution.
PASSED, APPROVED, AND ADOPTED this th day of 2019.
MAYOR
ATTEST:
CITY CLERK
DATE:
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 19- was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the th day of 2019, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
RESOLUTION NO. JPA 19 -
RESOLUTION OF THE BOARD OF THE SANTA CLARITA PUBLIC
FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF THE
SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE
BONDS (SHERIFF STATION PROJECT), SERIES 2019, IN THE
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000,
APPROVING THE EXECUTION AND DELIVERY OF AN INDENTURE, A
SITE LEASE, A LEASE AGREEMENT, AN ASSIGNMENT AGREEMENT, A
PRELIMINARY OFFICIAL STATEMENT, A FINAL OFFICIAL
STATEMENT AND SALE DOCUMENTS; AND AUTHORIZING THE
TAKING OF CERTAIN ACTIONS IN CONNECTION THEREWITH
WHEREAS, pursuant to Articles 1 through 4 (commencing with Section 6500) of
Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the "Act"), the
City of Santa Clarita, California (the "City"), and the Santa Clarita Redevelopment Agency have
heretofore entered into that certain Joint Exercise of Powers Agreement, dated as of July 9, 1991,
and as amended on May 10, 2016, by and among the City, the City as successor agency to the
Santa Clarita Redevelopment Agency, and the Santa Clarita Parking Authority, relating to the
Santa Clarita Public Financing Authority (the "Authority"), for the purpose, among other things,
of issuing its bonds to be used to provide financing and refinancing for public capital
improvements of the City; and
WHEREAS, the City desires to construct an approximately 46,500 square foot
sheriff station building and approximately 4,100 square foot service maintenance building to be
located on approximately 7.6 net acres of City property at 26201 Golden Valley Road within the
City (the "Project"); and
WHEREAS, the City has requested that the Authority issue its Lease Revenue
Bonds (Sheriff Station Project) Series 2019 (the "Bonds") for the purpose of financing a portion
of the costs of the Project, to pay for capitalized interest and to pay for the costs of issuing the
Bonds; and
WHEREAS, the Bonds are to be issued pursuant an Indenture (the "Indenture"),
by and between the Authority and a trustee, and pursuant to the Marks -Roos Local Bond Pooling
Act of 1985 (the "Bond Law"), constituting Article 4 (commencing with Section 6584) of the
Act, the form of which is on file with the Secretary of the Authority; and
WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the
California Legislature) ("SB 450") requires that the governing body of a public body obtain prior
to authorizing the issuance of bonds with a term of greater than 13 months, good faith estimates
of the following information in a meeting open to the public: (a) the true interest cost of the
bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the
amount of proceeds of the bonds expected to be received net of the fees and charges paid to third
parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d)
the sum total of all debt service payments on the bonds calculated to the final maturity of the
bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and
WHEREAS, it is proposed that the Bonds be sold on a competitive basis in
accordance with the terms and provisions of an Official Notice Inviting Bids (the "Official
Notice Inviting Bids"), the proposed form of which has been presented to this Board; and
WHEREAS, it is proposed that the City and the Authority enter into a Site Lease
(the "Site Lease") pursuant to which the City will lease the 7.6 net acre City property located at
26201 Golden Valley Road in the City (the "Site") to the Authority; and
WHEREAS, it is proposed that the City and the Authority enter into a Lease
Agreement (the "Lease") pursuant to which City will lease back the Site and the Project
(collectively, the "Leased Property") from the Authority, the form of which is on file with the
City Clerk of the City; and
WHEREAS, under the Lease, the City will be obligated to make base rental
payments to the Authority which the Authority will use to pay debt service on the Bonds; and
WHEREAS, the Authority will assign its rights under the Lease, including the
right to receive lease payments, to the trustee pursuant to an Assignment Agreement (the
"Assignment Agreement"), by and between the Authority and the trustee, the proposed form of
which is on file with the Secretary of the Authority; and
WHEREAS, there have been presented to this meeting the proposed forms of the
following documents:
(a) the Indenture;
(b) the Site Lease;
(c) the Lease;
(d) the Assignment Agreement;
(e) the Preliminary Official Statement;
(f) the Official Notice Inviting Bids; and
WHEREAS, the Board has reviewed the documentation related to the issuance of
the Bonds, which documentation is on file with the Secretary of the Authority.
NOW, THEREFORE, the Board of Directors of the Santa Clarita Public
Financing Authority, does hereby resolve as follows:
SECTION 1. Recitals. All of the above recitals are true and correct and the
Authority so finds.
SECTION 2. Approval of Bonds. The Authority hereby authorizes the issuance
by the Authority of the Bonds in the principal amount not to exceed $30,000,000.
SECTION 3. Approval of Site Lease. The Site Lease, in substantially the form
on file with the Secretary and presented to the Board at this meeting, is hereby approved. Any
one of the Chair, the Executive Director, or Treasurer of the Authority (each, an "Authorized
Officer"), is hereby authorized and directed, for and in the name and on behalf of the Authority,
to execute and deliver the Site Lease, with such revisions, amendments and completions as shall
be approved by an Authorized Officer, with the advice of Bond Counsel in consultation with the
Counsel to the Authority, such approval to be conclusively evidenced by such execution and
delivery thereof, and the Secretary is hereby authorized to attest to such execution.
SECTION 4. Approval of the Lease. The Lease, in substantially the form on file
with the Secretary and presented to the Board at this meeting, is hereby approved. Any
Authorized Officer is hereby authorized to execute the Lease in substantially the form on file,
with such revisions, amendments and completions as shall be approved by an Authorized
Officer, with the advice of Bond Counsel in consultation with the Counsel to the Authority, such
approval to be conclusively evidenced by the execution and delivery thereof, and the Secretary is
hereby authorized to attest to such execution.
SECTION 5. Approval of the Assignment Agreement. The Authority hereby
approves the Assignment Agreement in substantially the form on file with the Secretary and
presented to the Board at this meeting. Any Authorized Officer is hereby authorized to execute
the Assignment Agreement in substantially the form on file, with such revisions, amendments
and completions as shall be approved by an Authorized Officer, with the advice of Bond Counsel
in consultation with the Counsel to the Authority, such approval to be conclusively evidenced by
the execution and delivery thereof, and the Secretary is hereby authorized to attest to such
execution.
SECTION 6. Approval of the Indenture. The Authority hereby approves the
Indenture in substantially the form on file with the Secretary and presented to the Board at this
meeting. Any Authorized Officer is hereby authorized to execute the Indenture in substantially
the form on file, with such revisions, amendments and completions, as shall be approved by an
Authorized Officer, with the advice of Bond Counsel in consultation with the Counsel to the
Authority, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 7. Approval of the Preliminary Official Statement and the Official
Statement. The Preliminary Official Statement, in substantially the form on file with the
Secretary and presented to the Board at this meeting, is hereby approved with such revisions,
amendments and completions as shall be approved by an Authorized Officer to make the
Preliminary Official Statement final as of its date, except for the omission of certain information,
as permitted by Section 240.15c2 -12(b)(1) of Title 17 of the Code of Federal Regulations ("Rule
15c2-12"). Any Authorized Officer is authorized to execute a certificate relating to the finality
of the Preliminary Official Statements under Rule 15c2-12. An Authorized Officer is authorized
and directed to execute and deliver the final Official Statement in substantially the form of the
Preliminary Official Statement, with such additions and changes as may be approved by an
Authorized Officer executing the same with the advice of Disclosure Counsel in consultation
with the Counsel to the Authority, such approval to be conclusively evidenced by the execution
and delivery thereof.
SECTION 8. Approval of Official Notice Inviting Bids. The Authority hereby
approves the Official Notice Inviting Bids in the form thereof on file with the Secretary, together
with such additions, deletions or changes therein as shall be approved by an Authorized Officer,
with the advice of Disclosure Counsel in consultation with the Counsel to the Authority, such
approval to be conclusively evidenced by the execution and delivery thereof. Each of the
Authorized Officers is hereby authorized to execute the final form of the Official Notice Inviting
Bids, for and in the name and on behalf of the Authority. Sealed proposals shall be received at
the time and place provided for in the Official Notice Inviting Bids. Each Authorized Officer is
hereby authorized to accept the best bid, or to reject all bids therefor, in accordance with the
terms of the Official Notice Inviting Bids. Any irregularities with respect to such bid may be
waived after consultation with Bond Counsel. The aggregate principal amount of the Bonds
shall not exceed $30,000,000, and the true interest cost of the Bonds shall not exceed 4.00%.
The form of the Notice of Intention to Sell, on file with the Secretary, together with such
additions thereto and changes therein as may be approved by an Authorized Officer, with the
advice of Disclosure Counsel in consultation with the Counsel to the Authority, is hereby
approved, and use of the Notice of Intention to Sell in connection with the offering and sale of
the Bonds is hereby authorized and approved. The Authorized Officers are each hereby
authorized and directed, for and in the name and on behalf of the Authority, to cause the Notice
of Intention to Sell to be published in (a) The Bond Buyer (or such other financial publication
generally circulated throughout the State of California or reasonably expected to be disseminated
among prospective bidders for the Bonds as an Authorized Officer shall approve as being in the
best interests of the District) at least five (5) days, prior to the date set for the opening of bids in
the Official Notice Inviting Bids with such additions thereto and changes therein as an
Authorized Officer may require or approve, such requirement or approval to be conclusively
evidenced by such publishing of the Notice of Intention to Sell. An Authorized Officer may
withdraw or modify the Official Notice Inviting Bids and the Notice of Intention to Sell, or
either, at any time by notice published via Thomson Municipal News or other means determined
by such Authorized Officer to reasonably reach potential bidders for the Bonds. If the
Authorized Officer should withdraw the Official Notice Inviting Bids or the Notice of Intention
to Sell at any time before the Bonds are awarded, and should at a later date determine that it is
desirable to receive bids for the Bonds, the Authorized Officer is hereby authorized to
redistribute the Official Notice Inviting Bids and republish the Notice of Intention to Sell Bonds
with such modifications or revisions as are approved by the Authorized Officer.
SECTION 9. Good Faith Estimates. In accordance with SB 450, good faith
estimates of the following have been presented at this meeting: (a) the true interest cost of the
Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the
amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third
parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and
(d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the
Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds.
SECTION 10. Official Actions. The Authorized Officers, the Secretary and all
other officers of the Authority are hereby authorized and directed, for and in the name and on
behalf of the Authority, to do any and all things and take any and all other actions, including the
publication of any notices necessary or desirable in connection with the Project, the sale of the
Bonds, procurement of municipal bond insurance and/or a reserve surety, and execution and
delivery of any and all assignments, certificates, requisitions, agreements, notices, consents,
instruments of conveyance, warrants, escrow instructions and other documents, which they, or
any of them, deem necessary or advisable to consummate the lawful issuance and sale of the
Bonds and the consummation of the transactions as described herein.
SECTION 11. Ratification. All actions heretofore taken by any Authorized
Officer or any officer, employee or agent of the Authority with respect to the issuance, delivery
and sale of the Bonds or in connection with or related to any of the agreements referred to herein,
are hereby approved, confirmed and ratified.
SECTION 12. Effective Date of Resolution. This Resolution shall take effect
immediately upon its adoption.
SECTION 13. The Secretary shall certify to the adoption of this resolution.
PASSED, APPROVED, AND ADOPTED this day of May 2019.
CHAIR
ATTEST:
SECRETARY
DATE:
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 JPA 19- was duly adopted by the Board of the Santa
Clarita Public Financing Authority at a regular meeting thereof, held on the day of
2019, by the following vote:
AYES: BOARDMEMBERS:
NOES: BOARDMEMBERS:
ABSENT: BOARDMEMBERS:
SECRETARY
RESOLUTION NO. 19 -
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
CLARITA, CALIFORNIA, APPROVING THE EXECUTION AND
DELIVERY OF A COUNTY LEASE RELATING TO THE PROPOSED
NEW SHERIFF STATION FACILITIES, AND AUTHORIZING THE
TAKING OF CERTAIN ACTIONS IN CONNECTION THEREWITH
WHEREAS, in May 2016, the City of Santa Clarita, California (the "City") and
the County of Los Angeles (the "County") entered into a Memorandum of Understanding (the
"MOU") to construct a new sheriff station, along with a vehicle maintenance facility and helipad
to serve the Santa Clarita Valley; and
WHEREAS, the City has commenced construction of an approximately 46,500
square foot sheriff station building, an approximately 4,100 square foot service maintenance
building and related facilities to be located on approximately 7.6 net acres of City property at
26201 Golden Valley Road within the City (the "Project"); and
WHEREAS, the City has requested that the Santa Clarita Public Financing
Authority (the "Authority") issue its Lease Revenue Bonds (Sheriff Station Project) Series 2019
(the "Bonds") for the purpose of financing a portion of the costs of the Project; and
WHEREAS, in connection with the issuance of the Bonds it is proposed that the
City and the Authority enter into (a) a Site Lease (the "Site Lease") pursuant to which the City
will lease the site for the Project and (b) a Lease Agreement (the :Lease") pursuant to which City
will leaseback the site and the Project (collectively, the "Leased Property") from the Authority;
and
WHEREAS, pursuant to the MOU, upon completion of the Project and subject to
the terms of the Lease and the Site Lease, the County intends to sublease the Leased Property
from the City pursuant to the "County of Los Angeles, Chief Executive Office Lease
Agreement", by and between the City and the County (the "County Lease"), the form of which is
on file with the City Clerk of the City; and
WHEREAS, the City Council has reviewed the form of the County Lease.
NOW, THEREFORE, the City Council of the City of Santa Clarita, California,
does hereby resolve as follows:
SECTION 1. Recitals. All of the above recitals are true and correct and the City
Council so finds.
SECTION 2. Approval of County Lease. The County Lease, in substantially the
form on file with the City Clerk of the City and presented to the City Council at this meeting, is
hereby approved. The City Manager or designee is hereby authorized and directed, for and in the
name and on behalf of the City, to execute and deliver the County Lease, with such revisions,
amendments and completions as shall be approved by the City Manager or designee, subject to
City Attorney approval, such approval to be conclusively evidenced by such execution and
delivery, and the City Clerk is hereby authorized to attest to such execution.
SECTION 3. Official Actions. All officers of the City are hereby authorized and
directed, for and in the name and on behalf of the City, to do any and all things and take any and
all other actions in connection with the County Lease. The City Manager or designee is
authorized to execute all certificates, notices, consents and associated documents with the
County Lease which the City Manager or designee deem necessary or advisable to consummate
the transaction as described herein.
SECTION 4. Ratification. All actions heretofore taken by the City Manager or
any officer, employee or agent of the City with respect to the County Lease, are hereby
approved, confirmed and ratified.
SECTION 5. Effective Date of Resolution. This Resolution shall take effect
immediately upon its adoption.
SECTION 6. The City Clerk shall certify to the adoption of this resolution.
PASSED, APPROVED, AND ADOPTED this day of 2019.
MAYOR
ATTEST:
CITY CLERK
DATE:
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 19- was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the day of 2019, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
NRF draft of 4/11/19
11011300111110
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Dated as of June 1, 2019
Relating to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF
BONDS; EQUAL SECURITY........................................................................ 2
SECTION 1.01.
Definitions......................................................................................
2
SECTION 1.02.
Rules of Construction..................................................................
10
SECTION 1.03.
Authorization and Purpose of Bonds ...........................................
11
SECTION 1.04.
Equal Security..............................................................................
11
ARTICLE II ISSUANCE OF BONDS...............................................................................
11
SECTION 2.01.
Designation..................................................................................
11
SECTION 2.02.
Terms of Bonds............................................................................
11
SECTION 2.03.
Redemption of Bonds..................................................................
12
SECTION 2.04.
Form of Bonds.............................................................................
14
SECTION 2.05.
Execution of Bonds......................................................................
14
SECTION 2.06.
Transfer of Bonds........................................................................
15
SECTION 2.07.
Exchange of Bonds......................................................................
15
SECTION 2.08.
Temporary Bonds.........................................................................
15
SECTION 2.09.
Registration Books.......................................................................
15
SECTION 2.10.
Bonds Mutilated, Lost, Destroyed or Stolen ................................
16
SECTION 2.11.
Use of Depository........................................................................
16
ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS .......................................
19
SECTION 3.01.
Issuance of Bonds........................................................................
19
SECTION 3.02.
Application of Proceeds of Sale of Bonds ...................................
19
SECTION 3.03.
Costs of Issuance Fund................................................................
19
SECTION 3.04.
Project Fund.................................................................................19
SECTION 3.05.
Insurance and Condemnation Fund .............................................
20
SECTION 3.06.
Validity of Bonds.........................................................................
20
SECTION 3.07.
Additional Bonds.........................................................................
20
ARTICLE IV REVENUES; FLOW OF FUNDS.................................................................
21
SECTION 4.01.
Pledge of Revenues; Assignment of Rights .................................
21
SECTION 4.02.
Lease Revenue Fund; Receipt, Deposit and Application of
Revenues......................................................................................
22
SECTION 4.03.
Rebate Fund.................................................................................
23
SECTION 4.04.
Investments..................................................................................
24
SECTION 4.05.
Valuation and Disposition of Investments ...................................
24
ARTICLE V COVENANTS OF THE AUTHORITY........................................................ 25
SECTION 5.01. Punctual Payment......................................................................... 25
SECTION 5.02. Extension of Payment of Bonds ................................................... 25
SECTION 5.03. Against Encumbrances................................................................. 25
73308393.7 i
TABLE OF CONTENTS
(continued)
Page
SECTION 5.04.
Power to Issue Bonds and Make Pledge and Assignment...........
25
SECTION 5.05.
Accounting Records and Financial Statements ............................
25
SECTION 5.06.
Additional Obligations.................................................................
26
SECTION5.07.
Lease............................................................................................
26
SECTION 5.08.
Tax Covenants.............................................................................
26
SECTION 5.09.
Further Assurances.......................................................................
30
ARTICLE VI THE TRUSTEE.............................................................................................
31
SECTION 6.01.
Appointment of Trustee...............................................................
31
SECTION 6.02.
Acceptance of Trusts....................................................................
31
SECTION 6.03.
Fees, Charges and Expenses of Trustee .......................................
34
SECTION 6.04.
Notice to Owners of Default........................................................
35
SECTION 6.05.
Intervention by Trustee................................................................
35
SECTION 6.06.
Removal of Trustee......................................................................
35
SECTION 6.07.
Resignation by Trustee................................................................
35
SECTION 6.08.
Appointment of Successor Trustee ..............................................
35
SECTION 6.09.
Merger or Consolidation..............................................................
36
SECTION 6.10.
Concerning any Successor Trustee ..............................................
36
SECTION 6.11.
Appointment of Co-Trustee.........................................................
36
SECTION 6.12.
Indemnification; Limited Liability of Trustee .............................
37
ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE ...............
37
SECTION 7.01.
Amendment..................................................................................
37
SECTION 7.02.
Effect of Supplemental Indenture ................................................
38
SECTION 7.03.
Endorsement or Replacement of Bonds After Amendment ........
38
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF OWNERS ........................
38
SECTION 8.01.
Events of Default.........................................................................
38
SECTION 8.02.
Remedies; No Acceleration.........................................................
39
SECTION 8.03.
Application of Revenues and Other Funds After Default............
40
SECTION 8.04.
Power of Trustee to Control Proceedings ....................................
40
SECTION 8.05.
Appointment of Receivers...........................................................
41
SECTION 8.06.
Non-Waiver..................................................................................
41
SECTION 8.07.
Rights of Owners.........................................................................
41
SECTION 8.08.
Termination of Proceedings.........................................................
42
ARTICLE IX MISCELLANEOUS.................................................
SECTION 9.01. Limited Liability of Authority ................
SECTION 9.02. Benefits of Indenture Limited to Parties.
SECTION 9.03. Defeasance; Discharge of Indenture .......
11
.. 42
.. 42
.. 42
.. 43
iii
TABLE OF CONTENTS
(continued)
Page
SECTION 9.04.
Successor is Deemed Included in All References to
Predecessor..................................................................................
43
SECTION 9.05.
Content of Certificates and Opinions ...........................................
44
SECTION 9.06
Execution of Documents by Owners ...........................................
44
SECTION 9.07.
Disqualified Bonds.......................................................................
45
SECTION 9.08.
Waiver of Personal Liability........................................................
45
SECTION 9.09.
Partial Invalidity...........................................................................
45
SECTION 9.10.
Destruction of Canceled Bonds ...................................................
45
SECTION 9.11.
Funds and Accounts.....................................................................
45
SECTION 9.12.
Payment on Business Days..........................................................
45
SECTION9.13.
Notices.........................................................................................
46
SECTION 9.14
Unclaimed Moneys......................................................................
46
SECTION 9.15
Governing Law............................................................................
47
EXHIBIT A — FORM OF
BOND
EXHIBIT B — FORM OF COSTS OF ISSUANCE REQUISITION
EXHIBIT C — FORM OF
PROJECT FUND REQUISITION
EXHIBIT D — FORM OF
NET PROCEEDS REQUISITION
iii
INDENTURE
This INDENTURE is dated as of June 1, 2019, by and between the SANTA CLARITA
PUBLIC FINANCING AUTHORITY, a joint powers authority organized and existing under the
laws of the State of California (the "Authority"), and THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., a national banking association duly organized and existing under the
laws of the United States with a corporate trust office in Los Angeles, California and qualified to
accept and administer the trusts hereby created, as trustee (the "Trustee").
RECITALS:
WHEREAS, the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated as of July 9, 1991, as
amended on May 10, 2016, 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 (no longer a
member), and the Santa Clarita Parking Authority, and under the provisions of Articles 1 through
4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of
the State of California (the "Act"), and is authorized pursuant to Article 4 of the Act (the "Bond
Law") to borrow money for the purpose of financing and refinancing public capital
improvements; and
WHEREAS, the City desires to finance a portion of new sheriff station facilities for the
City, as described herein; and
WHEREAS, the City has requested that the Authority issue its Lease Revenue Bonds
(Sheriff Station Project) Series 2019 (the "Bonds") for the purpose of financing a portion of the
construction and improvements of an approximately 46,500 square foot sheriff station building
and approximately 4,100 square foot service maintenance building to be located on
approximately 7.6 net acres of City property at 26201 Golden Valley Road within the City (the
"Proj ect"); and
WHEREAS, the Authority intends to issue the Bonds for such purpose to assist the City;
and
WHEREAS, in connection with the issuance of the Bonds, the City and the Authority
have entered into a Site Lease, dated as of June 1, 2019 (the "Site Lease"), between the City and
the Authority, whereby the Authority has agreed to lease certain property consisting of the
property described therein (the "Site") from the City; and
WHEREAS, the Authority and the City have entered into a Lease Agreement, dated as of
June 1, 2019 (the "Lease"), between the Authority and the City, whereby the Authority has
agreed to lease the Site and, upon substantial completion, the facilities and improvements
constituting the Project (the "Leased Property") to the City; and
WHEREAS, under and pursuant to the Lease, the City is obligated to make Base Rental
Payments (as defined herein) to the Authority for the sublease of the Leased Property; and
WHEREAS, as security for its obligations hereunder, the Authority has assigned to the
Trustee all its rights to receive the Base Rental Payments scheduled to be paid by the City under
and pursuant to the Lease and certain other rights to the Trustee pursuant to the Indenture; and
WHEREAS, the City has determined that the issuance of the Bonds will result in
significant public benefits including demonstrable financing cost savings and more efficient
delivery of services to the community; and
WHEREAS, to provide for the authentication and delivery of the Bonds, to establish and
declare the terms and conditions upon which the Bonds are to be issued and to secure the
payment of the principal thereof, premium, if any, and interest thereon, the Authority has
authorized the execution and delivery of this Indenture; and
WHEREAS, the Authority has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the Authority, authenticated and delivered by
the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and
to constitute this Indenture a valid and binding agreement for the uses and purposes herein set
forth in accordance with its terms, have been done and taken, and the execution and delivery of
the Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time issued
and Outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the
terms and conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase
and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the
receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the
Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined
in this Section shall for all purposes of this Indenture and of any Supplemental Indenture and of
the Bonds and of any certificate, opinion, request or other document herein mentioned have the
meanings herein specified.
"Act" means Articles 1 through 4 (commencing with Section 6500), Chapter 5,
Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or
as thereafter amended from time to time.
"Additional Bonds" mean the Bonds of an additional Series authorized by a
Supplemental Indenture that are issued pursuant to this Indenture.
2
"Additional Rental Payments" means the additional rental payable by the City under
and pursuant to Section 3(b) of the Lease.
"Annual Debt Service" means, for each Bond Year with respect to the Bonds, the sum
of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal
amount of the Outstanding Bonds scheduled to mature or required to be redeemed by mandatory
sinking account redemption in such Bond Year.
"Assignment Agreement" means that certain Assignment Agreement, dated as of
June 1, 2019, by and between the Authority and the Trustee.
"Authority" means the Santa Clarita Public Financing Authority, a joint powers
authority duly organized and existing under the Joint Exercise of Powers Agreement, as
amended, and the laws of the State.
"Authority Board" means the governing body of the Authority.
"Authorized Denominations" means $5,000 or any integral multiple thereof.
"Base Rental Payments" means all Base Rental Payments under the Lease with respect
to the Bonds, as the context requires, and any additional base rental payments made under the
Lease with respect to any Additional Bonds issued in accordance with this Indenture.
"Bond Counsel" means (a) Norton Rose Fulbright US LLP, or (b) any other attorney or
firm of attorneys appointed by or acceptable to the Authority of nationally recognized experience
in the area of municipal finance.
"Bond Law" means the Marks -Roos Local Bond Pooling Act of 1985, constituting
Article 4 of the Act, as in existence on the Closing Date or as thereafter amended from time to
time.
"Bond Year" means each twelve-month period extending from June 2 in one calendar
year to December 1 of the succeeding calendar year, both dates inclusive, except that the first
Bond Year shall begin on the Closing Date and shall end on June 1, 2019.
"Bonds" means the Santa Clarita Public Financing Authority Lease Revenue Bonds
(Sheriff Station Project), Series 2019, and, where the context requires, any Additional Bonds.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a day on which
banking institutions in the city in which the Trustee maintains its Trust Office are authorized or
required by law or executive order to close or (iii) a day on which the New York Stock Exchange
is closed.
"Capitalized Interest" means amounts derived from the proceeds of the Bonds and
deposited in the Capitalized Interest Subaccount of the Interest Account of the Lease Revenue
Fund to pay interest on the Bonds and interest earned on such amounts to the extent that such
interest earned is required to be applied to pay interest on the Bonds.
3
"Capitalized Interest Subaccount" means the subaccount by that name within the
Interest Account of the Lease Revenue Fund.
"Certificate of the Authority" means a certificate in writing signed by a Responsible
Officer of the Authority.
"Certificate of the City" means a certificate in writing signed by a Responsible Officer
of the City.
"City" means the City of Santa Clarita, California.
"Closing Date" means June , 2019, being the date of delivery of the Bonds to the
Original Purchaser thereof.
"Code" means the Internal Revenue Code of 1986.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority and
the Trustee, compensation to any financial consultants or underwriters, legal fees and expenses
(including fees and expenses of Bond and Disclosure Counsel), filing and recording costs, rating
agency fees, costs of preparation and reproduction of documents, costs of printing and fees and
costs for any guaranty, surety bond, letter of credit or other credit facility.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"Defeasance Securities" means (1) cash, (2) non -callable direct obligations of the
United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in
future interest and principal payments on Treasuries held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has the right
to proceed directly and individually against the obligor and the underlying Treasuries are not
available to any person claiming through the custodian or to whom the custodian may be
obligated, (4) pre -refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's,
respectively.
"Depository" means DTC and its successors and assigns or if (a) the then Depository
resigns from its functions as securities depository of the Bonds, or (b) the Authority discontinues
use of the Depository pursuant to Section 2.13 hereof, any other securities depository which
agrees to follow the procedures requested to be followed by a securities depository in connection
with the Bonds and which is selected by the Authority.
"Depository Participant" means a member of, or participant in, the Depository.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Event of Default" means any of the events described in Section 8.01.
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"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "fair market value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit the value of
which is determined in accordance with applicable regulations under the Code, (ii) the
investment is an agreement with specifically negotiated withdrawal or reinvestment provisions
and a specifically negotiated interest rate (for example, a guaranteed investment contract, a
forward supply contract or other investment agreement) the value of which is determined in
accordance with applicable regulations under the Code, (iii) the investment is a United States
Treasury Security -State and Local Government Series that is acquired in accordance with
applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the
Local Agency Investment Fund of the State of California, but only if at all times during which
the investment is held its yield is reasonably expected to be equal to or greater than the yield on a
reasonably comparable direct obligation of the United States.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar
year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month
period selected and designated by the Authority as its official fiscal year period.
"Indenture" means this Indenture, dated as of June 1, 2019, as originally executed or as
it may from time to time be amended or supplemented in accordance herewith.
"Independent Certified Public Accountant" means any certified public accountant or
firm of certified public accountants appointed and paid by the Authority, and who, or each of
whom:
(a) is in fact independent and not under domination of the Authority or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or the
City; and
(c) is not connected with the Authority or the City as an officer or employee of the
Authority or the City but who may be regularly retained to make annual or other audits of the
books of or reports to the Authority or the City.
"Information Services" means the Electronic Municipal Market Access System
(referred to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at
http:llemma.msrb.org; provided, however, in accordance with then current guidelines of the
Securities and Exchange Commission, Information Services shall mean such other organizations
providing information with respect to called Bonds as the Authority may designate in writing to
the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and
held by the Trustee pursuant to Section 3.05.
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"Interest Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(a).
"Interest Payment Date" means June 1 and December 1 of each year, commencing
December 1, 2019.
"Joint Exercise of Powers Agreement" means that certain Joint Exercise of Powers
Agreement, dated as of July 9, 1991, as amended on May 10, 2016, by and among the City, the
Successor Agency to the Redevelopment Agency of the City of Santa Clarita, and the Santa
Clarita Parking Authority, together with any amendments thereof and supplements thereto.
Currently, the Successor Agency is no longer a member of the Authority.
"Lease" means that certain Lease Agreement, dated as of June 1, 2019, by and between
the Authority as lessor and the City as lessee, as it may be further amended or modified.
"Lease Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02.
"Leased Property" means, collectively, those certain parcels of real property, together
with the improvements to be constructed thereon, leased by the Authority to the City pursuant to
the Lease, as more fully described in Exhibit A to the Lease, as such Exhibit A may be revised
and amended from time to time pursuant to the terms hereof and of the Lease.
"Maximum Annual Debt Service" in respect of any Bond Year means the largest of the
sums obtained for that or any succeeding Bond Year after totaling the following for each such
Bond Year:
(a) The principal amount of all Outstanding Bonds maturing or required to be
redeemed by mandatory sinking account redemption in such Bond Year; and
(b) The interest that would be due during such Bond Year on the aggregate principal
amount of Bonds which would be Outstanding in such Bond Year if the Bonds Outstanding on
the date of such computation were to mature or be redeemed in accordance with the applicable
maturity or mandatory sinking account redemption schedule. At the time and for the purpose of
making such computation, the amount of Bonds already retired in advance of the above
mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon.
"Moody's" means Moody's Investors Service, Inc., a corporation organized and existing
under the laws of the State of Delaware, its successors and their assigns, or, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a securities rating
agency, any other nationally recognized securities rating agency designated by the Authority
with notice to the Trustee.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant hereto.
"Original Purchaser" means, with respect to the Bonds,
the initial purchaser of the Bonds.
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"Outstanding," when used as of any particular time with reference to Bonds and
Additional Bonds, means (subject to the provisions of Section 9.07) all Bonds and Additional
Bonds theretofore executed, issued and delivered by the Authority under this Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for
cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and
(c) Bonds in lieu of which or in substitution for which other Bonds shall have been
executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
"Owner" when used with respect to any Bond, means the person in whose name the
ownership of such Bond shall be registered on the Registration Books.
"Permitted Investments" means any of the following which at the time of investment
are legal investments under the laws of the State for the moneys proposed to be invested therein
(the Trustee is entitled to conclusively rely on a Written Request of the Authority directing
investment in such Permitted Investment as a certification by the Authority to the Trustee that
such Permitted Investment is a legal investment under the laws of the State), but only to the
extent that the same are acquired at Fair Market Value:
(a) Direct obligations of the United States of America (including obligations issued
or held in book -entry form on the books of the Department of the Treasury of the United States
of America) or obligations the timely payment of the principal of and interest on which are fully
guaranteed by the United States of America, including instruments evidencing a direct ownership
interest in securities described in this clause such as Stripped Treasury Coupons at the time of
purchase rated or assessed in the highest rating category by S&P and Moody's and held by a
custodian for safekeeping on behalf of holders of such securities.
(b) Bonds or notes which are exempt from federal income taxes and for the payment
of which cash or obligations described in clause (a) of this definition in an amount sufficient to
pay the principal of, premium, if any, and interest on when due have been irrevocably deposited
with a trustee or other fiscal depositary and which at the time of purchase are rated the same
rating as direct obligations of the United States of America by S&P and Moody's.
(c) Obligations, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following: Federal Home Loan Bank System, Government National
Mortgage Association, Farmer's Home Administration, Federal Home Loan Mortgage
Corporation or Federal Housing Administration; provided that with respect to the funds and
accounts established under this Indenture, such obligations shall at no time exceed an amount
equal to ten percent (10%) of the aggregate principal amount of the Bonds Outstanding.
(d) Deposit accounts certificates of deposit or savings accounts (i) fully insured by
the Federal Deposit Insurance Corporation or (ii) with banks whose short term obligations are at
the time of purchase rated no lower than A-1 by S&P and P-1 by Moody's including those of the
Trustee and its affiliates.
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(e) Federal funds or banker's acceptances with a maximum term of one year of any
bank that at the time of purchase has an unsecured, uninsured and unguaranteed obligation rating
of "Prime -1" or "A3" by Moody's and "A-1" or "A" or better by S&P (including the Trustee and
its affiliates).
(f) Repurchase or reverse repurchase obligations (including those of the Trustee or
any of its affiliates) with a term not exceeding 30 days pursuant to a written agreement between
the Trustee and either a primary dealer on the Federal Reserve reporting dealer list which falls
under the jurisdiction of the SIPC or a federally chartered commercial bank whose long-term
debt obligations at the time of purchase are rated A or better by S&P and Moody's, with respect
to any security described in clause (1); provided that the securities which are the subject of such
repurchase obligation (i) must be free and clear of all liens, (ii) in the case of a SIPC dealer, were
not acquired pursuant to a repurchase or reverse repurchase agreement, (iii) must be deposited
with the Trustee and maintained through weekly market valuations in an amount equal to 104%
of the invested funds plus accrued interest; and further provided that the Trustee must have a
valid first perfected security interest in such securities.
(g) Taxable government money market portfolios that at the time of purchase have a
rating by S&P of Am -G or Am or better and rated in one of the three highest rating categories of
Moody's, subject to a maximum permissible limit equal to six months of principal and interest
on the Bonds including such portfolios for which the Trustee, its affiliates or subsidiaries receive
and retains a fee for services provided to the portfolio, whether as a custodian, transfer agent,
investment advisor or otherwise.
(h) Tax-exempt government money market portfolios that at the time of purchase
have a rating by S&P of Am -G or Am or better and rated in one of the three highest rating
categories of Moody's consisting of securities which are rated in the highest Rating Categories
of S&P and Moody's subject to a maximum permissible limit equal to six months of principal
and interest on the Bonds, including such portfolios for which the Trustee, its affiliates or
subsidiaries receive and retains a fee for services provided to the portfolio, whether as a
custodian, transfer agent, investment advisor or otherwise.
(i) Money market funds registered under the Investment Company Act of 1940, the
shares in which are registered under the Securities Act of 1933 and that at the time of purchase
have a rating by S&P of AAAm-G or AAAm and rated in one of the two highest Rating
Categories of Moody's, including such funds for which the Trustee, its affiliates or subsidiaries
receive and retains a fee for services provided to the fund, whether as a custodian, transfer agent,
investment advisor or otherwise.
(k) United States of America dollar denominated commercial paper issued or
guaranteed by a United States or foreign corporation, company, financial institution, trust or
other entity, including both unsecured debt and asset-backed programs with a minimum rating of
A-1 (or the equivalent) by any one Nationally Recognized Statistical Rating Organization
(NRSRO).
0) The Local Agency Investment Fund of the State, created pursuant to
Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to
register such investment in its name.
(k) Shares of beneficial interest issued by a local agency investment pool joint powers
authority organized pursuant to Section 6509.7 of the California Government Code, that invests
in the securities and obligations authorized in Section 53601 of the California Government Code,
as it may be amended. At the time of purchase, the pool shall have a minimum rating of AAAm
or the equivalent by any one NRSRO.
(1) Investment agreements, including guaranteed investment contracts ("GICs")
forward purchase agreements and reserve fund put agreements with banks or other financial
institutions rated, or guaranteed by institutions rated, or with senior unsecured debt rated, at the
time of entrance into such agreement by S&P or Moody's, in one of the three highest rating
categories assigned by such agencies.
(m) Any other investments which meet the criteria established by applicable published
investment guidelines issued by each rating agency then rating the Bonds.
"Principal Account" means the account by that name established and held by the
Trustee pursuant to Section 4.02(b).
"Principal Payment Date" means each June 1, commencing June 1, 20
"Project" means the capital improvements and facilities for the City partially financed
with the proceeds of the Bonds, including an approximately 45,000 square foot sheriff station
building and approximately 4,000 square foot service maintenance building to be located on the
Site.
"Project Costs" means all costs which are paid from moneys on deposit in the Project
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 Project;
(b) obligations incurred for labor and materials in connection with the Project;
(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 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,
and for supervising construction, as well as for the performance of all
other duties required by or consequent to the Project;
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(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 Project; and
(f) all financing costs incurred in connection with the Project, including but
not limited to Costs of Issuance and other costs incurred in connection
herewith and the financing of the Project.
"Project Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3.04.
"Rebate Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.03.
"Rebate Requirement" means, in respect of an issue of Bonds, obligations imposed
under section 148(f) the Code in respect of such issue.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month immediately preceding such Interest Payment Date, whether or not
such day is a Business Day.
"Registration Books" means the records maintained by the Trustee pursuant to
Section 2.09 for the registration and transfer of ownership of the Bonds.
"Rental Payments" means, collectively, the Base Rental Payments, any additional base
rental payments made in connection with Additional Bonds and any Additional Rental Payments.
"Responsible Officer" means, with respect to the Authority, any member of the
Authority Board, the Executive Director or the Treasurer of the Authority, or any other person
authorized by resolution of the Authority Board to act on behalf of the Authority under or with
respect to the Lease or this Indenture, and means, with respect to the City, the Mayor, the City
Manager, the Assistant City Manager, the Deputy City Manager, the City Treasurer or any other
officer of the City duly authorized for that purpose by the Mayor, the City Manager or by the
City Council, as evidenced in writing to the Trustee.
"Revenues" means (i) all Base Rental Payments payable by the City pursuant to the
Lease (including prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all
moneys on deposit in the funds and accounts (other than the Rebate Fund) established hereunder,
(iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance
proceeds or condemnation awards received by or payable to the Trustee relating to the Base
Rental Payments.
"S&P" means S&P Global Ratings, its successors and assigns or, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a securities rating
agency, any other nationally recognized securities rating agency designated by the Authority
with notice to the Trustee.
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"Securities Depositories" means The Depository Trust Company, New York, New York
and its successors and assigns or if (i) the then Securities Depository resigns from its functions as
depository of the Bonds or (ii) the Authority discontinues use of the then Securities Depository
pursuant to Section 2. 11, any other securities depository which agrees to follow the procedures
required to be followed by a securities depository in connection with the Bonds and which is
selected by the Authority.
"Series" whenever used in this Indenture with respect to the Bonds or Additional Bonds,
means all of the Bonds designated as being of the same series, authenticated and delivered in a
simultaneous transaction, regardless of variations in maturity, interest rate, redemption and other
provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange of or
in lieu of or in substitution for (but not to refund) such Bonds as provided herein.
"Site" means the approximately 7.6 net acre parcel owned by the City at 26201 Golden
Valley Road, Santa Clarita.
"Site Lease" means that certain Site Lease, dated as of June 1, 2019, by and between the
City and the Authority, pursuant to which the Authority leases the Site from the City.
"State" means the State of California.
"Supplemental Indenture" means any agreement supplemental to or amendatory of this
Indenture entered into in accordance with the provisions of Article VII.
"Tax Certificate" means the Tax Certificate dated the date of the original delivery of the
Bonds relating to the requirements of certain provisions of the Code, as such certificate may
from time to time be modified or supplemented in accordance with the terms thereof.
"Term Bonds" mean, collectively, the Bonds maturing on June 1, [ I
"Trust Office" means the corporate trust office of the Trustee in Los Angeles, California
or such other offices as may be specified to the Authority by the Trustee in writing or, solely for
purposes of the surrender of the Bonds for payment, transfer or exchange, the corporate trust
operations or agency office designated by the Trustee.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., and its
successors and assigns, and any other banking corporation or association that may at any time be
substituted in its place as provided in Article VI hereof.
"Written Request of the Authority" means a request in writing signed by a Responsible
Officer of the Authority.
"Written Request of the City" means a request in writing signed by a Responsible
Officer of the City.
SECTION 1.02. Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of
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this Indenture; and the words "herein," "hereof," "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
SECTION 1.03. Authorization and Purpose of Bonds. The Authority has reviewed
all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a
result of such review, and hereby finds and determines that all things, conditions, and acts
required by law to exist, to happen and to be performed precedent to and in the issuance of the
Bonds do exist, have happened and have been performed in due time, form and manner as
required by law, and the Authority is now authorized under the Joint Exercise of Powers
Agreement and the Bond Law and each and every requirement of law, to issue the Bonds in the
manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the
issuance of the Bonds pursuant to the Bond Law and this Indenture for the purpose described in
the recitals hereof.
SECTION 1.04. Equal Security. In consideration of the acceptance of the Bonds by
the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between
the Authority and the Owners from time to time of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners without preference, priority or
distinction as to security or otherwise of any of the Bonds over any of the others by reason of the
number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any
cause whatsoever, except as expressly provided therein or herein.
ARTICLE II
ISSUANCE OF BONDS
SECTION 2.01. Designation. The Bonds are authorized to be issued by the Authority
under and subject to the Bond Law and the terms of this Indenture and shall be designated,
respectively, as the "Santa Clarita Public Financing Authority Lease Revenue Bonds (Sheriff
Station Project), Series 2019." The Bonds shall be issued in the original aggregate principal
amount of $[principal amount].
SECTION 2.02. Terms of the Bonds. The Bonds shall be dated the Closing Date,
shall mature on the dates and in the amounts, and shall bear interest (calculated on the basis of a
360 -day year of twelve 30 -day months) at the rates, set forth in the following table:
Maturity Date Principal Interest
(June 1) Amount Rate
12
Maturity Date Principal Interest
(June 1) Amount Rate
$[principal amount]
The Bonds shall be delivered in fully registered form, numbered from one upwards in
consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The
Bonds shall be executed and delivered in their respective Authorized Denominations.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (i) it is executed during the period from the day after the Record
Date for an Interest Payment Date to and including such Interest Payment Date, in which event it
shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or prior to the
Record Date for the first Interest Payment Date, in which event it shall bear interest from the
Closing Date; provided, however, that if, at the time of authentication of any Bond interest with
respect to such Bond is in default, such Bond shall bear interest from the Interest Payment Date
to which interest has been paid or made available for payment with respect to such Bond, or if no
interest has been paid, from the date of initial delivery of the Bonds.
Interest with respect to any Bond shall be payable in lawful money of the United States of
America on each Interest Payment Date to the Owner thereof as of the close of business on the
Record Date, such interest to be paid by check of the Trustee, mailed by first class mail no later
than the Interest Payment Date to the Owner at his address as it appears, on such Record Date, on
the Registration Books maintained by the Trustee; provided, however, that at the written request
of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds filed
with the Trustee prior to any Record Date, interest on such Bonds shall be paid to such Owner on
each succeeding Interest Payment Date (unless such request has been revoked in writing) by wire
transfer of immediately available funds to an account in the United States designated in such
written request. Payments of defaulted interest with respect to the Bonds shall be paid by check
or draft to the registered Owners of the Bonds as of a special record date to be fixed by the
Trustee, notice of which special record date shall be given to the registered Owners of the Bonds
not less than ten days prior thereto. The principal of and premium, if any, on the Bonds are
payable by check when due upon surrender thereof at the Trust Office in lawful money of the
United States of America.
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SECTION 2.03. Redemption of Bonds.
(a) Extraordinary Redemption. The Bonds shall be subject to redemption prior to
their respective maturity dates, upon written notice from the Authority to the Trustee at least
forty-five (45) days (or such lesser number of days acceptable to the Trustee, in the sole
discretion of the Trustee), from the date fixed for redemption, as a whole or in part on a pro rata
basis, on any date from prepayments of the applicable Base Rental Payments made by the City
pursuant to the Lease from funds received by the City due to a taking of the Leased Property or
any portion thereof under the power of eminent domain or from insurance proceeds received by
the City due to damage to or destruction of the Leased Property or any portion thereof, under the
circumstances and upon the conditions and terms prescribed herein and in the Lease.
Redemption of Bonds pursuant to this subparagraph (a) shall be made at a redemption
price equal to the sum of the principal of the Bonds to be redeemed plus accrued but unpaid
interest thereon to the date fixed for redemption, without premium.
(b) Bonds Optional Redemption from Prepayments of Base Rental Payments. The
Bonds maturing on or after June 1, 20 shall be subject to redemption prior to their respective
maturity dates, upon written notice from Authority to the Trustee at least forty-five (45) days (or
such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior
to the date fixed for redemption, as a whole or in part on any date on or after June 1, 20, in
such maturities as the Authority shall designate (and by lot within any maturity), from
prepayments of Base Rental Payments made at the option of the City pursuant to Section 11(b)
of the Lease, at a redemption price equal to the principal amount of the Bonds to be redeemed,
plus accrued but unpaid interest to the date fixed for redemption, without premium.
(c) Mandatory Sinking Account Redemption. The Term Bond maturing on June 1,
20 shall be subject to mandatory redemption, in part by lot, from sinking account payments set
forth in the following schedule commencing June 1, 20 , and on June 1 in each year thereafter
to and including June 1, 20 at a redemption price equal to the principal amount thereof to be
redeemed (without premium), together with interest accrued thereon to the date fixed for
redemption.
Redemption Date Principal Amount
(June 1 To be Redeemed
Maturity
The Term Bond maturing on June 1, 20 shall be subject to mandatory redemption, in
part by lot, from sinking account payments set forth in the following schedule commencing
June 1, 20, and on June 1 in each year thereafter to and including June 1, 20 at a redemption
price equal to the principal amount thereof to be redeemed (without premium), together with
interest accrued thereon to the date fixed for redemption.
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Redemption Date Principal Amount
(June 1 To be Redeemed
* Maturity
If some but not all of a Term Bond has been redeemed pursuant to extraordinary or
optional redemptions, the total amount of sinking account payments to be made subsequent to
such redemption shall be reduced in an amount equal to the principal amount of such Term Bond
so redeemed by reducing each such future sinking account payment on a pro rata basis (as nearly
as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice
filed by Authority with the Trustee. In the event of any reductions in the amount of sinking
account payments due as a result of some but not all of the Bonds being redeemed pursuant to
extraordinary or optional redemptions, the Authority shall provide the Trustee with a revised
schedule reflecting such reductions.
(d) Notice of Redemption. The Trustee on behalf and at the expense of the Authority
shall mail (by first class mail or other means acceptable to the recipient thereof) notice of any
redemption to the respective Owners designated for redemption at their respective addresses
appearing on the Registration Books, to the Securities Depositories and to one or more
Information Services, at least twenty (20) but not more than sixty (60) days prior to the date
fixed for redemption; provided, however, that neither failure to receive any such notice so mailed
nor any defect therein shall affect the validity of the proceedings for the redemption of such
Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the
notice, the redemption date, the redemption place and the redemption price and shall designate
the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of
redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be
redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the
Trustee for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date. Such notice shall further state, if so
determined by the Authority, that such notice may be rescinded at any time prior to the
redemption date.
Neither the Authority nor the Trustee shall have any responsibility for any defect in the
CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and
any such redemption notice may contain a statement to the effect that CUSIP numbers have been
assigned by an independent service for convenience of reference and that neither the Authority
nor the Trustee shall be liable for any inaccuracy in such numbers.
Any notice given pursuant to the preceding paragraph may be conditional and/or
rescinded by written notice given to the Trustee by the Authority and the Trustee shall provide
notice of such rescission as soon thereafter as practicable in the same manner, and to the same
recipients, as notice of such redemption was given pursuant to this Section. The Authority and
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the Trustee shall have no liability to the Owners or any other party related to or arising from such
rescission of redemption.
(e) Selection of Bonds for Redemption. Whenever provision is made in this Indenture
for the optional redemption of less than all of the Bonds of a series (other than mandatory
sinking account redemption), the Trustee shall select the Bonds to be redeemed from all Bonds
of such series not previously called for redemption, in such maturities as the Authority shall
designate (and by lot within any maturity). For purposes of such selection, all Bonds shall be
deemed to be comprised of separate $5,000 portions and such portions shall be treated as
separate Bonds, which may be separately redeemed.
(f) Partial Redemption of Bonds. In the event only a portion of any Bond is called
for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee
shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond
or Bonds of the same Series, interest rate and maturity date, in aggregate principal amount equal
to the unredeemed portion of the Bond being redeemed.
(g) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the principal of, premium, if any, and interest on the Bonds so called
for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to
any benefit under this Indenture other than the right to receive payment of the redemption price,
and no interest shall accrue thereon from and after the redemption date. All Bonds redeemed
pursuant to this Section 2.03 shall be canceled by the Trustee. All moneys held by or on behalf
of the Trustee for the payment of principal of or interest or premium on Bonds, whether at
redemption or maturity, shall be held in trust for the account of the Owners thereof and the
Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any
interest earned on, moneys so held.
SECTION 2.04. Form of Bonds. The Bonds, the form of Trustee's certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the form
set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or
appropriate variations, omissions and insertions, as permitted or required by this Indenture.
SECTION 2.05. Execution of Bonds. The Bonds shall be signed in the name and on
behalf of the Authority with the manual or facsimile signature of its Chair, and attested with the
manual or facsimile signature of its Secretary or any Assistant Secretary duly appointed by the
Authority Board, and shall be delivered to the Trustee for authentication by it. In case any
officer of the Authority who shall have signed any of the Bonds shall cease to be such officer
before the Bonds so signed shall have been authenticated or delivered by the Trustee or issued by
the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon
such authentication, delivery and issue, shall be as binding upon the Authority as though the
individual who signed the same had continued to be such officer of the Authority. Also, any
Bond may be signed on behalf of the Authority by any individual who on the actual date of the
execution of such Bond shall be the proper officer although on the nominal date of such Bond
such individual shall not have been such officer.
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Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A, manually executed on behalf of the Trustee, shall be
valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such
certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been
duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
SECTION 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred, upon the Registration Books, by the person in whose name it is registered, in person
or by his duly authorized attorney, upon presentation and surrender of such Bond for
cancellation, accompanied by delivery of a written instrument of transfer in a form approved by
the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the Authority
shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new
Bond or Bonds of like tenor, interest rate, series designation, maturity and aggregate principal
amount in Authorized Denominations. The cost of printing any Bonds and any services rendered
or expenses incurred by the Trustee in connection with any such transfer shall be paid by the
Authority, except that the Trustee shall require the payment by the Owner requesting such
transfer of any tax or other governmental charge required to be paid with respect to such transfer.
The Trustee shall not be required to transfer, pursuant to this Section, (a) any Bond during the
period established by the Trustee for the selection of Bonds for redemption or (b) any Bond
selected for redemption pursuant to Section 2.03(e). The transferor shall also provide or cause to
be provided to the Trustee all information necessary to allow the Trustee to comply with any
applicable tax reporting obligations, including without limitation any cost basis reporting
obligations under Internal Revenue Code Section 6045. The Trustee may rely on the information
provided to it and shall have no responsibility to verify or ensure the accuracy of such
information.
SECTION 2.07. Exchange of Bonds. Bonds may be exchanged at the Trust Office of
the Trustee for the same aggregate principal amount of Bonds of the same tenor, interest rate,
series designation, and maturity and of other Authorized Denominations. The cost of printing
any Bonds and any services rendered or expenses incurred by the Trustee in connection with any
such exchange shall be paid by the Authority, except that the Trustee shall require the payment
by the Owner requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange. The Trustee shall not be required to exchange, pursuant to
this Section, (a) any Bond during the period established by the Trustee for the selection of Bonds
for redemption or (b) any Bond selected for redemption pursuant to Section 2.03(e). The
transferor shall also provide or cause to be provided to the Trustee all information necessary to
allow the Trustee to comply with any applicable tax reporting obligations, including without
limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. The
Trustee may rely on the information provided to it and shall have no responsibility to verify or
ensure the accuracy of such information.
SECTION 2.08. Temporary Bonds. The Bonds may be issued initially in temporary
form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by the
Authority and may contain such reference to any of the provisions of this Indenture as may be
appropriate. Every temporary Bond shall be executed by the Authority and be registered and
authenticated by the Trustee upon the same conditions and in substantially the same manner as
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the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish
definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for
cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall
authenticate and deliver in exchange for such temporary Bonds definitive Bonds of like tenor,
series designation, maturity and aggregate principal amount in Authorized Denominations. Until
so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bonds authenticated and delivered hereunder.
SECTION 2.09. Registration Books. The Trustee will keep or cause to be kept at its
Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all
times during regular business hours be open to inspection by the Authority with reasonable prior
notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on
such records, Bonds as herein provided.
SECTION 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall
become mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and
the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, series designation,
maturity and aggregate principal amount in an Authorized Denomination in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it. If any
Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and
indemnity satisfactory to it shall be given, the Authority, at the expense of the Owner, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like series and
tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond
shall have matured or shall have been called for redemption, instead of issuing a substitute Bond
the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to
the Trustee). The Authority may require payment of a reasonable fee for each new Bond issued
under this Section and of the expenses that may be incurred by the Authority and the Trustee.
Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost,
destroyed or stolen shall constitute an original contractual obligation on the part of the Authority
whether or not the Bond alleged to be lost, destroyed or stolen shall be at any time enforceable
by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with
all other Bonds secured by this Indenture.
SECTION 2.11. Use of Depository. Notwithstanding any provision of the Indenture
to the contrary:
(a) The Bonds shall be initially issued in book -entry form as provided in Section
2.02. The Bonds will be initially registered in the name of Cede & Co., as nominee of the
Depository. Registered ownership of the Bonds, or any portion thereof, may not thereafter be
transferred except:
(i) To any successor of the Depository or its nominee, or to any substitute
depository designated pursuant to clause (ii) of this subsection (a) (a "substitute
depository"); provided that any successor of the Depository or substitute depository shall
In
be qualified under any applicable laws to provide the service proposed to be provided by
it;
(ii) To any substitute depository designated by the Authority and not objected
to by the Trustee, upon (1) the resignation of the Depository or its successor (or any
substitute depository or its successor) from its functions as depository or (2) a
determination by the Authority that the Depository or its successor (or any substitute
depository or its successor) is no longer able to carry out its functions as depository;
provided that any such substitute depository shall be qualified under any applicable laws
to provide the services proposed to be provided by it; or
(iii) To any Person as provided below, upon (1) the resignation of the
Depository or its successor (or any substitute depository or its successor) from its
functions as depository; provided that no substitute depository which is not objected to by
the Trustee can be obtained or (2) a determination by the Authority that it is in the best
interests of the Authority to remove the Depository or its successor (or any substitute
depository or its successor) from its functions as depository.
(b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a)
hereof, upon receipt of the Outstanding Bonds by the Trustee, together with a Certificate of the
Authority to the Trustee, a single new Bond for each maturity of Bonds then Outstanding shall
be executed and delivered in the aggregate principal amount of the Bonds of each such
respective maturity then Outstanding, registered in the name of such successor or such substitute
depository, or their nominees, as the case may be, all as specified in such Certificate of the
Authority. In the case of any transfer pursuant to clause (iii) of subsection (a) hereof, upon
receipt of the Outstanding Bonds by the Trustee together with a Certificate of the Authority to
the Trustee, new Bonds shall be executed and delivered in such denominations numbered in
consecutive order and registered in the names of such persons as are requested in such a
Certificate of the Authority, subject to the limitations of Section 2.02 hereof, provided the
Trustee shall not be required to deliver such new Bonds within a period less than sixty (60) days
from the date of receipt of such a Certificate of the Authority.
(c) The Authority and the Trustee shall be entitled to treat the person in whose name
any Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable
laws, notwithstanding any notice to the contrary received by the Trustee or the Authority; and the
Authority and the Trustee shall have no responsibility for transmitting payments to,
communication with, notifying, or otherwise dealing with any Beneficial Owners of the Bonds.
Neither the Authority nor the Trustee will have any responsibility or obligations, legal or
otherwise, to the Beneficial Owners or to any other party including the Depository or its
successor (or any substitute depository or its successor), except for the Holder of any Bond.
(d) So long as the Outstanding Bonds are registered in the name of Cede & Co. or its
registered assigns, the Authority and the Trustee shall cooperate with Cede & Co., as sole
registered Owner, and its registered assigns in effecting payment of the principal of and interest
on the Bonds by arranging for payment in such manner that funds for such payments are properly
identified and are made immediately available on the date they are due.
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(e) In connection with any proposed transfer outside the Book -Entry Only system, the
Authority, the City or DTC shall provide or cause to be provided to the Trustee all information
necessary to allow the Trustee to comply with any applicable tax reporting obligations, including
without limitation any cost basis reporting obligations under Internal Revenue Code Section
6045. The Trustee may rely on the information provided to it and shall have no responsibility to
verify or ensure the accuracy of such information.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this
Indenture, the Authority shall execute and deliver the Bonds to the Trustee for authentication,
issuance and delivery to the Original Purchaser thereof upon the Written Request of the
Authority.
SECTION 3.02. Application of Proceeds of Sale of Bonds. Upon the receipt of
payment for the Bonds on the Closing Date, the Trustee shall apply $ of the net
proceeds of the Bonds (which equals the principal amount of the Bonds, less an underwriting
discount of $ , plus/minus a net original issue premium/discount of $ ,
and which amount includes the good faith deposit of $[500,000] received by the Trustee from
, as initial purchaser of the Bonds), as follows:
(1) The Trustee shall deposit in the Capitalized Interest Subaccount of the
Interest Account the amount of $ , representing capitalized interest
with respect to the Bonds through and including June 1, 2021.
(2) The Trustee shall deposit in the Costs of Issuance Fund the amount of
911
(3) The Trustee shall deposit in the Project Fund the amount of
S
The Trustee may establish such temporary funds, accounts and subaccounts as may be
necessary or desirable to accomplish such deposits.
SECTION 3.03. Costs of Issuance Fund. There is hereby established a fund to be
held by the Trustee known as the "Costs of Issuance Fund," into which shall be deposited a
portion of the proceeds of the sale of the Bonds pursuant to Section 3.02. The moneys in the
Costs of Issuance Fund shall be used to pay Costs of Issuance related to the Bonds from time to
time and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition,
substantially in the form attached hereto as Exhibit B, executed by an officer of the Authority.
Each requisition 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 the date that is 180 days
following the Closing Date, or upon the earlier receipt by the Trustee of a Written Request of the
Authority certifying that all Costs of Issuance related to the Bonds have been paid or provided
for, the Trustee shall transfer any remaining amounts in the Costs of Issuance Fund to the Lease
Revenue Fund and the Trustee shall then close the Costs of Issuance Fund.
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SECTION 3.04. Project Fund. There is hereby established a fund to be held by the
Trustee known as the "Project Fund" into which shall be deposited a portion of the proceeds of
the sale of the Bonds pursuant to Section 3.02. Except as otherwise provided herein, moneys in
the Project Fund shall be used solely for the payment of Project Costs. Before any payment from
the Project Fund shall be made, the City shall file or cause to be filed with the Trustee, a
requisition of the City which shall be substantially in the form attached hereto as Exhibit C. The
Trustee shall be entitled to rely on the representations of the City contained in such requisition
and shall not be required to independently verify the contents of such requisition.
Within three (3) Business Days following receipt of each such Requisition, the Trustee
shall pay the amount set forth in such requisition as directed by the terms thereof out of the
Project Fund. Upon the Written Request of the City accompanied by a Certificate of the City
stating that all Project Costs have been paid or provision made for their payment, any
unexpended moneys in the Project Fund may be used to pay the costs associated with any other
improvements of the City; provided, that in the opinion of Bond Counsel such use of the
proceeds of the Bonds shall not adversely affect the exclusion of interest on the Bonds from
gross income of the owners thereof.
Any unexpended moneys in the Project Fund subsequent to the payment of all Project
Costs which are not used to pay the cost of other improvements of the City shall be transferred
by the Trustee and deposited in the Lease Revenue Fund upon receipt by the Trustee of a Written
Request of the City accompanied by a Certificate of the City stating that all Project Costs have
been paid or provision made for their payment.
SECTION 3.05. Insurance and Condemnation Fund. The Trustee shall establish
and maintain a separate fund to be known as the "Insurance and Condemnation Fund," into
which shall be deposited Net Proceeds required to be deposited therein pursuant to Section 9 of
the Lease. The Trustee shall disburse or transfer all amounts in the Insurance and Condemnation
Fund, as stated in a Written Request of the City (as described below) for the payment of the cost
of the reconstruction of the Leased Property (including reimbursement to the City for any such
costs paid by it). Before any payment of money is made from the Insurance and Condemnation
Fund, the Authority shall file or shall cause the City to file with the Trustee a requisition in
substantially the form set forth as Exhibit D hereto.
SECTION 3.06. Validity of Bonds. The validity of the authorization and issuance of
the Bonds shall not be affected in any way by any proceedings taken with respect to the
application of the proceeds of the Bonds, and the recital contained in the Bonds that the same are
issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the
regularity of their issuance.
SECTION 3.07. Additional Bonds. In addition to the Bonds, the Authority and the
Trustee may by execution of a Supplemental Indenture, without the consent of the Owners,
provide for the issuance and delivery of Additional Bonds in one or more series. Upon the
Written Request of the Authority, the Trustee may authenticate and deliver Additional Bonds in
an aggregate principal amount authorized by such Supplemental Indenture. The proceeds of
such Additional Bonds may be used for any purpose, including for the purpose of refunding
Outstanding Bonds. Such Additional Bonds may only be issued upon compliance by the
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Authority with the provisions of the Indenture, and subject to the following specific conditions,
which are made conditions precedent to the issuance of any such Additional Bonds:
(a) The Authority shall not be in default under the Indenture or any Supplemental
Indenture, as evidenced by a Certificate of the Authority, and the City shall not be in default
under the Lease, as evidenced by a Certificate of the City;
(b) A Supplemental Indenture may provide for the funding of a debt service reserve
for such Additional Bonds;
(c) The Additional Bonds shall be payable as to principal on June 1 of each year in
which principal is due and shall be payable as to interest on each Interest Payment Date;
(d) The aggregate principal amount of Bonds issued and at any time Outstanding
under the Indenture or under any Supplemental Indenture shall not exceed any limit imposed by
law, by the Indenture or by any Supplemental Indenture, as evidenced by a Certificate of the
Authority and the City; and
(e) The Lease shall have been amended, if necessary, so as to increase the Base
Rental Payments payable by the City thereunder by an aggregate amount equal to the principal
and interest due and payable on such Additional Bonds, payable at such times and in such
manner as may be necessary to provide for the payment of the principal and interest on such
Additional Bonds, as evidenced by a Certificate of the City;
(f) The Supplemental Indenture shall provide redemption dates and/or for the
mandatory redemption of Additional Bonds in amounts sufficient to provide for payment of the
Additional Bonds when the applicable Base Rental Payments are due; and
(g) Such Supplemental Indenture shall provide redemption dates and/or mandatory
redemption of Additional Bonds in amounts sufficient to provide for payment of the Additional
Bonds when the applicable Base Rental Payments are due.
Any Additional Bonds shall be on a parity with, and each Owner thereof shall have the
same rights upon an Event of Default as the Owner of, any other Bonds issued and delivered
under the Indenture, except as otherwise provided in the Supplemental Indenture under which
Additional Bonds are issued.
(h) The Supplemental Indenture shall prescribe the form or forms of such Additional
Bonds, and subject to the provisions hereof, shall provide for the distinctive designation,
denominations, dates, principal payment dates, interest payment dates, interest rates, provisions
for redemption, and places of payment for principal and interest.
ARTICLE IV
REVENUES; FLOW OF FUNDS
SECTION 4.01. Pledge of Revenues; Assignment of Rights. Subject to the
provisions of Sections 3.07 and 6.03, the Bonds shall be secured by a first lien on and pledge
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(which shall be effected in the manner and to the extent hereinafter provided) of all of the
Revenues, including all of the moneys in the Lease Revenue Fund, including the Interest
Account, the Principal Account, and the Redemption Account therein, and the Insurance and
Condemnation Fund, and all amounts derived from the investment of such moneys. The Bonds
and Additional Bonds shall be equally secured by a pledge, charge and lien upon the Revenues
and such moneys without priority for Series, number, date of the Bonds, date of execution or
date of delivery; and the payment of the interest on and principal of the Bonds and Additional
Bonds and any premiums upon the redemption of any portion thereof shall be and are secured by
an exclusive pledge, charge and lien upon the Revenues and such moneys. So long as any of the
Bonds or Additional Bonds are Outstanding, the Revenues and such moneys shall not be used for
any other purpose; except that out of the Revenues there may be apportioned such sums, for such
purposes, as are expressly permitted by Section 4.02.
The Authority hereby transfers in trust and assigns to the Trustee, for the benefit of the
Owners from time to time of the Bonds and Additional Bonds, all of the Revenues and all of the
right, title and interest (but none of the obligations) of the Authority in the Lease with respect to
the Revenues, including its rights to receive the Base Rental Payments scheduled to be paid by
the City under and pursuant to the Lease and any and all of the other rights of the Authority
under the Lease as may be necessary to enforce payment of such Base Rental Payments when
due or otherwise to protect the interest of the Owners of the Bonds and Additional Bonds,
including its leasehold title to the Leased Property leased to the City pursuant to the Lease with
respect to the Base Rental Payments. The Trustee accepts such assignments. The Trustee shall
be entitled to and shall receive all of the Revenues, and any Revenues collected or received by
the Authority shall be deemed to be held, and to have been collected or received, by the
Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee.
Each of the Authority and the City covenant and agree to take such action as is necessary
from time to time to preserve the priority of the pledge set forth in this Section 4.01 under
applicable law, and at the expense of the Authority or the City and the Trustee shall cooperate
with the Authority and/or the City in taking such action.
This Indenture shall be supplemented pursuant to a Supplemental Indenture to pledge
revenues from additional base rental payments under the Lease for any series of Additional
Bonds.
SECTION 4.02. Lease Revenue Fund; Receipt, Deposit and Application of
Revenues. All Revenues shall be deposited by the Trustee in a special fund designated as the
"Lease Revenue Fund," which the Trustee shall establish, maintain and hold in trust hereunder.
If the City pays more than 100% of the Base Rental Payments coming due fifteen (15) days prior
to any Interest Payment Date, the Trustee shall deposit into the Lease Revenue Fund only that
portion of the Base Rental Payments which the City is required to make under Section 3(a) of the
Lease, and shall remit any excess to the City.
On or before each Interest Payment Date or Principal Payment Date, as applicable, the
Trustee shall transfer from the Lease Revenue Fund and deposit into the following respective
accounts (each of which the Trustee shall establish and maintain within the Lease Revenue
Fund), the following amounts in the following order of priority, the requirements of each such
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account (including the making up of any deficiencies in any such account resulting from lack of
Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied
before any transfer is made to any account subsequent in priority:
(a) Interest Account. The Trustee shall establish and maintain a separate account to
be known as the "Interest Account" and within the Interest Account a separate subaccount to be
known as the "Capitalized Interest Subaccount of the Interest Account" into which shall be
deposited a portion of the proceeds of the sale of the Bonds pursuant to Section 3.02. On or
before each Interest Payment Date, the Trustee shall deposit in the Interest Account an amount
required to cause the aggregate amount on deposit in the Interest Account to equal the amount of
interest becoming due and payable on such Interest Payment Date on all respective Outstanding
Bonds. No deposit shall be made into the Interest Account if the amount contained therein is at
least equal to the interest becoming due and payable on all respective Outstanding Bonds on each
succeeding Interest Payment Date within the then current Bond Year. All moneys in the Interest
Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on
the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed
prior to maturity).
(b) Principal Account. The Trustee shall establish and maintain a separate account
to be known as the "Principal Account." On or before each Principal Payment Date, the Trustee
shall deposit in the Principal Account an amount required to cause the aggregate amount on
deposit in the Principal Account to equal the principal of the Bonds maturing on such Principal
Payment Date pursuant to Section 2.02 or Section 2.03 or pursuant to a Supplemental Indenture,
as the case may be. No deposit shall be made into the Principal Account if the amount contained
therein is at least equal to the principal becoming due and payable on all respective Outstanding
Bonds on each succeeding Interest Payment Date, as applicable, within the then current Bond
Year. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal of the Bonds.
(c) Redemption Account. On or before the Business Day on which Bonds are subject
to redemption (other than mandatory sinking fund redemption of term Bonds), the Authority will
transfer or cause there to be transferred to the Trustee for deposit in the Redemption Account an
amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on
such date. The Trustee will apply amounts in the Redemption Account solely for the purpose of
paying the principal of and premium, if any, on the Bonds upon the redemption thereof, other
than mandatory sinking fund redemption of term Bonds which will be made from amounts in the
Principal Account, on the date set for such redemption.
(d) Surplus. On or before June 1 of each year, commencing June 1, 2021, the
Trustee shall determine the amount, if any, remaining in the Lease Revenue Fund after making
the deposits required by paragraphs (a) through (c) above and the transfers of investment
earnings pursuant to Section 4.03, and shall apply such amount as a credit against the next
following Base Rental Payment. Notwithstanding the foregoing, if directed in a Written Request
of the City, the Trustee shall, with respect to all or any portion of such amount, pay, or set aside
an amount for the payment of, any Rebate Requirement (as defined in the Tax Certificate) in
accordance with a computation made by the City.
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SECTION 4.03. Rebate Fund.
(a) In addition to the other funds and accounts created pursuant hereto, the Trustee
shall establish and maintain a fund separate from any other fund or account established and
maintained hereunder designated the "Rebate Fund" (the "Rebate Fund") in connection with the
Bonds. Within the Rebate Fund, the Trustee shall maintain such accounts or subaccounts as are
specified in a Written Request of the Authority to the Trustee pursuant to the Tax Certificate.
The Trustee shall deposit moneys in the Rebate Fund pursuant to a Written Request of the
Authority. Subject to the transfer provisions provided in subparagraph (5) below, all money at
any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required
to satisfy the Rebate Requirement, for payment to the federal government of the United States of
America, and none of the Authority, the Trustee or the Owner of any Bond shall have any right
in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be
governed by this Section and by the Tax Certificate (which is incorporated herein by reference).
The Trustee shall be deemed conclusively to have complied with the provisions of this Section
4.03 and the Tax Certificate if it follows the Written Request of the Authority, including
supplying all necessary information in the manner requested by the Authority, and except as
otherwise expressly provided herein, shall not be required to take any actions hereunder in the
absence of written directions by the Authority, and shall have no liability or responsibility to
enforce compliance by the Authority with the terms of the Tax Certificate or this Section. The
Trustee agrees to comply with all Written Requests of the Authority given pursuant to the Tax
Certificate.
(1) Upon a Written Request of the Authority, an amount shall be deposited
into the Rebate Fund by the Trustee from deposits by the Authority, if and to the extent
required, so that the balance of the amount on deposit thereto shall be equal to the
Rebate Requirement. Computations of the Rebate Requirement shall be furnished by or
on behalf of the Authority in accordance with the Tax Certificate. The Authority shall
provide the Trustee with a Certificate of the Authority evidencing that the computation
of the Rebate Requirement has been made.
(2) The Trustee shall have no obligation to rebate any amounts required to
be rebated pursuant to this Section, other than from moneys held in the funds and
accounts created hereunder or from other moneys provided to it by the Authority.
(3) The Trustee shall invest all amounts held in the Rebate Fund in
Permitted Investments as directed by a Written Request of the Authority. Money,
including investment earnings, shall not be transferred from the Rebate Fund except as
provided in subparagraph (4) below.
(4) Upon receipt of a Written Request of the Authority, the Trustee shall
remit part or all of the amounts in the Rebate Fund to the United States of America, as
so directed. In addition, if the Authority so directs, the Trustee will deposit moneys
into or transfer moneys out of the Rebate Fund from or into such accounts or fund as
directed by the Written Request of the Authority. Any funds remaining in the Rebate
Fund in excess of the Rebate Requirement as of the end of any Bond Year shall be
transferred to the Interest Account.
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Notwithstanding any other provision hereof, including, in particular, Section 9.03, the
obligation to remit the Rebate Requirement to the United States and to comply with all other
requirements of this Section and the Tax Certificate shall survive the defeasance or payment in
full of the Bonds.
SECTION 4.04. Investments. All moneys in any of the funds or accounts established
with the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments pursuant to the written direction of the Authority given to the Trustee not less than
two (2) Business Days in advance of the making of such investments. In the absence of any such
direction from the Authority, the Trustee shall invest any such moneys in money market funds
described in subsection (i) of the definition of Permitted Investments; provided, however, that
any such investment shall be made by the Trustee only if, prior to the date on which such
investment is to be made, the Trustee shall have received a written direction of the Authority
specifying a specific money market fund that satisfies the requirements of such subsection in
which such investment is to be made and, if no such written direction is so received, the Trustee
shall hold such moneys uninvested. Obligations purchased as an investment of moneys in any
fund or account shall be deemed to be part of such fund or account.
The Trustee shall transfer all investment earnings on amounts in a Principal Account and
an Interest Account to the Lease Revenue Fund. All investment earnings on amounts in the
Insurance and Condemnation Fund shall be retained therein. For purposes of acquiring any
investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee, or
any of its affiliates, may act as principal or agent in the acquisition of any investment and may
impose its customary charges therefor. The Trustee may act as manager, sponsor, advisor or
depository with respect to any Permitted Investment. The Trustee shall incur no liability for the
selection (other than as provided herein) of investments or losses arising from any investments
made pursuant to this Section. The Authority acknowledges that regulations of the Comptroller
of the Currency grant the Authority the right to receive brokerage confirmations of security
transactions to be effected by the Trustee hereunder as they occur, at no additional cost. The
Authority specifically waives the right to receive such confirmation to the extent permitted by
applicable law and agrees that it will instead receive periodic cash transaction statements which
shall include detail for the investment transactions effected by the Trustee hereunder; provided,
however, that the Authority retains its right to receive brokerage confirmation on any investment
transaction requested by the Authority.
SECTION 4.05. Valuation and Disposition of Investments. For the purpose of
determining the amount in any fund or account, Permitted Investments credited to such fund or
account shall be valued at least semiannually on or before each Interest Payment Date at cost
(excluding any brokerage commissions and excluding any accrued interest) by the Trustee.
ARTICLE V
COVENANTS OF THE AUTHORITY
SECTION 5.01. Punctual Payment. The Authority shall punctually pay or cause to
be paid the principal, interest and premium (if any) to become due in respect of all the Bonds, in
strict conformity with the terms of the Bonds and of this Indenture, according to the true intent
26
and meaning thereof, but only out of applicable Revenues and other assets pledged for such
payment as provided in this Indenture.
SECTION 5.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the
Authority to issue Additional Bonds, or issue Bonds for the purpose of refunding any
Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity
of the Bonds.
SECTION 5.03. Against Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the applicable Revenues and
other assets pledged or assigned under this Indenture while any of the Bonds and Additional
Bonds are Outstanding, except the pledge and assignment created by this Indenture and
Supplemental Indenture. Subject to this limitation, the Authority expressly reserves the right to
enter into one or more other indentures for any of its corporate purposes, including other
programs under the Bond Law, and reserves the right to issue other obligations for such
purposes.
SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture
and to pledge and assign the Revenues, the Lease and other assets purported to be pledged and
assigned, respectively, under this Indenture in the manner and to the extent provided in this
Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and
binding special obligations of the Authority in accordance with their terms, and the Authority
and the Trustee (subject to the provisions of Section 6.02 hereof) shall at all times, to the extent
permitted by law, defend, preserve and protect such pledge and assignment of Revenues and
other assets and all the rights of the Owners under this Indenture against all claims and demands
of all persons whomsoever.
SECTION 5.05. Accounting Records and Financial Statements. The Trustee shall
at all times keep, or cause to be kept, proper books of record and account, prepared in accordance
with corporate trust industry standards, in which complete and accurate entries shall be made of
all transactions by the Trustee relating to the proceeds of Bonds, the Revenues, the Lease and all
funds and accounts established pursuant to this Indenture. Such books of record and account
shall be available for inspection by the Authority and the City during regular business hours with
reasonable prior notice.
SECTION 5.06. Additional Obligations. The Authority covenants that no additional
bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in
whole or in part, other than the Additional Bonds.
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SECTION 5.07. Lease. The Trustee, as assignee of the Authority's rights under the
Lease with respect to the Revenues pursuant to Section 4.01 hereof and the Assignment
Agreement(s), shall receive amounts due from the City pursuant to the Lease with respect to the
Revenues.
The Authority will faithfully comply with, keep, observe and perform all the agreements,
conditions, covenants and terms contained in the Lease required to be complied with, kept,
observed and performed by it and, together with the Trustee, will enforce the Lease against the
City in accordance with its terms.
So long as any Bond remain Outstanding, the Authority will not alter, amend or modify
the Lease, except pursuant to Section 21 thereof.
SECTION 5.08. Tax Covenants.
(a) Special Definitions. When used in this Section, the following terms have the
following meanings with respect to any Bonds or Additional Bonds that the Authority intends
interest thereon to be excludable from the gross income of the Owners thereof:
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Computation Period' means, initially, that period commencing on the date of issuance
of the Bonds and concluding on the initial Computation Date and, thereafter, each period
commencing on the day next following a Computation Date and concluding on the immediately
succeeding Computation Date.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax
Regulations (referring to sales, investment and transferred proceeds), and any replacement
proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nongovernmental Output Property" means any property (or interest therein) that prior
to its acquisition by the City was used by (or manufactured for or to the order of or held for the
use by) any Nongovernmental Person (whether actually so used or not) in connection with any
electric and gas generation, transmission, distribution, or related facilities.
"Nongovernmental Person" refers to any person or entity (including the United States or
any agency, department and instrumentality thereof) other than a state or local government, or an
agency or instrumentality acting solely on behalf thereof.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Original Facility" means any property the acquisition, construction or improvement of
which was financed directly or indirectly with Gross Proceeds of an Original Issue.
"Original Issue" means the Bonds.
"Output Facility" means any electric or gas generation, transmission, distribution
facility, or related facility, and any water collection, storage, or distribution facility.
"Proceeds, " with respect to an issue of governmental obligations, has the meaning set
forth in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred
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, or under the provisions of any predecessor
statute corresponding thereto.
"Yield" of
(1) any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and
(2) the Bonds has the meaning set forth in section 1.148-4 of the Tax Regulations.
(b) Exclusion of Interest from Gross Income. The Authority will take all actions
necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of
interest on the Bonds from the gross income of the owners thereof for federal income tax
purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the Bonds or any
other amounts or any of the Original Facilities in a manner that if made or omitted, respectively,
would cause the interest on any of the Bonds to fail to be excluded pursuant to section 103(a) of
the Code from the gross income of the owners 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 exclusion pursuant to section 103(a) of the Code of interest on any Bond from the gross
income of the owner thereof, the Authority shall comply with this covenant and each of the
specific covenants in this Section.
(c) No Private Use or Private Payments. Except as would not cause any Bond to
become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations and rulings thereunder, the Authority covenants that at all times prior to the payment
and cancellation of the last Bond to be paid and canceled:
(1) it will use its best efforts to ensure that the City (or another entity other
than a Nongovernmental Entity) exclusively owns, operates and possesses all of the
Original Facilities that are to be refinanced directly or indirectly with Gross Proceeds of
the Bonds, and that it will not use or permit the use of such Gross Proceeds (including
under any contractual arrangement with terms different than those applicable to the
general public) or any of the Original Facilities in any activity carried on by any
Nongovernmental Person, unless such use is solely as a member of the general public;
and
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(2) not directly or indirectly impose or accept any charge or other payment
by any person or entity in respect of the use by any Nongovernmental Person of Gross
Proceeds of the Bonds, other than interest earned on investments acquired with such
Gross Proceeds pending application for their intended purposes, or of any Original
Facility.
Without limiting the foregoing, except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the Authority will not: (i) permit any Nongovernmental Person to hold any
ownership, proprietary or possessory interest in any of the Original Facilities; (ii) contract with
any Nongovernmental Person for the provision of operating or other services with respect to any
function of an Original Facility (unless either (A) such arrangement requires no payment of fees
to such Nongovernmental Person other than as direct reimbursement of third party costs or
reasonable administrative overhead, or (B) such arrangement conforms to administrative
guidance of the Internal Revenue Service in order to assure that such arrangement does not
create a private business use relationship of the Nongovernmental Person to the Gross Proceeds
of the Bonds or to any Original Facility); or (iii) contract with any Nongovernmental Person for
the sale of output or capacity of an Original Facility that is an Output Facility, unless such
contract is described either in section 1.141-7(c) of the Treasury Regulations (describing certain
types of output contracts that do not have the effect of transferring the benefits of owning the
property and the burdens of paying debt service on the financing of the property) or in section
1.141-7(f) of the Treasury Regulations (describing certain types of output contracts that while
having the effect of transferring such benefits and burdens but nevertheless may be disregarded
in evaluating private business use). For purposes of the preceding sentence, the Authority will
treat proceeds of the Bonds as used ratably for the same purposes as were the proceeds of the
Original Issue.
(d) No Financing of Nongovernmental Output Property. Except as would not cause
any 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. As set
forth above, for purposes of the preceding sentence, the Authority will treat proceeds of the
Bonds as used ratably for the same purposes as were the proceeds of the Original Issue.
(e) No Private Loan. Except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the Authority has not used, and will not use, Gross Proceeds of any Bond to
make or finance loans to any Nongovernmental Person. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction that creates a debt for federal income tax purposes; (2) capacity in or service from
such property is committed to such person or entity under a take -or -pay, output or similar
contract or arrangement; or (3) indirect benefits of such Gross Proceeds, or burdens and benefits
of ownership of any property acquired, constructed or improved with such Gross Proceeds, are
otherwise transferred in a transaction that is the economic equivalent of a loan.
(f) Not to Invest at Higher Yield. Except as would not cause any Bond to become an
"arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and
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rulings thereunder, the Authority shall not at any time prior to the final maturity of the Bonds
directly or indirectly invest Gross Proceeds in any Investment, if as a result of such investment
the Yield of any Investment acquired with Gross Proceeds, whether then held or previously
disposed of, would materially exceed the Yield of such Bond within the meaning of such section
148.
(g) Not Federally Guaranteed. The Authority covenants that, except to the extent
permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, it will
not take or omit to take any action that would cause any Bond to be "federally guaranteed"
within the meaning of section 149(b) of the Code and the Tax Regulations and rulings
thereunder.
(h) Information Report. The Authority covenants that it will timely file or cause to be
filed any information required by section 149(e) of the Code with respect to the Bonds with the
Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary
of the Treasury may prescribe.
(i) Rebate of Arbitrage Profits. The Authority covenants that the requirements of
section 148(f) of the Code will be satisfied in order that the Bonds be not arbitrage bonds, and
that, except to the extent otherwise provided in section 148(f) of the Code and the Tax
Regulations and rulings thereunder:
(1) it will account for all Gross Proceeds of the Bonds (including all
receipts, expenditures and investments thereof) on its books of account separately and
apart from all other funds (and receipts, expenditures and investments thereof) and shall
retain all records of accounting for at least six years after the day on which the last
Bond is discharged. However, to the extent permitted by law, the Authority may
commingle Gross Proceeds of the Bonds with its other money, provided that the
Authority separately accounts for each receipt and expenditure of Gross Proceeds and
the obligations acquired therewith;
(2) not less frequently than each Computation Date, it will calculate or
cause to be calculated the Rebate Amount in accordance with rules set forth in section
148(f) of the Code and the Tax Regulations and rulings thereunder. The Trustee may
rely conclusively upon the Authority's determinations, calculations and certifications
required by this Section. The Trustee shall have no responsibility to independently
make any calculation of determination or to review the Authority's calculations
hereunder. The Authority covenants that it will maintain a copy of the calculation with
its official transcript of proceedings relating to the issuance of the Bonds until six years
after the final Computation Date;
(3) it will deposit in the Rebate Fund and cause the Trustee to pay to the
United States the amount that when added to the future value of previous rebate
payments made for the Bonds equals (A) in the case of a Final Computation Date as
defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of
the Rebate Amount on such date; and (B) in the case of any other Computation Date,
ninety percent (90%) of the Rebate Amount on such a date. In all cases such Rebate
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payments shall be made by the Authority (or by the Trustee at the direction of the
Authority) at the times and in the amounts as are or may be required by section 148(f)
of the Code and the Tax Regulations and rulings thereunder, and such payments shall
be accompanied by Form 8038-T prepared and executed by the Authority or such other
forms and information as is or may be required by section 148(f) of the Code and the
Tax Regulations and rulings thereunder.
(4) it will exercise reasonable diligence to assure that no errors are made in
the calculations and payments required by paragraphs (2) and (3) above, and if an error
is made, to discover and promptly correct such error within a reasonable amount of
time thereafter (and in all events within one hundred eighty (180) days after discovery
of the error), including payment to the United States of any additional Rebate Amount
owed to it, interest thereon, and any penalty imposed under section 1.148-3(h) or other
provision of the Tax Regulations.
0) Not to Divert Arbitrage Profits. The Authority covenants that, except to the
extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at
no time prior to the final maturity of the Bonds will it enter into any transaction that reduces the
amount required to be paid to the United States pursuant to paragraph (h) of this Section because
such transaction results in a smaller profit or a larger loss than would have resulted if the
transaction had been at arm's length and had the Yield on the Bonds not been relevant to each
party.
(k) Bonds Not Hedge Bonds.
(1) The Authority represents that none of the Original Issue was, and
covenants that the Bonds will not be, "hedge bonds" within the meaning of
section 149(g) of the Code.
(2) Without limitation of paragraph (1) above, the Authority warrants
as to each of its Original Issue that: (I) on each date of issuance of that issue, the
Authority reasonably expected that at least 85% of the spendable proceeds of that
Original Issue would be expended within the three-year period commencing on
such date of issuance, and (II) no more than 50% of the proceeds of that Original
Issue at any time has been invested in Nonpurpose Investments having a
substantially guaranteed yield for a period of four years or more.
(1) Elections. The Authority hereby directs and authorizes any Responsible Officer
to make elections permitted or required pursuant to the provisions of the Code or the Tax
Regulations, as such Responsible Officer (after consultation with Bond Counsel) deems
necessary or appropriate in connection with the Bonds, in the Tax Certificate relating to the
Bonds or similar or other appropriate certificate, form or document.
SECTION 5.09. Further Assurances. The Authority will adopt, make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Indenture,
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and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Indenture.
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Appointment of Trustee. The Bank of New York Mellon Trust
Company, N.A., a national banking association duly organized and existing under and by virtue
of the laws of the United States of America, is hereby appointed Trustee by the Authority for the
purpose of receiving all moneys required to be deposited with the Trustee hereunder and to
allocate, use and apply the same as provided in this Indenture. The Authority agrees that it will
maintain a Trustee which has (or which is a wholly-owned subsidiary of a corporation which
has) a combined capital and surplus of at least $75,000,000, and which is subject to supervision
or examination by Federal or State authority, so long as any Bonds are Outstanding. If such
bank, national banking association or trust company or such parent corporation publishes a report
of condition at least annually pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this Section 6.01 the combined
capital and surplus of such bank, national banking association or trust company or such parent
corporation shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and redemption
premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption
prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate
records of all funds and accounts administered by it and of all Bonds paid and discharged.
SECTION 6.02. Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform such trusts, but only upon and subject
to the following express terms and conditions:
(a) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(b) Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon a Certificate of the Authority.
(c) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Owners pursuant to this
Indenture, unless such Owners shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.
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(d) The Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond or other paper or document.
(e) The Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default that may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no covenants of or against the
Trustee shall be implied in this Indenture. In case an Event of Default hereunder or under the
Lease has occurred (which has not been cured or waived), the Trustee may exercise such of the
rights and powers vested in it by this Indenture and by the Lease, and shall use the same degree
of care and skill in the exercise of such rights and powers as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs.
(f) The Trustee may execute any of the trusts or powers hereunder and perform the
duties required of it hereunder either directly or by or through attorneys, receivers or agents,
shall not be liable for the acts or omissions of such attorneys, receivers or agents appointed with
due care, and shall be entitled to advice of counsel concerning all matters of trust and its duties
hereunder. The Trustee may conclusively rely on an opinion of counsel as full and complete
authorization and protection for any action taken, suffered or omitted by it hereunder.
(g) The Trustee shall not be responsible for any recital herein, in the Lease, or in the
Bonds, or for any of the supplements thereto or instruments of further assurance, or for the
sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and
makes no representation as to the validity or sufficiency of the Bonds, this Indenture or the
Lease. The Trustee shall not be bound to ascertain or inquire as to the observance or performance
of any covenants, conditions or agreements on the part of the Authority hereunder or on the part
of the Authority or the City under the Lease. The Trustee shall not be responsible for the
application of the proceeds of the Bonds paid over by it to the Authority in accordance with
Section 9.03 hereof.
(h) The Trustee may become the Owner or pledgee of Bonds secured hereby with the
same rights it would have if not the Trustee; may acquire and dispose of other bonds or
evidences of indebtedness of the Authority with the same rights it would have if it were not the
Trustee; and may act as a depositary for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights
of Owners of Bonds, whether or not such committee shall represent the Owners of the majority
in aggregate principal amount of the Bonds then Outstanding.
(i) The Trustee may rely and shall be protected in acting or refraining from acting, in
good faith and without negligence, upon any notice, resolution, opinion, report, direction,
request, requisition, consent, certificate, order, affidavit, letter, telegram or other paper or
document believed by it to be genuine and to have been signed or presented by the proper person
or persons. Any action taken or omitted to be taken by the Trustee in good faith and without
negligence pursuant to this Indenture or the Lease upon the request or authority or consent of any
person who at the time of making such request or giving such authority or consent is the Owner
of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon
Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to
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recognize any person as an Owner of any Bond or to take any action at his request unless the
ownership of such Bond by such person shall be reflected on the Registration Books.
0) The permissive right of the Trustee to do things enumerated in this Indenture or in
the Lease shall not be construed as a duty and it shall not be answerable for other than its
negligence or willful misconduct. The immunities and exceptions from liability of the Trustee
shall extend to its officers, directors, employees and agents.
(k) The Trustee shall not be required to take notice or be deemed to have notice of
any Event of Default hereunder or under the Lease except failure by the Authority or the City to
make any of the payments to the Trustee required to be made by the Authority pursuant hereto or
thereto or failure by the Authority or the City to file with the Trustee any document required by
this Indenture or the Lease to be so filed subsequent to the issuance of the Bonds, unless the
Trustee shall be specifically notified in writing of such default by the Authority or by the Owners
of at least 50% in aggregate principal amount of the Bonds then Outstanding and all notices or
other instruments required by this Indenture to be delivered to the Trustee must, to be effective,
be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the
Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid.
(1) At any and all reasonable times the Trustee and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right but shall not be required
to inspect all books, papers and records of the Authority pertaining to the Bonds, and to make
copies of any of such books, papers and records which are not privileged by statute or by law.
(m) The Trustee shall not be required to give any bond or surety in respect of the
execution of the trusts and powers or otherwise in respect of the premises hereof.
(n) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing
the right of the Authority to the execution of any Bonds, the withdrawal of any cash or the taking
of any other action by the Trustee.
(o) All moneys received by the Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(p) Whether or not expressly provided therein, every provision of this Indenture, the
Site Lease and the Lease relating to the conduct or affecting the liability of the Trustee shall be
subject to the provisions of this Section.
(q) The Trustee shall have no responsibility with respect to any information,
statement, or recital in any official statement, offering memorandum or any other disclosure
material prepared or distributed with respect to the Bonds.
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(r) The Trustee is authorized and directed to enter into the Assignment Agreement in
its capacity as Trustee.
(s) The Trustee shall have the right to accept and act upon instructions, including
funds transfer instructions ("Instructions") given pursuant to this Indenture and delivered using
Electronic Means ("Electronic Means" shall mean the following communications methods: e-
mail, facsimile transmission, secure electronic transmission containing applicable authorization
codes, passwords and/or authentication keys issued by the Trustee, or another method or system
specified by the Trustee as available for use in connection with its services hereunder); provided,
however, that the Authority and City shall provide to the Trustee an incumbency certificate
listing officers with the authority to provide such Instructions ("Authorized Officers") and
containing specimen signatures of such Authorized Officers, which incumbency certificate shall
be amended by the Authority and City whenever a person is to be added or deleted from the
listing. If the Authority and City elect to give the Trustee Instructions using Electronic Means
and the Trustee in its discretion elects to act upon such Instructions, the Trustee's understanding
of such Instructions shall be deemed controlling. The Authority and City understand and agrees
that the Trustee cannot determine the identity of the actual sender of such Instructions and that
the Trustee shall conclusively presume that directions that purport to have been sent by an
Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent
by such Authorized Officer. The Authority and City shall be responsible for ensuring that only
Authorized Officers transmit such Instructions to the Trustee and that the Authority and City and
all Authorized Officers are solely responsible to safeguard the use and confidentiality of
applicable user and authorization codes, passwords and/or authentication keys upon receipt by
the Authority and City. The Trustee shall not be liable for any losses, costs or expenses arising
directly or indirectly from the Trustee's reliance upon and compliance with such Instructions
notwithstanding such directions conflict or are inconsistent with a subsequent written instruction.
The Authority and City agree: (i) to assume all risks arising out of the use of Electronic Means to
submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on
unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is
fully informed of the protections and risks associated with the various methods of transmitting
Instructions to the Trustee and that there may be more secure methods of transmitting
Instructions than the method(s) selected by the Authority and City; (iii) that the security
procedures (if any) to be followed in connection with its transmission of Instructions provide to
it a commercially reasonable degree of protection in light of its particular needs and
circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or
unauthorized use of the security procedures.
(t) The Trustee shall not be liable to the parties hereto or deemed in breach or default
hereunder if and to the extent its performance hereunder is prevented by reason of force majeure.
The term "force majeure" means an occurrence that is beyond the control of the Trustee and
could not have been avoided by exercising due care. Force majeure shall include, but not be
limited to, acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other
similar occurrences.
(u) The Trustee shall not be liable in connection with the performance of its duties
hereunder, except for its own negligence or willful misconduct.
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SECTION 6.03. Fees, Charges and Expenses of Trustee. The Trustee shall be paid
and reimbursed by the Authority for reasonable fees for its services rendered hereunder and all
advances (with interest on such advances at the maximum rate allowed by law), counsel fees
(including expenses) and other expenses reasonably and necessarily made or incurred by the
Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder,
but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior
to payment of any Bond upon the amounts held hereunder for the foregoing fees, charges and
expenses incurred by it. When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default, such expenses and the compensation for such services are
intended to constitute expenses of administration under any federal or state bankruptcy,
insolvency, arrangement, moratorium, reorganization or other debtor relief law.
SECTION 6.04. Notice to Owners of Default. If an Event of Default hereunder or
under the Lease occurs with respect to any Bonds of which the Trustee has been given or is
deemed to have notice, as provided in Section 6.02(k) hereof, then the Trustee shall, within 30
days of the receipt of such notice, give written notice thereof by first class mail to the Owner of
each such Bond, unless such Event of Default shall have been cured before the giving of such
notice; provided, however, that unless such Event of Default consists of the failure by the
Authority to make any payment when due, the Trustee may elect not to give such notice if and so
long as the Trustee in good faith determines that it is in the best interests of the Owners not to
give such notice.
SECTION 6.05. Intervention by Trustee. In any judicial proceeding to which the
Authority or the City is a party that, in the opinion of the Trustee and its counsel, has a
substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on
behalf of such Owners, and subject to Section 6.02(c), shall do so if requested in writing by the
Owners of at least 25% in aggregate principal amount of such Bonds then Outstanding.
SECTION 6.06. Removal of Trustee. The Trustee may be removed at any time by an
instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners
of a majority in aggregate principal amount of the Outstanding Bonds. The Authority may also
remove the Trustee at any time upon 30 days' notice, except during the existence of an Event of
Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth
herein.
SECTION 6.07. Resignation by Trustee. The Trustee and any successor Trustee may
at any time give written notice of its intention to resign as Trustee hereunder, such notice to be
given to the Authority and the City by registered or certified mail. Upon receiving such notice of
resignation, the Authority shall promptly appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall
cause notice thereof to be given by first class mail, postage prepaid, to the Owners at their
respective addresses set forth on the Registration Books.
SECTION 6.08. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, the Authority shall
promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever
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fail to appoint a successor Trustee within 60 days following the delivery to the Trustee of the
instrument described in Section 6.06 or within 60 days following the receipt of notice by the
Authority pursuant to Section 6.07, the Trustee may, at the expense of the Authority, apply to a
court of competent jurisdiction for the appointment of a successor Trustee meeting the
requirements of Section 6.01. Any such successor Trustee appointed by such court shall become
the successor Trustee hereunder notwithstanding any action by the Authority purporting to
appoint a successor Trustee following the expiration of such 60 -day period.
SECTION 6.09. Merger or Consolidation. Any company into which the Trustee may
be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided that
such company shall meet the requirements set forth in Section 6.01, shall be the successor to the
Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
SECTION 6.10. Concerning any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the
Authority an instrument in writing accepting such appointment hereunder and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the Written Request of the Authority, or of the Trustee's
successor, execute and deliver an instrument transferring to such successor all the estates,
properties, rights, powers and trusts of such predecessor hereunder; and every predecessor
Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its
successor. Should any instrument in writing from the Authority be required by any successor
Trustee for more fully and certainly vesting in such successor the estate, rights, powers and
duties hereby vested or intended to be vested in the predecessor Trustee, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the
Authority.
SECTION 6.11. Appointment of Co -Trustee. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right of banking corporations or associations to transact business
as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action that may be desirable or necessary
in connection therewith, it may be necessary that the Trustee or the Authority appoint an
additional individual or institution as a separate trustee or co -trustee. The following provisions
of this Section are adopted to these ends.
If the Trustee or the Authority appoints an additional individual or institution as a
separate trustee or co -trustee, each and every remedy, power, right, claim, demand, cause of
action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by
and vest in such separate trustee or co -trustee but only to the extent necessary to enable such
separate trustee or co -trustee to exercise such powers, rights and remedies, and every covenant
and obligation necessary to the exercise thereof by such separate trustee or co -trustee shall run to
and be enforceable by either of them.
Should any instrument in writing from the Authority be required by the separate trustee
or co -trustee so appointed by the Trustee for more fully and certainly vesting in and confirming
to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Authority. In case any
separate trustee or co -trustee, or a successor to either, shall become incapable of acting, shall
resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate trustee or co -trustee, so far as permitted by law, shall vest in and be
exercised by the Trustee until the appointment of a new trustee or successor to such separate
trustee or co -trustee.
SECTION 6.12. Indemnification; Limited Liability of Trustee. The Authority
further covenants and agrees, to the extent permitted by law, to indemnify and save the Trustee
and its officers, directors, agents and employees, harmless against any loss, expense, action, suit,
claim, judgment and liabilities arising out of or in the exercise and performance of its powers and
duties hereunder and under the Site Lease and the Lease, including the costs and expenses of
defending against any claim of liability and fees and expenses of its attorneys, but excluding any
and all losses, expenses and liabilities that are due to the negligence or willful misconduct of the
Trustee, its officers, directors or employees. No provision in this Indenture shall require the
Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder. The
Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the
direction of the Owners of at least 25% in aggregate principal amount of Bonds Outstanding
relating to the time, method and place of conducting any proceeding or remedy available to the
Trustee under this Indenture or exercising any power conferred upon the Trustee under this
Indenture. The obligations of the Authority under this Section shall survive the termination of
this Indenture and the resignation or removal of the Trustee under this Indenture.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
SECTION 7.01. Amendment. This Indenture and the rights and obligations of the
Authority, and of the Owners of Bonds of a Series may be modified or amended at any time by a
Supplemental Indenture, which shall become binding to the extent permitted by law upon
adoption, without consent of any Owner, but only for any one or more of the following purposes:
(a) to issue Additional Bonds in accordance with Section 3.07 hereof;
(b) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed, to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or power
herein reserved to or conferred upon the Authority, provided that no such covenant, agreement,
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pledge, assignment or surrender shall materially adversely affect the interests of the applicable
Owners;
(c) to make such provisions for the purpose of curing any ambiguity, inconsistency or
omission, or of curing or correcting any defective provision, contained in this Indenture, or in
regard to matters or questions arising under this Indenture, as the Authority may deem necessary
or desirable and not inconsistent with this Indenture, and which shall not materially adversely
affect the interests of the applicable Owners in the reasonable judgment of the Authority;
(d) 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 applicable Owners;
(e) to maintain the exclusion of interest on the Bonds from gross income for federal
income tax purposes under the Code, if applicable; or
(f) for any other purpose that does not materially adversely affect the interests of the
Owners.
Except as set forth in the preceding paragraph of this Section, this Indenture and the
rights and obligations of the Authority and of the Owners may only be modified or amended at
any time by a Supplemental Indenture, which shall become binding when the written consent of
the Owners of a majority in aggregate principal amount of the affected Bonds then Outstanding
are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of
or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the
Authority to pay the principal, interest or redemption premiums (if any) at the time and place and
at the rate and in the currency provided therein of any Bond without the express written consent
of the Owner, (b) reduce the percentage of Bonds required for the written consent to any such
amendment or modification, or (c) modify any of the rights or obligations of the Trustee without
its written consent thereto.
SECTION 7.02. Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may
be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to
such modification and amendment, and all the terms and conditions of any Supplemental
Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Prior to entering into any Supplemental Indenture pursuant to this Section, the Authority
shall deliver to the Trustee an opinion of Bond Counsel to the effect that such Supplemental
Indenture has been adopted in accordance with the requirements of this Indenture and does not,
in and of itself, cause the interest on the Bonds, as applicable, to be included in the gross income
of the Owners of such Bonds.
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SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After
the effective date of any action taken as hereinabove provided, the Authority may determine that
the Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner at such effective date and presentation of
such Bond for that purpose at the Trust Office of the Trustee, a suitable notation as to such action
shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in
the opinion of the Authority, shall be necessary to conform to such Owners' action shall be
prepared and executed, and in that case upon demand of the Owner at such effective date such
new Bonds shall be exchanged at the Trust Office of the Trustee, without cost to each Owner, for
Bonds then Outstanding, upon surrender of such Outstanding Bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTION 8.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of or premium on any
Bond when and as the same shall become due and payable, whether at maturity as therein
expressed, or by proceedings for redemption.
(b) Default in the due and punctual payment of any installment of interest on any
Bond when and as such interest installment shall become due and payable.
(c) Any Event of Default (as defined in the Lease) shall have occurred and be
continuing.
(d) Failure by the Authority to observe and perform any of the covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, other than as referred to in
the preceding clauses (a) and (b), for a period of thirty (30) days after written notice, specifying
such failure and requesting that it be remedied has been given to the Authority by the Trustee, or
to the Authority and the Trustee by the Owners of not less than 50% in aggregate principal
amount of the Outstanding Bonds; provided, however, that if in the reasonable opinion of the
Authority the failure stated in such notice can be corrected, but not within such 60 -day period,
the Trustee and such Owners shall not unreasonably withhold their consent to an extension of
such time if corrective action is instituted by the Authority within such 60 -day period and
diligently pursued until such failure is corrected.
(e) The filing by the Authority of a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Authority, seeking reorganization under the Federal bankruptcy laws or any
other applicable law of the United States of America, or if, under the provisions of any other law
for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or
control of the Authority or of the whole or any substantial part of its property.
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SECTION 8.02. Remedies; No Acceleration. Upon the occurrence of an Event of
Default the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the Authority or any member, officer or employee thereof, to compel the
Authority or any such member, officer or employee to perform and carry out its or his or her
duties under law and the agreements and covenants required to be performed by it or him
contained herein or in the Lease;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the
Authority and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by
the Owners of a majority in aggregate principal amount of Outstanding Bonds and indemnified
as provided in Section 6.02(c), the Trustee shall be obligated to exercise such one or more of the
rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to
the Owners) is intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to any other remedy given to the Trustee or the
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver or any such Event of
Default or acquiescence therein; such right or power may be exercised from time to time as often
as may be deemed expedient.
The Trustee shall have no right to declare the principal of or interest on the Bonds
to be due and payable immediately.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee
to vote in respect of the claim of any Owner in any such proceeding without the approval of the
Owners so affected.
SECTION 8.03. Application of Revenues and Other Funds After Default. All
amounts received by the Trustee pursuant to any right given or action taken by the Trustee under
the provisions of this Indenture shall be applied by the Trustee in the following order of priority:
First, to the payment of the fees, costs and expenses of the Trustee, including
reasonable compensation to its agents, attorneys and counsel;
42
Second, to the payment of the whole amount of interest on and principal of the
Bonds of the applicable Series then due and unpaid; provided, however, that in the event
such amounts shall be insufficient to pay in full the full amount of such interest and
principal, then such amounts shall be applied to the payment of such principal and
interest without preference or priority of principal over interest, or interest over principal,
or of any installment of interest over any other installment of interest, ratably to the
aggregate of such principal and interest.
SECTION 8.04. Power of Trustee to Control Proceedings. If the Trustee, upon the
happening of an Event of Default, shall have taken any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request
of the Owners of at least a majority in aggregate principal amount of the Bonds then
Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the
Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise,
settlement or other disposal of such action; provided, however, that the Trustee shall not, unless
there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or
otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed
with it a written request signed by the Owners of a majority in aggregate principal amount of the
Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other
disposal of such litigation and if the Trustee is indemnified as provided in Section 6.02(c). Any
suit, action or proceeding which any Owner shall have the right to bring to enforce any right or
remedy hereunder may be brought by the Trustee for the equal benefit and protection of all
Owners similarly situated and the Trustee is hereby appointed (and the successive respective
Owners issued hereunder by taking and holding the same, shall be conclusively deemed so to
have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose
of bringing any such suit, action or proceeding and to do and perform any and all acts and things
for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable
in the opinion of the Trustee as such attorney-in-fact.
SECTION 8.05. Appointment of Receivers. Upon the occurrence of an Event of
Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings
to enforce the rights of the Trustee and of the Owners under this Indenture, the Trustee shall be
entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and
other amounts pledged hereunder, pending such proceedings, with such powers as the court
making such appointment shall confer.
SECTION 8.06. Non -Waiver. A waiver of any default or breach of duty or contract
by the Trustee or any Owners shall not affect any subsequent default or breach of duty or
contract, or impair any rights or remedies on any such subsequent default or breach. No delay or
omission of the Trustee or any Owner to exercise any right or power accruing upon any default
shall impair any such right or power or shall be construed to be a waiver of any such default or
an acquiescence therein; and every power and remedy conferred upon the Trustee or Owners by
the Bond Law or by this Article VIII may be enforced and exercised from time to time and as
often as shall be deemed expedient by the Trustee or the Owners, as the case may be.
SECTION 8.07. Rights of Owners. No Owner shall have the right to institute any
suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless
43
(a) such Owner shall have previously given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds
then Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) such
Owners shall have tendered to the Trustee indemnity acceptable to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall
have refused or omitted to comply with such request for a period of 60 days after such written
request shall have been received by, and such tender of indemnity shall have been made to, the
Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy
hereunder; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by his or their action to enforce any right under this Indenture, except in
the manner herein provided, and that all proceedings at law or in equity to enforce any provision
of this Indenture shall be instituted, had and maintained in the manner herein provided and for
the equal benefit of all Owners.
The right of any Owner to receive payment of the principal of and interest and premium
(if any) on such Bond as herein provided or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
SECTION 8.08. Termination of Proceedings. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a receiver or
otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or
shall have been determined adversely, then and in every such case, the Authority, the Trustee and
the Owners shall be restored to their former positions and rights hereunder, respectively, with
regard to the property subject to this Indenture, and all rights, remedies and powers of the
Trustee shall continue as if no such proceedings had been taken.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Limited Liability of Authority. Notwithstanding anything in this
Indenture contained, the Authority shall not be required to advance any moneys derived from
any source of income other than the Revenues for the payment of the principal of or interest on
the Bonds, or any premiums upon the redemption thereof, or for the performance of any
covenants herein contained (except to the extent any such covenants are expressly payable
hereunder from the Revenues or otherwise from amounts payable under the Lease). The
Authority may, however advance funds for any such purpose, provided that such funds are
derived from a source legally available for such purpose and may be used by the Authority for
such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other
funds as in this Indenture provided. The general fund of the Authority is not liable, and the full
faith and credit of the Authority is not pledged, for the payment of the interest and premiums (if
any) on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of, or
charge, lien or encumbrance upon, any of the property of the Authority or any of its income or
receipts, except the Revenues and such other moneys and securities as provided in this Indenture.
The Owners shall never have the right to compel the forfeiture of any property of the Authority
except the Revenues and other funds pledged to the payment of the Bonds as provided in this
Indenture. The principal of and interest on the Bonds, and any premiums upon the redemption of
any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any
property of the Authority or upon any of its income, receipts or revenues except the Revenues
and other funds (other than amounts on deposit in the Rebate Fund) pledged to the payment
thereof as provided in this Indenture.
SECTION 9.02. Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee, the
City and the Owners, any right, remedy or claim under or by reason of this Indenture. Any
covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of
the Authority shall be for the sole and exclusive benefit of the Trustee, the City and the Owners.
SECTION 9.03. Defeasance; Discharge of Indenture. If the Authority shall pay and
discharge any or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and
premiums (if any) on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money
which, together with the available amounts then on deposit in the funds and accounts established
with the Trustee pursuant to this Indenture, is fully sufficient to pay such Bonds, including all
principal, interest and redemption premiums (if any); or
(c) by irrevocably depositing with the Trustee or an escrow agent, in trust pursuant to
an escrow deposit agreement, Defeasance Securities in such amount as an Independent Certified
Public Accountant shall determine in a written report acceptable to the Authority in form and
substance, and addressed, to the Authority and the Trustee, filed with the Trustee (upon which
report the Trustee may conclusively rely) will, together with the interest to accrue thereon and
available moneys then on deposit in the funds and accounts established with the Trustee pursuant
to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds
(including all principal, interest and redemption premiums) at or before their respective maturity
dates;
and delivering an opinion of Bond Counsel acceptable to the Authority in form and substance,
and addressed, to the Authority and the Trustee to the effect that the Bonds are no longer
Outstanding under the Indenture, and if such Bonds are to be redeemed prior to the maturity
thereof notice of such redemption shall have been mailed pursuant to Section 2.03(d) or
provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at
the Written Request of the Authority, and notwithstanding that any of such Bonds shall not have
been surrendered for payment, the pledge of the Revenues and other funds provided for in this
Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority under
'.
this Indenture with respect to all such Bonds, shall cease and terminate, except only the
obligation of the Authority to pay or cause to be paid to the Owners not so surrendered and paid
all sums due thereon from amounts set aside for such purpose as aforesaid, and all amounts due
the Trustee. Any funds held by the Trustee following any payment or discharge of the
Outstanding Bonds pursuant to this Section, which are not required for such purposes, shall after
payment of amounts due the Trustee hereunder be paid over to the Authority for use by the
Authority for any lawful purpose.
SECTION 9.04. Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to,
such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in
this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
SECTION 9.05. Content of Certificates and Opinions. Every certificate or opinion
with respect to compliance with a condition or covenant provided for in this Indenture except the
certificate of destruction pursuant to Section 9.10 shall include (a) a statement that the person or
persons making or giving such certificate or opinion have read such covenant or conditions and
the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such certificate
or opinion are based; (c) a statement that, in the opinion of the signers, they have made or caused
to be made such examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of the signers, such condition or covenant has been
complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar
as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with respect to the matters
upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of
reasonable care should have known that the same were erroneous. Any such certificate or
opinion or representation made or given by counsel may be based, insofar as it relates to factual
matters, on information with respect to which is in the possession of the Authority, or upon the
certificate or opinion of or representations by an officer or officers of the Authority, unless such
counsel knows that the certificate or opinion or representations with respect to the matters upon
which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in
the exercise of reasonable care should have known that the same were erroneous.
SECTION 9.06. Execution of Documents by Owners. Any request, consent or other
instrument required by this Indenture to be signed and executed by Owners may be in any
number of concurrent writings of substantially similar tenor and may be signed or executed by
such Owners in person or by their agent or agents duly appointed in writing. Proof of the
execution of any such request, consent or other instrument or of a writing appointing any such
agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and of the Authority if made in the manner provided in this Section.
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The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof
to take acknowledgments of deeds, certifying that the person signing such request, consent or
other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request,
consent or vote of the Owner shall bind every future Owner with respect to the same Bond and
the Owner with respect to any Bond issued in exchange therefor or in lieu thereof, in respect of
anything done or suffered to be done by the Trustee or the Authority in pursuance of such
request, consent or vote. In lieu of obtaining any demand, request, direction, consent or waiver
in writing, the Trustee may call and hold a meeting of the Owners upon such notice and in
accordance with such rules and obligations as the Trustee considers fair and reasonable for the
purpose of obtaining any such action.
SECTION 9.07. Disqualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request, direction,
consent or waiver under this Indenture, unless all Bonds are then so owned, Bonds that are
owned or held by or for the account of the City or the Authority (but excluding Bonds held in
any employees' retirement fund) shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination; provided, however, that for the purpose of determining
whether the Trustee shall be protected in relying on any such demand, request, direction, consent
or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded.
Upon request of the Trustee, the Authority and the City shall specify in a certificate to the
Trustee those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely
on such certificate.
SECTION 9.08. Waiver of Personal Liability. No official, officer, agent or
employee of the Authority shall be individually or personally liable for the payment of the
interest on or principal of the Bonds; but nothing herein contained shall relieve any such official,
officer, agent or employee from the performance of any official duty provided by law.
SECTION 9.09. Partial Invalidity. If any one or more of the covenants or
agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the
Trustee) to be performed should be contrary to law, then such covenant or covenants, such
agreement or agreements, or such portions thereof, shall be null and void and shall be deemed
separable from the remaining covenants and agreements or portions thereof and shall in no way
affect the validity of this Indenture or of the Bonds; but the Owners shall retain all rights and
benefits accorded to them under the Bond Law or any other applicable provisions of law.
SECTION 9.10. Destruction of Canceled Bonds. Whenever in this Indenture
provision is made for the surrender of any Bonds which have been paid or canceled pursuant to
the provisions of this Indenture, the Trustee shall cancel and destroy such Bonds and upon
Written Request of the Authority furnish to the Authority a certificate of such destruction.
SECTION 9.11. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Authority or the Trustee may be established
47
and maintained in the accounting records of the Authority or the Trustee, as the case may be,
either as a fund or an account, and may, for the purpose of such records, any audits thereof and
any reports or statements with respect thereto, be treated either as a fund or as an account. All
such records with respect to all such funds and accounts held by the Authority shall at all times
be maintained in accordance with generally accepted accounting principles and all such records
with respect to all such funds and accounts held by the Trustee shall be at all times maintained in
accordance with corporate trust industry practices; in each case with due regard for the protection
of the security of the Bonds and the rights of every Owner thereof.
SECTION 9.12. Payment on Business Days. Whenever in this Indenture any amount
is required to be paid on a day that is not a Business Day, such payment shall be required to be
made, without accruing additional interest thereby, on the Business Day immediately following
such day.
SECTION 9.13. Notices. All notices, requests and other communications provided for
hereunder shall be in electronic, telephonic or written form and shall be given to the party to
whom sent, addressed to it, at its address or other address or telephone, number telecopier as
such party may hereafter specify for the purpose by notice to the other parties set forth below.
Each such notice, request or communication shall be effective (i) if given by telephone,
telecopier or other electronic means, when such communication is transmitted to the address
specified below and any appropriate answerback or confirmation is received, (ii) if given by
certified or registered mail, return receipt requested, on the date of receipt appearing on the
return postal receipt for notices given by certified or registered mail, (iii) if given by hand
delivery, when delivered at the address specified below:
If to the Authority: Santa Clarita Public Financing Authority
c/o City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Treasurer
661-255-4997
If to the City: City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: City Treasurer
661-255-4997
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
Reference: City of Santa Clarita 2019 LRB
213-630-6465
The Authority and the Trustee may designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
SECTION 9.14. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of
the Bonds that remain unclaimed for two years after the date when such Bonds have become due
and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys
were held by the Trustee at such date, or for two years after the date of deposit of such moneys if
deposited with the Trustee after such date when such Bonds become due and payable, shall be
repaid by the Trustee to the Authority, as its absolute property and free from trust, and the
Trustee shall thereupon be released and discharged with respect thereto and the Owners shall
look only to the Authority for the payment of such Bonds; provided, however, that before being
required to make any such payment to the Authority, the Trustee shall, at the written request and
expense of the Authority, cause to be mailed to the Owners, at their respective addresses
appearing on the Registration Books, a notice that such moneys remain unclaimed and that, after
a date named in such notice, which date shall not be less than 30 days after the date of mailing of
such notice, the balance of such moneys then unclaimed will be returned to the Authority.
SECTION 9.15. Governing Law. This Indenture shall be construed and governed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be signed by
their respective officers, all as of the day and year first above written.
ATTEST:
3
Mary Cusick, Secretary
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
Chair
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Officer
50
EXHIBIT A
[FORM OF BOND]
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE INDENTURE) TO
THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
SANTA CLARITA PUBLIC FINANCING AUTHORITY
LEASE REVENUE BOND
(SHERIFF STATION PROJECT)
SERIES 2019
RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP:
% JUNE 1, JUNE _, 2019
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint powers authority
organized and existing under the laws of the State of California (the "Authority"), for value
received, hereby promises to pay (but only out of the Revenues, as defined in the Indenture
hereinafter referred to, and certain other moneys) to the Registered Owner identified above or
registered assigns (the "Registered Owner"), on the Maturity Date identified above or any earlier
redemption date, the Principal Amount identified above in lawful money of the United States of
America; and to pay interest thereon at the Rate of Interest identified above in like money from
the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of
this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the
fifteenth calendar day of the month preceding such Interest Payment Date, in which event it shall
bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to
November 15, 2019, in which event it shall bear interest from the Dated Date identified above;
provided, however, that if, at the time of authentication of this Bond, interest is in default on this
Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has
EN
previously been paid or made available for payment), payable semiannually on June 1 and
December 1 in each year, commencing December 1, 2019 (each an "Interest Payment Date")
until payment of such Principal Amount in full. The Principal Amount hereof is payable by
check upon presentation hereof upon maturity or earlier redemption at the designated corporate
trust office (the "Trust Office") of The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee"). Interest hereon is payable by check of the Trustee mailed by first class
mail on each Interest Payment Date to the Registered Owner hereof at the address of the
Registered Owner as it appears on the registration books of the Trustee as of the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date (except that in the case of a
Registered Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds,
such payment may, at such Registered Owner's option, be made by wire transfer of immediately
available funds to an account located in the United States in accordance with written instructions
provided by such Registered Owner prior to the fifteenth calendar day of the month preceding
such Interest Payment Date).
This Bond is one of a duly authorized issue of bonds of the Authority designated the
"Santa Clarita Public Financing Authority Lease Revenue Bonds (Sheriff Station Project), Series
2019" (herein, the "Bonds"), in an aggregate principal amount of $[principal amount] issued
under an Indenture, dated as of June 1, 2019 (the "Indenture"), by and between the Authority and
the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto
for a description of the rights thereunder of the owners of the Bonds, of the nature and extent of
the Revenues (as that term is defined in the Indenture), of the rights, duties and immunities of the
Trustee and of the rights and obligations of the Authority thereunder; and all of the terms of the
Indenture are hereby incorporated herein and constitute a contract between the Authority and the
Registered Owner hereof, and to all of the provisions of which Indenture the Registered Owner
hereof, by acceptance hereof, assents and agrees.
The Bonds are authorized to be issued pursuant to the provisions of the Marks -Roos
Local Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of the
Government Code of the State of California (the "Act"). The Bonds are special obligations of
the Authority and, as and to the extent set forth in the Indenture, are payable solely from and
secured by a first lien on and pledge of the Revenues as provided in the Indenture. All of the
Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues (other
than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than
deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and
payment of the principal of and interest on the Bonds. The full faith and credit of the Authority
are not pledged for the payment of the principal of or interest or premium (if any) on the Bonds.
The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance
upon, any of the property of the Authority or any of its income or receipts, except the Revenues
and such other moneys and securities as provided in the Indenture.
The Bonds have been issued for the purpose of financing certain capital improvements
for the City. The Authority and the City have entered into a Lease Agreement, dated as of June
1, 2019 (the "Lease"), under which the City is obligated to pay amounts which are anticipated to
be sufficient to enable the Authority to pay the principal of and interest on the Bonds.
The Bonds are subject to redemption prior to their maturity as provided in the Indenture.
FEW
The Bonds are subject to redemption prior to their respective maturity dates, upon notice
as provided in the Indenture, as a whole or in part on any date, from prepayments of Base Rental
Payments made by the City pursuant to the Lease from funds received by the City due to a taking
of the Leased Property or any portion thereof under the power of eminent domain or from
insurance proceeds received by the City due to damage to or destruction of the Leased Property
or any portion thereof, under the circumstances and upon the conditions and terms prescribed in
the Indenture and in the Lease. Redemption of Bonds pursuant to this paragraph shall be made at
a redemption price equal to the sum of the principal of the Bonds to be redeemed plus accrued
interest thereon to the date fixed for redemption, without premium.
The Bonds may be issued in denominations of $5,000 or any integral multiple thereof.
Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, this
Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount,
interest rate and maturity of fully registered Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of
Authorized Denomination or Denominations, for the same aggregate principal amount and of the
same maturity will be issued to the transferee in exchange herefor. The Authority and the Trustee
may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the
Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee shall
not be required to register the transfer or exchange of any Bond during the period in which the
Trustee is selecting Bonds for redemption or any Bond selected for redemption.
The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any
Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or
premiums at the time and place and at the rate and in the currency provided therein of any Bond
without the express written consent of the owner of such Bond, (b) reduce the percentage of
Bonds required for the written consent to any such amendment or modification, or (c) without its
written consent thereto, modify any of the rights or obligations of the Trustee, all as more fully
set forth in the Indenture.
It is hereby certified that all things, conditions and acts required to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California and by the Act (as such term is defined on the
reverse side hereof) and the amount of this Bond, together with all other indebtedness of the
Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of
California or by the Act.
EM
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon shall have been
manually signed by the Trustee.
IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name
and on its behalf by the manual or facsimile signatures of its Chair and Secretary as of the Dated
Date identified above.
ATTEST:
Secretary
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
3
EM
Chair
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within -mentioned Indenture and registered on
the Bond Registration Books.
Dated: , 20
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
I:l
:.
Authorized Officer
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is ,
mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same
the within -
on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTICE: Signature must be guaranteed by a
member of an institution which is a participant
in the Securities Transfer Agent Medallion
Program (STAMP) or other similar program.
NOTE: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
EWA
EXHIBIT B
FORM OF COSTS OF ISSUANCE REQUISITION
COSTS OF ISSUANCE REQUISITION NO.
with reference to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
I. The Santa Clarita Public Financing Authority (the "Authority") hereby requests
The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), pursuant to that
certain Indenture, dated as of June 1, 2019 (the "Indenture"), by and between the Authority and
the Trustee, under the terms of which the Authority has issued its Lease Revenue Bonds (Sheriff
Station Project), Series 2019, to pay from the moneys in the Costs of Issuance Fund established
pursuant to the Indenture, the amounts shown on Schedule I attached hereto to the parties
indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Costs of Issuance Fund. None of the items for which payment is
requested has been reimbursed previously from the Costs of Issuance Fund.
Dated: , 20
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
By_
Title:
73308393.7 B-1
EXHIBIT C
FORM OF PROJECT FUND REQUISITION
REQUISITION OF THE CITY
PROJECT FUND REQUISITION NO. (to be numbered sequentially)
with reference to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
I. The City of Santa Clarita (the "City") hereby requests The Bank of New York
Mellon Trust Company, N.A., as trustee (the "Trustee"), pursuant to that certain Indenture, dated
as of June 1, 2019 (the "Indenture"), by and between the Santa Clarita Public Financing
Authority (the "Authority") and the Trustee, under the terms of which the Authority has issued
its Lease Revenue Bonds (Sheriff Station Project), Series 2019, to pay from the moneys in the
Project Fund established pursuant to the Indenture, the amounts shown on Schedule I attached
hereto to the parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto is a Project Cost (as defined in the
Indenture) and has been properly incurred and is a proper charge against the Project Fund. None
of the items for which payment is requested has been reimbursed previously from the Project
Fund.
IV. There has not been filed with or served upon the City or the Authority a stop
notice or any other notice of any lien, right to lien or attachment upon, or claim affecting the
right to receive payment of, any of the money payable to the person[s] named on Schedule I
hereto which has not been released or will not be released simultaneously with the payment of
such obligation, other than liens accruing by mere operation of law.
Dated: , 20
CITY OF SANTA CLARITA
By_
Title:
C-1
SCHEDULEI
Project Component
Amount of
This Draw
(Continue on Additional Sheet if Necessary)
Name and Address of party to whom payment is to be made:
Purpose for which the obligation was incurred:
C-2
Aggregate Amount
Draws Including
This Draw
EXHIBIT D
FORM OF NET PROCEEDS REQUISITION
REQUISITION NO. (to be numbered sequentially)
with reference to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
I. The Santa Clarita Public Financing Authority (the "Authority") hereby requests
The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), pursuant to that
certain Indenture, dated as of June 1, 2019 (the "Indenture"), by and between the Authority and
the Trustee, under the terms of which the Authority has issued its Lease Revenue Bonds (Sheriff
Station Project), Series 2019, to pay from the moneys in the Insurance and Condemnation Fund
established pursuant to the Indenture, the amounts shown on Schedule I attached hereto to the
parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Insurance and Condemnation Fund. None of the items for which
payment is requested has been reimbursed previously from the Insurance and Condemnation
Fund.
IV. There has not been filed with or served upon the City or the Authority a stop
notice or any other notice of any lien, right to lien or attachment upon, or claim affecting the
right to receive payment of, any of the money payable to the person[s] named on Schedule I
hereto which has not been released or will not be released simultaneously with the payment of
such obligation, other than liens accruing by mere operation of law.
Dated: , 20
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
By_
Title:
D-1
NRF draft of 4/11/19
AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind, Esq.
SITE LEASE
Dated as of June 1, 2019
by and between
CITY OF SANTA CLARITA
and
SANTA CLARITA PUBLIC FINANCING AUTHORITY
Relating to the
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT
TO REVENUE AND TAXATION CODE SECTION 11922
AND THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO GOVERNMENT CODE SECTION 27383.
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS................................................................................................. 1
SECTION2.
SITE................................................................................................................ 1
SECTION3.
TERM.............................................................................................................. 2
SECTION4.
RENTAL.......................................................................................................... 2
SECTION5.
TITLE.............................................................................................................. 2
SECTION6.
DEFAULT....................................................................................................... 2
SECTION 7.
EMINENT DOMAIN...................................................................................... 3
SECTION 8.
RIGHT OF ENTRY......................................................................................... 3
SECTION 9.
TERMINATION.............................................................................................. 3
SECTION 10.
QUIET ENJOYMENT BY THE AUTHORITY ............................................. 3
SECTION 11.
ASSIGNMENTS AND SUBLEASES............................................................ 3
SECTION 12.
WAIVER OF PERSONAL LIABILITY......................................................... 3
SECTION13.
TAXES............................................................................................................. 4
SECTION14.
LAW GOVERNING........................................................................................ 4
SECTION15.
NOTICES......................................................................................................... 4
SECTION 16.
VALIDITY AND SEVERABILITY............................................................... 4
SECTION 17.
PURPOSE OF THE SITE................................................................................ 5
SECTION 18.
WAIVER OF DEFAULT................................................................................ 5
SECTION 19.
SECTION HEADINGS................................................................................... 5
SECTION 20.
AMENDMENTS............................................................................................. 5
SECTION21.
EXECUTION................................................................................................... 5
EXHIBIT A DESCRIPTION OF THE SITE
I
SITE LEASE
This SITE LEASE, dated as of June 1, 2019 (this "Site Lease"), is made by and
between the CITY OF SANTA CLARITA, a city duly organized and existing under the laws of
the State of California (the "City"), as lessor, and the SANTA CLARITA PUBLIC FINANCING
AUTHORITY, a joint exercise of powers authority, duly organized and existing under the laws
of the State of California (the "Authority"), as lessee.
RECITALS:
WHEREAS, the City is leasing the property more particularly described in
Exhibit A attached hereto (the "Site") to the Authority; and
WHEREAS, the Authority has determined to issue its Lease Revenue Bonds
(Sheriff Station Project), Series 2019 (the "Bonds") and any Additional Bonds pursuant to an
Indenture, dated as of June 1, 2019 (the "Indenture"), by and between the Authority and The
Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"); and
WHEREAS, the Authority, concurrently with the execution of this Site Lease,
will lease the Site and future sheriff station facilities and improvements (the "Leased Property")
to the City pursuant to a Lease Agreement, dated as of June 1, 2019 (the "Lease"), by and
between the City and the Authority, in consideration for base rental payments equal to the
principal and interest coming due on the Bonds and Additional Bonds; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Site Lease do exist, have happened and have been performed in regular and
due time, form and manner as required by law, and the parties hereto are now duly authorized to
execute and enter into this Site Lease;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as
follows:
SECTION 1. DEFINITIONS.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Indenture or the Lease, as applicable.
SECTION 2. SITE LEASE.
The City hereby leases the Site to the Authority and the Authority hereby leases
the Site from the City, on the terms and conditions hereinafter set forth.
SECTION 3. TERM.
The term of this Site Lease shall commence on June —, 2019. This Site Lease
shall constitute a lease of the City's interest in the Site.
The term of this Site Lease shall expire on the earliest of (i) the Expiration Date;
(ii) the date the last base rental payment is made under the provisions of the Lease; or (iii) the
date of discharge of the Indenture pursuant to Section 9.03 thereof. Notwithstanding the
foregoing, the term of this Lease shall automatically be extended for a period of ten (10) years,
if, on the Expiration Date, the Indenture has not been fully discharged, and shall terminate on the
date when the Indenture has been fully discharged.
SECTION 4. RENTAL.
The Authority agrees to pay to the Trustee, on the Closing Date, the proceeds of
the Bonds, as advance rental for the use and right to possession of the Site for the term of this
Site Lease. The rental shall be applied by the Trustee as provided in the Indenture.
SECTION 5. TITLE.
Throughout the term of this Site Lease, title to the Site shall remain in the City.
SECTION 6. DEFAULT.
(a) If the Authority shall fail to keep, observe or perform any term, covenant
or condition contained herein to be kept or performed by the Authority, or (b) if (1) the
Authority's interest in this Site Lease or any part thereof is assigned or transferred without the
written consent of the City, either voluntarily or by operation of law or otherwise, except as
provided in Section 11 hereof, or (2) any proceeding under the United States Bankruptcy Code or
any federal or state bankruptcy, insolvency or similar law or any law providing for the
appointment of a receiver, liquidator, trustee or similar official of the Authority or of all or
substantially all of its assets is instituted by or with the consent of the Authority, or is instituted
without its consent and is not permanently stayed or dismissed within sixty (60) days, or if the
Authority offers to the Authority's creditors to effect a composition or extension of time to pay
the Authority's debts, or asks, seeks or prays for a reorganization or to effect a plan of
reorganization or for readjustment of the Authority's debts, or if the Authority shall make a
general assignment or any assignment for the benefit of the Authority's creditors, then the
Authority shall be deemed to be in default hereunder and it shall be lawful for the City to
exercise any and all rights and remedies available pursuant to law; provided however, that:
(i) no merger of this Site Lease and of the Lease shall be deemed to occur as a result thereof, and
(ii) so long as any Bonds remain outstanding the City shall have no power to terminate this Site
Lease by reason of any default on the part of the Authority if such termination would prejudice
the exercise of the remedies provided in Section 10 (captioned "DEFAULT") of the Lease.
Neither the City nor the Authority shall in any event be in default in the
performance of any of its obligations hereunder or imposed by law unless and until the City or
the Authority (as the case may be) shall have failed to perform such obligations within sixty (60)
2
days after notice by the Authority or the City to the nonperforming party properly specifying
wherein such party has failed to perform any such obligation.
SECTION 7. EMINENT DOMAIN.
If the whole or any part of the Site shall be taken under the power of eminent
domain, the interest of the Authority shall be recognized and is hereby determined to be the
amount of the unpaid principal components of base rental payments due under the Lease, and all
accrued interest thereon, and the amount of the unpaid Additional Rental Payments due under the
Lease, and the balance of the award, if any, shall be paid to the City.
SECTION 8. RIGHT OF ENTRY.
The City and its assignees shall have the right to enter the Site during reasonable
business hours (and in emergencies at all times) (a) to inspect the same, (b) for any purpose
connected with the City's or the Authority's rights or obligations under this Site Lease, and
(c) for all other lawful purposes.
SECTION 9. TERMINATION.
The Authority agrees, upon the termination of this Site Lease to quit and
surrender the Site in the same good order and condition as the same were in at the time of
commencement of the term hereunder, reasonable wear and tear excepted, and the Authority and
the City agree that any permanent improvements and structures existing upon the Site at the time
of the termination of this Site Lease shall remain thereon and title thereto shall be vested in the
City.
SECTION 10. QUIET ENJOYMENT BY THE AUTHORITY.
The Authority shall at all times during the term of this Site Lease peaceably and
quietly have, hold and enjoy the Site without suit, trouble or hindrance from the City, subject to
the Authority's compliance with the terms and provisions hereof and of the Lease.
SECTION 11. ASSIGNMENTS AND SUBLEASES.
The Authority shall not assign, mortgage, hypothecate or otherwise encumber this
Site Lease or any rights hereunder or the leasehold created hereby by trust agreement, indenture
or deed of trust or otherwise or sublet the Site without the written consent of the City, except as
provided by the Lease and as security for the Bonds and any Additional Bonds.
SECTION 12. WAIVER OF PERSONAL LIABILITY.
All liabilities hereunder on the part of the Authority shall be solely liabilities of
the Authority as a separate legal entity, and no member, officer or employee of the Authority
shall at any time or under any circumstances be individually or personally liable hereunder for
anything done or omitted to be done by the Authority hereunder.
3
SECTION 13. TAXES.
The City agrees and covenants to pay, any and all assessments of any kind or
character and also all taxes, including possessory interest taxes, levied or assessed upon the Site
(including both land and improvements thereon).
SECTION 14. LAW GOVERNING.
This Site Lease shall be governed exclusively by the provisions hereof and by the
laws of the State of California.
SECTION 15. NOTICES.
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests or other communications hereunder by either party to the other shall be in
writing and shall be sufficiently given and served upon the other party if delivered personally or
if mailed by United States registered or certified mail, return receipt requested, postage pre -paid,
and,
If to the Authority: Santa Clarita Public Financing Authority
c/o City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Treasurer
If to the City: City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: City Treasurer
or to such other addresses as the respective parties may from time to time designate by notice in
writing.
SECTION 16. VALIDITY AND SEVERABILITY.
If any one or more of the terms, provisions, covenants or conditions of this Site
Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes
final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall
be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the
fullest extent permitted by law.
If for any reason this Site Lease shall be held by a court of competent jurisdiction
to be void, voidable, or unenforceable by the City or by the Authority, or if for any reason it is
held by such a court that any of the covenants and conditions of the Authority hereunder is
unenforceable for the full term hereof, then and in such event this Site Lease is and shall be
deemed to be a lease from year to year and all of the rental and other terms, provisions and
.19
conditions of this Site Lease, except to the extent that such terms, provisions and conditions are
contrary to or inconsistent with such holding, shall remain in full force and effect.
SECTION 17. PURPOSE OF THE SITE.
The Authority covenants that during the term of this Site Lease, it shall use the
Site for the purposes described in the Lease and for such other purposes as may be incidental
thereto.
SECTION 18. WAIVER OF DEFAULT.
Failure of the City to take advantage of any default on the part of the Authority
shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may
grow up between the parties in the course of administering this Site Lease be construed to waive
or to lessen the right of the City to insist upon performance by the Authority of any term,
covenant or condition hereof, or to exercise any rights given the City on account of such default.
A waiver of a particular default shall not be deemed to be a waiver of the same or any
subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a
waiver of any term, covenant or condition of this Site Lease.
SECTION 19. SECTION HEADINGS.
All section headings contained are for convenience of reference only and are not
intended to define or limit the scope of any provision of this Site Lease.
SECTION 20. AMENDMENTS.
This Site Lease may be amended in writing as may be mutually agreed by the
Authority and the City.
SECTION 21. EXECUTION.
This Site Lease may be executed in any number of counterparts, each of which
shall be deemed to an original, but all together shall constitute but one and the same Site Lease.
It is also agreed that separate counterparts of this Site Lease may separately be executed by the
City and the Authority, all with the same force and effect as though the same counterpart had
been executed by both the City and the Authority.
Wi
IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease
to be executed by their respective officers thereunto duly authorized, all as of the day and year
first above written.
ATTEST:
I:1
ATTEST:
3
Secretary
City Clerk
m
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
an
Chair
CITY OF SANTA CLARITA
City Manager
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA
61.2
COUNTY OF LOS ANGELES
On before me, (insert name of the
officer), Notary Public, personally appeared who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
EXHIBIT A
DESCRIPTION OF THE SITE
Real property in the City of Santa Clarita, County of Los Angeles, State of California, described
as follows:
PARCEL 1:
THAT PORTION OF LOT 62 OF ST. JOHN'S SUBDIVISION, IN THE CITY OF SANTA
CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 196 PAGE 304 OF MISCELLANEOUS RECORDS AND OF THE
RANCHO SAN FRANCISCO, AS SHOWN ON MAP RECORDED IN BOOK 1 PAGE 521
OF PATENTS, BOTH IN THE OFFICE OF THE COUNTY RECORDED OF SAID COUNTY,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 62; THENCE SOUTHERLY
ALONG THE EASTERLY LINE OF SAID LOT 62, 641.74 FEET; THENCE WESTERLY,
PARALLEL WITH THE NORTH LINE OF SAID LOT 62, 641.74 FEET; THENCE
NORTHERLY, PARALLEL WITH THE EAST LINE OF SAID LOT 62 AND THE EAST
LINE OF SAID RANCHO SAN FRANCISCO, 801.74 FEET; THENCE EASTERLY,
PARALLEL WITH THE NORTH LINE OF SAID LOT 62, 641.74 FEET TO THE EAST LINE
OF SAID RANCHO SAN FRANCISCO; THENCE SOUTHERLY ALONG THE EAST LINE
OF SAID RANCHO, 160.00 FEET TO THE POINT OF BEGINNING.
PARCEL 2:
A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND PUBLIC UTILITY
PURPOSES OVER THE EASTERLY 60 FEET OF THE SOUTHERLY 200 FEET OF THE
LAND DESCRIBED IN THE DEED TO HI SHEAR CORPORATION BY DEED RECORDED
DECEMBER 7, 1964 AS INSTRUMENT NO. 1073 IN BOOK D-2723 PAGE 89, OFFICIAL
RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
APN: 2836-012-905 and 2836-016-909
A-1
NRF draft of 4/11/19
AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind
ASSIGNMENT AGREEMENT
Dated as of June 1, 2019
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Relating to the
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT TO REVENUE AND
TAXATION CODE SECTION 11922 AND THIS DOCUMENT IS EXEMPT FROM
RECORDING FEES PURSUANT TO GOVERNMENT CODE SECTION 27383.
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS................................................................................................. 1
SECTION2.
ASSIGNMENT................................................................................................ 1
SECTION 3.
ACCEPTANCE OF ASSIGNMENT.............................................................. 2
SECTION 4.
NO ADDITIONAL RIGHTS OR DUTIES ..................................................... 2
SECTION 5.
FURTHER ASSURANCES............................................................................ 2
SECTION 6.
COUNTERPARTS.......................................................................................... 2
SECTION7.
LAW GOVERNING........................................................................................ 2
SECTION8.
NOTICES......................................................................................................... 2
SECTION 9.
BINDING EFFECT; SUCCESSORS.............................................................. 2
EXHIBIT A DESCRIPTION OF THE SITE
I
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of June 1, 2019 (this "Assignment
Agreement"), by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a
joint powers authority duly organized and existing under the laws of the State of California (the
"Authority") and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a
national banking association organized and existing under the laws of the United States of
America and authorized to accept assignments of the nature herein set forth, as trustee (the
"Trustee");
WITNESSETH:
WHEREAS, the Authority has entered into a Site Lease, dated as of June 1, 2019 (the
"Site Lease"), with the City of Santa Clarita, California (the "City"), whereby the Authority has
agreed to lease certain real property located within the City, as described in Exhibit A attached
hereto (the "Site"), from the City; and
WHEREAS, the Authority has entered into a Lease Agreement, dated as of June 1, 2019
(the "Lease"), with the City, whereby the Authority has agreed to lease the Site and future sheriff
station facilities and improvements, as more fully described on Exhibit A to the Lease (the
"Leased Property") to the City; and
WHEREAS, under and pursuant to the Lease, the City is obligated to make base rental
payments, including the Base Rental Payments as defined therein, to the Authority for the lease
of the Leased Property; and
WHEREAS, the Base Rental Payments have been pledged by the Authority as security
for the payment of principal of and interest on its Lease Revenue Bonds (Sheriff Station Project),
Series 2019 (the "Bonds"), authorized and issued pursuant to an Indenture, dated as of June 1,
2019 (the "Indenture"), by and between the Authority and the Trustee; and
WHEREAS, the Authority desires to assign to the Trustee without recourse certain of its
rights under the Lease and the Site Lease, including all of its rights to receive the Base Rental
Payments scheduled to be paid by the City under and pursuant to the Lease;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein without definition shall
have the meanings given to such terms in the Indenture or the Lease, as appropriate.
Section 2. Assignment. The Authority does hereby assign and transfer to the Trustee
all of the Authority's rights, title and interest in and to (but none of its obligations under) the
Lease and the Site Lease (excepting only (i) the Authority's rights to give approvals and consents
thereunder, including, without limitation, to amendments, and the Authority's rights to the
payment of Additional Rental Payments pursuant to Section 3(b) of the Lease and to
indemnification pursuant to Section 14 of the Lease, and (ii) the Authority's rights to receive
lease payments other than the Base Rental Payments), including the Authority's rights to receive
Base Rental Payments, as well as its rights to enforce payment of such Base Rental Payments
when due or otherwise to protect its interests in the event of a default by the City under the
Lease, in accordance with the terms thereof, in trust nonetheless and provided that should the
Authority well and truly perform all of its obligations under the Indenture, this Assignment
Agreement shall terminate and all interest in the Lease and the Site Lease shall revert to the
Authority. The Base Rental Payments and any other base rental payments made under the Lease
in connection with Additional Bonds shall be applied, and the rights of the Authority assigned
hereunder shall be exercised by the Trustee, as provided in the Indenture.
Section 3. Acceptance of Assignment. The Trustee hereby accepts the assignment
and transfer of such of the Authority's rights, title and interest in and to the Lease and the Site
Lease as are assigned and transferred pursuant to the terms of this Assignment Agreement.
Section 4. No Additional Rights or Duties. Excepting only the assignment and
transfer of rights to the Trustee pursuant to Section 2 hereof, this Assignment Agreement shall
not confer any rights nor impose any duties, obligations or responsibilities upon the Trustee
beyond those expressly provided in the Lease, the Site Lease and the Indenture. The Trustee
does not warrant the accuracy of any of the recitals hereto. This Assignment Agreement shall not
impose any duties, obligations or responsibilities upon the Authority or the City beyond those
expressly provided in the Lease, the Site Lease and the Indenture or as otherwise set forth herein.
Section 5. Further Assurances. The Trustee will make, execute and deliver any and
all such further resolutions, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of this Assignment Agreement, and for
the better assuring and confirming to the Trustee the rights and obligations intended to be
conveyed pursuant hereto.
Section 6. Counterparts. This Assignment Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same agreement.
Section 7. Law Governing. This Assignment Agreement is made in the State of
California under the Constitution and laws of the State of California and is to be so construed.
Section 8. Notices. All notices under this Assignment Agreement shall be in
accordance with Section 9.13 of the Indenture.
Section 9. Binding Effect; Successors. This Assignment Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their respective successors
and assigns. Whenever in this Assignment Agreement any party is named or referred to, such
reference shall be deemed to include such party's successors and assigns and all covenants and
agreements contained in this Assignment Agreement by or on behalf of any party hereto shall
bind and inure to the benefit of such party's successors and assigns whether so expressed or not.
2
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the date first above written.
ATTEST:
Mary Cusick, Secretary
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
0
Chair
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Officer
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA
M
COUNTY OF LOS ANGELES
On before me, (insert name of the
officer), Notary Public, personally appeared who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
EXHIBIT A
DESCRIPTION OF THE SITE
Real property in the City of Santa Clarita, County of Los Angeles, State of California, described
as follows:
PARCEL 1:
THAT PORTION OF LOT 62 OF ST. JOHN'S SUBDIVISION, IN THE CITY OF SANTA
CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 196 PAGE 304 OF MISCELLANEOUS RECORDS AND OF THE
RANCHO SAN FRANCISCO, AS SHOWN ON MAP RECORDED IN BOOK 1 PAGE 521
OF PATENTS, BOTH IN THE OFFICE OF THE COUNTY RECORDED OF SAID COUNTY,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 62; THENCE SOUTHERLY
ALONG THE EASTERLY LINE OF SAID LOT 62, 641.74 FEET; THENCE WESTERLY,
PARALLEL WITH THE NORTH LINE OF SAID LOT 62, 641.74 FEET; THENCE
NORTHERLY, PARALLEL WITH THE EAST LINE OF SAID LOT 62 AND THE EAST
LINE OF SAID RANCHO SAN FRANCISCO, 801.74 FEET; THENCE EASTERLY,
PARALLEL WITH THE NORTH LINE OF SAID LOT 62, 641.74 FEET TO THE EAST LINE
OF SAID RANCHO SAN FRANCISCO; THENCE SOUTHERLY ALONG THE EAST LINE
OF SAID RANCHO, 160.00 FEET TO THE POINT OF BEGINNING.
PARCEL 2:
A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND PUBLIC UTILITY
PURPOSES OVER THE EASTERLY 60 FEET OF THE SOUTHERLY 200 FEET OF THE
LAND DESCRIBED IN THE DEED TO HI SHEAR CORPORATION BY DEED RECORDED
DECEMBER 7, 1964 AS INSTRUMENT NO. 1073 IN BOOK D-2723 PAGE 89, OFFICIAL
RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
APN: 2836-012-905 and 2836-016-909
Em
NRF draft of 4/11/19
AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind, Esq.
LEASE AGREEMENT
Dated as of June 1, 2019
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
CITY OF SANTA CLARITA
Relating to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT
TO REVENUE AND TAXATION CODE SECTION 11922
AND THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO GOVERNMENT CODE SECTION 27383.
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS.................................................................................................
2
SECTION2.
TERM..............................................................................................................
3
SECTION3.
RENTAL..........................................................................................................
3
SECTION 4.
USE OF PROCEEDS......................................................................................
5
SECTION 5.
MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS ..................
5
SECTION 6.
CHANGES TO THE LEASED PROPERTY ..................................................
6
SECTION 7.
SUBSTITUTION AND RELEASE OF PROPERTY .....................................
6
SECTION8.
INSURANCE...................................................................................................
8
SECTION 9.
DAMAGE, DESTRUCTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS.........................................................
10
SECTION 10.
DEFAULT.....................................................................................................
11
SECTION 11.
PREPAYMENT AND CREDITS..................................................................
13
SECTION 12.
MECHANICS' LIENS..................................................................................
14
SECTION 13.
QUIET ENJOYMENT...................................................................................
14
SECTION 14.
INDEMNIFICATION....................................................................................
14
SECTION 15.
ASSIGNMENT..............................................................................................
15
SECTION 16.
ABATEMENT OF RENTAL........................................................................
16
SECTION 17.
COVENANTS OF THE CITY......................................................................
16
SECTION 18.
CONTINUING DISCLOSURE.....................................................................
21
SECTION19.
WAIVER........................................................................................................
21
SECTION 20.
NET LEASE..................................................................................................
21
SECTION 21.
AMENDMENTS...........................................................................................
21
SECTION 22.
ESSENTIALITY............................................................................................
22
SECTION 23.
LAW GOVERNING......................................................................................
22
SECTION24.
NOTICES.......................................................................................................
22
SECTION 25.
VALIDITY AND SEVERABILITY.............................................................
22
SECTION 26.
SECTION HEADINGS.................................................................................
23
SECTION 27.
NO MERGER................................................................................................
23
SECTION 28.
EXECUTION.................................................................................................
23
EXHIBIT A
DESCRIPTION OF THE LEASED PROPERTY
EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE
I
LEASE AGREEMENT
This Lease Agreement, dated as of June 1, 2019 (this "Lease"), is made by and
between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California (the "Authority"), as lessor,
and the CITY OF SANTA CLARITA, a city duly organized and existing under the laws of the
State of California (the "City"), as lessee.
RECITALS:
WHEREAS, the Authority is a joint powers authority duly organized and existing
under and pursuant to that certain Joint Exercise of Powers Agreement, dated as of July 9, 1991,
as amended on May 10, 2016, 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 (no
longer a member), and the Santa Clarita Parking Authority, establishing the Authority for the
purpose, among other things, of issuing its bonds to be used to provide financing and refinancing
for public capital improvements of the City; and
WHEREAS, the City desires to finance a portion of the construction and
improvement of an approximately 46,500 square foot sheriff station building and approximately
4,100 square foot service maintenance building to be located on approximately 7.6 net acres of
City property at 26201 Golden Valley Road within the City (the "Project"); and
WHEREAS, the City has requested that the Authority issue lease revenue bonds
for the purpose of financing the Project; and
WHEREAS, the Authority intends to issue its Lease Revenue Bonds (Sheriff
Station Project) Series 2019 (the "Bonds") for such purposes to assist the City; and
WHEREAS, the Bonds are to be issued pursuant to an Indenture, dated as of June
1, 2019 (the "Indenture"), by and between the Authority and a trustee, and pursuant to the
Marks -Roos Local Bond Pooling Act of 1985 (the "Act"), constituting 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
WHEREAS, the City and the Authority have entered into a Site Lease, dated as of
June 1, 2019 (the "Site Lease"), whereby the Authority has agreed to lease the 7.6 acre site (the
"Site") from the City; and
WHEREAS, the Authority, pursuant to the Lease, will sublease the Leased
Property described in Exhibit A hereto to the City, in consideration for base rental payments to
be made by the City pursuant to the Lease, in accordance with the base rental payment schedules
attached hereto as Exhibit B that correspond in amounts to the principal of and interest on the
Bonds, respectively; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Lease do exist, have happened and have been performed in regular and due
time, form and manner as required by law, and the parties hereto are now duly authorized to
execute and enter into this Lease;
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
SECTION 1. DEFINITIONS
Terms used herein and not otherwise defined herein but defined in the Indenture
shall have the meanings ascribed to them in the Indenture. Unless the context otherwise requires,
the terms defined in this Section shall, for all purposes of this Lease, have the meanings herein
specified, the following definitions to be equally applicable to both the singular and plural forms
of any of the terms herein defined:
"Additional Rental Payments" means Additional Rental Payments due under
Section 3(b) hereof.
"Base Rental Payments" means Base Rental Payments to be made by the City
hereunder in accordance with the base rental schedule attached hereto as Exhibit B in connection
with the Bonds, and any additional base rental payments made hereunder to support Additional
Bonds issued in accordance with the Indenture.
"County Lease" means that certain sublease of the Leased Premises entitled
"County of Los Angeles, Chief Executive Office, Lease Agreement" to be entered into by and
between the City and the County of Los Angeles upon the completion of the Project, as
originally executed or as it may from time to time be amended or supplemented in accordance
therewith.
"Event of Default" means the Events of Default set forth in Section 10.
"Expiration Date" means June 1, 2049.
"Insurance Consultant" means an individual or firm retained by the City as an
independent insurance consultant, experienced in the field of risk management.
"Interest Component" means the interest component of any Base Rental Payments
as set forth in the exhibit to this Lease relating to such Base Rental Payments.
"Lease" means this Lease, as originally executed or as it may from time to time be
amended or supplemented in accordance herewith.
"Leased Property" means the Site and the approximately 46,500 square foot
sheriff station building and approximately 4,100 square foot service maintenance building to be
constructed thereon, as more fully described on Exhibit A.
4
"Net Proceeds" means proceeds of any casualty or title insurance or
condemnation awards, paid with respect to the Leased Property remaining after payment
therefrom of all expenses in the collection thereof.
"Permitted Encumbrances" means, with respect to the Leased Property, as of any
particular time, (i) the Site Lease; (ii) this Lease, (iii) the Indenture, the Assignment Agreement
and the Trustee's and the Authority's interests in the Leased Property, (iv) liens for taxes and
assessments not then delinquent, (v) utility, access and other easements and rights of way,
restrictions and exceptions that as certified in a Certificate of the City will not interfere with or
impair the use intended to be made of the Leased Property; (vi) encumbrances upon any
additions and improvements to the Leased Property as permitted in this Lease and the County
Lease and which do not materially impair the use intended to be made of the portions of the
Leased Property other than such additions and improvements; (vii) any sublease or use permitted
by this Lease, (viii) covenants, conditions or restrictions or liens of record relating to the Leased
Property and existing on the Closing Date; (ix) such minor defects, irregularities, encumbrances
and clouds on title as normally exist with respect to property similar in character to the Leased
Property and as do not materially impair the use intended to be made of property affected
thereby; (x) any encumbrances listed in the Preliminary Report issued by Chicago Title
Company, dated , 2019, and (xi) the County Lease.
"Principal Component" means the principal component of any Base Rental
Payments as set forth in an exhibit to this Lease relating to such Base Rental Payments.
"Site" means the approximately 7.6 net acre parcel of City property located at
26201 Golden Valley Road within the City, as more fully described on Exhibit A to the Site
Lease.
"Substantial Completion" means the Project has been constructed in accordance
with the construction documents, with the exception of any punch list items, and the City has
issued a certificate of occupancy (or comparable written approval), filed with the Trustee,
authorizing initial occupancy and beneficial use of the Project.
SECTION 2. TERM
The Authority hereby leases to the City and the City hereby leases from the
Authority, on the terms and conditions hereinafter set forth, the Leased Property. The term of
this Lease shall commence on June , 2019.
The term of the leasehold interest created hereby shall expire on the later of (i) the
Expiration Date; (ii) the date the last Base Rental Payment is made under the provisions hereof,
or (iii) the date of discharge of all of the Bonds and Additional Bonds pursuant to Section 9.03 of
the Indenture. Notwithstanding the foregoing, the term of this Lease shall automatically be
extended for a period of ten (10) years, if, on the Expiration Date, the Bonds and any Additional
Bonds have not been fully paid and discharged, and shall terminate on the date when the Bonds
and any Additional Bonds have been fully paid or discharged.
the City.
Throughout the term of this Lease, fee title to the Leased Property shall remain in
3
SECTION 3. RENTAL
Subject to the provisions of Sections 11 and 16 hereof, the City agrees to pay to
the Authority, its successors or assigns, as rental for the use and possession of the Leased
Property, the following amounts at the following times:
(a) Base Rental Payments; Additional Rental Payments. The City shall pay
the Base Rental Payments to the Trustee, as assignee of the Authority, as hereinafter provided, in
accordance with the Base Rental Payment Schedule attached hereto as Exhibit B, less any
amounts credited against the Base Rental Payments pursuant to Section 4.02(d) of the Indenture.
The City shall pay to the Trustee the Base Rental Payments coming due fifteen (15) Business
Days prior to the next succeeding June 1 and December 1, respectively, as set forth in Exhibit B
and such payments shall constitute payment in arrears in consideration for the City's use and
possession of the Leased Property for the six-month period preceding the due date of such Base
Rental Payments.
The obligation of the City to pay the Base Rental Payments with respect to the
Bonds shall rank pari passu with the obligation of the City to pay base rental payments with
respect to any Additional Bonds. Upon and after the issuance of any Additional Bonds secured
by base rental payments with respect to the Leased Property, the City shall pay the Base Rental
Payments with respect to such Additional Bonds as provided in the Supplemental Indenture for
such Additional Bonds, in accordance with an additional Base Rental Payment schedule which
shall be attached hereto as an additional exhibit prior to the delivery of such Additional Bonds,
as adjusted for any prepayments.
(b) Additional Rental Payments. The City shall also pay, as "Additional
Rental Payments" hereunder, in addition to the Base Rental Payments and any base rental
payments hereunder made with respect to Additional Bonds, to the Trustee, as assignee of the
Authority, as hereinafter provided, such amounts in each year as shall be required for the
payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of
sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution,
performance or enforcement of this Lease or the assignment hereof, the Indenture, or the
Authority's or the Trustee's interest in the Leased Property, including, but not limited to, all fees,
costs and expenses, all administrative costs of the Authority relating to the Leased Property
(including, without limiting the generality of the foregoing, salaries and wages of employees,
overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and
indemnification of the Trustee payable by the Authority under the Indenture), fees of auditors,
accountants, attorneys or engineers, all other reasonable and necessary administrative costs of the
Authority or charges required to be paid by it to comply with the terms of the Bonds or of the
Indenture.
Such Additional Rental Payments shall be billed to the City by the Authority or
the Trustee from time to time. Amounts so billed shall be paid by the City within sixty (60) days
after receipt of the bill by the City.
(c) Fair Rental Value. Payments of Base Rental Payments and Additional
Rental Payments for each rental payment period shall constitute the total rental for such rental
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payment period, and shall be paid by the City in each rental payment period for and in
consideration of the right of the use and possession of, and the continued quiet use and
enjoyment of, the Leased Property during each such period for which said rental is to be paid.
The City represents and covenants that the useful life of the Leased Property is not shorter than
the final maturity of the Bonds. The parties to this Lease specifically acknowledge that the
annual fair rental value of the Leased Property is in excess of the maximum annual Base Rental
Payments. In making such determination, consideration has been given to other obligations of
the parties under this Lease, the uses and purposes which may be served by the Leased Property
and the benefits therefrom which will accrue to the City and the general public. The
determination of fair rental value of the Leased Property pursuant to this paragraph shall not be
deemed to be controlling in connection with a determination of fair value of the Leased Property
by the parties hereto for any other purpose.
(d) Payment of Base Rental Payments. Each installment of Base Rental
Payments and Additional Rental Payments payable hereunder shall be paid from any source of
legally available funds of the City in lawful money of the United States of America to the order
of the Trustee at the corporate trust office of the Trustee in Los Angeles, California, or such
other place as the Trustee shall designate. All Base Rental Payments shall be made on a pari
passu basis with each other. Notwithstanding any dispute between the City and the Authority, the
City shall make all Base Rental Payments and Additional Rental Payments when due, without
deduction or offset of any kind, and shall not withhold any Base Rental Payments pending the
final resolution of any such dispute. In the event of a determination that the City was not liable
for such Base Rental Payments or any portion thereof, said Base Rental Payments or excess of
payments, as the case may be, shall, at the option of the City, be credited against subsequent
Base Rental Payments due hereunder or be refunded at the time of such determination.
(e) Increases in Aggregate Base Rental Payments. The City covenants that it
shall not permit an increase in the aggregate Base Rental Payments or permit additional base
rental payments with respect to Additional Bonds without first obtaining an opinion of Bond
Counsel to the effect that the incurring of such increased Base Rental Payments will not (i)
impair the validity and enforceability of this Lease and (ii) in and of itself impair the exclusion of
interest on the Bonds and, to the extent applicable, any Additional Bonds from the gross income
of the owners thereof for federal income tax purposes.
(f) Covenant to Budget and Appropriate. The City covenants to take such
action as may be necessary to include all Base Rental Payments and Additional Rental Payments
due hereunder in its annual budget and to make the necessary annual appropriations for all such
Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in
Section 16 hereof. The City will furnish to the Authority and the Trustee annually, on or
before September 1, a certificate stating that it has complied with the covenants set forth in
this paragraph. The City is not obligated to make such transfer if Base Rental Payments or
Additional Rental are subject to abatement or otherwise are not required under the Lease to be
paid in such fiscal year. The obligation of the City to make Base Rental Payments and Additional
Rental Payments is solely from the City's General Fund. The covenants on the part of the City
herein contained shall be deemed to be and shall be construed to be duties imposed by law and it
shall be the duty of each and every public official of the City to take such action and do such
things as are required by law in the performance of the official duty of such officials to enable
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the City to carry out and perform the covenants and agreements in this Lease agreed to be carried
out and performed by the City. The obligation of the City to make Base Rental Payments or
Additional Rental Payments does not constitute an obligation of the City for which the City is
obligated to levy or pledge any form of taxation or for which the City has levied or pledged any
form of taxation. Neither the Bonds and any Additional Bonds nor the obligation of the City to
make Base Rental Payments or Additional Rental Payments constitutes an indebtedness of the
City, the State or any of its political subdivisions within the meaning of any constitutional or
statutory debt limitation or restriction.
SECTION 4. USE OF PROCEEDS
The parties hereto agree that the proceeds of the Bonds will be used to fund a
portion of the Project, fund capitalized interest with respect to the Bonds, and pay the costs for
issuance of the Bonds, as more fully set forth in the Indenture.
SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS
During such time as the City or any assignee or sublessee thereof is in possession
of the Leased Property, all maintenance and repair, ordinary or extraordinary, of the Leased
Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for
the payment of, including pursuant to the County Lease, (a) all utility services supplied to the
Leased Property, (b) the cost of operation of the Leased Property, and (c) the costs of
maintenance of and repair to the Leased Property resulting from ordinary wear and tear or want
of care on the part of the City. The City shall, at the City's sole cost and expense or otherwise
provide pursuant to the County Lease, keep and maintain the Leased Property clean and in a safe
and good condition and repair. The Authority shall have no obligation to alter, remodel,
improve, repair, decorate, or paint the Leased Property or any part thereof, and the parties hereto
affirm that the Authority has made no representations or warranties to the City respecting the
condition of the Leased Property.
The City shall comply with all statutes, ordinances, regulations, and other
requirements of all governmental entities that pertain to the occupancy or use of the Leased
Property. The Authority has no responsibility or obligation whatsoever to construct any
improvements, modifications or alterations to the Leased Property.
The City waives the right to make repairs at the Authority's expense under
Subsection 1 of Section 1932 and Section 1942 of the California Civil Code, or any other such
law, statute, or ordinance now or hereafter in effect.
The parties hereto contemplate that the Leased Property will be used for public
purposes by the City and, therefore, that the Leased Property will be exempt from all taxes
presently assessed and levied with respect to real and personal property, respectively. In the
event that the use, possession or acquisition by the Authority or the City of the Leased Property
is found to be subject to taxation in any form, the City will pay during the term hereof, as the
same respectively become due, all taxes and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the Leased Property and
any other property acquired by the City in substitution for, as a renewal or replacement of, or a
on
modification, improvement or addition to the Leased Property; provided, that with respect to any
governmental charges or taxes that may lawfully be paid in installments over a period of years,
the City shall be obligated to pay only such installments as are accrued during such time as this
Lease is in effect.
SECTION 6. CHANGES TO THE LEASED PROPERTY
The City shall have the right during the term of this Lease to acquire and
construct improvements or to attach fixtures, structures or signs to the Leased Property if such
improvements, fixtures, structures or signs are necessary or beneficial for the use of the Leased
Property by the City; provided, however, that no such acquisition or construction shall result in a
material reduction in the value of the Leased Property, reduce the fair rental value thereof or
substantially alter the nature of the Leased Property.
Upon termination of this Lease, the City may remove any fixture, structure or sign
added by the City, but such removal shall be accomplished so as to leave the Leased Property,
except for ordinary wear and tear and damage by casualty, in substantially the same condition as
it was in before the fixture, structure or sign was attached.
SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY
The parties to this Lease specifically acknowledge that the annual fair rental value
of the Leased Property is in excess of the maximum annual Base Rental Payments. The City
shall have, so long as this Lease is in effect, and is hereby granted, the option at any time and
from time to time, to substitute other real property (the "Substitute Property") for any portion of
the Leased Property (the "Former Property") or release any identifiable real property and/or
improvements currently constituting the Leased Property (in such case, Substitute Property shall
mean the Former Property less any portion released pursuant to this Section); provided, that the
City shall satisfy all of the following requirements, which are conditions precedent to such
substitution:
(a) No default under Section 10 hereof or Event of Default shall have
occurred and be continuing;
(b) The City shall file with the Authority and the Trustee, and cause to be
recorded in the office of the County Recorder, sufficient memorialization of amendments to this
Lease and the Site Lease which replaces Exhibit A hereto and Exhibit A to the Site Lease with a
description of such Substitute Property which deletes therefrom the description of the Former
Property;
(c) The City shall obtain an extended California Land Title Association
("CLTA") policy of title insurance insuring the City's fee or leasehold estate in such Substitute
Property, the City's leasehold estate hereunder, and the Authority's leasehold estate under the
Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount
not less than the aggregate principal amount of the Outstanding Bonds; provided, however, that
this requirement shall not apply to Substitute Property that consists only of Former Property less
any released portion;
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(d) The City shall provide a Certificate of the City to the Authority and to the
Trustee stating that such Substitute Property constitutes property which the City is permitted to
lease under the laws of the State of California; provided, however, that this requirement shall not
apply to Substitute Property that consists only of Former Property less any released portion;
(e) The substitution of the Substitute Property shall not cause the City to
violate any of its covenants, representations and warranties made herein;
(f) The City shall file with the Authority and the Trustee a Certificate of the
City or other evidence which establishes that the annual fair rental value of the Substitute
Property after substitution or release will be at least equal to 100% of the maximum amount of
the Base Rental Payments becoming due in the then current fiscal year or in any subsequent
fiscal year and the useful economic life of the Substitute Property shall be at least equal to the
maximum remaining term of this Lease; and
(g) The City shall furnish to the Trustee an opinion of Bond Counsel
addressed to the Trustee, the City and the Authority to the effect that the substitution or release is
permitted under this Lease and will not in and of itself (i) impair the validity and enforceability
of this Lease or (ii) impair the exclusion of interest on the Bonds and, if applicable, any
Additional Bonds from the gross income of the owners thereof for federal income tax purposes.
Upon the satisfaction of all such conditions precedent, and upon the City
delivering to the Authority and the Trustee a Certificate of the City certifying that the conditions
set forth in subsections (a), (c) and (e) of this Section have been satisfied, the Term of this Lease
shall thereupon end as to the Leased Property and shall thereupon commence as to the Substitute
Property, and all references to the Leased Property shall apply with full force and effect to the
Substitute Property. The City shall not be entitled to any reduction, diminution, extension or
other modification of the Base Rental Payments whatsoever as a result of any substitution or
removal hereunder.
The parties to this Lease specifically acknowledge that the annual fair rental value
of the Leased Property is in excess of the maximum annual Base Rental Payments. Without
substituting or releasing any of the Leased Property, the City and the Authority may amend this
Lease pursuant to Section 21(d) to increase the amount of Base Rental Payment payable
hereunder for the purpose of allowing the Authority to issue Additional Bonds pursuant to
Section 3.07 of the Indenture; provided the City shall provide the Trustee and the Authority (i) a
Certificate of the City certifying that the value of the Leased Property shall not be less than the
aggregate principal amount of the Outstanding Bonds and Additional Bonds to be issued, and (ii)
a new or amended extended CLTA policy of title insurance in an amount not less than the
aggregate principal amount of the Outstanding Bonds and Additional Bonds to be issued.
SECTION 8. INSURANCE
(a) The City shall secure and maintain or cause to be secured and maintained
at all times with insurers of recognized responsibility or through a program of self-insurance to
the extent such self-insurance specifically permitted in this Section 8, all coverage on the Leased
Property required by this Section 8.
Such insurance shall consist of:
(1) Comprehensive general liability coverage against claims for
damages including death, personal injury, bodily injury or property damage arising from
operations involving the Leased Property. Such insurance shall afford protection with a
combined single limit of not less than $1,000,000 per occurrence with respect to bodily
injury, death or property damage liability, or such greater amount as may from time to
time be recommended by the City's risk management officer or an independent insurance
consultant retained by the City for that purpose, subject to a deductible clause of not to
exceed $400,000. The City's obligations under this clause (1) may be satisfied by self-
insurance;
(2) Casualty insurance against loss or damage to any or all of the
Leased Property by fire and lightning, with extended coverage and vandalism and
malicious mischief insurance, and against loss of Leased Property by theft. Such
extended coverage insurance shall, as nearly as practicable, cover loss or damage by
explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are
normally covered by such insurance. The insurance required by this paragraph shall be in
an amount equal to the lesser of the replacement cost (subject to deductible clauses not in
excess of $400,000 for any one loss) of improvements located or to be located on the
Leased Property and the principal amount of the Bonds then Outstanding. The City's
obligations under this clause (2) may be satisfied by self-insurance;
(3) Workers' compensation insurance issued by a responsible carrier
authorized under the laws of the State to insure employers against liability for
compensation under the Labor Code of the State, or any act enacted as an amendment or
supplement thereto or in lieu thereof, such workers' compensation insurance to cover all
persons employed by the City in connection with the Leased Property and to cover full
liability for compensation under any such act; provided, however, that the City's
obligations under this clause (3) may be satisfied by self-insurance; and
(4) Rental interruption insurance in an amount not less than the
maximum remaining scheduled Base Rental Payments in any twenty-four (24) month
period to insure against loss of use of the Leased Property caused by perils covered by the
insurance required in Section 8(a)(2). Such insurance may be maintained as part of or in
conjunction with any other rental interruption insurance carried by the City and must list
the Authority and the Trustee as an additional insured party. Such insurance shall be in
place as of the Closing Date. The Net Proceeds of such insurance shall be paid to the
Trustee and deposited in the Lease Revenue Fund, and shall be credited toward the
payment of the Base Rental Payments in the order in which such Base Rental Payments
come due and payable.
(5) The City shall, on or before the Closing Date, deliver a CLTA title
insurance policy insuring the leasehold interest in the Leased Property of the City and the
Authority, in an amount not less than the aggregate principal amount of the Outstanding
Bonds.
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All policies or certificates issued by the respective insurers for insurance, with the
exception of workers' compensation insurance, shall provide that such policies or certificates
shall not be canceled or materially changed without at least 30 days' prior written notice to the
Authority and the Trustee. Certificates of comprehensive general liability and workers'
compensation insurance shall be furnished by applicable insurers to the City, and, at least ten
days prior to the expiration dates of such policies, if any, evidence of renewals shall be deposited
with the Trustee.
If the City elects to provide self-insurance pursuant to clauses (1), (2) and/or (3)
above, the City shall annually cause to be delivered to the Trustee a certificate of an Insurance
Consultant certifying to the adequacy of the City's reserves for such insurance.
All policies or certificates of insurance provided for herein shall name the City as
a named insured and the Trustee as an additional insured. All proceeds of insurance maintained
under clauses (1) and (3) shall be deposited with the City and under clause (2), (4) or (5) shall be
deposited with the Trustee.
Notwithstanding the generality of the foregoing, the City shall not be required to
maintain or cause to be maintained more insurance than is specifically referred to above or any
policies of insurance other than standard policies of insurance with standard deductibles offered
by reputable insurers at a reasonable cost on the open market.
(b) Form of Policies. The City shall deliver to the Trustee on or before the
Closing Date and each anniversary of the Closing Date a Certificate of the City that all insurance
required under this Lease is in full force and effect. In the event that the City obtains insurance
through a pooled insurance program of governmental entities, an annual statement or
memorandum of coverage delivered to the Authority and the Trustee will satisfy the
requirements of this subsection. The Trustee and the Authority shall not be responsible for the
sufficiency of any insurance herein required or payment of premium and shall be fully protected
in accepting payment on account of such insurance or any adjustment, compromise or settlement
of any loss agreed to by the City.
(c) Advances. If the City shall fail to perform any of its obligations under this
Section, then the Authority or the Trustee may, but shall not be obligated to, take such action as
may be necessary to cure such failure, including the advancement of money on behalf of the
City, and the City shall be obligated to repay all such advances as soon as possible.
SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS
If prior to the termination of the term hereof (a) the Leased Property is destroyed
(in whole or in part) or is damaged by fire of other casualty, or (b) title to, or the temporary use
of, any portion of the Leased Property or the estate of the Authority or the City in the Leased
Property or any portion shall be taken under the exercise of the power of eminent domain by any
governmental body or by any person or firm or corporation acting under governmental authority,
then the City and the Authority shall, as expeditiously as possible, continuously and diligently
prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not
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to repair or replace the Leased Property or portion thereof, in accordance with the provisions of
this Section 9. If Net Proceeds are insufficient to repair or replace the Leased Property or portion
thereof, the City shall, to the extent permitted by law, use its best efforts to fund any deficiency
from any legally available funds.
If there is an abatement of rental payments pursuant to Section 16 hereof as a
result of such casualty or event, and the City elects pursuant to Section 11(a) hereof to apply
such insurance proceeds and such other sums as are deposited by the City pursuant to such
Section to the prepayment of Base Rental Payments rather than replacing or repairing the
destroyed or damaged portion of the Leased Property, then this Lease shall terminate with
respect to the destroyed or damaged portion of the Leased Property as of the later of the date of
such election by the City or the date the amount required by Section 11(a) hereof is received by
the Trustee.
The provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4,
of the California Civil Code, including any amendments thereto and any other law which may
hereinafter be in force during the term of this Lease which authorizes the termination of this
Lease upon the partial or complete destruction of the Leased Property, are hereby waived by the
City.
The City hereby covenants and agrees, to the extent it may lawfully do so, that so
long as any of the Bonds and any Additional Bonds remain outstanding and unpaid, the City will
not exercise the power of condemnation with respect to the Leased Property. The City further
covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing
covenant is determined to be unenforceable or if the City should fail or refuse to abide by such
covenant and condemns the Leased Property, the value of the Leased Property shall not be less
than the greater of (i) if Outstanding Bonds are then subject to redemption, the principal and
interest due on the Outstanding Bonds through the date of their redemption, or (ii) if such
Outstanding Bonds are not then subject to redemption, the amount necessary to defease such
Outstanding Bonds to the first available redemption date in accordance with the Indenture.
The City shall deposit any proceeds received from insurance and condemnation
awards with respect to the destruction or partial destruction of Leased Property with the Trustee
for deposit into the: (a) Insurance and Condemnation Fund if the City elects to repair the Leased
Property or (b) the Lease Revenue Fund if the City elects to redeem the Outstanding Bonds. The
City shall have 45 days from the date of any such destruction or partial destruction to determine
whether to repair the Leased Property or use insurance and condemnation award proceeds
received to redeem such bonds. To the extent that the City determines not to repair the Leased
Property and cannot use insurance and condemnation award proceeds to redeem such bonds, the
City shall and hereby covenants to substitute property for such Leased Property of equivalent or
greater value in accordance with the provisions of Section 7 hereof. If the City determines to
repair the Leased Property, disbursements by the Trustee shall only be made upon presentation
of a requisition in a form substantially similar to Exhibit C of the Indenture. Each requisition
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. If the City determines to cause the redemption of less
than the full amount of the Outstanding Bonds, such redemption shall only be made to the extent
the remaining fair rental value of the Leased Property is sufficient to support the remaining Base
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Rental Payments supporting debt service on the Outstanding Bonds remaining after such
redemption.
SECTION 10. DEFAULT
(a) Each of the following events constitutes an "Event of Default" hereunder:
(1) Failure by the City to pay any Base Rental Payment or other
payment (including Additional Rental Payments) required to be paid hereunder at the
time specified herein, provided, that any Base Rental Payments abated pursuant to
Section 16 shall not constitute an event of default.
(2) Failure by the City to observe and perform any covenant, condition
or agreement on its part to be observed or performed hereunder, other than as referred to
in the preceding subsection (1), for a period of 30 days after written notice specifying
such failure and requesting that it be remedied has been given to the City by the
Authority. However, if the City notifies the Authority that in its reasonable opinion the
failure stated in the notice can be corrected, but not within such 30 day period, the failure
will not constitute an Event of Default if the City commences to cure the failure within
such 30 day period and thereafter diligently and in good faith cures such failure in a
reasonable period of time; provided, that such cure period shall not extend beyond 60
days.
(3) The filing by the City of a voluntary petition in bankruptcy, or
failure by the City promptly to lift any execution, garnishment or attachment, or
adjudication of the City as a bankrupt, or assignment by the City for the benefit of
creditors, or the entry by the City into an agreement of composition with creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the City in any
proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended,
or under any similar acts which may hereafter be enacted.
The Authority expressly waives the right to receive any amount from the City
pursuant to Section 1951.2(a)(3) of the California Civil Code.
(b) Whenever any Event of Default has happened and is continuing, the
Authority may exercise any and all remedies available under law or granted under this Lease.
Notwithstanding anything herein to the contrary, there shall be no right under any circumstances
to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then
in default to be immediately due and payable. Each and every covenant hereof to be kept and
performed by the City is expressly made a condition and upon the breach thereof the Authority
may exercise any and all rights granted hereunder; provided, that no termination of this Lease
will be effected either by operation of law or acts of the parties hereto, except only in the manner
herein expressly provided. Upon the occurrence and during the continuance of any Event of
Default, the Authority may exercise each and every one of the following remedies:
(1) Enforcement of Payments Without Termination. If the Authority
does not elect to terminate this Lease in the manner hereinafter provided for in subsection
(b)(2) of this Section, the City agrees to remain liable for the payment of all Base Rental
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Payments and the performance of all conditions herein contained, and the Authority may
take whatever action at law or in equity may appear necessary or desirable, to collect
each Base Rental Payment as it becomes due hereunder. The City will reimburse the
Authority for any deficiency arising out of the re-leasing of the Leased Property or
portion thereof, or, if the Authority is unable to re -lease the Leased Property, then for the
full amount of all Base Rental Payments to the end of the term of this Lease, but said
Base Rental Payments and/or deficiency will be payable only at the same time and in the
same manner as hereinabove provided for the payment of Base Rental Payments
hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful
detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry
or obtaining possession of the Leased Property or portion thereof or the exercise of any
other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and
attorney-in-fact of the City and shall allow the Authority to enter upon and re -lease the
Leased Property upon the occurrence and continuation of an Event of Default and to
remove all personal property whatsoever situated upon the Leased Property, to place such
property in storage or other suitable place in the State of California for the account of and
at the expense of the City, and the City hereby agrees to save harmless the Authority
from any costs, loss or damage whatsoever arising or occasioned by any such entry upon
and re-leasing of the Leased Property and the removal and storage of such property by
the Authority or its duly authorized agents in accordance with the provisions herein
contained. The City agrees that the terms of this Lease constitute full and sufficient
notice of the right of the Authority to re -lease the Leased Property in the event of such re-
entry without effecting a surrender of this Lease, and further agrees that no acts of the
Authority in effecting such re-leasing constitute a surrender or termination of this Lease
irrespective of the term for which such re-leasing is made or the terms and conditions of
such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the
City the right to terminate this Lease will vest in the Authority to be effected in the sole
and exclusive manner hereinafter provided for in subsection (2) of this Section. Any
rental obtained by the Authority in excess of the unpaid Base Rental Payments will be
applied as a credit against future Base Rental Payments.
(2) Termination of Lease. If an Event of Default occurs and is
continuing hereunder, the Authority at its option may terminate this Lease and re -lease all
or any portion of the Leased Property. If the Authority terminates this Lease at its option
and in the manner hereinafter provided on account of default by the City (and
notwithstanding any re-entry upon the Leased Property by the Authority in any manner
whatsoever or the re-leasing of the Leased Property), the City nevertheless agrees to pay
to the Authority all costs, loss or damages howsoever arising or occurring payable at the
same time and in the same manner as is herein provided in the case of payment of Base
Rental Payments. Any surplus received by the Authority from such re-leasing will be
applied as a credit against future Base Rental Payments. Neither notice to pay rent or to
deliver up possession of the Leased Property given under law nor any proceeding in
unlawful detainer taken by the Authority will of itself operate to terminate this Lease, and
no termination of this Lease on account of default by the City will be or become effective
by operation of law, or otherwise, unless and until the Authority has given written notice
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to the City of the election on the part of the Authority to terminate this Lease. The City
agrees that no surrender of the Leased Property, or of the remainder of the term hereof or
any termination of this Lease will be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Authority by such written notice.
(3) Proceedings at Law or In Equity. If an Event of Default occurs
and continues hereunder, the Authority may take whatever action at law or in equity may
appear necessary or desirable to collect the amounts then due and thereafter to become
due hereunder or to enforce any other of its rights hereunder.
(4) Remedies under the Site Lease. If an Event of Default occurs and
continues hereunder, the Authority may exercise its rights under the Site Lease.
SECTION 11. PREPAYMENT AND CREDITS
(a) Prepayment From Net Proceeds.
(1) The City may prepay, from Net Proceeds of insurance or a
condemnation award received by it pursuant to Section 9, the Principal Component of
Base Rental Payments then unpaid (and corresponding Interest Component), in whole or
in part on any date, pursuant to Section 9 hereof, at a prepayment price equal to the sum
of the Principal Component prepaid plus accrued interest thereon to the date of
prepayment.
(2) Prepayments made pursuant to this subsection (a) shall be
allocated pro rata among the Principal Components of Base Rental Payments relating to
the Bonds and any Additional Bonds.
(b) Optional Prepayment.
The City may at its option prepay from any source of available moneys for
redemption of Bonds pursuant to Section 2.03 of the Indenture, all or any part (in an integral
multiple of $5,000) of the Principal Component of Base Rental Payments (and corresponding
Interest Component), so that the aggregate annual amounts of Principal Component of Base
Rental Payments which shall be payable after such prepayment shall each be an integral multiple
of $5,000, at a prepayment price equal to the principal amount to be redeemed, plus accrued but
unpaid interest to the prepayment date, without premium.
Before making any prepayment pursuant to this Section, the City shall give
written notice to the Trustee specifying the date on which the prepayment will be made, which
date shall be not less than forty-five (45) days from the date such notice is given unless the
Trustee agrees to a shorter period.
The Authority and the City hereby agree that any prepayment in part under this
Section and the redemption of any Bonds by the Authority pursuant to Section 2.03(b) of the
Indenture shall be credited towards the City's obligations hereunder to make Base Rental
Payments in any manner determined in writing by the City and delivered to the Trustee. A
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prepayment made pursuant to this Section shall not cause a defeasance of any Bonds unless the
requirements of Section 9.03 of the Indenture are satisfied.
In the event of prepayment in full of the Principal Component of all Base Rental
Payments, such that this Lease shall be terminated by its terms as provided in Section 2, all
amounts then on deposit under the Indenture which are to be credited to the City's obligations to
make Base Rental Payments shall be credited towards the amounts then required to be so
prepaid. In the event of the prepayment of some but not all of the Principal Components of the
Base Rental Payments, the City shall replace the applicable Base Rental Schedule with a revised
Base Rental Payment Schedule reflecting such prepayment of the Principal Components of such
Base Rental Payments.
SECTION 12. MECHANICS' LIENS
In the event the City shall at any time during the term of this Lease cause any
improvements or other work to be done or performed or materials to be supplied, in or upon the
Leased Property, the City shall pay, when due, all sums of money that may become due for, or
purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to
have been furnished to or for the City in, upon or about the Leased Property and which may be
secured by any mechanics', materialmen's or other liens against the Leased Property or the
Authority's interest therein, and will cause any such lien to be fully discharged and released at
the time the performance of any obligation secured by any such lien matures or becomes due,
except that, if the City desires to contest any such lien it may do so. If any such lien shall be
reduced to final judgment and such judgment or such process as may be issued for the
enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the
City shall forthwith pay and discharge said judgment.
SECTION 13. QUIET ENJOYMENT
The parties hereto mutually covenant that the City, so long as it keeps and
performs the covenants and agreements herein contained, shall at all times during the term of this
Lease peaceably and quietly have, hold and enjoy the Leased Property without suit, trouble or
hindrance from the Authority.
SECTION 14. INDEMNIFICATION
The City shall, to the full extent then permitted by law, indemnify, defend, protect
and hold harmless the Authority, the Trustee and their members, officers, directors, agents and
employees from and against any and all liabilities, obligations, losses, claims and damages
whatsoever, regardless of the cause thereof (except for claims arising out of willful misconduct
or negligence on the part of the Authority or the Trustee or their respective members, officers,
directors or employees), and expenses in connection therewith, including, without limitation,
reasonable counsel fees and expenses, penalties and interest arising out of or as the result of the
entering into of this Lease and the Indenture, the payment of the costs of acquiring the Leased
Property or any accident in connection with the operation, use, condition or possession of the
Leased Property or any portion thereof resulting in damage to property or injury to or death to
any person. The indemnification arising under this section shall continue in full force and effect
15
notwithstanding the full payment of all rent obligations hereunder, the removal or resignation of
the Trustee or the termination hereof for any reason. The City agrees not to withhold or abate
any portion of the payments required pursuant hereto by reason of any defects, malfunctions,
breakdowns or infirmities of the Leased Property. The Authority and the City mutually agree to
promptly give notice to each other of any claim or liability hereby indemnified against following
either party's learning thereof.
SECTION 15. ASSIGNMENT
The parties understand that this Lease and the rights of the Authority hereunder,
with certain exceptions, will be assigned to the Trustee as provided in the Indenture and the
Assignment Agreement, to which assignments the City hereby consents.
Except for the Permitted Encumbrances, including the County Lease, neither this
Lease nor any interest of the City hereunder shall be mortgaged, pledged, assigned or transferred
by the City by voluntary act or by operation of law or otherwise; provided, subject to the
provisions of Section 17 hereof, that the Leased Property may be further subleased in whole or in
part by the City, but only subject to the following conditions, which are hereby made conditions
precedent to any such sublease:
(a) This Lease and the obligation of the City to make all Base Rental
Payments and Additional Rental Payments hereunder shall remain the primary obligation of the
City;
(b) The City shall, within 30 days after the delivery thereof, furnish or cause
to be furnished to the Authority and the Trustee a true and complete copy of such sublease;
(c) No such sublease by the City shall cause the Leased Property to be used
for a primary purpose other than a governmental or proprietary function authorized under the
provisions of the Constitution and laws of the State of California, as evidenced by a Certificate
of the City that is delivered to the Trustee;
(d) Any sublease of the Leased Property by the City shall explicitly provide
that such sublease is subject to all rights of the Authority under this Lease; and
(e) The City shall have filed or caused to be filed with the Authority and the
Trustee an opinion of Bond Counsel to the effect that such sublease will not, in and of itself,
cause the interest on the Bonds and any Additional Bonds (that are intended to be tax-exempt) to
be included in gross income for federal income tax purposes.
(f) To the extent that this Lease confers upon or gives or grants the Trustee
any right, remedy or claim under or by reason of this Lease, the Trustee is hereby explicitly
recognized as being a third -party beneficiary hereunder and may enforce any such right, remedy
or claim conferred, given or granted hereunder.
16
SECTION 16. ABATEMENT OF RENTAL
The obligation of the City to pay Base Rental Payments and Additional Rental
Payments shall be abated during any period in which by reason of any damage, destruction,
condemnation or title defect there is substantial interference with the use by the City of the
Leased Property or any portion thereof. Such abatement shall be in an amount such that the
resulting Base Rental Payments in any year during which such interference continues does not
exceed the fair rental value of the portions of the Leased Property as to which such damage,
destruction, taking or title defect does not substantially interfere with the City's use and right of
possession, as evidenced by a Certificate of the City. Such abatement shall continue for the
period commencing with the date of interference resulting from such damage, destruction,
condemnation or title defect and, with respect to damage to or destruction of the Leased
Property, and ending with the substantial completion of the work of repair or replacement of the
Leased Property, or the portion thereof so damaged or destroyed, and the term of this Lease shall
be extended as provided in Section 2 hereof. Notwithstanding the foregoing, to the extent that
moneys are available for the payment of Base Rental Payments and Additional Payments in any
of the funds and accounts established under the Indenture, such Base Rental Payments and
Additional Payments shall not be abated but shall be payable by the City as a special obligation
payable solely from such funds and accounts. Abatement in whole or in part, with respect to the
Base Rental Payments, is therefore limited for the period of time prior to Substantial Completion
of the Project.
SECTION 17. COVENANTS OF THE CITY
(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.
"Computation Period" means, initially, that period commencing on the date of issuance
of the Series 2019 Bonds and concluding on the initial Computation Date and, thereafter, each
period commencing on the day next following a Computation Date and concluding on the
immediately succeeding Computation Date.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax
Regulations (referring to sales, investment and transferred proceeds), and any replacement
proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nongovernmental Output Property" means any property (or interest therein) that prior
to its acquisition by the City was used by (or manufactured for or to the order of or held for the
use by) any Nongovernmental Person (whether actually so used or not) in connection with any
electric and gas generation, transmission, distribution, or related facilities.
17
"Nongovernmental Person" refers to any person or entity (including the United States or
any agency, department and instrumentality thereof) other than a state or local government, or an
agency or instrumentality acting solely on behalf thereof.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Original Facility" means any property the acquisition, construction or improvement of
which was financed directly or indirectly with Gross Proceeds of an Original Issue.
"Original Issue " refers to the Bonds.
"Output Facility" means any electric or gas generation, transmission, distribution
facility, or related facility, and any water collection, storage, or distribution facility.
"Proceeds, " with respect to an issue of governmental obligations, has the meaning set
forth in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred
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, or under the provisions of any predecessor
statute corresponding thereto.
"Yield" of
(1) any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and
(2) the Bonds has the meaning set forth in section 1.148-4 of the Tax
Regulations.
(b) Exclusion of Interest from Gross Income. The City will take all actions
necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of
interest on the Bonds from the gross income of the owners thereof for federal income tax
purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the Bonds or any
other amounts or any of the Original Facilities in a manner that if made or omitted, respectively,
would cause the interest on any of the Bonds to fail to be excluded pursuant to section 103(a) of
the Code from the gross income of the owners thereof for federal income tax purposes. Without
limiting the generality of the foregoing, unless and until the City receives a written Opinion of
Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the
exclusion pursuant to section 103(a) of the Code of interest on any Bond from the gross income
of the owner thereof, the City shall comply with this covenant and each of the specific covenants
in this Section.
IV
(c) No Private Use or Private Payments. Except as would not cause any Bond
to become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations and rulings thereunder, the City covenants that at all times prior to the payment and
cancellation of the last Bond to be paid and canceled:
(1) it will use its best efforts to ensure that the City (or another entity other
than a Nongovernmental Entity) exclusively owns, operates and possesses all of the
Original Facilities that are to be financed directly or indirectly with Gross Proceeds of the
Bonds, and that it will not use or permit the use of such Gross Proceeds (including under
any contractual arrangement with terms different than those applicable to the general
public) or any of the Original Facilities in any activity carried on by any
Nongovernmental Person, unless such use is solely as a member of the general public;
and
(2) not directly or indirectly impose or accept any charge or other payment by
any person or entity in respect of the use by any Nongovernmental Person of Gross
Proceeds of the Bonds, other than interest earned on investments acquired with such
Gross Proceeds pending application for their intended purposes, or of any Original
Facility.
Without limiting the foregoing, except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the City will not: (i) permit any Nongovernmental Person to hold any
ownership, proprietary or possessory interest in any of the Original Facilities; (ii) contract with
any Nongovernmental Person for the provision of operating or other services with respect to any
function of an Original Facility (unless either (A) such arrangement requires no payment of fees
to such Nongovernmental Person other than as direct reimbursement of third party costs or
reasonable administrative overhead, or (B) such arrangement conforms to administrative
guidance of the Internal Revenue Service in order to assure that such arrangement does not
create a private business use relationship of the Nongovernmental Person to the Gross Proceeds
of the Bonds or to any Original Facility); or (iii) contract with any Nongovernmental Person for
the sale of output or capacity of an Original Facility that is an Output Facility, unless such
contract is described either in section 1.141-7(c) of the Treasury Regulations (describing certain
types of output contracts that do not have the effect of transferring the benefits of owning the
property and the burdens of paying debt service on the financing of the property) or in section
1.141-7(f) of the Treasury Regulations (describing certain types of output contracts that while
having the effect of transferring such benefits and burdens but nevertheless may be disregarded
in evaluating private business use).
(d) No Financing of Nongovernmental Output Property. Except as would not
cause any Series 2019 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.
(e) No Private Loan. Except as would not cause any Bond to become a
"private activity bond" within the meaning of section 141 of the Code and the Tax Regulations
and rulings thereunder, the City has not used, and will not use, Gross Proceeds of any Bond to
19
make or finance loans to any Nongovernmental Person. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction that creates a debt for federal income tax purposes; (2) capacity in or service from
such property is committed to such person or entity under a take -or -pay, output or similar
contract or arrangement; or (3) indirect benefits of such Gross Proceeds, or burdens and benefits
of ownership of any property acquired, constructed or improved with such Gross Proceeds, are
otherwise transferred in a transaction that is the economic equivalent of a loan.
(f) Not to Invest at Higher Yield. Except as would not cause any Bond to
become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax
Regulations and rulings thereunder, the City shall not at any time prior to the final maturity of
the Bonds directly or indirectly invest Gross Proceeds in any Investment, if as a result of such
investment the Yield of any Investment acquired with Gross Proceeds, whether then held or
previously disposed of, would materially exceed the Yield of such Bond within the meaning of
said section 148.
(g) Not Federally Guaranteed. The City covenants that, except to the extent
permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, it will
not take or omit to take any action that would cause any Bond to be "federally guaranteed"
within the meaning of section 149(b) of the Code and the Tax Regulations and rulings
thereunder.
(h) Information Report. The City covenants that it will timely file or cause to
be filed any information required by section 149(e) of the Code with respect to the Bonds with
the Secretary of the Treasury on Form 8038-G or such other form and in such place as the
Secretary may prescribe.
(i) Rebate of Arbitrage Profits. The City covenants that the requirements of
section 148(f) of the Code will be satisfied in order that the Bonds be not arbitrage bonds, and
that, except to the extent otherwise provided in section 148(f) of the Code and the Tax
Regulations and rulings thereunder:
(1) it will account for all Gross Proceeds of the Bonds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all
records of accounting for at least six years after the day on which the last Bond is
discharged. However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Bonds with its other money, provided that the City separately accounts
for each receipt and expenditure of Gross Proceeds and the obligations acquired
therewith.
(2) not less frequently than each Computation Date, it will calculate or cause
to be calculated the Rebate Amount in accordance with rules set forth in section 148(f) of
the Code and the Tax Regulations and rulings thereunder. The Trustee may rely
conclusively upon the City's determinations, calculations and certifications required by
this Section. The Trustee shall have no responsibility to independently make any
20
calculation of determination or to review the City's calculations hereunder. The City
covenants that it will maintain a copy of the calculation with its official transcript of
proceedings relating to the issuance of the Bonds until six years after the final
Computation Date;
(3) it will deposit in the Rebate Fund and cause the Trustee to pay to the
United States the amount that when added to the future value of previous rebate payments
made for the Bonds equals (A) in the case of a Final Computation Date as defined in
section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate
Amount on such date; and (B) in the case of any other Computation Date, ninety percent
(90%) of the Rebate Amount on such a date. In all cases such Rebate payments shall be
made by the City (or by the Trustee at the direction of the City) at the times and in the
amounts as are or may be required by section 148(f) of the Code and the Tax Regulations
and rulings thereunder, and such payments shall be accompanied by Form 8038-T
executed by the City or such other forms and information as is or may be required by
section 148(f) of the Code and the Tax Regulations and rulings thereunder.
(4) it will exercise reasonable diligence to assure that no errors are made in
the calculations and payments required by paragraphs (2) and (3) above, and if an error is
made, to discover and promptly correct such error within a reasonable amount of time
thereafter (and in all events within one hundred eighty (180) days after discovery of the
error), including payment to the United States of any additional Rebate Amount owed to
it, interest thereon, and any penalty imposed under section 1.148-3(h) or other provision
of the Tax Regulations.
0) Not to Divert Arbitrage Profits. The City covenants that, except to the
extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at
no time prior to the final maturity of the Bonds will it enter into any transaction that reduces the
amount required to be paid to the United States pursuant to paragraph (h) of this Section because
such transaction results in a smaller profit or a larger loss than would have resulted if the
transaction had been at arm's length and had the Yield on the Bonds not been relevant to each
party.
(k) Bonds Not Hedge Bonds.
(1) The City represents that the Bonds will not be, "hedge bonds"
within the meaning of section 149(g) of the Code.
(2) Without limitation of paragraph (1) above, the City warrants as to
the Original Issue that: (I) on each date of issuance of that issue, the City reasonably
expected that at least 85% of the spendable proceeds of that Original Issue would be
expended within the three-year period commencing on such date of issuance, and (II) no
more than 50% of the proceeds of that Original Issue at any time has been invested in
Nonpurpose Investments having a substantially guaranteed yield for a period of four
years or more.
21
(1) Elections. The City hereby directs and authorizes any Responsible Officer
to make elections permitted or required pursuant to the provisions of the Code or the Tax
Regulations, as such Responsible Officer (after consultation with Bond Counsel) deems
necessary or appropriate in connection with the Bonds, in the Tax Certificate relating to the
Bonds or similar or other appropriate certificate, form or document.
(m) Closing Certificate. The City agrees to execute and deliver in connection
with the execution and delivery of this Lease a Tax Certificate as to Arbitrage and the Provisions
of Sections 103 and 141-150 of the Internal Revenue Code of 1986, or similar document
containing additional representations and covenants pertaining to the exclusion of the interest on
the Bonds from the gross income of the owners thereof for federal income tax purposes, which
representations and covenants are incorporated as though expressly set forth herein.
SECTION 18. CONTINUING DISCLOSURE
The City will comply with the continuing disclosure requirements applicable to it
promulgated under U.S. Securities and Exchange Commission Rule 15c2-12 and will also
comply with its obligations under the Continuing Disclosure Certificate, dated as of June 1,
2019, delivered by the City relating to the Bonds and under any continuing disclosure certificate
or agreement related to Additional Bonds that are subject to Rule 15c2-12; provided, however,
that the sole remedy hereunder in the event of any failure of the City to comply with this
covenant shall be an action to compel performance and the City's failure to comply with any
continuing disclosure requirement shall not be deemed a default or an Event of Default.
SECTION 19. WAIVER
Failure of the Authority to take advantage of any default on the part of the City
shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may be
established between the parties in the course of administering this Lease be construed to waive or
to lessen the right of the Authority to insist upon performance by the City of any term, covenant
or condition hereof, or to exercise any rights given the Authority on account of such default. A
waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent
default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any
term, covenant or condition of this Lease.
SECTION 20. NET LEASE
Subject to the provisions of Section 16 ("Abatement of Rental"), this Lease shall
be deemed and construed to be a "Triple -Net -Lease" and the City hereby agrees that rental
provided for herein shall be an absolute net return to the Authority, free and clear of any
expenses, taxes, fees, insurance premiums, rebate payments, Leased Property costs, reserve
deposits, charges or setoffs whatsoever.
SECTION 21. AMENDMENTS.
This Lease may be amended in writing as may be mutually agreed by the
Authority and the City; provided, that no such amendment which materially adversely affects the
rights of the Owners shall be effective unless it shall have been consented to by the Owners of
22
more than a majority in aggregate principal amount of the affected Bonds and any Additional
Bonds then Outstanding, and provided further, that no such amendment shall (a) extend the
payment date of any Base Rental Payment, without the prior written consent of the Owner of
each Bond and any Additional Bond so affected, or (b) reduce the percentage of the Outstanding
Bonds the consent of the Owners of which is required for the execution of any amendment
hereof.
This Lease and the rights and obligations of the Authority and the City hereunder
may also be amended or supplemented at any time by an amendment hereof or supplement
hereto which shall become binding upon execution by the Authority and the City without the
written consents of any Owners, but only to the extent permitted by law and only for any one or
more of the following purposes:
(a) to add to the agreements, conditions, covenants and terms required by the
Authority or the City to be observed or performed herein and other agreements, conditions,
covenants and terms thereafter to be observed or performed by the Authority or the City, or to
surrender any right or power reserved herein to or conferred herein on the Authority or the City,
and which in either case shall not materially adversely affect the interests of the Owners;
(b) to make such provisions for the purpose of curing any ambiguity or
correcting, curing or supplementing any defective provision contained herein or in regard to
questions arising hereunder which the Authority or the City may deem desirable or necessary and
not inconsistent herewith, and which shall not materially adversely affect the interests of the
Owners;
(c) to effect a substitution or release of the Leased Property;
(d) to increase the amount of Base Rental Payment payable hereunder for the
purpose of allowing the Authority to add any real property to be acquired and leased hereunder
or for the issuance of Additional Bonds; or
(e) for any other purpose which shall not materially adversely affect the
interests of the Owners.
SECTION 22. ESSENTIALITY
The City covenants and agrees that the Leased Property is essential to the City's
exercise of its governmental functions.
SECTION 23. LAW GOVERNING
This Lease shall be governed exclusively by the provisions hereof and by the laws
of the State of California.
23
SECTION 24. NOTICES
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests or other communications hereunder by either party to the other shall be
made as provided in the Indenture.
SECTION 25. VALIDITY AND SEVERABILITY
If for any reason this Lease shall be held by a court of competent jurisdiction to be
void, voidable, or unenforceable by the Authority or by the City, or if for any reason it is held by
such a court that any of the covenants of the City hereunder, including the covenant to pay
rentals hereunder, is unenforceable for the full term hereof, then and in such event this Lease is
and shall be deemed to be a lease from year to year under which the rentals are to be paid by the
City semi-annually in consideration of the right of the City to possess, occupy and use the
Leased Property, and all of the rental and other terms, provisions and conditions of this Lease,
except to the extent that such terms, provisions and conditions are contrary to or inconsistent
with such holding, shall remain in full force and effect.
SECTION 26. SECTION HEADINGS
All section headings contained are for convenience of reference only and are not
intended to define or limit the scope of any provision of this Lease.
SECTION 27. NO MERGER
If both the Authority's and the City's estate under this or any other lease relating
to the Leased Property or any portion thereof shall at any time or for any reason become vested
in one owner, this Lease and the estate created hereby shall not be destroyed or terminated by the
doctrine of merger unless the City so elects as evidenced by recording a written declaration so
stating, and unless and until the City so elects, the City shall continue to have and enjoy all of its
rights and privileges as to the separate estates.
SECTION 28. EXECUTION
It is agreed that separate counterparts of this Lease may separately be executed by
the Authority and the City, all with the same force and effect as though the same counterpart had
been executed by both the Authority and the City.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to
be executed by their respective officers thereunto duly authorized, all as of the day and year first
above written.
ATTEST:
I:1
ATTEST:
3
Mary Cusick, Secretary
Mary Cusick, City Clerk
25
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
an
Chair
CITY OF SANTA CLARITA
By
Kenneth W. Striplin, Ed.D, City Manager
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA
61.2
COUNTY OF LOS ANGELES
On before me, (insert name of the
officer), Notary Public, personally appeared who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
EN
[Seal]
EXHIBIT A
DESCRIPTION OF THE LEASED PROPERTY
The public safety facilities to be constructed by the City of Santa Clarita and/or Santa Clarita
Public Financing Authority, including an approximately 46,500 gross square foot sheriff station
building, an approximately 4,100 gross square foot service maintenance building and related
improvements, on parcels currently assessed by the County Assessor as APNs 2836-012-905 and
2836-016-909, and the real property in the City of Santa Clarita, County of Los Angeles, State of
California, described as follows:
PARCEL 1:
THAT PORTION OF LOT 62 OF ST. JOHN'S SUBDIVISION, IN THE CITY OF SANTA
CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 196 PAGE 304 OF MISCELLANEOUS RECORDS AND OF THE
RANCHO SAN FRANCISCO, AS SHOWN ON MAP RECORDED IN BOOK 1 PAGE 521
OF PATENTS, BOTH IN THE OFFICE OF THE COUNTY RECORDED OF SAID COUNTY,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 62; THENCE SOUTHERLY
ALONG THE EASTERLY LINE OF SAID LOT 62, 641.74 FEET; THENCE WESTERLY,
PARALLEL WITH THE NORTH LINE OF SAID LOT 62, 641.74 FEET; THENCE
NORTHERLY, PARALLEL WITH THE EAST LINE OF SAID LOT 62 AND THE EAST
LINE OF SAID RANCHO SAN FRANCISCO, 801.74 FEET; THENCE EASTERLY,
PARALLEL WITH THE NORTH LINE OF SAID LOT 62, 641.74 FEET TO THE EAST LINE
OF SAID RANCHO SAN FRANCISCO; THENCE SOUTHERLY ALONG THE EAST LINE
OF SAID RANCHO, 160.00 FEET TO THE POINT OF BEGINNING.
PARCEL 2:
A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND PUBLIC UTILITY
PURPOSES OVER THE EASTERLY 60 FEET OF THE SOUTHERLY 200 FEET OF THE
LAND DESCRIBED IN THE DEED TO HI SHEAR CORPORATION BY DEED RECORDED
DECEMBER 7, 1964 AS INSTRUMENT NO. 1073 IN BOOK D-2723 PAGE 89, OFFICIAL
RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
APN: 2836-012-905 and 2836-016-909
FEW
EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE
Interest Total
Pavment Dates(') Principal Interest Debt Service
12/01/2019
06/01/2020
12/01/2020
06/01/2021
12/01/2021
06/01/2022
12/01/2022
06/01/2023
12/01/2023
06/01/2024
12/01/2024
06/01/2025
12/01/2025
06/01/2026
12/01/2026
06/01/2027
12/01/2027
06/01/2028
12/01/2028
06/01/2029
12/01/2029
06/01/2030
12/01/2030
06/01/2031
12/01/2031
06/01/2032
12/01/2032
06/01/2033
12/01/2033
06/01/2034
12/01/2034
06/01/2035
12/01/2035
06/01/2036
12/01/2036
06/01/2037
12/01/2037
06/01/2038
12/01/2038
06/01/2039
12/01/2039
06/01/2040
12/01/2040
06/01/2041
12/01/2041
06/01/2042
12/01/2042
06/01/2043
m.
12/01/2043
06/01/2044
12/01/2044
06/01/2045
12/01/2045
06/01/2046
12/01/2046
06/01/2047
12/01/2047
06/01/2048
12/01/2048
06/01/2049
$ [principal
Total amount].00
(') Base Rental Payments from June _, 2019 to and including June 1, 2021 are funded from capitalized interest.
Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date.
M.
Norton Rose Fulbright draft 5/10/19
OFFICIAL NOTICE INVITING BIDS
$ [PRINCIPAL AMOUNT]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
NOTICE IS HEREBY GIVEN by the Santa Clarita Public Financing Authority (the "Authority")
that electronic bids will be received by the Authority for the purchase of $[principal amount]* principal
amount of Santa Clarita Public Financing Authority Lease Revenue Bonds (Sheriff Station Project),
Series 2019 (the "Bonds") up to the time specified below. All electronic bids must be submitted via an
electronic bidding service offered through I -Deal LLC BIDCOMP/PARITY® System ("PARITY"'). The
date and time specified for receipt of bids is as follows:
Tuesday, June 11, 2019
9:30 a.m., Pacific Standard Time
(or at the election of the Authority, at such time on any day thereafter, specified by notification through
Thomson Municipal News or Bloomberg News Wire at least 24 hours prior to the scheduled date and
time of sale) for the purchase of the Bonds. The Bonds will be issued and sold under the provisions of an
Indenture, dated as of June 1, 2019, between the Authority and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "Trustee"), pursuant to the laws of the State of California. The Bonds are
more particularly described in the proposed form of the Indenture on file with the Secretary of the
Authority and copies thereof will be furnished to the bidder upon request.
BOND RATING
The Bonds are rated "AA+" by S&P Global Ratings ("S&P")
DESCRIPTION OF THE BONDS
FORM OF BONDS: The Bonds will be issued and sold in fully registered form in denominations
of $5,000 or authorized integral multiples thereof, to be dated initially as of the date of delivery to the
successful bidder.
MATURITIES". The Bonds will become due in principal installments on June 1 in each of the
years and in the amounts, as set forth in the following table. The final aggregate principal amount of the
Bonds, and the final amount of each maturity of the Bonds, shall be subject to increase or reduction as
described below under the heading "Adjustment of Principal Amounts." Each Bidder may speck in its
bid whether consecutive maturities will be aggregated into a term Bond subject to mandatory sinking
account redemption in the applicable principal amount set forth below.
Preliminary, subject to change.
Preliminary, subject to change. See also, "Adjustment of Principal Amounts" herein.
Maturity Date Principal Maturity Date Principal
June 1 Amount June 1 Amount
PAYMENT PROVISIONS: Interest on the Bonds will be payable semiannually on June 1 and
December 1 of each year, commencing on December 1, 2019 (each, an "Interest Payment Date"), to the
registered owners by check of the Trustee or, in the case of the owner of Bonds in an aggregate principal
amount of at least $1,000,000, at the written request of such owner by wire transfer to an account in the
United States of America. Principal and premium (if any) of any Bond will be paid upon presentation and
surrender thereof at the corporate trust office of the Trustee in Los Angeles, California, or such other
office as may be designated by the Trustee. The principal and premium (if any) of and interest on the
Bonds are payable in lawful money of the United States of America.
BOOK ENTRY ONLY.• The Bonds will be initially delivered only in book -entry form and will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New
York, New York. DTC will act as securities depository for the Bonds. Individual purchases of the Bonds
will be made in book -entry form only, in denominations of $5,000 or any integral multiple thereof.
Purchasers of Bonds will not receive certificated securities representing their ownership interests in the
Bonds purchased. Principal of and interest on the Bonds are payable directly by the Trustee to DTC
which is obligated in turn to distribute such payments to the beneficial owners of the Bonds, as provided
in the Indenture.
OPTIONAL REDEMPTION. The Bonds maturing on or after June 1, 20_, shall be subject to
redemption prior to maturity, at the option of the City, on or after June 1, 20_, in whole at any
time or in part (by lot within any maturity), on any date, at a redemption price equal to the
principal amount to be redeemed, plus accrued interest to the date fixed for redemption, without
premium.
REDEMPTION FROM NET PROCEEDS OF INSURANCE OR CONDEMNATION AWARDS. The
Bonds are subject to redemption on any date prior to their stated Principal Payment Dates, as a whole, or
in part, from the net proceeds of any insurance or condemnation award with respect to the Leased
Property or portions thereof, at a redemption price equal to the sum of the principal amount evidenced
thereby plus accrued interest evidenced thereby to the date fixed for redemption, without premium.
SINKING ACCOUNT REDEMPTION. Any bidder may, at its option, specify that one or more
maturities of the Bonds will consist of term Bonds which are subject to mandatory sinking account
redemption in consecutive years immediately preceding the maturity thereof, as designated in the bid of
such bidder. In the event that the bid of the successful bidder specifies that any maturity of Bonds will be
termed, such term Bonds will be subject to mandatory sinking account redemption on June 1 in each
applicable year in the principal amount for such year as set forth above under the heading
"MATURITIES," at a redemption price equal to the principal amount thereof to be redeemed together
with accrued interest thereon to the redemption date, without premium.
PURPOSE: The proceeds from the sale of the Bonds will be used (i) for the purpose of financing
a portion of the construction and improvements of an approximately 46,500 square foot sheriff station
building, approximately 4,100 square foot service maintenance building and related improvements to be
located on approximately 7.6 net acres of City property at 26201 Golden Valley Road within the City (the
"Project"), (ii) to pay capitalized interest on the Bonds through and including June 1, 2021, and (iii) to
pay the costs incurred in connection with the execution and delivery of the Bonds, all as further described
in the Preliminary Official Statement.
SECURITY Payments of principal of and interest on the Bonds are derived from Revenues
consisting primarily of certain base rental payments (the "Base Rental Payments") made by the City of
Santa Clarita, California (the "City") to the Authority under that certain Lease Agreement dated as of
June 1, 2019 (the "Lease"), by and between the Authority and the City, under which the City shall lease
the Project, including the land and improvements thereon, as described in the Lease (the "Leased
Property") from the Authority. The obligation of the City to make Base Rental Payments is payable
solely from the City's General Fund (subject to abatement of such Base Rental Payments in the event of
the interruption of use of the Leased Property), but does not constitute an obligation for which the City
has levied or pledged, or is obligated to levy or pledge, any form of taxation, nor does the obligation of
the City to make Base Rental Payments constitute an indebtedness of the City, the State of California or
any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or
restriction. Pursuant to the Lease, the City covenants to take such action as may be necessary to include
all Base Rental Payments due thereunder in its annual budget and to make the necessary annual
appropriations for all such Base Rental Payments, subject only to abatement as provided for in the Lease.
NO RESERVE FUND: No reserve fund is established for the Bonds.
TAX-EXEMPT STATUS: In the opinion of Norton Rose Fulbright US LLP, Los Angeles,
California, Bond Counsel, under existing law interest on the Bonds is exempt from personal income taxes
of the State of California and, assuming compliance with the tax covenants herein, interest on the Bonds
is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the
owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the
alternative minimum income tax imposed on corporations and individuals. Bond Counsel expresses no
opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or
receipt of interest on the Bonds. See the discussion in the Preliminary Official Statement under the
heading "TAX MATTERS."
CONTINUING DISCLOSURE: In order to assist bidders in complying with S.E.C. Rule 15c2 -
12(b)(5) (the "Rule"), the City will undertake, pursuant to a Continuing Disclosure Certificate, to provide
certain annual financial information and notices of the occurrence of certain events, if material. A
description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth
in the final Official Statement relating to the Bonds.
At the request of the City, Digital Assurance Certification, LLC ("DAC") has compiled a
summary statement reflecting the filing due dates applicable under the City's and the related entities'
undertakings under the Rule and, for the last five years, the actual filings dates of audited financial
statements and financial and operating data. See the discussion in the Preliminary Official Statement
under the heading "CONTINUING DISCLOSURE." [Update language]. Currently, the City believes
that it is in material compliance with its continuing disclosure undertakings under the Rule for the last
five years.
The summary statement is the result of certain limited activities and inquiry and is being provided
by the City to prospective purchasers to assist with their respective responsibilities under certain
securities laws. The scope of those activities performed were inherently limited and do not purport to
encompass all activities that the prospective purchasers or the City may be responsible to undertake, and
may not be sufficient for or appropriate to your (prospective purchaser's) purposes.
LEGAL OPINION: The legal opinion of Norton Rose Fulbright US LLP, Los Angeles, California,
Bond Counsel, concerning the validity of the Bonds, and certain other matters, will be furnished to the
purchaser of the Bonds without cost.
FURTHER INFORMATION: A copy of the Preliminary Official Statement describing the Bonds,
the DAC summary statement and any other information concerning the proposed financing, will be
furnished upon request to the City and to the municipal advisor to the City with respect to the Bonds (the
"Municipal Advisor"): Columbia Capital Management, LLC, 100 N. Brand Boulevard, Suite 605
Glendale, California 91203, telephone: (818) 385-4900, e-mail: cdecriniskcolumbiacapital.com.
Additionally, a copy of the Preliminary Official Statement, the DAC summary statement and this Official
Notice Inviting Bids can be obtained in electronic format at www.i-dealprospectus.com.
TERMS OF SALE
CONDITIONS OF BIDS: Each bid must be for not less than all of the Bonds hereby offered for
sale. Bids will be received on the Bonds bearing such rate or rates of interest as may be specified by the
bidders, subject to the following conditions: (a) the same rate shall apply to all Bonds of the same
maturity year; (b) no supplemental interest payments will be accepted; (c) for Bonds maturing on and
after June 1 , no maturity may be reoffered at a price of less than %; and (d) the aggregate
reoffering price (calculated based upon the coupons and yields submitted by each bidder) for Bonds shall
be no less than %.
The purchase price to be paid for the Bonds may not be less than 99% of the par value thereof.
Any premium must be paid as part of the purchase price.
ELECTRONIC BIDS: Electronic Bids via PARITY® (the "Electronic Bidding System") will be
accepted in accordance with this Official Notice Inviting Bids until 9:30 a.m. Pacific Standard Time,
Tuesday, June 11, 2019, but no bid will be received after this time. To the extent any instructions or
directions set forth in PARITY® conflict with this Official Notice Inviting Bids, the terms of this Official
Notice Inviting Bids shall control. For further information about PARITY®, potential bidders may
contact Columbia Capital Management LLC, 100 N Brand Boulevard, Suite 605 Glendale, California
91203, telephone (818) 385-4900, email: cdecriniskcolumbiacapital.com.
Each bid shall specify the total bid price with respect to the Bonds (which shall include the
discount, if any, and the premium, if any, offered by the bidder), the total interest cost (expressed in
dollars) during the term of the Bonds on the basis of such bid, and an estimate of the true interest cost
("TIC") on the basis of such bid. Each bidder shall certify to the Authority the correctness of the
information submitted on PARITY®; the Authority will be entitled to rely on such certification.
THE AUTHORITY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE
ELECTRONIC BIDS; HOWEVER, THE AUTHORITY, THE MUNICIPAL ADVISOR AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY
BID SUBMITTED ELECTRONICALLY. THE OFFICIAL TIME FOR RECEIPT OF BIDS IS
AS STATED IN THIS OFFICIAL NOTICE INVITING BIDS AND AS DETERMINED
EXCLUSIVELY BY THE MUNICIPAL ADVISOR.
DESIGNATION OF INTEREST RATES: Each bidder must specify the rate or rates of interest
which the Bonds shall evidence. The maximum rate bid on any Bonds may not exceed 5.0% per annum.
A bidder will be permitted to bid different rates of interest for each maturity of Bonds; but (i) each
interest rate specified must be in a multiple of one -twentieth or one-eighth of one percent; (ii) no Bond
shall evidence more than one rate of interest; (iii) payments of interest on each Bond shall be computed
from the date of original delivery thereof to its stated maturity (or, in the case of term Bonds, to the
respective dates of mandatory sinking fund redemption thereof as designated in the bid) at the interest rate
specified in the proposal, payable on the Interest Payment Date as set forth above; and (iv) all Bonds
maturing at any one time shall bear the same rate of interest.
DETERMINATION OF BEST BID: The Bonds will be awarded to the responsible bidder whose
bid produces the lowest TIC on the Bonds. The TIC specified in any bid will be that rate which, when
used in computing the present value of all payments of principal of and interest to be paid on all Bonds
from the date of delivery of the Bonds to the successful bidder to their respective maturity dates produces
an amount equal to the purchase price specified in such bid. For purposes of computing the TIC
represented by any proposal, the purchase price specified in such proposal shall be equal to the par
amount of the Bonds less any discount specified in such proposal or plus any premium specified in such
proposal, and the TIC shall be calculated by the use of a semiannual interval of compounding interest
based on the Interest Payment Date for the Bonds.
ADJUSTMENT OF PRINCIPAL AMOUNTS: The Authority reserves the right to increase or to
decrease the principal amount of any maturity of the Bonds in $5,000 increments as the Authority deems
advisable, based on the actual rates of interest to be borne by the Bonds to obtain the necessary amount of
bond proceeds and to structure debt service payments subject to the constraints and preferences of the
Authority. Any such increase or decrease shall be allocated among the various maturities of the Bonds on
such basis as the Authority deems advisable, and shall result in a proportionate increase or decrease (as
the case may be) in the amount of any premium or discount bid. Notice of such increase or decrease shall
be given to the successful bidder as soon as practicable following the notification of award, as described
below. No such adjustment will have the effect of altering the basis upon which the best bid is
determined. Bidders should consider that bids generating significant premium (discount) may result in
increased principal amortization in later (earlier) years. If there is an increase or decrease in the final
aggregate principal amount of the Bonds or a change in the schedule of principal payments as described
above, notice of such increase or decrease shall be given to the successful bidder as soon as practicable
following the notification of award. The Authority will calculate the actual purchase price for the Bonds
in a way that will preserve the successful bidder's original spread included in its bid (computed as a
percentage of the final adjusted aggregate principal amount of the Bonds).
RIGHT TO REJECT ANY BID: The Authority reserves the right, in its discretion, to reject any
and all proposals and to waive any irregularity or informality in any proposal.
TIME OF AWARD: The Authority has authorized its Executive Director or Treasurer to award the
sale of the Bonds to the bidder whose proposal is the best responsible proposal determined in accordance
herewith. The Authority will take action awarding the Bonds or rejecting all bids not later than 5:00 p.m.
(PST) on June 11, 2019, provided that the award may be made after the expiration of the specified time
unless the successful bidder provides the Authority with a notice in writing of the withdrawal of such bid.
DELIVERY AND PAYMENT: Delivery of the definitive Bonds will be made to The Depository
Trust Company to the account of the purchaser upon the delivery thereof, which is expected to occur on
or about June 25, 2019. Payment for the Bonds must be made by wire transfer of Federal Reserve Bank
funds, which is immediately available to the Trustee on the date of delivery. Any expense in providing
immediately available funds shall be borne by the purchaser.
GOOD FAITH DEPOSIT: To secure the Authority from any loss resulting from the failure of the
successful bidder to comply with the terms of its bid, a good faith deposit in the amount of $500,000 (the
"Good Faith Deposit") must be provided by the successful bidder.
Upon the determination by the Authority of the successful bidder of the Bonds, the Municipal
Advisor will notify the successful bidder of the Authority's determination. After notification, the
successful bidder will confirm to the Municipal Advisor by telephone ((818) 385-4900) that the
successful bidder will wire the Good Faith Deposit as soon as possible and in any event not later than
twenty-four (24) hours after verbal notice of the bid award. The successful bidder will provide the
Federal wire reference number of such Good Faith Deposit to the Municipal Advisor. The wire transfer
instructions will be provided to the successful bidder at the time of the bid award.
If the successful bidder does not confirm to the Municipal Advisor that the successful bidder will
wire the Good Faith Deposit upon receipt of wiring instructions from the Authority as provided herein,
the Authority may, in its sole discretion, reject the bid of the successful bidder and may award the Bonds
to the responsible bidder that timely submitted a conforming bid that represents the next lowest TIC to the
Authority, which will in turn become and will assume the responsibilities of the successful bidder as
described in this paragraph.
The Good Faith Deposit will immediately upon receipt become the property of the Authority and
will be held and invested for the exclusive benefit of the Authority and the City. No interest will be paid
upon the Good Faith Deposit. The Good Faith Deposit, without interest, will be credited against the
purchase price of the Bonds purchased by the purchaser at the time of delivery of the Bonds.
If the purchase price is not paid in full upon tender of the Bonds by the Authority to the
purchaser, the Authority will retain the Good Faith Deposit and the purchaser will have no right in or to
the Bonds or to the recovery of its Good Faith Deposit, or to any allowance or credit by reason of such
deposit, unless it appears that the Bonds would not be validly delivered if delivered to the purchaser in the
form and manner proposed, except in the case that a successful bidder provides the Authority with a
notice in writing of the withdrawal of such bid. If the purchaser fails to deliver the Good Faith Deposit in
accordance with this Official Notice Inviting Bids or fails to take up and pay for the Bonds, the Authority
reserves any and all rights granted by law to recover the full purchase price of the Bonds and, in addition,
any damages suffered by the Authority or the City.
CONFLICT WAIVER. Norton Rose Fulbright US LLP is serving as Bond Counsel in connection
with the issuance and sale of the Bonds. By placing a bid, each bidder represents that it understands that
Norton Rose Fulbright US LLP, in its capacity as Bond Counsel, represents the Authority and the City,
and the successful bidder waives any conflict of interest that Norton Rose Fulbright US LLP's
involvement in connection with the issuance and sale of the Bonds to such successful bidder presents.
ESTABLISHMENT OF ISSUE PRICE.
The successful bidder shall assist the Authority in establishing the issue price of the Bonds and
shall execute and deliver to the Authority prior to the Closing Date a certificate acceptable to Bond
Counsel setting forth the reasonably expected initial public offering price, or the sales price or prices of
the bonds, together with the supporting pricing wires or equivalent communications, substantially in the
form attached hereto as Exhibit A, with such modifications as may be appropriate or necessary in the
reasonable judgment of the successful bidder, the Authority or Bond Counsel. All actions to be taken by
the Authority under this Official Notice Inviting Bids to establish the issue price of the Bonds may be
taken on behalf of the Authority by the Authority's Municipal Advisor identified herein and any notice or
report to be provided to the Authority may be provided to the Authority's Municipal Advisor.
The Authority intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(1)
(defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the
initial sale of the Bonds (the "competitive sale requirements") because:
(1) the Authority shall disseminate this Official Notice Inviting Bids to potential
underwriters in a manner that is reasonably designed to reach potential
underwriters;
(2) all bidders shall have an equal opportunity to bid;
(3) the Authority may receive bids from at least three underwriters of municipal
bonds who have established industry reputations for underwriting new issuances
of municipal bonds; and
(4) the Authority anticipates awarding the sale of the Bonds to the bidder who
submits a firm offer to purchase the Bonds at the highest price (or lowest interest
cost), as set forth in this Official Notice Inviting Bids.
If the Authority receives less than three bids that conform to the parameters contained herein such
that the competitive sale requirements are not satisfied, the Authority intends to treat the Initial Public
Offering Price of each maturity of the Bonds as the issue price of that maturity (the "hold -the -offering -
price rule"). Consequently, each bidder should assume for purposes of making its bid that for each
maturity of the Bonds, the Authority will treat the Initial Public Offering Prices as of the Sale Date of the
Bonds as the issue price of the Bonds. The Authority will advise the apparent successful bidder within
one hour of receipt of bids if the hold -the -offering -price rule will apply. Attached as Exhibit B is a form
of the issue price certificate to be provided by the successful bidder to the Authority prior to the Closing
Date if the competitive sale requirements are not satisfied and the hold -the -offering -price rule is applied.
Exhibit B is provided in form only and may be modified as may be appropriate or necessary in the
reasonable judgment of the successful bidder, the Authority or Bond Counsel.
By submitting a bid, the successful bidder shall, on behalf of the underwriters participating in the
purchase of the Bonds, (i) confirm that the underwriters have offered or will offer each maturity of the
Bonds to the public on or before the date that the Bonds are awarded by the Authority to the successful
bidder ("Sale Date") at the Initial Public Offering Prices set forth in the bid submitted by the winning
bidder, and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the
underwriters will neither offer nor sell any maturity of the Bonds to any person at a price that is higher
than the Initial Public Offering Price for such maturity during the period starting on the Sale Date and
ending on the earlier of the following:
(1) the close of the fifth business day after the Sale Date; and
(2) the date on which the underwriters have sold at least 10% of that maturity of the
Bonds to the public at a price that is no higher than the Initial Public Offering
Price for such maturity.
The successful bidder shall promptly advise the Authority when the underwriters
have sold 10% of that maturity of the Bonds to the public at a price that is no
higher than the Initial Public Offering Price if that occurs prior to the close of the
fifth (5th) business day after the Sale Date.
The Authority acknowledges that, in making the representation set forth above, the successful
bidder will rely on (i) the agreement of each underwriter to comply with the hold -the -offering -price rule,
as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling
group has been created in connection with the initial sale of the 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, as set
forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter
is a party to a retail distribution agreement that was employed in connection with the initial sale of the
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, as set forth in the retail distribution agreement and the related pricing
wires.
By submitting a bid, each bidder confirms that:
(i) any agreement among underwriters, any selling group agreement and each retail
distribution agreement (to which the bidder is a parry) relating to the sale of the Bonds to
the public, together with the related pricing wires, contains or will contain language
obligating each underwriter, 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 Bonds of each maturity allotted
to it until it is notified by the successful bidder that either the 10% test has been
satisfied as to the Bonds of that maturity or all Bonds of that maturity have been
sold to the public, and
(B) comply with the hold -the -offering -price rule, if and for so long as directed by the
successful bidder and in the related pricing wires, and
(ii) any agreement among underwriters relating to the sale of the Bonds to the public,
together with the related pricing wires, contains or will contain language obligating each
underwriter that is a party to a retail distribution agreement to be employed in connection
with the initial sale of the Bonds to the public to require each broker-dealer that is a party
to such retail distribution agreement:
(A) report the prices at which it sells to the public the unsold Bonds of each maturity
allotted to it until it is notified by the successful bidder or such underwriter that
either the 10% test has been satisfied as to the Bonds of that maturity or all
Bonds of that maturity have been sold to the public, and
(B) comply with the hold -the -offering -price rule, if and for so long as directed by the
successful bidder or such underwriter and as set forth in the related pricing wires.
Sales of any Bonds to any person that is a related party to an underwriter shall not constitute sales
to the public for purposes of this Notice of Sale. Further, for purposes of this Official Notice Inviting
Bids:
(i) "public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an underwriter or a related party,
(ii) "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 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 Bonds to the public (including a member of a selling group or a
parry to a retail distribution agreement participating in the initial sale of the Bonds to the
public), and
(iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter
and the purchaser are subject, directly or indirectly, to (A) 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), (B) 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 (C) 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).
NO LITIGATION: There is no litigation pending concerning the validity of the Bonds, the
existence of the City and the Authority or the entitlement of the officers thereof to their respective offices,
and the purchaser will be furnished a no -litigation certificate certifying to the foregoing as of and at the
time of delivery of the Bonds.
CUSIP NUMBERS- It is anticipated that CUSIP numbers will be printed on the Bonds, but
neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute
cause for a failure or refusal by the purchaser to accept delivery of and pay for the Bonds in accordance
with the terms hereof. The CUSIP Service Bureau charge for the assignment of said numbers will be the
responsibility of and shall be paid for by the purchaser of the Bonds.
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION FEES: All fees payable to
the California Debt and Investment Advisory Commission in connection with the execution and delivery
of the Bonds shall be the responsibility of the purchaser of the Bonds.
OFFICIAL STATEMENT: The City and the Authority have each approved the Preliminary
Official Statement relating to the Bonds. Copies of such Preliminary Official Statement will be
distributed to any bidder, upon request, prior to the sale in a form "deemed final' by the City and the
Authority for purposes of the Rule. Within seven (7) business days from the sale date, the Authority will
deliver to the purchaser up to 100 copies of the Final Official Statement, executed by authorized
representatives of the City and the Authority, in sufficient number to allow the purchaser to comply with
paragraph (b)(4) of the Rule and to satisfy the Municipal Securities Rulemaking Board (the "MSRB")
Rule G-32 or any other rules adopted by the MSRB, which shall include information permitted to be
omitted by paragraph (b)(1) of the Rule and such other amendments or supplements as shall have been
approved by the City and the Authority (the "Final Official Statement"). The purchaser agrees that it will
not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the
delivery of a copy of the Final Official Statement.
DISCLOSURE COUNSEL OPINION: The purchaser shall receive an opinion (or a reliance letter
to an opinion addressed to the Authority), dated the closing date, of Norton Rose Fulbright US LLP,
Disclosure Counsel, relating to the contents of the Official Statement.
UNDERWRITING GROUP: The successful bidder will be required to submit a list of all
syndicate members in addition to the managers not later than 24 hours after receiving a verbal award.
Dated: 12019
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
Ma
Treasurer
CITY OF SANTA CLARITA, CALIFORNIA
By: /s/
City Treasurer
10
Exhibit A
Form of Issue Price Certificate
[Note: for Competitive Sales to be modified if Hold -the -Offering -Price Rule applies]
12019
Santa Clarita Public Financing Authority
Santa Clarita, California
City of Santa Clarita
Santa Clarita, California
Norton Rose Fulbright US LLP
Los Angeles, California
Ladies and Gentlemen:
The undersigned, on behalf of [NAME OF UNDERWRITER] ("[SHORT NAME OF
UNDERWRITER]"), hereby certifies as set forth below with respect to the sale, issuance and delivery by
the Santa Clarita Public Financing Authority (the "Authority") of its Lease Revenue Bonds (Sheriff
Station Project) Series 2019 (the "Bonds").
Reasonably Expected Initial Offering Price.
(a) As of the Sale Date, the reasonably expected initial offering price of the Bonds to the
Public by [SHORT NAME OF UNDERWRITER] is the price shown in Schedule A (the "Expected
Offering Price"). The Expected Offering Price is the price of the Bonds used by [SHORT NAME OF
UNDERWRITER] in formulating its bid to purchase the Bonds. Attached as Schedule B is a true and
correct copy of the bid provided by [SHORT NAME OF UNDERWRITER] to purchase the Bonds.
(b) [SHORT NAME OF UNDERWRITER] was not given the opportunity to review other
bids prior to submitting its bid.
(c) The bid submitted by [SHORT NAME OF UNDERWRITER] constituted a firm offer to
purchase the Bonds.
2. Defined Terms.
(a) Maturity means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as
separate Maturities.
(b) Public means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term
"related party" for purposes of this certificate generally means any two or more persons who have greater
than 50 percent common ownership, directly or indirectly.
A-1
(c) Sale Date means the first day on which there is a binding contract in writing for the sale
of the Bonds. The Sale Date of the Bonds is June 11, 2019.
(d) Underwriter means (i) 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 Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or
indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the
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 Bonds to the Public).
The undersigned understands that the foregoing information will be relied upon by the Authority
and the City of Santa Clarita in its efforts to comply with the conditions imposed by the Internal Revenue
Code of 1986 (the "Code") with respect to certain representations set forth in the Tax Certificate with
respect to the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds,
and will be relied upon by Norton Rose Fulbright US LLP, Bond Counsel, in connection with rendering
its legal opinion that the interest on the Bonds is excluded from gross income for federal income tax
purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax
advice that it may give the Authority from time to time relating to the Bonds.
[UNDERWRITER],
as Underwriter
Ma
Title:
(Attached)
SCHEDULE A TO ISSUE PRICE CERTIFICATE
EXPECTED OFFERING PRICES
A-3
SCHEDULE B TO ISSUE PRICE CERTIFICATE
[Copy of Bid Submitted by Underwriter]
A-4
Exhibit B
Form of Issue Price Certificate
[Note: if Hold -the -Offering -Price Rule applies]
12019
Santa Clarita Public Financing Authority
Santa Clarita, California
City of Santa Clarita
Santa Clarita, California
Norton Rose Fulbright US LLP
Los Angeles, California
Ladies and Gentlemen:
The undersigned, on behalf of [NAME OF UNDERWRITER] ("[SHORT NAME OF
UNDERWRITER]"), hereby certifies as set forth below with respect to the sale, issuance and delivery by
the Santa Clarita Public Financing Authority (the "Authority") of its Lease Revenue Bonds (Sheriff
Station Project) Series 2019 (the "Bonds").
Initial Offering Price of the Hold -the -Offering -Price Maturities.
(a) [SHORT NAME OF UNDERWRITER] [The Underwriting Group] offered the Hold -the -
Offering -Price Maturities to the Public for purchase at the respective initial offering prices listed in
Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of the pricing wire or
equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the [Bond Purchase Agreement][Notice of Sale and bid award], [SHORT
NAME OF UNDERWRITER] [The Underwriting Group] agreed in writing on or prior to the Sale Date
that, (i) for each Maturity of the Hold -the -Offering -Price Maturities, [it] [they] would neither offer nor sell
any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for
such Maturity during the Holding Period for such Maturity (the "hold -the -offering -price rule"), and (ii)
any selling group agreement shall contain the agreement of each dealer who is a member of the selling
group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a
party to the retail distribution agreement, to comply with the hold -the -offering -price rule. Pursuant to
such agreement, no Underwriter (as defined below) offered or sold any Maturity of the Hold -the -
Offering -Price Maturities at a price that is higher than the respective Initial Offering Price for that
Maturity of the Bonds during the Holding Period.
2. Defined Terms.
(a) Hold -the -Offering -Price Maturities means those Maturities of the Bonds listed in
Schedule A hereto as the "Hold -the -Offering -Price Maturities."
I:0I
(b) Holding Period means, with respect to a Hold -the -Offering -Price Maturity, the period
starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale
Date, or (ii) the date on which [SHORT NAME OF UNDERWRITER] [The Underwriting Group] sold at
least 10% of such Hold -the -Offering -Price Maturity to the Public at prices that are no higher than the
Initial Offering Price for such Hold -the -Offering -Price Maturity.
(c) Maturity means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as
separate maturities.
(d) Public means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term
"related party" for purposes of this certificate generally means any two or more persons who have greater
than 50 percent common ownership, directly or indirectly.
(e) Sale Date means the first day on which there is a binding contract in writing for the sale
of a Maturity of the Bonds. The Sale Date of the Bonds is [date of award].
(f) Underwriter means (i) 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 Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or
indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the
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 Bonds to the Public).
The undersigned understands that the foregoing information will be relied upon by the Authority
and the City of Santa Clarita in its efforts to comply with the conditions imposed by the Internal Revenue
Code of 1986 (the "Code") with respect to certain representations set forth in the Tax Certificate with
respect to the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds,
and will be relied upon by Norton Rose Fulbright US LLP, Bond Counsel, in connection with rendering
its legal opinion that the interest on the Bonds is excluded from gross income for federal income tax
purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax
advice that it may give the Authority from time to time relating to the Bonds.
[UNDERWRITER],
as Underwriter
Title:
IMpil
SCHEDULE A
INITIAL OFFERING PRICES OF THE HOLD -THE -OFFERING -PRICE MATURITIES
(Attached)
ilsim
(Attached)
SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
Lam
COUNTY OF LOS ANGELES
CHIEF EXECUTIVE OFFICE
LEASE AGREEMENT
SHERIFF'S DEPARTMENT - TENANT
CITY OF SANTA CLARITA --LANDLORD
26201 GOLDEN VALLEY ROAD
SANTA CLARITA, CALIFORNIA
HOA. 102470070.8
TABLE OF CONTENTS
1.
BASIC LEASE INFORMATION.....,.,... ...... ......... ............................................1
1.1. TERMS ............................ I .........................................
...... ................. ............1
a. Landlord's Address for Notice: ......................... — ......
......... — ........... 1
b. Tenant's Address for Notice: ............................ -.—
... --- ........ 1
C. Premises: ..........................................................
........ .......... 2
d. Building:.........................................................................................................2
e. Initial Term: ...................................................... .......
......... 2
f. Base Rent:..........................................................
___ ...... ............................. 2
g. Rentable/gross Square Feet in the Premises:....
........ ............. 2
h. Use: .................................................................. -.--
........... __ ......... 3
i. Initial Departmental Use: ............................. .......
........ 3
L Parking Spaces: ....................................... ......
...... 3
k. Normal Working Hours: ...................................... _,_
... ...... ......... 3
1.2. EXHIBITS TO LEASE: .............. ......
,......., ...........,,.. ,...... 3
2.
PREMISES ........................... ..._............... ......,.....,.....,., ......
..............,.......... .....,,..,.... 3
3.
TERM ........................................... .... ............... ....a.,......... ...
........... ......,...,........ ..,......,,. 3
4.
RENT............................................................... .................. .....
........... ... .....,.....,a..4
5.
USES ......................................................... .........................
............ ..a............. .........,....4
6.
HOLDOVER............................................................... .......
................. ........ .............. 5
7.
COMPLIANCE WITH LAW- ................................................................
..................... 5
8.
DAMAGE OR DESTRUCTION ...... .............. .,,,,.,.0 .,..........
..,,....,......... --- .......... 5
9.
REPAIRS AND MAINTENANCE .... ........ ........ .................
.,.,.. ........ ............6
9.1. LANDLORD REPRESENTATIONS..................................................................................6
9.2. LANDLORD OBLIGATIONS PROPRIETOR COSTS .........:............
........ ...................... 6
9.3. TENANT/LANDLORD OBLIGATIONS SHARED COSTS ................................................
7
9.4. TENANT OBLIGATIONSOPERATIONALCOSTS......................................................7
9.5. MISCELLANEOUS..................................................................................
7
10.
SERVICES AND UTILITIES...............................................................................................
8
10.1. SERVICES............................................................. ..........
--- .......... ...,..,.,....... ..,.,..8
10.2. UTILITIES..................................................................................................................8
11.
TAXES........................................................................................................................a....,.8
12.
LANDLORD ACCESS........................................................................................................
8
13.
DEFAULT AND REMEDIES ............................................. ..............
................... ..a.....,....... 9
13.1. DEFAULT..............................................................d......,
......... .....,.,...,.,,.......,,........,.....9
13.2. NO EFFECT ON INDEMNITY ....................................... ........„..........
.....,........ .......,..,..... 9
13.3. REMEDIES...............................................................................................9
13.4. WAIVER......................................................................
................. 10
13.5. EMERGENCY.......................................................................................................10
14.
ALTERATIONS AND ADDITIONS...................................................................................
10
14.1. LANDLORD CONSENT—. ........... —,— ................... .................
......... ,,,.....,..,....... 10
HOA.102470070.8
HOA.102470070.8
14.2. END OF TERM..........................................................................................................
1' 1
14.3. PERFORMANCE OF ALTERATIONS....................................
....... ............................ 11
15.
INDEMNIFICATION.........................................................................................................11
15.1. LANDLORD'S INDEMNITY..........................................................................................
1
15.2. TENANT'S INDEMNITY.................................................
16.
INSURANCE.....................................................................................................
..........12
16.1. GENERAL INSURANCE PROVISIONS-REQUIREMENTS, ......
......... 12
a. Evidence of Coverage and Notice to Tenant................................................12
b. Additional Insured Status and Scope of Coverage
.......................................13
C. Cancellation of or Changes in Insurance.....................................................13
d. Failure to Maintain Insurance.......................................................................
14
e. Insurer Financial Ratings.............................................................................14
f. Deductibles and Self-Insured Retentions (SIRs)
..........................................14
Claims Made Coverage.......................................................P.,..........,,,.....,..
14
h. Application of Excess Liability Coverage...........................................„.,.,..,..,
14
i. Separation of Insureds.................................................................................14
L Tenant Review and Approval of Insurance Requirements..
-.. - - . ........ --- 14
16.2. INSURANCE COVERAGE TYPES AND LIMITS.. ................
.......,........ ................ ....... 15
17.
ENVIRONMENTAL MATTERS....... .................. ........ .......
................. 17
17.1. HAZARDOUS MATERIALS..........................................................................................
17
17.2. LANDLORD INDEMNITY..................... .................. ..................
--- ..........,.,............. 18
17.3. TENANT INDEMNITY........................................... .................
..... 18
18.
LIENS...................................................... .. ................,.
19
19.
SURRENDER OF POSSESSION ............ ........
.................19
20.
SIGNAGE..... --- ......... ................. ............... .,........ ...................
...., ...,.,.......,.,.. ...........19
21.
QUIET ENJOYMENT.......................................................................................................19
22.
GENERAL.......................................................................................................................20
22.1. HEADINGS........................................................................................................„...,.,20
22.2. ASSIGNMENT AND SUBLETTING; SUCCESSORS AND ASSIGNS................................... 2.0
22.3. ENTIRE AGREEMENT...................................... ..............„.........,,
........20
22.4. SEVERABILITY................................................. ........
............ ...20
22.5. NOTICES................................... .........,, ...................,........A.........
............... ...,..,.20
22.6. GOVERNING LAW AND FORUM ....... ..................
................................ 21
22.7. WAIVERS..................................................................
............................ 21,
22.8. TIME OF ESSENCE........................................................................................„....21
22.9. CONSENT............................................................................
..... .... ........,..21
23.
AUTHORITY...............................................................................
........,.............,.....21,
24.
SOLICITATION OF CONSIDERATION-- ........ ..........
__ ........ ..,.. ....................22
25.
TAX-EXEMPT BONDS .............. ............................ .. .................
... ...,.......,........ 22
HOA.102470070.8
EXHIBITS
Exhibit A — Legal Description of the Property
Exhibit B — Floor Plan of the Premises
Exhibit C — Commencement Date memorandum and Confirmation of Lease Terms
Exhibit D — Replacement, Repairs and Maintenance Schedule (Schedule 1, 2 and 3)
Exhibit E — LASD Equipment and County Furniture
Exhibit F — Surrounding Area Map
HOA.102470070.8
COUNTY OF LOS ANGELES
CHIEF EXECUTIVE OFFICE
LEASE AGREEMENT
THIS LEASE ("Lease") is entered into as of the day of ,
20 between CITY OF SANTA CLARITA ("Landlord" or "City"), and COUNTY OF LOS
ANGELES, a body corporate and politic ("Tenant" or "County").
Landlord and Tenant agree:
1. BASIC LEASE INFORMATION
1.1. Terms
The following terms as used herein shall have the meanings provided in
this Section 1, unless otherwise specifically modified by provisions of this
Lease:
a. Landlord's Address for CITY OF SANTA CLARITA
Notice: 23920 Valencia Boulevard
Santa Clarita, CA 91355-2196
Attn: City Manager
kstriplin@santa-clarita.com
b. Tenant's Address for
Notice:
HOA.102470070.8
Board of Supervisors
Kenneth Hahn Hall of Administration
Room 383
500 West Temple Street
Los Angeles, California 90012
With a copy to:
Chief Executive Office
Real Estate Division
222 South Hill Street, 3rd Floor
Los Angeles, California 90012
Attention: Acting Senior Manager
c. Premises: A portion (approximately 7.7 acres) of
two parcels owned by the City of Santa
Clarita and currently assessed by the
County Assessor as APNs 2836-012-
905 and 2836-016-909 lying west of
Golden Valley Road, and described
more particularly in Exhibit A attached
hereto (the "Property") containing an
approximately 45,000 gross square foot
Building, an approximately 4,000 square
foot service building, a dedicated 4,000
square foot portion of the parcels
reserved for exclusive future
development by the Tenant, separate
facilities to maintain/service Tenant's
vehicles, a separate designated helipad
area, parking to accommodate
approximately 340 vehicles, and other
site improvements, all as shown on
Exhibit B attached hereto.
d. Building: The approximately 45,000 square foot.
Sheriff Station (the "Station") facility and
4,000 square foot maintenance building
located at 26201 Golden Valley Road,
Santa Clarita.
e. Initial Term: Fifteen (15) years commencing thirty
(30) days after Tenant's acceptance of
the Premises as defined in Section 3
(the "Commencement Date"), subject to
extension as provided herein. The
phrase "Term of this Lease" or "the
Term hereof' as used in this Lease, or
words of similar import, shall refer to
the initial Term of this Lease together
with any additional Extension Term for
which an option has been validly
exercised.
f. Base Rent: Tenant shall occupy and use the
Premises on a gratis basis.
g. Rentable/gross Square Approximately 7.7 acres
Feet in the Premises:
ptl
HOA.102470070.8
h. Use: The Premises together with all
appurtenances thereto, shall be used for
law enforcement activities including
detention operations and associated
general office use exclusively by the Los
Angeles County Sheriffs Department or
its contracted services.
Initial Departmental Use: Sheriff law enforcement activities as
described in the Sheriff Service
Agreement (as defined hereinafter).
Parking Spaces; Approximately, 340 exclusive parking
spaces.
k. Normal Working Hours: 24-hour full service Los Angeles County
Sheriff Station.
1.2. Exhibits to Lease:
(Executed concurrently with
this Lease and incorporated
herein by this reference):
2. PREMISES
Exhibit A- Legal Description of
Property
Exhibit B- Floor Plan of Premises
Exhibit C- Commencement Date
Memorandum and
Confirmation of Lease
Terms
Exhibit D- Replacement, Repairs
and Maintenance
Schedule (Schedule 1, 2
and 3)
Exhibit E — LASD Equipment and
County Furniture
Exhibit F — Surrounding Area Map
Landlord does hereby lease to Tenant, and Tenant does hereby lease from
Landlord, upon the terms and conditions herein set forth, the Premises described in
Section 1 and Exhibit A attached hereto.
3. TERM
3.1 The term of this Lease shall be fifteen (15) years ("Initial Term") beginning
on the Commencement Date and thereafter for so long as Tenant continues to provide
Sheriff services to Landlord pursuant to the Municipal Law Enforcement Services
Agreement between the parties dated May 20, 2014 or its successor or equivalent
agreement ("Sheriff Service Agreement"). The Commencement Date shall be thirty (30)
3
HOA.102470070.8
days after Tenant's acceptance of the Premises. The term "Tenant's acceptance of the
Premises" as used in this Lease shall mean the date upon which the Premises are
substantially Complete, Tenant has inspected the Premises, and Tenant has accepted
the Premises, in writing. The term Substantially Complete as used in this Lease shall
mean those requirements as set forth in the project manual, plans and specifications.
Notwithstanding Tenant's acceptance of the Premises:
a. Landlord shall address all warranty items during the Contractor's warranty
period; typically a duration of 1 -year from Substantial Completion or longer
depending upon Contractor/City agreements.
b. Landlord shall address and provide funding for any construction
deficiencies as a result of errors and omissions by the City's design team.
In the event that Landlord terminates the Sheriff Service Agreement or is the cause
of its termination due to any requests by the City to amend and significantly reduce the
services historically provided by the Sheriffs Department or failure to meet an agreed
upon agreement, prior to the end of the Initial Term, Landlord shall refund to Tenant the
$18 million dollar Tenant contribution towards the construction of the Premises, within
one hundred (180) days, in accordance with the parties' Memorandum of Understanding
dated May 31, 2016 (the "MOU"). Upon such termination of the Sheriff Service
Agreement by the Landlord, Tenant shall have no fewer than eighteen (18) months in
which to vacate the Premises and remove all of its personal property. At the conclusion
of the Initial Term, the Term shall be extended on a year-to-year basis for so long as the
Tenant continues to provide law enforcement services to Landlord pursuant to the Sheriff
Service Agreement or its successor or equivalent agreement (the "Extension Term").
3.2 Within thirty (30) days of determining the Commencement Date, Landlord
and Tenant shall acknowledge in writing the Commencement Date by executing the
Commencement Date Memorandum and Confirmation of Lease Terms attached as
Exhibit C.
4. RENT
The use of the Premises will be gratis during the Initial Term, any Extension Term,
or of any Holdover as described in Section 6. Consideration for this Lease shall be the
Tenant's adherence to the terms and conditions of this Lease, including Tenant providing
law enforcement services to Landlord pursuant to the Sheriff Service Agreement or its
successor or equivalent agreement.
5. USES
The Premises are to be used only for the uses set forth in Section 1 and for no
other use or purpose; however, Landlord shall not unreasonably withhold its consent to a
change of use, provided that such change of use is approved by City's bond counsel as
maybe required under Section 26 of this Lease.
4
HOA.102470070.8
If Tenant remains in possession of the Premises or any part thereof after the
expiration of the Initial or Extension Term of this Lease ("Holdover"), such occupancy
shall be a tenancy which is terminable only upon ninety (90) days written notice from
Landlord or ninety (90) days written notice from the Chief Executive Officer of Tenant.
Tenant shall have no fewer than eighteen (18) months in which to vacate the Premises
and remove all of its personal property.
7. COMPLIANCE WITH LAW
Tenant shall, at Tenant's expense, comply promptly with all applicable statutes,
ordinances, rules, regulations, orders and requirements in effect during the term hereof,
regulating the use, occupancy or improvement of the Premises by Tenant. Landlord, not
Tenant, shall, at its sole cost, at all times cause the Premises and the Building to comply
with all applicable statutes, ordinances, rules, regulations, orders and requirements in
effect during the term hereof, including without limitation, the Americans with Disabilities
Act, except to the extent such compliance is made necessary as a result of Tenant's
particular use of or alterations or improvements to the Premises.
8, DAMAGE OR DESTRUCTION
a, In the event any portion of the Premises is damaged by fire or any other
casualty, including but not limited to a natural disaster, rendering the
Premises totally or partially inaccessible or unusable ("Catastrophic
Damage"), Tenant shall promptly inform Landlord of the damage and take
steps to mitigate any additional damage to persons or property that may
arise. Promptly after receiving notice, Landlord shall secure the area to
prevent injury to persons and/or vandalism to the improvements.
Thereafter, Landlord shall promptly contact contractors to obtain bids for
repair of the damage. Upon selection, Landlord's contractor shall, within a
commercially reasonable period of time, restore the Premises to a complete
architectural unit of the same value, condition and character that existed
immediately prior to such casualty at Landlord's expense, and this Lease
shall continue in full force and effect. Tenant waives the provisions of
California Civil Code Sections 1932(2) and 1933(4) with respect to any
partial or total destruction of the Premises. During any time which the
Premises are not suitable to sustain the Tenant's operation pursuant to this
agreement and/or the Sheriffs Service Agreement, the Landlord shall
provide a suitable temporary location in order to allow the Tenant to
complete its contracted operations as set forth in the Sheriff Service
Agreement. The size, site, and features of the temporary location shall be
selected by Landlord but shall be subject to Tenant's approval, which
approval shall not be unreasonably withheld.
HOA.102470070.8
b. Notwithstanding the foregoing language, Landlord's obligations set forth in
this provision shall not apply to any cause or damage caused by the gross
negligence or willful misconduct of Tenant, or its agents, employees,
invitees or visitors. In such instance, Tenant shall be responsible for
securing and restoring the Premises and providing a temporary location for
Tenant's operation, unless such damage is Catastrophic Damage caused
by an invitee or visitor, in which Landlord's obligations under subsection a
shall apply.
9. REPAIRS AND MAINTENANCE
9.1. Landlord' Reioresenitations
Landlord represents to Tenant that on the Commencement Date:
a. The Premises including electrical, heating, ventilating, and air conditioning
("HVAC"), mechanical, plumbing, gas and fire/life safety systems in the
Building and similar building service systems shall comply with all then
current laws, codes, and ordinances, including the Americans With
Disabilities Act; and will be in reasonable Good Working Order and
Condition. "Good Working Order and Condition" means that the Premises
are in the condition that one would expect the Premises to be in, if
throughout the Lease Term Landlord (i) uses and maintains the Premises
in a commercially reasonable manner and in an accordance with the
requirements of this Lease and (ii) makes all required repairs and/or
replacements.
b. The Building and Premises will comply with all covenants, conditions,
restrictions and bond underwriter's requirement then in effect.
c. The Building and Premises will comply with all requirements for LEED Silver
certification and will be maintained in such condition during the Term hereof.
d. The Building shall have received a Certificate of Occupancy from the
applicable permitting governmental entity.
9.2. Landlord Obligations (Proprietor Costs)
The Landlord shall, at Landlord's sole cost and/or expense, repair and
maintain in good order and condition, the items set forth in Schedule 1 (collectively
referred to as "Landlord Obligations"), which Schedule 1 is attached hereto and
incorporated herein by this reference within Exhibit D. Landlord Obligations shall be
undertaken by the Landlord, at its sole expense, within thirty (30) days of the Tenant's
notification to Landlord, or within such other time period as mutually agreed upon by the
Tenant or its designee and Landlord's Chief Administrative Officer, unless said Landlord
Obligations is deemed an Emergency Repair. "Emergency Repair" shall be defined as a
0
HOA.102470070.8
repair that if left unrepaired would compromise the health, welfare, or security of the
Premises inhabitants or the public, as determined by the Tenant. An Emergency Repair
shall be commenced by Landlord as soon as the circumstances reasonably allow. In
cases deemed as an Emergency Repair and are not completed within the agreed upon
timeline, the Tenant reserves the option to effect such repairs and charge the Landlord
for all associated costs to be reimbursed within thirty (30) days. The Landlord reserves
the option of facilitating all needed repairs through the County to be reimbursed within the
normal billing process. Landlord shall provide the Tenant with the name and telephone
number of a designated contact person(s) for emergencies, for both business hours and
after hours. Landlord's failure or refusal to commence or diligently pursue to completion
any Landlord Obligations under this Section 9.2 shall be considered a Landlord Default
as specified in Section 13.
9.3. Tenant/Landlord Obligations (Shared Costs)
The Tenant shall repair and maintain in good order and condition, the items
set forth in Schedule 2 (collectively referred to as "Shared Costs"), which Schedule 2 is
attached hereto and incorporated herein by this reference within Exhibit D. Landlord
shall be responsible to reimburse Tenant for seventy-five percent (75%) of all Shared
Costs and/or expenses within thirty (30) days of being provided an invoice by Tenant.
Landlord's failure to reimburse Tenant within thirty (30) days of being provided an invoice
by Tenant shall be considered a Landlord Default (as specified in Section 13).
9.4. Tenant Obligations (Operational Costs)
The Tenant shall, at Tenant's sole cost and/or expense, repair and maintain
in good order and condition, the items set forth in Schedule 3 (collectively referred to as
"Operational Costs"), which Schedule 3 is attached hereto and incorporated herein by
this reference within Exhibit D.
9.5. Miscellaneous
a. In the event that the Landlord fails, neglects or refuses to commence or
diligently pursue to completion any Landlord Obligations within thirty
(30) days after notification by the Tenant or within such other time period
as mutually agreed upon by the Tenant or Tenant's designee and the
Landlord's Chief Administrative Officer, Tenant at its election, may
perform or cause to be performed said repair work and invoice the
Landlord for the costs and/or expenses incurred by Tenant for said
repairs.
b. The maintenance and repairs authorized by this Article 9 are intended
solely to maintain the Premises in Good Working Order and Condition
intended by the parties in a Class -A quality before and after completion
of the improvements and refurbishment contemplated by this Lease,
normal wear and tear accepted.
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c. The Tenant may authorize improvements to the Premises at no cost to
the Landlord for the benefit of the Tenant or related to the law
enforcement services in territory outside of the Santa Clarita.
d. The Landlord and its designated representatives and/or contractors
performing maintenance within secured areas of the Station will be
required to submit and pass the Sheriffs Department background check
process prior to access into secured areas.
e. Notwithstanding the foregoing, or any language to the contrary
contained herein, if Landlord is responsible for construction of the
improvements under the Lease, Tenant shall not be responsible for the
costs and/or expenses of the repair of any latent defects in such
improvements that Landlord was required to construct to the extent that
such defects existed as of the Lease Commencement Date and were of
such a nature that Tenant could not normally discover them in the
exercise of reasonable diligence in Tenant's inspection of the Premises
on or before the Lease Commencement Date.
10. SERVICES AND UTILITIES
10.1. Services
Services shall be handled according to Exhibit D, Replacement, Repairs
and Maintenance Schedule.
10.2. Utilities
Tenant agrees to pay when due all charges for all utilities, including, but not
limited to the use of the sewer, effluent treatment, when and if imposed by any
governmental authority, all water, sprinkler standby charges, electricity, gas, heating,
telephone, internet, cable, exterior power and lighting, power charges associated with
the HVAC, and other utility rents and charges accruing or payable in connection with
Tenant's use of the Premises during the Initial or Extension Term of this Lease or any
Holdover thereof, whether the same are pro -rated or measured by separate meters.
11. TAXES
Landlord shall pay promptly all real property taxes, assessments and special
assessments which may be levied or assessed against the Premises, Property, or
Building during the term of this Lease or any Extension Term or Holdover period thereof.
12. LANDLORD ACCESS
Tenant shall permit Landlord and its agents to enter the Premises upon prior
written notice for the purpose of inspecting the Premises or for any reasonable purpose.
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Landlord shall have the right at any and all times to enter the Premises in the event of an
emergency, provided that Landlord shall at all times be accompanied by a member of
Tenant's staff, with the exception of secured areas of the facility, including but not limited
to the armory and detention area. Landlord entry into the armory or detention area shall
only occur with the direct approval of the Los Angeles County Sheriff Station Captain or
his/her designee. Notwithstanding the foregoing or any language to the contrary
contained within this Lease, all City vendors and contractors shall be required to go
through the Sheriff's background check process, which requires, but is not limited to, an
interview, completion of forms/documentation, submittal of personal identification.
13. DEFAULT AND REMEDIES
13.1. Default
In addition to any other provisions for default provided hereunder, the
occurrence of the following shall constitute a material default and breach of this Lease by
either Tenant or Landlord ("Default"):
The failure by either Tenant or Landlord to pay when due any sum of
money payable to the other party hereunder where such failure
continues for a period of thirty (30) days following written notice of such
failure.
b. Failure to Perform
The failure by either Tenant or Landlord to observe or perform any of the
covenants, conditions or provisions of this Lease, where such failure
shall continue for a period of thirty (30) days after written notice from the
other party specifying in detail the nature of the default; provided,
however, if more than thirty (30) days are reasonably required for its
cure then curing party shall not be deemed to be in default if curing party
commences such cure within said 30 -day period and thereafter diligently
prosecutes such cure to completion.
13.2. No Effect on Indemnity
Nothing in this Section shall be deemed to affect either Landlord or Tenant's
right to indemnification under any indemnification clause or clauses set forth in this Lease.
13.3. Remedies
If a default is not cured after notice and the required opportunity to cure, the
non -defaulting party shall be limited to enforcement of the provisions of this Agreement
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via injunctive relief or specific performance; provided however, that monetary damages
may be sought in the case of a default under section 13.1.a.
13.4. Waiver
Nothing herein contained shall relieve Landlord or Tenant from its duty, if
any, to effect the repair, replacement, correction or maintenance required to restore any
affected services, or to perform any other obligations to the standard prescribed in this
Lease, nor shall this Section 13 be construed to obligate either Party to undertake an
obligation of the other Party. .
13.5. Emergency
Notwithstanding the foregoing cure period, Tenant may cure any Landlord
Default without notice where the failure promptly to cure such Landlord Default would, in
the reasonable opinion of Tenant, create or allow to persist an emergency condition or
materially and adversely affect Tenant's operations on the Premises.
14. ALTERATIONS AND ADDITIONS
14.1. Landlord Consent
a. Tenant shall not make any structural alterations, improvements, additions,
or utility installations in or about the Premises, including, but not limited to,
the Building (collectively, "Alterations") without first obtaining the written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. Required upgrades and/or modifications that would
impact daily Station operations shall have expedited consideration by
Landlord. Tenant shall only be required to submit for alternations approval
for structural related modifications to the Premises. Tenant shall be allowed
to make minor non-structural alterations in order to meet the operational
needs that would support the Sheriff Service Agreement or its successor or
equivalent agreement. Landlord shall provide a dedicated staff to
coordinate approval for code related alterations.
b. If Landlord fails to respond in writing within fifteen (15) business days of
such request, Landlord shall be deemed to approve the Alterations.
Additionally, if an alteration in or about the Premises, which is necessary in
order to meet the Sheriff Service Agreement, yet is visible from the exterior
of the Premises or Building and/or from Golden Valley Road, the Landlord
shall approve such alteration.
c. Landlord's approval shall be required for any development by Tenant of the
4,000 square foot portion of the Premises reserved for exclusive future
development by the Tenant. Any development shall be negotiated at the
time of request between the Tenant and the Landlord.
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d. Notwithstanding the foregoing or any language to the contrary found within
this Lease, Tenant shall install Conex boxes in or about the Premises as
required by the operational needs of the Station, with first obtaining the
written consent of the Landlord.
14.2. End of Term
Any Alterations not removed by Tenant shall become the property of
Landlord and remain upon and be surrendered with the Premises at the expiration of the
Term, except as provided in Section 20 hereof. The Landlord shall take possession of
the Premises at the expiration of the Term or Holdover without expectation of the Tenant
returning Premises back to its original condition or to any level of code compliance.
14.3 Performance of Alterations
The making of any Alterations or other modifications or changes to the
Premises or any part thereof, whether or not requiring the consent of Landlord, shall be
performed by Tenant in a good and workmanlike manner, in compliance with all
applicable statutes, laws, ordinances, rules and regulations of all governmental
authorities having jurisdiction, and at. Tenant's sole cost and expense. Tenant shall pay
when due all costs and expenses incurred in connection with any such Alterations or other
modifications or changes. Tenant shall not be required to restore Alterations to pre-
existing conditions upon termination as specified under Section 20.
15. INDEMNIFICATION
15.1. Landlord's Indemnity
The Landlord shall indemnify, defend and hold harmless the Tenant from
and against any and all liability, loss, injury or damage including (but not limited to)
demands, claims, actions, fees, costs and expenses (including attorney and expert
witness fees), arising from or connected with the Landlord's construction, repair,
maintenance and other acts and omissions arising from and/or relating to the Landlord's
ownership of the Premises.
15.2. Tenant's Indemnity
The Tenant shall indemnify, defend and hold harmless the Landlord, from
and against any and all liability, loss, injury or damage including (but not limited to)
demands, claims, actions, fees, costs and expenses (including attorney and expert
witness fees), arising from or connected with the Tenant's repair, maintenance and other
acts and omissions arising from and/or relating to the Tenant's use of the Premises.
16. INSURANCE: During the term of this Lease, the following insurance requirements
will be in effect.
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16.1. General Insurance Provisions — Requirements
Without limiting the Landlord's indemnification of Tenant or Tenant's
indemnification of Landlord and during the term of this Lease, and until all of its obligations
pursuant to this Lease have been met, Landlord and Tenant (each the "Insuring Party")
shall each provide and maintain at its own expense insurance coverage satisfying the
requirements specified below. These minimum insurance coverage terms, types and
limits (the "Required Insurance") also are in addition to and separate from any other
contractual obligation imposed upon each Insuring Party pursuant to this Lease. Landlord
and Tenant, each as the insured party of the other (and each the "Insured Party") in no
way warrant that the Required Insurance is sufficient to protect the Insured Party for
liabilities which may arise from or relate to this Lease.
a. Evidence of Coverage and Notice to Insured Party
Certificate(s) of insurance coverage (Certificate) satisfactory to each
Insured Party, and a copy of an Additional Insured endorsement confirming each Insured
Party and its Agents (defined below) has given Insured status under the Insured Party's
General Liability policy, shall be delivered to each Insured Party at the address shown
below and provided prior to the start day of this Lease.
Renewal Certificates shall be provided to each Insured Party not less than
10 days prior to each Insured Party's policy respective expiration dates. Each Insured
Party reserves the right to obtain complete, certified copies of the other Insured Party's
insurance policies at any time.
Certificates shall identify all Required Insurance coverage types and limits
specified herein, reference this Lease by name or number, and be signed by an
authorized representative of the insurer(s). The Insured Party named on the Certificate
shall match the name of the respective Insured Party identified in the Lease. Certificates
shall provide the full name of each insurer providing coverage, its NAIC (National
Association of Insurance Commissioners) identification number, its financial rating, the
amounts of any policy deductibles or self-insured retentions exceeding twenty-five
thousand ($25,000) dollars, and list any Insured Party required endorsement forms.
Neither the Insured Party's failure to obtain, nor the Insured Party's receipt
of, or failure to object to a non -complying insurance certificate or endorsement, or any
other insurance documentation or information provided by the other Insured Party, its
insurance broker(s) and/or insurer(s), shall be construed as a waiver of any of the
Required Insurance provisions.
Certificates and copies of any required endorsements, notices of
cancellation shall be delivered to:
[County of Los Angeles]
HOA.102470070.8
12
[Tenant Department Name]
[Tenant Department Address]
[Attention: Name of Department Contact Person]
[City of Santa Clarita]
Administrative Services, Clerk and Contract Services Division
23920 Valencia Blvd, Suite 120
Attn: Joe Oerum, Clerk and Contract Services Manager
Each Insured Party also shall promptly notify the other Insured Party of any
third -party claim or suit filed against the notifying Insured Party which arises from or
relates to this Lease, and could result in the filing of a claim or lawsuit against either
Insured Party.
b, Additional Insured Status and Scope of Coverage
Each Insured Party, including, its Special Districts, Elected Officials,
Officers, Agents, Employees and Volunteers (collectively Insured Party and its Agents),
shall be provided additional insured status under each Insured Party's General Liability
policy with respect to liability arising from or connected with the Insured Party's acts,
errors, and omissions arising from and/or relating to the Insured Party's operations on
and/or its ownership of the premises. Each Insured Party's additional insured status shall
apply with respect to liability and defense of suits arising out of the other Insured Party's
acts or omissions, whether such liability is attributable to either Insured Party. The full
policy limits and scope of protection also shall apply to the other Insured Party as an
additional insured, even if they exceed the Insured Party's minimum Required Insurance
specifications herein. Use of an automatic additional insured endorsement form is
acceptable providing it satisfies the Required Insurance provisions herein. The Tenani
acknowledges that in connection with the issuance of bonds, the Santa Clarita Public
Financing Authority and the Trustee for the bonds will be provided additional insured
status.
c. Cancellation of or Changes in Insurance
Insured Party shall provide the other Insured Party with, or Insured Party's
insurance policies shall contain a provision that the other Insured Party shall receive,
written notice of cancellation or any change in Required Insurance, including insurer,
limits of coverage, term, of coverage or policy period. The written notice shall be provided
to the respective Insured Party at feast ten (10) days in advance of cancellation for non-
payment of premium, and thirty (0) days in advance for any other cancellation or policy
change, Failure to provide written notice of cancellation or any change in Required
Insurance may constitute a material breach of the Lease, in the sole discretion of the non -
breaching Insured Party, upon which the non -breaching Insured Party may suspend or
terminate this Lease.
d. Failure to Maintain Insurance
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Insured Party's failure to maintain or to provide acceptable evidence that it
maintains the Required Insurance shall constitute a material breach of the Lease by said
Insured Party failure.
e. Insurer Financial Ratings
Insurance is to be provided by an insurance company authorized to do
business in California and acceptable to the Insured Party, with an A.M. Best rating of not
less than A:VII, unless otherwise approved in writing by both Insured Party.
f. Deductibles and Self -Insured Retentions(SIRs)
Insured Party's policies shall not obligate the other Insured Party to pay any
portion of any Insured Party deductible of SIR. The Insured Party retains the right to
require the other Insured Party to reduce or eliminate policy deductibles and SIRs as
respects the Insured Party, or to provide a bond guaranteeing Insured Party's payment of
all deductibles and SIRs„ including all related claims investigation, administration and
defense expenses. Such bond shall be executed by a corporate surety licensed to
transact business in the State of California.
g. Claims Made Coverage
If any part of the Required Insurance is written on claims made basis, any
policy retroactive date shall precede the start date of this Lease. Each Insured Party
understands and agrees it shall maintain such coverage for a period of not less than three
(3) years following Lease expiration, termination or cancellation.
h. Application of Excess Liability Coverage
Each Insured Party may use a combination of primary and excess
insurance policies which provide coverage as broad as ("follow form" over) the
underlying primary policies, to satisfy the Required Insurance provisions.
i. Separation of Insureds
All liability policies shall provide cross -liability coverage as would be
afforded by the standard ISO (Insurance Services Office, Inc.) separation of insureds
provision with no insured versus insured exclusions or limitations.
j. Insured Party Review and Approval of Insurance Requirements
The Insured Party reserves the right to review and adjust the Required
Insurance provisions, conditioned upon Insured Party's determination of changes in risk
exposures.
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16.2. Insurance Coverage Tvpes And Limits
Requirements
During the term of this Lease, each Insuring Party shall maintain a program
of insurance coverage as described below. The Insuring Party, at its sole option, may
satisfy all or any part of this insurance requirement through use of a program of self-
insurance. Certificate evidencing coverage or letter evidencing self -funding will be
provided to the other Insured Party after execution of this Lease at other Insured Party's
request.
a. Commercial General Liability Insurance providing scope of coverage
equivalent to ISO policy form CG 00 01, naming Insured Party and its
Agents as an additional insured, with limits of not less than:
General Aggregate: $ 10 million
Products/Completed Operations Aggregate: $ 10 million
Personal and Advertising Injury: $ 5 million
Each Occurrence: $ 5 million
b, Commercial Property Insurance. Such insurance shall: Provide
coverage for Insured Party's property and any improvements and
betterments; this coverage shall be at least as broad as that provided
by the Causes -of -Loss Special Form (ISO form CP 10 30), excluding
earthquake and including flood and ordinance or law coverage.
Be written for the full replacement cost of the property, with a
deductible no greater than $250,000 or 5% of the property value,
whichever is less. Insurance proceeds shall be payable to the Insured
Party and Insured Party as their interests may appear.
c. Landlord Requirements (Construction Period): During the period of
construction of the Premises, Landlord shall provide and maintain the
following programs of insurance coverage:
Builder's Risk Course of Construction Insurance. Such coverage
shall insure against damage from perils covered by the Causes -of -
Loss Special Form (ISO form CP 10 30). This insurance shall be
endorsed to include earthquake, flood, ordinance or law coverage,
coverage for temporary offsite storage, debris removal, pollutant
cleanup and removal, testing, preservation of property, excavation
costs, landscaping, shrubs and plants, and full collapse coverage
during construction, without restricting collapse coverage to
specified perils. Such insurance shall be extended to include boiler
& machinery coverage for air conditioning, heating and other
equipment during testing. This insurance shall be written on a
completed value basis and cover the entire value of the
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HOA.102470070.8
construction project, including Landlord furnished materials and
equipment, against loss or damage until completion and
acceptance by the Tenant and the Landlord if required. Such
coverage shall provide a per occurrence deductible of no greater
than ten percent (10%) of the value insured for earthquake, and five
percent (5%) of the value insured for all other perils.
General Liability Insurance. Such coverage shall be written on ISO
policy form CG 00 01 or its equivalent, naming Landlord as an
additional insured, with limits of not less than
$ 10 million.
General Aggregate:
Products/Completed Operations Aggregate:
Personal and Advertising Injury:
Each Occurrence:
The Products/Completed Operations coverage shall continue to be
maintained in the amount indicated above for at least two (2) years
from the date the Project is completed and accepted by the Tenant
and the Landlord if required.
Automobile Liability. Such coverage shall be written on ISO policy
form CA 00 01 or its equivalent with limits of not less than $ 5
million for bodily injury and property damage, in combined or
equivalent split limits, for each single accident. Such insurance
shall cover liability arising out of Tenant's or Tenant's contractor
use of autos pursuant to this Lease, including owned, leased, hired,
and/or non -owned autos, as each may be applicable.
Professional Liability. Such insurance shall cover liability arising
from any error, omission, negligent, or wrongful act of the Tenant's
contractor and/or licensed professional (i.e. architects, engineers„
surveyors, etc.) with limits of not less than $ 1 million per claim and
$ 2 million aggregate. The coverage shall also provide an extended
two-year reporting period commencing upon expiration, termination
or cancellation of the construction project.
• Workers Compensation and Employers' Liability Insurance or
qualified self-insurance satisfying statutory requirements. Such
coverage shall provide Employers' Liability coverage with limits of
not less than $1 million per accident. Such policy shall be endorsed
to waive subrogation against the Landlord for injury to the Tenant's
or Tenant's contractor employees. If Tenant or Tenant's contractor
will provide leased employees, or, is an employee leasing or
temporary staffing firm or a professional employer organization
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(PEO), coverage also shall include an Alternate Employer
Endorsement (providing scope of coverage equivalent to ISO policy
form WC 00 03 01 A) naming the Landlord as the Alternate
Employer, and the endorsement form shall be modified to provide
that Landlord will receive not less than thirty (30) days advance
written notice of cancellation of this coverage provision.
Asbestos Liability or Contractors Pollution Liability Insurance is
needed if construction requires remediation of asbestos or
pollutants. Such insurance shall cover liability for personal injury
and property damage arising from the release, discharge, escape,
dispersal or emission of asbestos, whether gradual or sudden, and
include coverage for the costs and expenses associated with
voluntary clean-up, testing, monitoring and treatment of asbestos in
compliance with governmental mandate or requests. If the asbestos
or pollutant will be removed from the construction site, asbestos or
pollution liability is also required under the Tenant's or Tenant's
contractor Automobile Liability Insurance. Tenant or Tenant's
contractor shall maintain limits of not less than $ 1 million for this
project.
17. ENVIRONMENTAL MATTERS
17.1. Hazardous Materials
Tenant shall not cause nor permit, nor allow any of Tenant's employees
agents, customers, visitors, invitees, licensees, servants or contractors, to cause or
permit, any Hazardous Materials to be brought upon, stored, manufactured, generated,
blended, handled, recycled, treated, disposed of or used on, under or about the Premises,
or any part thereof, including, without limitation, the Building or parking areas, except for:
(a) routine office and janitorial supplies in usual and customary quantities stored, used
and disposed of in accordance with all applicable Environmental Laws, and (b) small
quantities of controlled substances that may be logged into evidence storage as part of
the ordinary law enforcement operations of Tenant. As used herein, "Hazardous
Materials" means any chemical, substance, material, controlled substance, object,
condition, waste, living organism or combination thereof, whether solid, semi solid, liquid
or gaseous, which is or may be hazardous to human health or safety or to the
environment due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity,
carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other harmful or potentially
harmful properties or effects, including, without limitation, molds, toxic levels of bacteria,
tobacco smoke within the Premises, petroleum and petroleum products, asbestos, radon,
polychlorinated biphenyls (PCBs), refrigerants (including those substances defined in the
Environmental Protection Agency's "Refrigerant Recycling Rule," as amended from time
to time) and all of those chemicals, substances, materials, controlled substances, objects,
conditions, wastes, living organisms or combinations thereof which are now or become in
the future listed, defined or regulated in any manner by any Environmental Law based
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HOA.102470070.8
upon, directly or indirectly, such properties or effects. As used herein, "Environmental
Laws means any and all federal, state or local environmental, health and/or safety-
related laws, regulations, standards, decisions of courts, ordinances, rules, codes, orders,
decrees, directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable to
Tenant on the Premises or the Building.
17.2. Landlord Indemnity
Landlord shall indemnify, protect, defend (by counsel acceptable to Tenant)
and hold harmless Tenant from and against any and all claims, judgments, causes of
action, damage, penalties, fine, taxes, costs, liabilities, losses and expenses arising at
any time during or after the Term as a result (directly or indirectly) of or in connection with
the presence of Hazardous Materials on, under or about the Premises or Building or
other violation of laws relating to Hazardous Materials other than caused by Tenant. This
indemnity shall include, without limitation, the cost of any required or necessary repair,
cleanup or detoxification, and the preparation and implementation of any closure,
monitoring or other required plans, as such action is required by local or state laws or any
governmental agency. Landlord shall promptly deliver to Tenant a copy of any notice
received from any governmental agency during the Term of this Lease concerning the
presence of Hazardous Materials in the Building or the Premises. Landlord's obligations
pursuant to the foregoing indemnity, shall survive the expiration or termination of this
Lease. A default by Landlord under this Section shall constitute a material default under
this Lease.
17.3 Tenant Indemnity
Tenant shall indemnify, protect, defend (by counsel acceptable to Landlord)
and hold harmless Landlord from and against any and all claims, judgments, causes of
action, damage, penalties, fine, taxes, costs, liabilities, losses and expenses arising at
any time during or after the Term as a result (directly or indirectly) of or in connection with
the presence of Hazardous Materials on, under or about the Premises or Building or
other violation of laws relating to Hazardous Materials caused by Tenant. This indemnity
shall include, without limitation, the cost of any required or necessary repair, cleanup or
detoxification, and the preparation and implementation of any closure, monitoring or other
required plans, as such action is required by local or state laws or any governmental
agency. Tenant shall promptly deliver to Landlord a copy of any notice received from any
governmental agency during the Term of this Lease concerning the presence of
Hazardous Materials in the Building or the Premises. Tenant's obligations pursuant to
the foregoing indemnity shall survive the expiration or termination of this Lease. A default
by Tenant under this Section shall constitute a material default under this Lease.
18. LIENS
Tenant shall keep its interest in this Lease and the Premises free from any liens
arising out of any work performed or materials ordered or obligations incurred by Tenant
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HOA.102470070„8
and Tenant hereby indemnifies and holds Landlord harmless from any liability or loss from
any such liens. Landlord shall keep its interest in this Lease and the Premises free from
any liens from arising out of any work performed or materials ordered or obligations
incurred by Landlord and Landlord hereby indemnifies and holds Tenant harmless from
any liability or loss from any such lien.
19. SURRENDER OF POSSESSION
Subject to casualty, at the expiration of the Term of this Lease, whether by lapse
of time or otherwise, Tenant shall promptly and peacefully surrender the Premises to
Landlord in a "broom -clean" condition. Tenant may (but shall not be required to) remove,
at its own expense, Alterations, all trade fixtures, equipment and all other personal
property placed or installed in or upon the Premises by Tenant, or under its authority
(including any modular furniture). All new furniture, communications and computer
equipment, and office and other equipment brought onto the Premises by Tenant shall
remain the property of Tenant during the term hereof and, if removed by Tenant, at and
after expiration thereof, including but not limited to all proprietary equipment, County
rented equipment, antennas and other equipment on the communications tower, dispatch
equipment, computers, MDR equipment, IDF equipment, independent UPS systems,
locks and/or any equipment proprietary to the LA County Sheriff's Department. For
reference, an itemized list of all such furniture and equipment existing on the Premises
as of the Commencement Date is attached hereto as Exhibit E, but such list does not
preclude Tenant from bringing additional furniture and equipment on to the Premises
during the Term hereof and Tenant shall retain ownership of all such furniture and
equipment in accordance with this Section 20. Furniture, fixtures and equipment ("FF&E")
provided by the Landlord shall remain the property of the Landlord, provided, however,
that any damaged or broken FF&E shall be repaired or replaced by the Tenant at Tenant's
expense, unless such repair or replacement is due to Catastrophic Damage as described
in Section 8. Such repaired or replaced FF&E shall be and remain the property of the
Landlord." Landlord shall provide an inventory of all such FF&E to Tenant prior to
Tenant's occupancy.
20. SIGNAGE
Landlord shall install signage to conform to any and all applicable laws and
ordinances. Tenant shall be permitted to install, as needed, at the Premises reasonably
appropriate signs that conform to law enforcement operations.
21. QUIET ENJOYMENT
So long as Tenant is not in material default hereunder, Tenant shall have the right
to the quiet and peaceful enjoyment and possession of the Premises during the Term of
this Lease, subject to the terms and conditions of this Lease.
22. GENERAL
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22.1. Headings
Titles to Sections of this Lease are not a part of this Lease and shall have
no effect upon the construction or interpretation of any part hereof.
22.2. Assignment and Subletting: Successors and Assigns
Tenant shall not have the right to assign this Lease or sublet the Premises,
or any part of either thereof. Subject to the preceding sentence, all of the covenants,
agreements, terms and conditions contained in this Lease shall inure to and be binding
upon the Landlord and Tenant and their respective successors and assigns.
22.3. Entire Agreement
This Lease, together with the MOU and the Sheriff Service Agreement is
the final and complete expression of Landlord and Tenant relating in any manner to the
leasing, use and occupancy of the Premises, to Tenant's use of the Building and other
matters set forth in this Lease. No prior agreements or understanding pertaining to the
same shall be valid or of any force or effect and the covenants and agreements of this
Lease shall not be altered, modified or added to except in writing signed by both Landlord
and Tenant.
22.4. Severability
Any provision of this Lease which shall prove to be invalid, void or illegal
shall in no way affect, impair or invalidate any other provision hereof and the remaining
provisions hereof shall nevertheless remain in full force and effect.
22.5. Notices
All notices and communications to any party hereunder shall be in writing
and shall be deemed properly given if delivered personally, sent by registered or certified
mail, postage prepaid, or by a recognized overnight or next business commercial
messenger providing proof of delivery, to Landlord's Address for Notice and Tenant's
Address for Notice as set forth in Section 1. Any notice so given shall be deemed to have
been given as of the date of delivery (whether accepted or refused) established by U.S.
Post Office return receipt or the overnight carrier's proof of delivery, as the case may be.
Any such notice not so given shall be deemed given upon receipt of the same by the party
to whom the same is to be given.
22.6. Governing Law and Forum
This Lease shall be governed by and construed in accordance with the
internal laws of the State of California. Any litigation with respect to this Lease shall be
conducted in the County of Los Angeles, State of California.
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HOA.102470070.8
22.7. Waivers
No waiver by Landlord or Tenant of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Landlord or Tenant
of the same or any other provision. Landlord's or Tenant's consent to or approval of any
act shall not be deemed to render unnecessary the obtaining of Landlord's or Tenant's
consent to or approval of any subsequent act by Landlord or Tenant.
22.8. Time of Essence
Time is of the essence for the performance of all of the obligations specified
hereunder.
22.9. Consent
Except as otherwise stated herein, whenever any consent is required by
Landlord or Tenant hereunder, such consent shall not be unreasonably withheld,
conditioned or delayed and, unless otherwise specifically provided herein, shall be
deemed granted if not refused within ten (10) days after written request is made therefore,
together with all necessary information.
23. AUTHORITY
Only the Board of Supervisors has the authority, by formally authorizing, approving
and/or executing this Lease, to bind the County to the terms included herein. Each
individual executing this Lease on behalf of Tenant represents and warrants that he or
she is duly authorized to execute and deliver this Lease on behalf of Tenant, and that this
Lease is binding upon Tenant in accordance with its terms. Landlord understands that
no material terms of this Lease may be altered or deleted, nor may any new material
terms be added to this Lease, without the express written approval of the Board of
Supervisors, either through an amendment to the Lease or by other formal Board action.
No County officer, employee, agent or independent contractor has any authority to alter,
add or delete the material terms of this Lease and Landlord may not rely upon any
representations to the contrary. This limitation of authority applies to all material terms of
the Lease including, without limitation, any monetary ceiling established for Tenant
Improvements or other project costs of Landlord which are subject to reimbursement by
County. County shall not reimburse Landlord for any expenses which exceed this ceiling.
Notwithstanding the foregoing, the Chief Executive Officer of the County or its delegate
(the "Chief Executive Officer") may take any administrative act on behalf of Tenant
hereunder which does not have the effect of increasing Base Rent or other financial
obligations of Tenant under this Lease, including without limitation, granting any
approvals, terminating this Lease in the manner provided herein by an Early Termination
Notice or otherwise, signing estoppel ceftificates, signing the Commencement Date
Memorandum and Confirmation of Lease Terms or subordinating this Lease. Each
individual executing this Lease on behalf of Landlord represents and warrants that he or
21
HOA,102470070.8
she is duly authorized to execute and deliver this Lease on behalf of Landlord, and that
this Lease is binding upon Landlord in accordance with its terms.
Landlord acknowledges that it is aware of the following provisions:
It is improper for any County officer employee or agent to solicit
consideration in any form from a Landlord with the implication, suggestion or statement
that the Landlord's provision of the consideration may secure more favorable treatment
for the Landlord in the award of the Lease or that Landlord's failure to provide such
consideration may negatively affect the County's consideration of the Landlord's offer to
lease. A Landlord shall not offer or give, either directly or through an intermediary,
consideration in any form to a County officer, employee or agent for the purpose of
securing favorable treatment with respect to the award of the Lease.
Landlord shall immediately report any attempt by a County officer,
employee or agent to solicit such improper consideration. The report shall be made either
to the County Manager charged with the supervision of the employee or to the County
Auditor -Controller's Employee Fraud Hotline at (213) 974-0914 or (800) 544-6861.
Failure to report such solicitation may result in the termination of the Lease.
25. TAX-EXEMPT BONDS
Tenant acknowledges that tax-exempt bonds will be utilized in financing a portion
of the Premises, and this Lease is a sublease and is subject and subordinate in all
respects to all rights, interests and other provisions of the ground lease ("Site Lease")
between the Landlord and the Santa Clarita Public Financing Authority (the "Authority")
and the lease of the Premises ("Financing Lease") between the Authority and the
Landlord, as such may be amended, supplemented or modified. Tenant agrees that it
will cooperate with the Landlord in providing documentation, reports or other data
reasonably required and requested by Landlord in meeting reporting requirements of the
Landlord or Authority under California or federal law. Tenant shall provide Landlord
copies of any third party contracts relating to the Premises and shall cooperate with
Landlord to ensure that such third party contracts are deemed qualified management
contracts under federal law where necessary. Tenant acknowledges all or a portion of
the Premises may be utilized for future Authority or Landlord financings as permitted
under the Financing Lease (a "Future Financing Lease") and this Lease shall also be
subordinate and subject to the provisions of any Future Financing Lease. Tenant agrees
to reasonably cooperate with the Landlord and, in that regard, to sign any and all
documents which may be reasonably necessary, helpful, or appropriate to carry out the
purposes and intent of such future Authority or Landlord financings, including, but not
limited to, releases or additional agreements. Landlord shall not transfer, assign,
sublease, encumber, hypothecate or in any way convey an interest of the Tenant in the
Premises without the consent of the Landlord.
22
HOA.102470070.8
[Signature Page Immediately Follows]
23
HOA.102470070.8
IN WITNESS WHEREOF this Lease has been executed the day and year first
above set forth.
LANDLORD:
TENANT,
ATTEST:
DEAN C. LOGAN
Registrar-Recorder/County Clerk
............................
Deputy
APPROVED AS TO FORM
MARY C. WICKHAM
County Counsel
By:
Deputy
HOA.102470070.8
CITY OF SANTA
CLARITA
By:
Name:
Its:
COUNTY OF LOS ANGELES,
a body corporate and politic
SACHI A. HAMAI
Chief Executive Officer
In
24
David P. Howard
Assistant Chief Executive Officer
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
HOA.102470070.5 EXHIBIT A
Legal Description of Premises
EXHIBIT B
FLOOR PLANS OF THE PREMISES
HOA.102470070.5 HOA.102470070.8EXH I BIT B
Floor Plans of the Premises
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
AND CONFIRMATION OF LEASE TERMS
Reference is made to that certain lease ("Lease") dated 1 20._,
between County of Los Angeles, a body politic and corporate ("Tenant"), and
, a ("Landlord"), whereby Landlord leased to
Tenant and Tenant leased from Landlord certain premises located at
("Premises"),
Landlord and Tenant hereby acknowledge as follows:.
1) Landlord delivered possession of the Premises to Tenant in a Substantially
Complete condition on ("Possession Date").
2) Tenant has accepted possession of the Premises and now occupies the
same;
3) The Lease commenced on
Date").
("Commencement
4) The Premises contain rentable/gross square feet of space; and
IN WITNESS WHEREOF, this memorandum is executed this - day of
120
Tenant: Landlord:
COUNTY OF LOS ANGELES CITY OF SANTA
a body corporate and politic CLARITA
By:
Name
Its By:
Name
Its
HOA.102470070.5 HOA„102470070.8EXHI BIT C
COMMENCEMENT DATE MEMORANDUM
AND CONFIRMATION OF LEASE TERMS
EXHIBIT D
REPLACEMENT, REPAIRS AND MAINTENANCE
(Schedule 1, 2, and 3)
HOA.102470070,8EXH I BIT DHOA.102470070.5
SANTA CLARITA STATION EQUIPMENT AND FURNITURE PROPERTY
(Exhibit E)
The following
is, but not limited
to, the list of LASD Equipment to
be returned to the County should there be a
termination
of the lease.
Equipment to be returned includes the
following and any additional equipment and
appurtenances purchased by
the County. Any furniture purchased by
the County for Station personnel, post County
Acceptance shall be returned to the County should it be requested.
1
CFMB
Dispatch
Dispatch Radio and Antenna Installation (including DCS,
console, and common equip)
2
CFMB
Dispatch
Dispatch Consoles
3
CFMB
Dispatch
DCS Radio
4
CFMB
Dispatch
Communications Microwave
5
CFMB
Dispatch
Vesta 911
6
CFMB
Dispatch
CAD
7
CFMB
Dispatch
GST Mapper
= SEEM
MEMM
MEN=
8
DSB
MCR
Router ISR445114431
9
DSB
MCR
Network Switch C9410R-96U-BNDL-A
10
DSB
MCR
UPS APC 5000
11
DSB
MCR
Analog Voice Gateway for 911 VG320
12
DSB
IDF
Network Switch C9407R-96U-BNDL-A
13
DSB
IDF
UPS APC 5000
14
DSB
Desk
VoIP Phones
15
DSB
Outside Parking Lot
Wireless AP AIR-AP3802E-B-K9
16
DSB
Station
Wireless AP AIR-AP4800-B-K9
17
DSB
Conference Room
Spark-Board70-1<9
18
DSB
Outside Parking_ Lot
C9300-48U-A and IE-4010�S24P
19
DSB
Outside Parking Lot
UPS APC 1500
20
DSB
MCR
CCN Server I Storage
21
SCVS
Office and Conference
Computer workstation system, monitor, keyboard, mouse,
DSB baseline
22
SCVS
Conference Rooms
Mobile stand for computers
25
SCVS
Attorney Conference
Video Visitation unit
26
SCVS
Public Lobby
Sorts computer station
PRELIMINARY Y OF"F"ICIAL STATEMENT I)ATED MAY 2019
NEW ISSUE - FULL BOOK ENTRY RATING: S&P:
(See "RATING" herein.)
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 Bonds
is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986from the gross income of the owners thereoffor federal
income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. It is also the opinion
ofBond Counsel that under existing law interest on the Bonds is exemptfrom personal income taxes of the State of California. See
"TAXMATIERS " herein.
The Santa Clarita Public Financing Authority (the "Authority") is issuing its Lease Revenue Bonds (Sheriff Station
Project), Series 2019 (the "Bonds"), pursuant to an Indenture, dated as of June 1, 2019, by and between the Authority and The
Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), to provide funds to (i) finance a portion of the costs
of construction and improvement of a new sheriff station and related public safety facilities (the "Project") to be located at 26201
Golden Valley Road within the City of Santa Clarita (the "City"), (ii) pay capitalized interest on the Bonds through and including
June 1, 2021, and (iii) pay the costs of issuing the Bonds. See "PLAN OF FINANCE" herein. The Bonds are being issued as fully
registered bonds and, when executed and delivered, will be registered in the name of Cede & Co., as nominee of The Depository
Trust Company, New York, New York ("DTC). The Bonds will be issued in denominations of $5,000 or any integral multiple
thereof. DTC will act as securities depository of the Bonds. Individual purchases of Bonds will be made in book -entry form only.
Payments of principal of and interest on the Bonds are to be made to purchasers by DTC through DTC Participants. Purchasers
will not receive physical delivery of the Bonds purchased by them. See APPENDIX F — "BOOK -ENTRY SYSTEM." Interest on
the Bonds is payable on June 1 and December 1 of each year, commencing December 1, 2019.
The Bonds are subject to optional, mandatory and extraordinary redemption prior to their stated maturities, as
described herein. See "DESCRIPTION OF THE BONDS — Redemption" herein.
The Bonds are payable from and secured by Revenues pledged under the Indenture. "Revenues" means (i) all Base
Rental Payments payable by the City pursuant to the Lease (including prepayments), (ii) any proceeds of Bonds deposited with the
Trustee and all moneys on deposit in the funds and accounts (other than the Rebate Fund) established under the Indenture, (iii)
investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards
received by or payable to the Trustee relating to the Base Rental Payments. Pursuant to the Lease, the City will lease certain real
property described herein (the "Site") and the Project (collectively, the "Leased Property") from the Authority. The City is required
under the Lease to make Base Rental Payments in each year inconsideration for the use of the Leased Property from any source of
legally available funds, in an amount sufficient to pay the annual principal of and interest on the Bonds. The City's obligation to
make Base Rental Payments is subject to abatement in the event of substantial interference with the use and possession of
all or a part of the Leased Property. See "RISK FACTORS — Abatement" herein. The City has covenanted in the Lease to
take such action as may be necessary to include and maintain all Base Rental Payments in its annual budget and to make the
necessary appropriations therefor, subject to such abatement.
The Bonds are special obligations of the Authority and, as and to the extent set forth in the Indenture, are payable
solely from and secured by a first lien on and pledge of the Revenues as provided in the Indenture. All of the Bonds are
equally secured by a pledge of, and charge and lien upon, all of the Revenues (other than deposits to the Rebate Fund
created by the Indenture), and the Revenues (other than deposits to the Rebate Fund created by the Indenture) constitute
a trust fund for the security and payment of the principal of and interest on the Bonds. The full faith and credit of the
Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are
not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or
any of its income or receipts, except the Revenues and such other moneys and securities as provided in the Indenture.
This cover page contains certain information for general reference only. It is not intended to be a summary of the
security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to the
making of an informed investment decision. Capitalized terms used and not otherwise defined herein shall have the
meanings given in the Indenture or the Lease (each as hereinafter defined).
The Bonds are offered by competitive sale when, as and if issued and accepted by the Underwriter, subject to the
approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the Authority. Certain legal
matters will be passed on for the Authority by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel and
for the Authority and the City by Burke, Williams and Sorensen, LLP, as City Attorney. It is anticipated that the Bonds will be
available for delivery through the book -entry facilities ofDTC on or about June 2019.
Dated: June ,2019
Preliminary, subject to change.
MATURITY SCHEDULE
$[principal amount]`
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
(Base CUSIPI 801687)
Maturity Date Principal Interest
(June 1) Amount Rate Yield CUSIPt
% Term Bonds due June 1, 20 , Priced to Yield % CUSIPT:
Preliminary, subject to change.
CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein are provided by CUSIP Global
Services, managed by S&P Capital IQ on behalf of the American Bankers Association. CUSIP numbers have been assigned by an
independent company not affiliated with the Authority, the Underwriter, the Municipal Advisor or the City and are included solely
for the convenience of the holders of the Bonds. None of the Authority, the Underwriter, the Municipal Advisor or the City is
responsible for the selection or use of these CUSIP numbers and no representation is made as to their correctness on the Bonds or
as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the
Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as
a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to
all or a portion of the Bonds.
SANTA CLARITA PUBLIC FINANCING AUTHORITY
CITY COUNCIL/BOARD OF DIRECTORS
Marsha A. McLean, Mayor/Chairperson
Cameron Smyth, Mayor Pro Tem/Vice-Chairperson
Robert C. Kellar, Councilmember/Board Member
William Miranda, Councilmember/Board Member
Laurene F. Weste, Councilmember/Board Member
CITY OFFICIALS
Kenneth W. Striplin, Ed.D., City Manager/Executive Director
Frank Oviedo, Assistant City Manager
Darren Hernandez, Deputy City Manager
Carmen Magana, Director ofAdministrative Services/Treasurer
Mary Cusick, City Clerk/Secretary
Joseph M. Montes, City Attorney/Authority Counsel
SPECIAL SERVICES
Municipal Advisor
Columbia Capital Management, LLC
Glendale, California
Bond Counsel 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
,A 91219 "KI a 1121 WO 1110 FEN 1 M12KI 1.1110 W 1 1. 1 LMI 13 to F-1 00 W-1 0 90 191201
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 result', "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 Site Lease, the Lease, the Assignment 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.
Website. 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
Page
INTRODUCTION..................................................................................................................................1
Purposeof the Bonds.................................................................................................................1
Securityfor the Bonds................................................................................................................ l
TheCity of Santa Clarita............................................................................................................2
LeasedProperty......................................................................................................................... 3
No Debt Service Reserve...........................................................................................................3
Existing General Fund Debt and Additional Bonds..................................................................... 3
ContinuingDisclosure................................................................................................................3
DESCRIPTION OF THE BONDS..........................................................................................................4
Redemption...............................................................................................................................4
Selection of Bonds for Redemption............................................................................................ 5
Noticeof Redemption................................................................................................................ 5
Partial Redemption of Bonds......................................................................................................6
Effectof Redemption................................................................................................................. 6
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.........................................................6
General...................................................................................................................................... 6
LimitedObligation.....................................................................................................................7
No Debt Service Reserve...........................................................................................................7
CapitalizedInterest.................................................................................................................... 7
Abatement of Base Rental Payments.......................................................................................... 7
Insurance Coverages..................................................................................................................8
AdditionalBonds....................................................................................................................... 8
Existing General Fund Indebtedness...........................................................................................9
Maintenance, Utilities, Taxes and Assessments........................................................................10
Substitution and Release of Property........................................................................................10
PLAN OF FINANCE...........................................................................................................................12
General....................................................................................................................................12
ProjectCosts............................................................................................................................12
Diagramof Site........................................................................................................................15
TheLeased Property................................................................................................................16
Future Sublease with County and Memorandum of Understanding...........................................16
ESTIMATED SOURCES AND USES OF FUNDS..............................................................................17
DEBT SERVICE REQUIREMENTS...................................................................................................18
THEAUTHORITY..............................................................................................................................19
THECITY...........................................................................................................................................19
General....................................................................................................................................19
Budgetary Process and Administration.....................................................................................19
GeneralFund........................................................................................................................... 20
Budgeted Revenues and Expenditures......................................................................................23
Management Discussion of Financial Performance...................................................................25
Capital Improvement Program.................................................................................................25
AppropriationsLimit...............................................................................................................25
FinancialStatements................................................................................................................25
FiscalPolicies.......................................................................................................................... 26
TABLE OF CONTENTS
(continued)
Page
Taxable Property and Assessed Valuation................................................................................26
LargestTaxpayers....................................................................................................................29
State Legislative Shift of Property Tax Allocation....................................................................29
OtherLocal Taxes....................................................................................................................29
Other Revenue Sources............................................................................................................ 31
Employee Relations and Collective Bargaining........................................................................ 31
RiskManagement.................................................................................................................... 31
City Investment Policy and Portfolio........................................................................................32
Outstanding Indebtedness of the City....................................................................................... 32
Directand Overlapping Debt....................................................................................................33
Employee Retirement Plans.....................................................................................................35
Post -Retirement Medical Benefits(OPEB)...............................................................................42
Deferred Compensation Plan/Defined Contribution Plan..........................................................43
Redevelopment Agencies.........................................................................................................44
STATE OF CALIFORNIA BUDGET INFORMATION.......................................................................44
RISKFACTORS..................................................................................................................................46
Substitutionof Property...........................................................................................................46
Base Rental Payments Are Not Debt; Bonds are Limited Obligations ....................................... 46
Abatement...............................................................................................................................47
City Pension and OPEB Obligations........................................................................................47
Riskof Uninsured Loss............................................................................................................47
Self-Insurance.......................................................................................................................... 47
EminentDomain......................................................................................................................48
Bankruptcy..............................................................................................................................48
No Liability of Authority to the Owners................................................................................... 49
No Limitation on Incurring Additional Obligations..................................................................49
SeismicFactors........................................................................................................................49
Risk of Structural and Wildland Fire........................................................................................ 50
Riskof Floods.......................................................................................................................... 51
Hazardous Substances..............................................................................................................51
ClimateChange....................................................................................................................... 51
Risks Related to Taxation in California.................................................................................... 52
FutureInitiatives......................................................................................................................55
Limitations on Remedies.......................................................................................................... 55
Remedieson Default................................................................................................................56
EarlyRedemption Risk............................................................................................................ 56
InvestmentRisk....................................................................................................................... 56
No Debt Service Reserve.........................................................................................................56
Lossof Tax Exemption............................................................................................................ 56
IRS Audit of Tax -Exempt Bonds.............................................................................................. 57
SecondaryMary Risk............................................................................................................... 57
OtherFactors........................................................................................................................... 57
RATING.............................................................................................................................................. 57
UNDERWRITING............................................................................................................................... 58
CONTINUING DISCLOSURE............................................................................................................ 58
TAXMATTERS.................................................................................................................................. 60
TABLE OF CONTENTS
(continued)
Page
TaxExemption........................................................................................................................60
Tax Accounting Treatment of Bond Premium and Original Issue Discount on Bonds ...............60
California Personal Income Tax............................................................................................... 61
Other Tax Consequences..........................................................................................................61
LITIGATION....................................................................................................................................... 62
LEGALOPINION............................................................................................................................... 62
MUNICIPAL ADVISOR.....................................................................................................................62
FINANCIAL STATEMENTS..............................................................................................................62
MISCELLANEOUS............................................................................................................................. 62
EXECUTION AND DELIVERY.........................................................................................................63
APPENDIX A —
GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA ........
A-1
APPENDIX B —
AUDITED FINANCIAL STATEMENTS OF THE CITY OF
SANTA CLARITA FOR THE FISCAL YEAR ENDED NNE 30, 2018 .............
B-1
APPENDIX C —
SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL
LEGAL DOCUMENTS.......................................................................................
C-1
APPENDIX D —
FORM OF CONTINUING DISCLOSURE CERTIFICATE .................................
D-1
APPENDIX E —
FORM OF OPINION OF BOND COUNSEL ........................................................E-1
APPENDIX F —
BOOK -ENTRY SYSTEM....................................................................................F-1
V 11 C 11 IN a F% IVE A 11, 101E
OFFICIAL STATEMENT
SANTA CLARITA PUBLIC FINANCING AUTHORITY
$[principal amount]`
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
This Official Statement, including the cover page and the appendices hereto, is provided to furnish
information in connection with the sale and delivery of the $[principal amount]* Santa Clarita Public
Financing Authority Lease Revenue Bonds (Sheriff Station Project), Series 2019 (the `Bonds').
Capitalized terms used and not otherwise defined herein shall have the meanings given in the Indenture or
the Lease (each as hereinafter defined) or in APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS
OF THE PRINCIPAL LEGAL DOCUMENTS. "
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 the Bonds to potential investors is made only by means of the entire Official
Statement.
Purpose of the Bonds
The Bonds are being issued under the provisions of the Marks -Roos Local Bond Pooling Act of
1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 65 84) of the
California Government Code (the "Bond Law"). The Bonds are being issued pursuant to an Indenture,
dated as of June 1, 2019 (the "Indenture"), by and between the Santa Clarita Public Financing Authority
(the "Authority") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee").
The proceeds of the Bonds will be applied to provide funds to (i) finance a portion of the costs of
construction and improvement of a new sheriff station and related public safety facilities (the "Project') to
be located at 26201 Golden Valley Road within the City of Santa Clarita (the "City"), (ii) pay capitalized
interest on the Bonds, and (iii) pay the costs of issuing the Bonds. See "ESTIMATED SOURCES AND
USES OF FUNDS" and "PLAN OF FINANCE" herein.
Security for the Bonds
Pursuant to a Site Lease, dated as of June 1, 2019 (the "Site Lease"), by and between the City and
the Authority, the Authority will lease from the City certain real property consisting of two parcels totaling
approximately 7.6 net acres located at 26201 Golden Valley Road in the City, as further described herein
(the "Site"). See "- Leased Property" below. Pursuant to a Lease Agreement, dated as of June 1, 2019 (the
"Lease"), by and between the Authority as lessor, and the City as lessee, the Authority will lease the Site
and the Project (collectively, the "Leased Property") to the City. Pursuant to the Lease, the City will pay
to the Authority base rental payments (the "Base Rental Payments") in amounts equal to scheduled debt
service on the Bonds.
Preliminary, subject to change.
The Bonds are payable solely from and secured by Revenues pledged under the Indenture, as
hereinafter described. "Revenues" means (i) all Base Rental Payments payable by the City pursuant to the
Lease (including prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all moneys on
deposit in the funds and accounts (other than the Rebate Fund) established under the Indenture, (iii)
investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or
condemnation awards received by or payable to the Trustee relating to the Base Rental Payments. See
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" herein.
Pursuant to an Assignment Agreement, dated as of June 1, 2019 (the "Assignment Agreement'),
by and between the Authority and the Trustee relating to the Bonds the Authority will assign, as further
security for its obligations to make timely payment of principal of and interest on the Bonds to the Trustee
for the benefit of the Owners certain of the Authority's rights under the Lease, including the right to receive
Base Rental Payments. Under the Lease, in addition to Base Rental Payments, the City has agreed to pay
annual incidental costs and expenses incurred by the Authority or the Trustee relating to the Lease.
The obligation of the City to make Base Rental Payments under the Lease is an unsecured
obligation of the City, payable from all legally available funds. Pursuant to the Lease, the City has
covenanted to take such action as may be necessary to annually budget and appropriate sufficient funds to
make all rental payments required to be made under the Lease, subject only to abatement as provided
therein.
The Bonds are special obligations of the Authority and, as and to the extent set forth in the
Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided in
the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the
Revenues (other than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than
deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and payment
of the principal of and interest on the Bonds. The full faith and credit of the Authority is not pledged for
the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured by
a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or
any of its income or receipts, except the Revenues and such other moneys and securities as provided in the
Indenture.
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, 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, 2019, had an
estimated population of approximately 218,103 as reported by the California Department of Finance. 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 and animal control services are provided under contract with the County, whereas fire
protection, water, sanitation, and schools are funded by special districts not under City control. Other
regularly contracted services include refuse and recycling collection, landscaping, library and public transit
services.
Leased Property
The Leased Property consists of two parcels totaling approximately 7.6 net acres owned by the City
located at 26201 Golden Valley Road in the City of Santa Clarita, along with the Project to be constructed.
The Project consists of the construction and improvement of public safety facilities, including an
approximately 46,500 square foot sheriff station building and approximately 4,100 square foot service
maintenance building for an estimated cost of approximately $67.3 million. The public safety facilities will
include an emergency communications center, detention area, heliport and vehicle fueling station. See
"THE PLAN OF FINANCE" herein.
The Authority will lease the Leased Property to the City pursuant to the Lease. Under the Lease,
the City is required to maintain the Leased Property in working order. The City will sublease the Leased
Property to the County of Los Angeles (the "County") for an initial term of fifteen (15) years pursuant to a
form of lease entitled "County of Los Angeles, Chief Executive Office, Lease Agreement', to be entered
into upon completion of the Project (the "County Lease") for sheriff law enforcement activities. See "THE
PLAN OF FINANCE — County Lease" herein.
The Authority and the City have each acknowledged under the Lease that the annual fair rental
value of the Leased Property is in excess of the maximum annual Base Rental Payments. Pursuant to the
Lease, the City has the right to substitute alternate real property or improvements for the Leased Property,
release existing property or add additional real property or improvements to the Leased Property. Given the
excess value of the Leased Property it is possible that during the term of the Lease, the Base Rental
Payments may be increased for the purpose of securing Additional Bonds or a portion of the Leased
Property may be released. "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —
Substitution and Release of Property" herein.
None of the Leased Property is located in a 100 -year flood plain. The City insures the improvements
on the Leased Property for the estimated replacement value of such improvements.
No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the payment of debt
service on the Bonds.
Existing General Fund Debt and Additional Bonds
The City currently has three (3) debt issuances outstanding which are secured by the City's General
Fund and the City may in the future issue or incur other obligations payable from the City's General Fund.
See "SECURITY AND SOURCES OF PAYMENT FOR BONDS — Existing General Fund Indebtedness"
herein. In addition, pursuant to the Indenture and the Lease, the Authority may issue additional bonds (the
"Additional Bonds") payable on a parity with the Bonds so long as certain conditions precedent are
satisfied. See "SECURITY AND SOURCES OF PAYMENT FOR BONDS — Additional Bonds" herein.
Continuing Disclosure
The Authority has determined that no financial or operating data concerning the Authority is
material to any decision to purchase, hold or sell the Bonds and the Authority will not provide any such
information.
The City has agreed to provide, with respect to the Bonds, or cause to be provided, to the Municipal
Securities Rulemaking Board's Electronic Municipal Market Access system (the " EMMA System"),
certain annual financial information and operating data relating to the City and, in a timely manner, notice
of certain enumerated events. These covenants have been made in order to assist the Underwriter in
complying with Rule 15c2-12, as amended (the "Rule") adopted by the U.S. Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934, as amended. See "CONTINUING
DISCLOSURE" herein and APPENDIX D — "FORM OF CONTINUING DISCLOSURE CERTIFICATE"
for a description of the annual reports and notices of enumerated events to be provided by the City.
DESCRIPTION OF THE BONDS
The Bonds will be dated their date of delivery and issued in the aggregate principal amount and
bear interest at the rates per annum and mature on the dates set forth on the inside cover page of this Official
Statement. Interest on the Bonds will be payable semiannually on June 1 and December 1 of each year
(each an "Interest Payment Date"), commencing December 1, 2019. Each Bond will bear interest from the
Interest Payment Date next preceding the date of authentication thereof unless (i) it is executed after the
fifteenth calendar day of the month immediately preceding an Interest Payment Date, in which case interest
will accrue from such Interest Payment Date, or (ii) it is authenticated on or before November 15, 2019, in
which event interest will accrue from the date of initial delivery of the Bonds. If, at the date of
authentication of any Bond, interest thereon is in default, such Bond will bear interest from the Interest
Payment Date to which interest has previously been paid or made available for payment on such outstanding
Bond, or if no interest has been paid, from the date of initial delivery of the Bonds. Interest on the Bonds
will be computed on the basis of a 360 -day year of twelve 30 -day months.
The Bonds are being issued as fully registered bonds and, when executed and delivered, will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New
York ("DTC"). The Bonds will be issued in denominations of $5,000 or any integral multiple thereof.
Individual purchases of Bonds will be made in book -entry form only. Payments of principal of and interest
on the Bonds are to be made to purchasers by DTC through DTC Participants. Purchasers will not receive
physical delivery of the Bonds purchased by them. See APPENDIX F — "BOOK -ENTRY SYSTEM."
Redemption
Optional Redemption. The Bonds maturing on or after June 1, 20 are subject to redemption
prior to their respective maturity dates as a whole or in part on any date on or after June 1, 20 , in any
order deemed reasonable by the Authority, and by lot within a maturity, from prepayments of Base Rental
Payments made at the option of the City pursuant to the Lease, at a redemption price equal to the principal
amount of the Bonds to be redeemed, plus accrued but unpaid interest thereon to the date fixed for
redemption, without premium.
Extraordinary Redemption. The Bonds are subject to redemption prior to their respective maturity
dates, as a whole or in part on a pro rata basis, on any date from prepayments of the Base Rental Payments
made by the City pursuant to the Lease out of funds received by the City due to a taking of the Leased
Property or any portion thereof under the power of eminent domain or from insurance proceeds received
by the City due to damage to or destruction of the Leased Property or any portion thereof, under the
circumstances and upon the conditions and terms prescribed in the Indenture and in the Lease. Redemption
of Bonds pursuant to this paragraph will be made at a redemption price equal to the sum of the principal of
the Bonds to be redeemed plus accrued but unpaid interest thereon to the date fixed for redemption, without
premium. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Insurance Coverages"
herein.
Mandatory Sinking Account Redemption. The Term Bonds maturing June 1, are subject to
mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule
commencing June 1, 20 , and on June 1 in each year thereafter to and including June 1, 20 at a
redemption price equal to the principal amount thereof to be redeemed (without premium), together with
interest accrued thereon to the date fixed for redemption.
Redemption Date Principal Amount
(June 1) To be Redeemed
fiMaturity
If some but not all of the Term Bonds have been redeemed pursuant to mandatory or optional
redemptions, the total amount of sinking account payments to be made subsequent to such redemption will
be reduced in an amount equal to the principal amount of the Term Bonds so redeemed by reducing each
such future sinking account payment on a pro rata basis (as nearly as practicable) in integral multiples of
$5,000, as will be designated pursuant to written notice filed by Authority with the Trustee. In the event of
any reductions in the amount of sinking account payments due as a result of some but not all of the Bonds
being redeemed pursuant to extraordinary or optional redemptions, the Authority will provide the Trustee
with a revised schedule reflecting such reductions.
Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the optional redemption of less than all of the
Bonds of a series, the Trustee shall select the Bonds of such series to be redeemed from all Bonds of that
series not previously called for redemption, in such maturities as the Authority shall designate (and by lot
within any maturity). For purposes of such selection, all Bonds of a series shall be deemed to be comprised
of separate $5,000 portions and such portions shall be treated as separate Bonds, which may be separately
redeemed.
Notice of Redemption
The Trustee on behalf and at the expense of the Authority will mail (by first class mail or other
means acceptable to the recipient thereof) notice of any redemption to the respective Owners designated
for redemption at their respective addresses appearing on the Registration Books, to the Securities
Depositories and to one or more Information Services, at least twenty (20) but not more than sixty (60) days
prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so
mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds
or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the
redemption date, the redemption place and the redemption price and shall designate the CUSIP numbers,
the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such
maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then
surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also
that further interest on such Bonds will not accrue from and after the redemption date. Such notice shall
further state, if so determined by the Authority, that such notice may be rescinded at any time prior to the
redemption date.
Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP
number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption
notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent
service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any
inaccuracy in such numbers.
Any notice given pursuant to the preceding paragraph may be conditional and/or rescinded by
written notice given to the Trustee by the Authority and the Trustee shall provide notice of such rescission
as soon thereafter as practicable in the same manner, and to the same recipients, as notice of such
redemption was given pursuant to the Indenture.
Partial Redemption of Bonds
If only a portion of any Bond is called for redemption, then upon surrender of such Bond the
Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense
of the Authority, a new Bond or Bonds of the same Series, interest rate and maturity date, in aggregate
principal amount equal to the unredeemed portion of the Bond being redeemed.
Effect of Redemption
From and after the date fixed for redemption, if funds available for the payment of the principal of,
premium, if any, and interest on the Bonds so called for redemption shall have been duly provided, such
Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive
payment of the redemption price, and no interest shall accrue thereon from and after the redemption date.
All moneys held by or on behalf of the Trustee for the payment of principal of or interest or premium on
Bonds, whether at redemption or maturity, shall be held in trust for the account of the Owners thereof and
the Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any interest
earned on, moneys so held.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds will be secured by a first lien on and pledge of all of the Revenues, including all of the
moneys in the Lease Revenue Fund, including the Interest Account, the Principal Account and the
Redemption Account, and the Insurance and Condemnation Fund.
The Base Rental Payments will be paid by the City in an amount sufficient to pay the principal of
and interest on the Bonds on each Interest Payment Date. Under the Lease, in addition to Base Rental
Payments, the City has agreed to pay Additional Rental Payments in such amounts in each year as shall be
required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds
of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution, performance
or enforcement of the Lease or the assignment thereof, the Indenture, or the Authority's or the Trustee's
interest in the Leased Property, including, but not limited to, all fees, costs and expenses, all administrative
costs of the Authority relating to the Leased Property (including, without limiting the generality of the
foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any),
expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture),
fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative
costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or of the
Indenture.
The City has agreed in the Lease to take such action as may be necessary to include all Base Rental
Payments and Additional Rental Payments due under the Lease in its annual budget and to make the
necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments, subject
only to abatement as provided in the Lease. The covenants on the part of the City contained in the Lease
are duties imposed by law and it will be the duty of each and every public official of the City to take such
action and do such things as are required by law in the performance of the official duty of such officials to
enable the City to carry out and perform the covenants and agreements in the Lease agreed to be carried out
and performed by the City.
Pursuant to the Assignment Agreement, the Authority will assign, as further security for its
obligations to make timely payment of principal of and interest on the Bonds to the Trustee for the benefit
of the Owners certain of the Authority's rights under the Lease, including the right to receive Base Rental
Payments. Not less than fifteen (15) Business Days preceding each June 1 and December 1, the City is
required to pay to the Trustee the Base Rental Payments coming due on the next succeeding June 1 and
December 1, respectively, from any legally available sources.
Limited Obligation
The Bonds are special obligations of the Authority and, as and to the extent set forth in the
Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided in
the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the
Revenues (other than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than
deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and payment
of the principal of and interest on the Bonds. The full faith and credit of the Authority is not pledged for
the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured
by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority
or any of its income or receipts, except the Revenues and such other moneys and securities as provided in
the Indenture.
No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the payment of debt
service on the Bonds.
Capitalized Interest
A portion of the proceeds of the Bonds will be deposited into the Capitalized Interest Subaccount
of the Interest Account of the Lease Revenue Fund and used to pay interest accruing on the Bonds through
and including June 1, 2021.
Abatement of Base Rental Payments
The City's obligation to pay Base Rental Payments is subject to abatement during any period in
which by reason of any damage, destruction or condemnation there is substantial interference with the
beneficial use by the City of the Leased Property or any portion thereof. Such abatement may be in an
amount such that the resulting Base Rental Payments in any year during which such interference occurs or
continues do not exceed the fair rental value of the portions of the Leased Property as to which such damage,
destruction or taking do not substantially interfere with the City's use and right of possession, as evidenced
by a Certificate of the City. Such abatement shall continue for the period commencing with the date of
such interference and ending with the restoration of the Leased Property to tenantable condition. See "RISK
FACTORS — Abatement' herein.
The City will sublease the Leased Property to the County for an initial term of fifteen (15) years
pursuant to the County Lease for sheriff law enforcement activities. Should the County Lease terminate or
not be renewed, the City expects to use the Leased Property to provide public safety and police services or,
in the alternative, utilize the Leased Property for other public purposes. Termination of the County Lease
will not, in and of itself, constitute abatement of the Lease. See "PLAN OF FINANCE — County Lease."
Insurance Coverages
Pursuant to the Lease, the City will obtain one or more California Land Title Association title
policies insuring the City's and Authority's interest in the Leased Property. The Lease requires that the
City maintain rental interruption insurance in an amount not less than the maximum remaining scheduled
Base Rental Payments in any twenty-four (24) month period to insure against loss of use of the Leased
Property caused by perils covered by required casualty insurance, casualty insurance against loss or damage
to any or all of the Leased Property, workers' compensation insurance, and comprehensive general liability
coverage against claims for damages including death, personal injury, bodily injury or property damage
arising from operations involving the Leased Property. While the City currently maintains earthquake
insurance, the Lease does not require the City to obtain or maintain earthquake insurance on the Leased
Property. For additional information regarding insurance coverages required by the Lease, see APPENDIX
C — "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The
Lease — Insurance."
Additional Bonds
The Authority has agreed pursuant to the Indenture that no additional bonds, notes or indebtedness
shall be issued or incurred that are payable out of the Revenues in whole or in part, other than Additional
Bonds as provided in the Indenture. However, the City may issue or incur other obligations payable from
the City's General Fund. The parties to the Lease have acknowledged that the annual fair rental value of
the Leased Property is in excess of the maximum annual Base Rental Payments and it is possible that the
Lease will be amended to release a portion of the Leased Property or increase the Base Rental Payments
for the purpose of Additional Bonds. See "RISK FACTORS — No Limitation on Incurring Additional
Obligations" herein.
The Authority and the Trustee may by execution of a Supplemental Indenture, without the consent
of the Owners, provide for the issuance and delivery of Additional Bonds in one or more series. Upon the
Request of the Authority, the Trustee may authenticate and deliver Additional Bonds in an aggregate
principal amount authorized by such Supplemental Indenture. The proceeds of such Additional Bonds may
be used for any purpose, including for the purpose of refunding Outstanding Bonds. Such Additional Bonds
may only be issued upon compliance by the Authority with the provisions of the Indenture, and subject to
the following specific conditions, which are made conditions precedent to the issuance of any such
Additional Bonds:
(a) The Authority will not be in default under the Indenture or any Supplemental Indenture, as
evidenced by a Certificate of the Authority, and the City will not be in default under the Lease, as evidenced
by a Certificate of the City;
(b) A Supplemental Indenture may provide for the funding of a debt service reserve for such
Additional Bonds;
(c) The Additional Bonds will be payable as to principal on June 1 of each year in which
principal is due and will be payable as to interest on each Interest Payment Date;
(d) The aggregate principal amount of Bonds issued and at any time Outstanding under the
Indenture or under any Supplemental Indenture will not exceed any limit imposed by law, by the Indenture
or by any Supplemental Indenture, as evidenced by a Certificate of the Authority and the City;
(e) The Lease will have been amended so as to increase the base rental payments payable by
the City thereunder by an aggregate amount equal to the principal and interest due and payable on such
Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment
of the principal and interest on such Additional Bonds, as evidenced by a Certificate of the City;
(f) The Supplemental Indenture will provide redemption dates and/or for the mandatory
redemption of Additional Bonds in amounts sufficient to provide for payment of the Additional Bonds
when the applicable Base Rental Payments are due; and
(g) The Supplemental Indenture will prescribe the form or forms of such Additional Bonds,
and subject to the provisions hereof, will provide for the distinctive designation, denominations, dates,
principal payment dates, interest payment dates, interest rates, provisions for redemption, and places of
payment for principal and interest.
Any Additional Bonds will be on a parity with, and each Owner thereof will have the same rights
upon an Event of Default as the Owner of, any other Bonds issued and delivered under the Indenture, except
as otherwise provided in the Supplemental Indenture under which Additional Bonds are issued.
Existing General Fund Indebtedness
In July 2015, the City and the Authority entered into a private placement lease agreement for the
City Hall facilities in the amount of $6,985,000 with Umpqua Bank secured by lease payments made by
the City from the General Fund. Principal components of the lease payments are due on October 1 and April
1 of each year through October 1, 2020. The unpaid balance as of June 30, 2018, was $3,595,740.
The Authority previously issued its Lease Revenue Refunding Bonds (Golden Valley Road) Series
2016A (the "Series 2016A Bonds") in the principal amount of $10,320,000, secured by base rental
payments made by the City under a lease of the City Hall of the City located at 23920 Valencia Boulevard
within the City, which base rental payments are payable from the City's General Fund due on January 15
and July 15 of each year through January 15, 2036. The unpaid balance as of June 30, 2018, was
$9,570,000.
The Authority also issued its Lease Revenue Bonds (Open Space and Parkland Acquisition
Program) Series 2016B (the "Series 2016B Bonds") in the principal amount of $14,020,000, secured by
base rental payments made by the City under a lease of the Aquatics Center and Sports Complex of the City
located at 20880 Centre Pointe Parkway within the City, which base rental payments are due on March 15
and September 15 of each year through September 15, 2037, and secured by the City's General Fund but
payable from the City's assessment revenue from its Open Space Preservation District. The unpaid balance
as of June 30, 2018, was $13,450,000. See "THE CITY — Outstanding Indebtedness of the City."
Maintenance, Utilities, Taxes and Assessments
During such time as the City or any assignee or sublessee thereof is in possession of the Leased
Property, all maintenance and repair, ordinary or extraordinary, of the Leased Property will be the
responsibility of the City, and the City will pay for, or otherwise arrange for the payment of, including
pursuant to the County Lease, (a) all utility services supplied to the Leased Property, (b) the cost of
operation of the Leased Property, and (c) the costs of maintenance of and repair to the Leased Property
resulting from ordinary wear and tear or want of care on the part of the City. The City will, at the City's
sole cost and expense or otherwise provide pursuant to the County Lease, keep and maintain the Leased
Property clean and in a safe and good condition and repair. The Authority has no obligation to alter,
remodel, improve, repair, decorate, or paint the Leased Property or any part thereof.
The City will comply with all statutes, ordinances, regulations, and other requirements of all
governmental entities that pertain to the occupancy or use of the Leased Property. The Authority has no
responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the
Leased Property.
The Authority and the City contemplate that the Leased Property will be used for public purposes
by the City and the County and, therefore, that the Leased Property will continue to be exempt from all
taxes presently assessed and levied with respect to real and personal property. In the event that the use,
possession or acquisition by the Authority or the City of the Leased Property is found to be subject to
taxation in any form, the City will pay during the term of the Lease, as the same respectively become due,
all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or
levied against or with respect to the Leased Property and any other property acquired by the City in
substitution for, as a renewal or replacement of, or a modification, improvement or addition to the Leased
Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in
installments over a period of years, the City will be obligated to pay only such installments as are accrued
during such time as the Lease is in effect.
Substitution and Release of Property
The City will have, so long as the Lease is in effect, the option at any time and from time to time,
to substitute other real property (the "Substitute Property") for any portion of the Leased Property (the
"Former Property") or release any identifiable real property and/or improvements currently constituting the
Leased Property (in such case, Substitute Property will mean the Former Property less any portion released
pursuant to the Lease); provided, that the City will satisfy all of the following requirements, which are
conditions precedent to such substitution:
(a) No default under the Lease or Event of Default under the Indenture will have occurred and
be continuing;
(b) The City will file with the Authority and the Trustee, and cause to be recorded in the office
of the County Recorder, sufficient memorialization of amendments to the Lease and the Site Lease with a
description of such Substitute Property which deletes therefrom the description of the Former Property;
(c) The City will obtain an extended California Land Title Association ("CLTA") policy of
title insurance insuring the City's fee or leasehold estate in such Substitute Property, the City's leasehold
estate under the Lease, and the Authority's leasehold estate under the Site Lease in such Substitute Property,
subject only to Permitted Encumbrances, in an amount not less than the aggregate principal amount of the
Outstanding Bonds; provided, however, that this requirement will not apply to Substitute Property that
consists only of Former Property less any released portion;
(d) The City will provide a Certificate of the City to the Authority and to the Trustee that such
Substitute Property constitutes property which the City is permitted to lease under the laws of the State of
California;
(e) The substitution of the Substitute Property will not cause the City to violate any of its
covenants, representations and warranties made in the Lease;
10
(f) The City will file with the Authority and the Trustee a Certificate of the City or other
evidence which establishes that the annual fair rental value of the Substitute Property after substitution or
release will be at least equal to 100% of the maximum amount of the Base Rental Payments becoming due
in the then current fiscal year or in any subsequent fiscal year and the useful economic life of the Substitute
Property will be at least equal to the maximum remaining term of the Lease; and
(g) The City will furnish to the Trustee an opinion of Bond Counsel addressed to the Trustee,
the City and the Authority to the effect that the substitution or release is permitted under the Lease and will
not in and of itself (i) impair the validity and enforceability of the Lease or (ii) impair the exclusion of
interest on the Bonds and, if applicable, any Additional Bonds from the gross income of the owners thereof
for federal income tax purposes.
Upon the satisfaction of all such conditions precedent, and upon the City delivering to the Authority
and the Trustee a Certificate of the City certifying that the conditions set forth in subsections (a), (c) and
(e) above have been satisfied, the Term of the Lease will thereupon end as to the Leased Property and will
thereupon commence as to the Substitute Property, and all references to the Leased Property will apply with
full force and effect to the Substitute Property. The City will not be entitled to any reduction, diminution,
extension or other modification of the Base Rental Payments whatsoever as a result of any substitution or
removal under the Lease.
The parties to the Lease have acknowledged that the annual fair rental value of the Leased Property
is in excess of the maximum annual Base Rental Payments and it is likely that the Lease will be amended
to release a portion of the Leased Property or increase the Base Rental Payments for the purpose of
Additional Bonds. Without substituting or releasing any of the Leased Property, the City and the Authority
may amend the Lease to increase the amount of Base Rental Payment payable hereunder for the purpose of
allowing the Authority to issue Additional Bonds pursuant to the Indenture; provided the City will provide
the Trustee and the Authority (i) a Certificate of the City certifying that the value of the Leased Property
will not be less than the aggregate principal amount of the Outstanding Bonds and Additional Bonds to be
issued, and (ii) a new or amended extended CLTA policy of title insurance in an amount not less than the
aggregate principal amount of the Outstanding Bonds and Additional Bonds to be issued.
[Remainder of page intentionally left blank.]
PLAN OF FINANCE
General
Proceeds of the Bonds will be used to finance a portion of the costs of the Project, including the
construction and improvement of public safety facilities, including a new sheriff station and related facilities
to be located at 26201 Golden Valley Road within the City, pay capitalized interest on the Bonds through
and including June 1, 2021, and pay the costs of issuing the Bonds. To the extent there remains proceeds
of the Bonds after completion of the Project, such proceeds may be used for other public capital
improvements as determined by the Authority and the City.
The new public safety facilities will replace the existing sheriff station owned by the County at
23640 Magic Mountain Parkway, which was built in 1972, doubling its size. The total cost of the Project
M
is estimated to be approximately $67.3 million, excluding the value of the land. Sources of funds for the
Project include $25 million of Bond proceeds and $42.3 million from the City and the County from other
available funds.
Project Description and Costs
The Project includes a main sheriff station, detention facility and emergency communications
center totaling approximately 46,500 square feet, a vehicle maintenance building totaling approximately
4,100 square feet, a heliport, over 300 parking spaces, and a vehicle fueling station. Exterior walls and the
detention facility will be constructed with concrete block, and the station's non -detention interior walls will
be constructed using metal studs. The non -detention wall finishes will be painted drywall, and the detention
wall finishes will be painted concrete block. The roof system will be truss joist with clearstory lighting at
the front of the building. The Site will provide parking for staff, patrol cars, specialized vehicles, and
visitors. A covered un -leaded fueling station will be located near the vehicle maintenance building. A full
transfer generator is included with a 72 -hour diesel fuel reserve at full load. The heliport will provide for
24-hour landings. Two points of access will be provided from Golden Valley Road (north and south
driveway) a third driveway will be provided for the visitor parking area.
Source: City of Santa Clarita
The proposed funding sources are as follows:
Contributor
Contribution
City of Santa Clarita Bond Proceeds
The estimated cost for construction of the Project is $67.3 million, as follows: $52.1 million for
construction,
$13.8 for soft costs and $1.4 million for specialized
communication
equipment.
Phase
Description
Cost
Completion Date
I
Environmental/Geotechnical Services/CEQA
$ 1,097,810
August 2017 (completed)
II
Architectural Design
3,692,907
January 2019 (permit ready)
IIIA
Grading and Retaining Walls
6,303,466
January 2019 (completed)
IIIB
Station, Maintenance Building, Site Work
53,997,437
1" Quarter 2021
IIIC
Offsite Improvements
2,252,029
Fall 2019 (underway)
TOTAL'
$67,343,649
Source: City of Santa Clarita
The proposed funding sources are as follows:
Contributor
Contribution
City of Santa Clarita Bond Proceeds
$25,000,000
Public Facilities Fund
18,737,151
Eastside B&T (loan from Facilities Fund)
2,000,000
Law Enforcement Facilities Impact Fee
2,057,766
Federal Drug Forfeiture Funds (held by LASD)
1,244,782
State Drug Forfeiture Funds
138,950
Air Quality Mgt District (AQMD) Funds
165,000
Subtotal $49,343,649
County of Los Angeles County Contribution $18,000,000
TOTAL $67.343.649
Source: City of Santa Clarita
12
In November 2016, the City Council awarded contracts for Phase I of the Project, which included
civil engineering, concept design services, geotechnical services and cost estimating services for the
Project. Subsequently, in June 2017, the Initial Study and Mitigated Negative Declaration for the Project
was completed in compliance with the California Environmental Quality Act as part of Phase L The final
Mitigated Negative Declaration was approved and certified by the City Council on August 22, 2017.
In October 2017, the City Council awarded the contract for Phase II of the Project, which included
finalizing the concept design developed in Phase I, and the preparation of all associated architectural,
structural, and civil engineering drawings and specifications necessary for the construction of the Project.
MNS Engineers Inc. has provided project management services, R.T. Frankian & Associates has provided
geotechnical site studies and soil testing, and Hunsaker & Associates has provided civil engineering and
surveying for the design of the facility and grading.
The construction of the Project has been divided into the following three subphases: Phase IIIA
Grading, Phase IIIB Onsite Construction and Phase IIIC Offsite Construction.
Phase IIIA Grading includes fine grading, retaining walls, drainage devices, erosion control, traffic
control, construction water, and demolition. On June 26, 2018, the City Council awarded this Phase to R.C.
Becker and Son, Inc. On site grading began in July 2018 and was completed in January 2019. Phase IIIC
Offsite Construction includes bringing wet and dry utilities to the site including water, gas, power, AT&T
telephone, AT&T fiber, Spectrum Fiber, Spectrum cable TV, sewer, storm drain, and roadway
improvements including median modifications, west curb and gutter, west streetlights, paving, west
sidewalk, commercial driveways, and emergency response traffic signal. The City Council approved a
contract for Toro Enterprises, Inc. on January 8, 2019. Construction of off-site improvements began in
January 2019.
Phase IIIB Onsite Construction includes the main station, detention facility, vehicle maintenance
building, visitor parking, staff parking, generator, fuel station, wet utilities, dry utilities, radio antenna,
perimeter wall, landscaping, furnishings, fixtures, and equipment. On May 14, 2019, the City Council
awarded this final construction contract to Icon West, Inc. The construction of the onsite public safety
facilities is expected to begin in June 2019. With regard to communications equipment and furniture,
fixtures, & equipment (FF&E), the City will transfer $174,787 to the County Sheriff Department for their
procurement costs for communications equipment and FF&E costs. The Project is expected to be
completed by first quarter 2021. See "Future Sublease with the County and Memorandum of
Understanding" herein.
13
RENDERING OF PUBLIC SAFETY FACILITIES
SANTA CLARITA VALLEY SHERIFF'S STATION �������u��
SITE DIAGRAM OF PUBLIC SAFETY FACILITIES
15
Leased Property
The Leased Property consists of land owned by the City at 26201 Golden Valley Road within the
City consisting of two parcels totaling approximately 7.6 net usable acres (the "Site"), along with the Project
to be built on the Site. The Site was purchased by the City in 2001 for $1,915,992 and its uses over the
years included a temporary fire station.
The Site will be leased from the City to the Authority pursuant to the Site Lease. The Project will
be built on the Site and the Authority will then lease the Leased Property (the Site and the Project) to the
City pursuant to the Lease. Under the Lease, the City is required to maintain the Leased Property in working
order. The City will sublease the Leased Property to the County for an initial term of fifteen (15) years
pursuant to a proposed County Lease for sheriff law enforcement activities. See "Future Sublease with the
County and Memorandum of Understanding" below.
The City covenants in the Lease to obtain and maintain certain insurance with specified minimum
coverages for the Leased Property. See "SECURITY AND SOURCES OF PAYMENT OF THE BONDS
— Insurance Coverages" and APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE
PRINCIPAL LEGAL DOCUMENTS — The Lease — Insurance." The City has a blanket insurance policy
for real property issued through the Special Districts Risk Management Authority ("SDRMA"). See "THE
CITY — Risk Management' herein.
Future Sublease with the County and Memorandum of Understanding
The City has an existing three-year contract with the County Sheriff Department for the provision
of sheriff services for the City and such contact expires in June 2019. A new five year contract is in the
process of being finalized, with an anticipated renewal date of July 1, 2019.
The new public safety facilities are a collaborative effort by the City, the County and the County
Sheriff Department. On May 31, 2016, the City and the County entered into a Memorandum of
Understanding ("MOU) for the joint funding by the County and the City of the Project, whereby the
County agreed to contribute $15 million, and the City agreed to contribute the land and remaining amounts
needed for the Project.
Pursuant to the MOU, the County has contributed to the City $15 million, which was placed in a
trust account to be used for design, engineering, and construction costs of the Project. The MOU provided
that concurrently with completion of the construction of the Project, the City and County will enter into a
rent-free sublease to allow the County to use and occupy the Project for as long as the County Sheriff
Department provides law enforcement services to the City. In addition, to protect the contribution and
investment of the County, the MOU provided that the sublease shall include a provision that if at any time
during the first fifteen (15) years of the sublease term the City terminates the agreement for the County to
provide sheriff services, the City will refund to the County the full amount of the $15 million County
contribution. Commented [BH1]: Not sure whether MOU will be amended to
reflect $18 million. Re -word this section?
The Project is to be constructed under the management of and owned by the City. The MOU
stipulates that the contracts for various phases of the Project are subject to approval by the County. As of
the date of this Official Statement, the County has been included throughout the selection process for the
contractors related to the Project and has given its approval.
Should the proposed County Lease be terminated or not renewed, the City will undertake to use the
facilities for the provision of police services by the City or other public agency, or in the event the facilities
16
are not required for public safety services, rehabilitate the facilities for other governmental uses.
Termination of the proposed County Lease will not, in and of itself, constitute abatement of the Lease.
The MOU provided that concurrently with completion of the construction of the Project, the City
and County will enter into a rent-free lease to allow the County to use and occupy the Project for as long as
the County Sheriff Department provides law enforcement services to the City. Over the past several
months, the City and the County have been in negotiations over the form of the County Lease. On [May
14, 2019, the City Council approved the form of the County Lease.] It is anticipated that the form of the
County Lease will be finalized and approved by the County closer to the date of the completion of the
Project and entered into by the City and the County upon completion of the Project. The proposed form of
the County Lease provides that in addition to use of the sheriff station and maintenance facility, the County
will have the right in the future to construct a 4,000 square foot building on the Site for its exclusive use.
The proposed form of the County Lease also provides that the sublease by the County is subordinate and
subject to the Site Lease and the Lease.
The proposed form of the County Lease includes the provision that if at any time during the first
15 years of the sublease term the City terminates the agreement for the County to provide sheriff services,
the City will refund to the County the full amount of the $18 million County contribution. Should the
County no longer provide sheriff services, the City will undertake to use the facilities for the provision of
police services by the City or other public agency or, in the event the facilities are not required for public
safety services, rehabilitate the facilities for other governmental uses.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds are as follows:
Sources:
Principal amount of Bonds
Plus/Less Net Premium/Discount
Total Sources
Uses:
Deposit to Project Fund
Capitalized Interest(')
Costs of Issuance (2)
Total Uses
$[principal amount]
(') For debt service payments through and including June 1, 2021.
(2) Costs of issuance include legal, trustee, rating agency, and municipal advisor fees, printing costs,
underwriter's discount, and other costs incurred in connection with the issuance of the Bonds.
[Remainder of page intentionally left blank.]
17
DEBT SERVICE REQUIREMENTS
The following table sets forth the debt service requirements for the Bonds.
Bond Year
Ending
June 1 Principal Interest Total
2020"
2021"
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
Totals
* Payable from funds in the Interest Account of the Lease Revenue Fund representing capitalized interest.
18
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 (the "JPA
Agreement'), by and among the City, the City as successor agency to the Redevelopment Agency of the
City of Santa Clarita (the "Successor Agency"), and the Santa Clarita Parking Authority, 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"). The Successor Agency is no longer a member of the Authority.
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. 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 Mayor Pro Tem of the City. The City Manager acts as its Executive
Director, the City Clerk acts as its Secretary, and the Director of Administrative Services 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.
THE CITY
General
The City is located in the County of Los Angeles (the "County"), 35 miles northwest of Los Angeles
and 40 miles east of the Pacific Ocean. The City encompasses an area of approximately 66 square miles
and, as of January 1, 2019, had an estimated population of approximately 218,103 according to the
California Department of Finance. See APPENDIX A — "GENERAL INFORMATION ABOUT THE
CITY OF SANTA CLARITA." A copy of the City's audited financial statements for the fiscal year ended
June 30, 2018 is attached hereto as APPENDIX B.
Budgetary Process and Administration
The City uses the following procedures when establishing the budgetary data reflected in its
financial statements:
• The fiscal year of the City begins on the first day of July of each year and ends on the
thirtieth day of June the following year.
• At such date as the City Manager determines, each department head must furnish to the
City Manager an estimate of revenues and expenditures for such department for the ensuing fiscal
year, detailed in such manner as may be prescribed by the City Manager. In preparing the proposed
budget, the City Manager reviews the estimates, holds conferences thereon with the respective
department heads as necessary, and may revise the estimates as he may deem advisable.
• In June, the City Manager submits to the City Council the proposed budget as prepared by
him. After reviewing and making such revisions as it deems advisable, the City Council determines
the time for the holding of a public hearing thereon and causes to be published a notice thereof not
less than ten days prior to the hearing date. Copies of the proposed budget are available for
inspection by the public in the office of the City Clerk at least ten days prior to the hearing.
fC+
• At the conclusion of the public hearing, the City Council further considers the proposed
budget and makes any revisions thereof that it deems advisable and on or before June 30 it adopts
the budget with revisions, if any, by the affirmative vote of at least a majority of the total members
of the Council.
• From the effective date of the budget, the several amounts stated as proposed expenditures
become appropriated to the several departments, offices and agencies for the objects and purposes
named, provided that the City Manager may transfer funds from one object or purpose to another
within the same fund, department, office or agency. All appropriations lapse at the end of the
budget period to the extent that they have not been expended or lawfully encumbered. At any
public meeting after the adoption of the budget, the City Council may amend or supplement the
budget by motion adopted by the affirmative vote of at least a majority of the total members of the
City Council.
The City Council employs, at the beginning of each fiscal year, an independent certified public
accounting firm which, at such time or times as specified by the City Council, at least annually, at such
other times as such firm shall determine, examines the books, records, inventories and reports of all officers
and employees who receive, control, handle or disburse public funds and of all such other officers,
employees or departments as the City Council may direct. As soon as practicable after the end of the fiscal
year, a report is submitted by such firm to the City Council and a copy of the financial statements as of the
close of the fiscal year is published.
Budgetary control is maintained through a mid -year budget review and an adjustment process.
Budgetary adjustments are considered within the framework of the adopted budget and the City Council
directions, goals and policies. The budget as adopted by the City Council can be amended during the fiscal
year if necessary and proper by action of the City Council.
General Fund
The following tables summarize the audited financial statements for the City's General Fund for
the Fiscal Years ended June 30, 2014 through June 30, 2018. This information should be read in conjunction
with APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA
FOR FISCAL YEAR ENDED JUNE 30,2018."
Table 1 sets forth the City's General Fund balance sheet based upon audited financial statements
for Fiscal Years ended June 30, 2014 through June 30, 2018. Table 2 sets forth the City's General Fund
revenues, expenditures and changes in fund balances based upon audited financial statements for Fiscal
Years ended June 30, 2014 through June 30, 2018.
20
TABLE I
CITY OF SANTA CLARITA
GENERAL FUND BALANCE SHEET
As of June 3l)
Source: City ofSanta Claiita Comprehensive Annual Financial Reports.
21
2014
2015
2016
2017
2018
Assets
Cash and investments
$ 98,311,598
$113,799,150
$130,261,818
$152,219,199
$153,380,261
Accounts receivable
488,495
373,279
480,986
729,681
676,014
Interest receivable
253,201
258,503
384,607
688,378
782,857
Taxes receivable
7,931,716
7,986,753
9,017,822
9,163,168
9,958,518
Notes to RDA Successor Agency
7,903,770
7,225,964
9,254,794
9,462,202
9,440,601
Allowance for doubtful accounts
(7,903,770)
-
-
-
-
Prepaid costs
91,630
118,400
202,769
126,097
275,867
Due from other governments
1,234,746
975,587
4,760,873
405,775
103,765
Due from other funds
2,274,080
2,040,570
3,117,635
4,380,533
3,838,034
Advances to other funds
11,427,513
11,036,236
11,054,805
17,256,104
13,828,350
Restricted Assets — cash and
investments w/ fiscal agents
825.665
825,698
99
-
-
Total Assets
$122,838,644
$144,640,140
$168,536,208
$194,431,137
$192,284267
Liabilities and Fund Balance
Liabilities:
Accounts payable and accrued liabilities
$ 7,627,130
$ 7,448,001
$ 5,216,293
$7,976,998
$ 7,351,373
Deposits payable
3,168,883
3,070,803
2,944,401
17,744,541
17,074,062
Due to other governments
-
7,700,000
7,700,000
7,700,000
7,700,000
Unearned revenues
603,859
598,658
605,545
695,630
723,600
Total Liabilities
$ 11,399,872
$ 18,817,462
$ 16,466,239
$ 34,117,169
$ 32,849,035
Deferred inflows of resources
Unavailable (deferred) revenues
$ 2,546,893
$ 9,320,047
$ 10,925,053
$ 11298 702
$ 11253 355
Total deferred inflows of resources
$ 2,546,893
$ 9,320,047
$ 10,925,053
$ 11298 702
$ 11253 355
Fund Balance:
Nonspendable
$ 11,519,143
$ 11,024,338
$ 11,108,252
$ 15,742,945
$ 12,390,885
Committed
-
-
-
-
-
Assigned
51,718,096
55,336,807
79,367,084
79,367,084
88,674,761
Unassigned
45,654,640
50,141,48
50,669,58
53,905,23
47,116,231
Total Fund Balance
$108,891,879
$116,502,631
$141,144,916
$149,015,266
$148,181,877
Total Liabilities and Fund Balance
$122.838.644
$144.640.140
$168.536.208
$194.431.137
$192 284 267
Source: City ofSanta Claiita Comprehensive Annual Financial Reports.
21
Total Revenues
$89,907,974
TABLE 2
$104,318,639
$98,816,86
$102,915,745
Expenditures:
CITY OF SANTA CLARITA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES
IN FUND BALANCE
$14,211,854
$21,366,674
FOR THE YEAR ENDED
JUNE 30
$23,789,790(3)
Public safety
20,419,720
2014
2015
2016
2017
2018
Revenues:
$2,217,935
$1,491,715
$1,384,023
$4,451,281
services
Taxes
$73,832,592
$78,232,263
$84,035,464()
$81,462,981
$84,657,643
Licenses and permits
5,366,972
5,567,280
7,283,898
7,408,357
7,688,342
Intergovernmental
208,313
1,125,699
292,869
241,992
377,151
Charges for set -vices
8,801,042
9,139,349
9,376,146
8,397,274
8,756,356
Investment income
1,018,077
1,073,899
2,211,873
537,605
277,852
Fines and forfeitures
545,983
452,052
528,836
706,870
794,423
Other revenue
134,995
14,501
589,553
61,788
363,978
Total Revenues
$89,907,974
$95,605,043
$104,318,639
$98,816,86
$102,915,745
Expenditures:
Current:
General government
$14,211,854
$21,366,674
$13,520,450
$15,097,325
$23,789,790(3)
Public safety
20,419,720
21,069,111
22,003,693
23,306,998
24,793,460
Recreation and community
$2,647,420
$2,217,935
$1,491,715
$1,384,023
$4,451,281
services
20,319,194
20,673,945
21,103,557
20,283,686
21,068,481
Public works
11,566,617
12,079,362
12,043,887
21,541,973
21,141,020
Community development
5,461,356
5,270,770
5,959,372
5,989,628
6,475,435
Neighborhood Services
-
-
-
593,591
715,633
Capital Outlay
1,666,884
5,849,555
703,663
341,442
6,794,657
Debt service
$108,891,879
$116,502,631
$141,144,916
$149,015,266
$148,181,877
Principal retirement
-
22,422
-
-
-
Interest and fiscal charges
$4.46 million.
-
Total Expenditures
$73,645,625
$86,331,839
$75,334,622
$87,154,643
$104,778,476
Excess (Deficiency) of
Revenues Over (Under)
Expenditures
$16,262,349
$9,273,204
$28,984,017
$11,662,224
($1,862,731)
Other Financing Sources (Uses):
Transfers in
$2,647,420
$2,217,935
$1,491,715
$1,384,023
$4,451,281
Transfers out Cr)
(4,355,191)
(3,880,387)
(5,833,447)
(5,175,897)
(3,421,939)
Total Other Financing Sources
(Uses)
(1,707,771)
(1,662,452)
(4,341,732)
(3,791,874)
1,029,342
Net change in fund balance
$14,554,578
$7,610,752
$24,642,285
$7,870,350
$(833,389)
Fund Balance, July 1
$ 94,337,301
$108,891,879
$116,502,631
$141,144,916
$149,015,266
Fund Balance, June 30
$108,891,879
$116,502,631
$141,144,916
$149,015,266
$148,181,877
(1) Includes debt service payments transferred
out to the debt service
funds.
(2) Includes one-time triple flip true up of
$4.46 million.
(3) Includes one-time UAL payment of $5
million.
Source: City ofSanta Clarita Comprehensive Annual Financial Reports.
22
Budgeted Revenues and Expenditures
Table 3 includes the City's General Fund adopted final budget and actual results for the Fiscal
Years 2016/17 and 2017/18. Throughout the year, budget changes may be authorized by City Council and
therefore variances between the budget and actual expenditures are common.
The City General Fund Budget includes programs which are provided on a largely city-wide basis.
The programs and services are financed primarily by the City's share of sales tax, property tax, revenues
from the State and/or federal government, and charges for services provided.
2017118 Budget Comparing the beginning 2017/18 General Fund Budget million with the 2017/18
final budget indicates the General Fund had supplemental budgetary appropriations of $22.2 million during
the fiscal year. Included in the supplemental appropriations are the results of that year's mid -year budget
review. During the mid -year budget review, budgeted general fund revenue had a net increase of
$1,813,067. Included in the net increase is $758,000 in development revenue; $300,000 increase in
property tax revenues; $300,000 in sales tax revenues, and $1 million in revenues from the Self Insurance
Fund. At year-end, the City's actual General Fund revenues were $1.5 million more than the final budgetary
estimates. Actual General Fund expenditures were less than the final budgetary estimates by $9.5 million,
which includes a December 2018 mid -year adjustment of the 2017/18 General Fund Budget of a $6 million
transfer of funds from the General Fund to the Facilities Fund in anticipation of funding needs for future
facilities outlined in the Santa Clarita 2020 Plan.
2018119 Budget The 2018/19 Adopted Budgeted General Fund included a 5.5% increase in
property tax revenues and a 1.4% increase in sales tax revenues. General Fund sales tax revenue continues
to be the largest revenue source to operate general governmental functions, accounting for 35% or $37
million as projected in the 2018/19 budget. Property tax revenues account for 34% of the General Fund
budget, or $35.8 million, in 2018/19. This increase is in proportion to the growth of assessed valuation
citywide, net of annexations. Development revenues are projected at $9 million, which is a 19% increase.
This is due primarily to an increase in development and construction citywide. Transient Occupancy Tax
(`TOT"), is projected to decrease to $3.6 million, which is a decrease of 5%. Decreasing TOT revenues
can be partially attributed to a lower average daily hotel rate than was previously estimated.
Budgetary control is maintained through a mid -year budget review and ongoing adjustments. Table
3 provides information on the Current General Fund Budget for fiscal year 2018/19, adjusted for the
December 2018 mid -year review and other adjustments authorized by City Council action. In mid -year
review, the General Fund revenue was increased by almost $486,000 to $104.5 million. This adjustment
included increases of $292,893 in property tax in lieu, $95,000 in waste hauler franchise fees, and $113,364
in development revenues adjustments. In addition, the increase included transfers in of $150,000 from
traffic safety, $50,000 from a grant, $26,436 from fire district administrative fees, and $25,000 in
sponsorship revenue. The increase also included a $139,600 transfer to the General Fund Capital, while
accounting for a decrease in TOT of $360,000. In mid -year review, the General Fund expenditure budget
was adjusted $218,426. Total General Fund expenditures are projected to be $100.8 million, resulting in
an operating surplus of $3.8 million and a 20% operating reserve of $16.9 million.
The City's unassigned fund balance for the General Fund has ranged between $45 million to over
$50 million during the last five fiscal years. The City's stated budget policy is to maintain an operating
reserve of 20% of annual General Fund expenditures to be used for one-time unanticipated expenditure
requirements and local disaster. At June 30, 2018, the balance of the City's operating reserve totaled
$16,870,000, which is included in the unassigned fund balance in the General Fund.
General Fund sales tax revenue continue to be the largest revenue source to operate general
governmental functions, accounting for 35% or $37 million in the 2018/19 budget. Property tax revenues
account for 34% of the 2018/19 General Fund budget, or $35.8 million.
23
The following table includes the City's adjusted current budget as of April 30, 2019 for the General
Fund for the Fiscal Year ending June 30, 2019.
24
TABLE 3
CITY OF
SANTA CLARITA
GENERAL FUND COMPARISON
OF FINAL ADOPTED BUDGET
AND ACTUAL RESULTS FOR FISCAL
YEARS ENDED JUNE 30, 2017 AND JUNE 30, 2018 AND
ADJUSTED CURRENT
BUDGET
FOR FISCAL YEAR
ENDED JUNE 30, 2019
Final Adopted
Final Adopted
Adjusted
Budget
Actual Results
Budget
Actual Results
Current Budget
2016-17
2016-17
2017-18
2017-18
2018-19
REVENUES
Taxes
$81,141,008
$81,462,981
$83,789,656
$84,657,643
$85,113,127
Licenses and permits
6,623,532
7,408,357
8,425,038
7,688,342
7,965,291
Intergovernmental
323,076
241,992
338,564
377,151
286,254
Charges for services
7,834,241
8,397,274
6,745,091
8,756,356
7,592,016
Investment income
1,229,619
537,605
1,582,339
277,852
2,215,065
Fines and forfeitures
470,300
706,870
450,000
794,423
1,108,230
Other revenue
287,912
61,788
89,092
363,978
305 592
Total Revenues
$97,909,688
$98,816,867
$101,419,780
$102,915,745
$104,585,575
EXPENDITURES
Operating:
Personnel
$37,588,114
$36,637,042
$39,487,799
$37,639,960
$38,552,489
Operating
50,087,352
40,988,330
49,429,914
49,088,090
45,064,680
Capital Outlay
2,569,935
2,378,766
3,538,379
3,485,600
2,240,685
Capital Improvement Projects:
Personnel
203,802
-
182,673
-
Operatindi)
23,746,727
6,946,703
15,170,521
8,483,191
14,194,443
Capital Outlay
6,603,44
5,898,962
704,487
Total Expenditures
$113,992,128
$87,154,643
$114,230,062
$104,778,476
$100,756,784
Excess (Deficiency) ofRevenues
Over (Under) Expenditures
$(16,082,440)
$11,662,224
$(12,810,282)
$(1,862,731)
$3,828,791
OTHER FINANCING SOURCES (USES):
Other Financing Uses
598,250
-
-
-
Transfer in
13,502,548
1,384,023
12,781,338
4,451,281
2,007,467
Transfers (out)
(18,323,693)
(5,175,897)
(19,953,289)
(3,421,939)
(12,238,144)
Total Other financing sources (uses)
$(4,222,895)
$(3,791,874)
$ (7,171,951)
$1,029,342
$(10,230,677)
Net Change in Fund Balance
$(20,305,335)
$ 7,870,350
$(19,982,233)
$ (833,389)
$ (6,401,886)
Fund Balance at Beginning of Year
$141,144,916
$149,015,266
$148,181,877
Fund Balance at End of Year
$149 015 266
$148.181.877
$141779.991
(1) Reductions due to appropriated funds for projects which were not spent in such fiscal year.
Source: City ofSwita Clarita Comprehensive Annual Financial Reports.
24
Management Discussion of Financial Performance
The City management's discussion and analysis of the financial activities of the City for the fiscal
year ended June 30, 2018 is presented in the City's audited financial statements for the fiscal year ended
June 30, 2018 attached hereto as APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE
CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30,2018."
Capital Improvement Program
The City is considering a number of future capital projects, whose financing sources may include
the City's General Fund, future lease revenue debt, grants, special taxes or assessment or lease payments
payable from the City's General Fund. The City prepares a five-year capital improvement program ("CIP")
which includes potential capital projects that reflect the desires of the community, as well as projects that
address operational and maintenance needs of the City. The City's 2018/19-2022/23 CIP consists of
improvements and projects totaling $28,676,314 for fiscal year 2018/19 and lists $121,555,890 of
improvements and projects for fiscal years 2020-24. Subject to the City's Fiscal Policies, some of these
improvements and projects will ultimately be financed by the City's General Fund.
Appropriations Limit
Section 7910 of the Government Code of the State requires the City to adopt aformal appropriations
limit for each fiscal year. The City's appropriations limit for Fiscal Year 2017/18 was $385,247,625. The
City's appropriations limit for Fiscal Year 2018/19 is $401,702,653. The appropriations limit is not
expected to have any impact on the ability of the City to budget and appropriate the Base Rental Payments
and Additional Rental Payments as required by the Lease.
Financial Statements
All governmental funds are accounted for using the modified accrual basis of accounting. The
City's revenues are recognized when they become measurable and available as net current assets.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund
liability is incurred. The exception to this general rule is principal and interest on general long-term debt,
which is recognized when due. Some debts and obligations may be payable from self-supporting
enterprises or revenue sources other than property taxation. Special assessment bonds are not included in
the tabulation; lease revenue obligations payable from the General Fund or equivalent sources are included.
All proprietary funds are accounted for using the accrual basis for accounting. Revenues are recognized
when they are earned, and expenses are recognized when they are incurred. Receivables are recorded and
determined at the time of consumption, and unbilled receivables are not recorded. See APPENDIX B —
"AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL
YEAR ENDED JUNE 30,2018."
The City retained the firm of Vavrinek, Trine, Day & Co. LLP ("VTD"), Certified Public
Accountants, Rancho Cucamonga, California, to examine the general purpose financial statements of the
City as of and for the year ended June 30, 2018. The City is the recipient of the GFOA Certificate of
Achievement for Excellence in Financial Reporting for the last twenty-nine fiscal years. The audited
combined financial statements of the City are available on the City's website at https://www.santa-
clarita.com/city-hall/departments/administrative-services/annual-financial-reports. The information
presented in the City's website is not part of this Official Statement and should not be relied on in making
investment decisions with respect to the Bonds.
25
Fiscal Policies
The City has developed a set of fiscal policies (the "Fiscal Policies"), which are reviewed and
adopted annually by the City Council as part of its budgetary approval process, that the City uses to guide
its fiscal decision making. The Fiscal Policies provide guidance relating to the following:
• Cash Management Policy includes an annually adopted investment policy and investment
selection procedures.
• Budget Policies and Procedures is a comprehensive summary of budget and capital
improvement plan responsibilities, preparation, policies and adjustment procedures. In
particular, the current budget policy states the City will maintain the operating reserves at
20% of annual General Fund Expenditures.
• Debt Management Policy sets forth certain debt management objectives for the City, and
establishes overall parameters for issuing and administering the City's debt.
• Post -Issuance Compliance Policy sets forth procedures and guidelines in order to comply
with certain federal tax requirements applicable to tax-exempt bonds and other debt
obligations subsequent to the issuance of such debt, including the monitoring of the use of
bond proceeds, arbitrage yield restrictions and rebate and record retention.
• Continuing Disclosure Procedures Policy sets forth the procedures for compliance with
continuing disclosure undertakings and related filings, including annual report and material
events notices.
• Annual Audit Policy requires an annual audit by a qualified independent accountant of the
books of account, financial records, inventories and reports of all City officers and
employees involved in the handling of financial matters.
• Financial Structure Policy sets forth the accounting system and budgetary controls,
including fund designations and classifications.
• Risk Management Policy describes the risk management program which provides
centralized services to all City departments for risk management, loss control, and safety.
The complete Fiscal Policies can be found within the City's budget for the Fiscal Year ending
June 30, 2019. Information on the Budget may be found on the City's website: https://www.santa-
clarita.com/city-hall/departments/city-manager-s-office/city-budget. The information presented in the
City's website is not part of this Oficial Statement and should not be relied on in making investment
decisions with respect to the Bonds.
Taxable Property and Assessed Valuation
Property tax revenues account for 34% of the 2018/19 General Fund budget, or $35.8 million. The
County Assessor's office makes changes to the City's property tax roll daily to reflect transfers in
ownership, new construction, assessment appeals, parcel splits and changes.
Taxes are levied for each fiscal year on taxable real and personal property which is situated in the
City as of the preceding January 1. For assessment and collection purposes, property is classified either as
"secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured
roll" is that part of the assessment roll containing State assessed property and real property having a tax
lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is
assessed on the "unsecured roll."
26
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of
the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a
10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to
which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may
thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption
penalty of 1Y% per month to the time of redemption. If taxes are unpaid for a period of five years or more,
the property is deeded to the State and then is subject to sale by the County Tax Collector.
Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent,
if unpaid on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and
an additional penalty of 11/2% per month begins to accrue on November 1 of the fiscal year. The City has
four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing
a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on
certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder's
Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal
property, improvements or possessory interests belonging or assessed to the assessee.
City taxes are assessed and collected by Los Angeles County at the same time and on the same rolls
as are County, school and special district taxes.
State law exempts $7,000 of the full cash value of an owner -occupied dwelling, but this exemption
does not result in any loss of revenue to local agencies, since the State reimburses local agencies for the
value of the exemptions.
In fiscal year 2018/19, the City was the fourth largest city in assessed valuation within the County.
The following table represents the most recent ten-year history of assessed valuation in the City, including
State -reimbursed exemptions.
TABLE 4
CITY OF SANTA CLARITA
Assessed Valuation
(000s)
Fiscal Year Local Secured Utility Unsecured Total
2009/10
$20,313,270
$4,015
$944,836
$21,262,122
2010/11
20,222,555
4,015
887,372
21,113,942
2011/12
20,317,662
3,696
847,579
21,168,938
2012/13
20,111,075
3,696
870,669
20,985,441
2013/14
23,410,799
3,696
854,976
24,269,472
2014/15
25,220,113
3,696
888,132
26,111,942
2015/16
26,473,499
3,696
853,667
27,330,863
2016/17
27,884,913
3,696
797,211
28,685,821
2017/18
29,903,220
4,576
819,549
30,727,345
2018/19
31,772,883
4,576
848,468
32,625,928
Source: HACoren&Cone,LosAngelerCouniyAssessor.
The following table represents the breakdown for assessed valuation of the City among the types
of different property for the last five fiscal years.
27
TABLE 5
CITY OF SANTA CLARITA
ASSESSED VALUATION BY PROPERTY TYPE
FOR THE YEAR ENDED JUNE 30
2014 2015 2016 2017 2018
Type:
Residential $18,138,258 $19,755,522 $20,809,579 $21,784,467 $23,734,570
Commercial 2,847,760 2,592,772 3,059,959 3,248,600 3,399,444
Industrial 1,561,091 1,642,719 1,799,120 1,706,030 1,790,583
Vacant Land 509,125 507,997 419,751 449,270 554,513
All Others 1,213,238 1,612,932 1,242,455 1,235,541 1,248,236
Total $24,269,473 $26,111,943 $27,330,863 $28,423,909 $30,727,345
Source: City of Santa Clarita Finance Department.
Beginning in 1978/79, Proposition 13 and its implementing legislation provided for each county to
levy (except for levies to support prior voter -approved indebtedness) and collect all property taxes, and
prescribed how levies on county -wide property values are to be shared with local taxing entities within each
county. The secured property tax levies and year-end delinquencies for 2008/09 through 2017/18 are
reflected on the following table.
TABLE 6
CITY OF SANTA CLARITA
Secured Tax Charges and Delinquencies
Amount Paid Percent Delinquent
Year Total Current Levy June 30 June 30
2008/09 $11,925,285 $11,361,604 4.7%
2009/10 14,202,626 13,711,940 3.5
2010/11 14,172,030 13,829,640 2.4
2011/12 14,299,999 13,999,770 2.1
2012/13 18,634,850 18,297,746 1.8
2013/14 21,446,963 21,128,332 1.5
2014/15 23,131,317 22,795,838 1.5
2015/16 24,304,887 23,957,604 1.4
2016/17 25,483,385 25,178,564 1.2
2017/18 27,299,254 26,957,834 1.3
Source: County ofLor.4ngeles, DepartmentofAuditor-Controller.
[Remainder of page intentionally left blank.]
28
Largest Taxpayers
The following table lists the major taxpayers in the City in terms of their 2017/18 assessed
valuation.
TABLE 7
CITY OF SANTA CLARITA
Principal Property Taxpayers
2017/18
Other Local Taxes
In addition to ad valorem taxes on real property, the City receives the following local taxes:
Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization.
Each local jurisdiction receives an amount equal to one percent of taxable sales within their jurisdiction.
Franchise Taxes. The City levies a franchise tax on its cable television, trash collection and utility
franchises.
Business License Taxes. The City levies a business license tax based primarily on the number of
employees.
Transient Occupancy Taxes. The City levies a 10% transient occupancy tax on hotel and motel
bills. See "LIMITATIONS ON TAX REVENUE — Proposition 62" herein.
Property Transfer Taxes. A documentary stamp tax is assessed for recordation of real property
transfers.
29
% of Total
No. of
City Assessed
Owner/Taxpayer
Parcels
Total Assessed Value
Value
Valencia Town Center Venture LP
17
$380,418,174
1.24%
Bel Valencia LLC
9
162,999,991
0.53
Park Sierra Properties
15
139,879,720
0.46
WESTCO IV LLC
2
123,475,402
0.40
Saugus Colony Limited
19
118,157,292
0.38
EQR Valencia LLC
218
104,965,564
0.34
EQR The Oaks LLC
28
102,832,717
0.33
Southern California Edison Company
2
102,419,258
0.33
ARC SLSTCCA001 LLC
4
99,413,280
0.32
Aerospace Dynamics International
6
98,426,895
0.32
Subtotal
320
$ 1,432,988,293
4.66%
AllOthers
$29,294,357,126
95.34
TOTAL
$30,727,345,419
100.00%
Source: Hdl Coren & Cone, LA County Assessor
2017118
Combined Tax Rolls.
Other Local Taxes
In addition to ad valorem taxes on real property, the City receives the following local taxes:
Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization.
Each local jurisdiction receives an amount equal to one percent of taxable sales within their jurisdiction.
Franchise Taxes. The City levies a franchise tax on its cable television, trash collection and utility
franchises.
Business License Taxes. The City levies a business license tax based primarily on the number of
employees.
Transient Occupancy Taxes. The City levies a 10% transient occupancy tax on hotel and motel
bills. See "LIMITATIONS ON TAX REVENUE — Proposition 62" herein.
Property Transfer Taxes. A documentary stamp tax is assessed for recordation of real property
transfers.
29
The following table shows the tax revenues of the General Fund for the past three fiscal years and
the budgeted amounts for 2018/19.
Sales and use taxes provide the major source of revenues to the General Fund, comprising
approximately 35% of the City's 2017/18 year-end General Fund revenues and approximately 44% of such
General Fund taxes. A sales tax is imposed on retail sales or consumption of personal property. The
statewide sales tax rate is established by the State Legislature.
In Los Angeles County the sales tax rate is 9.50%. 7.25% is collected and administered by the
State on taxes collected within the City as follows:
State General Fund ....................................
TABLE 8
Proposition 172 (public safety use) ................
0.50%
County Health/Welfare.................................
CITY OF SANTA
CLARITA
0.25%
City.........................................................
1.00%
Tax Revenues By Source
Current
Actual
Actual
Actual
Adjusted Budget
2015/16
2016/17
2017/18
2018/19
Sales and Use Tax
$30,705,681
$36,147,727
$37,252,523
$37,000,000
In Lieu Sales and Use Tax
7,101,704
-
-
-
Property Taxes
33,019,058
32,521,990
34,360,615
35,815,000
Franchise Taxes
7,883,058
7,733,972
8,073,102
7,678,127
Real Property Transfer Tax
1,383,743
1,275,363
1,320,018
1,300,000
Transient Occupancy Tax
3,813,437
3,639,264
3,489,281
3,280,000
Motor Vehicle Tax in Lieu
86,035
101,026
113,883
100,000
Satellite Wagering Tax
42,748
43,639
48,220
40,000
Total General Fund Tax
$84,035,462
$81,462,981
$84,657,642
$85,213,127
Source: city of Santa Clarita.
Sales and use taxes provide the major source of revenues to the General Fund, comprising
approximately 35% of the City's 2017/18 year-end General Fund revenues and approximately 44% of such
General Fund taxes. A sales tax is imposed on retail sales or consumption of personal property. The
statewide sales tax rate is established by the State Legislature.
In Los Angeles County the sales tax rate is 9.50%. 7.25% is collected and administered by the
State on taxes collected within the City as follows:
State General Fund ....................................
5.00%
Proposition 172 (public safety use) ................
0.50%
County Health/Welfare.................................
0.50%
County Transportation ................................
0.25%
City.........................................................
1.00%
The 1.00% sales tax revenue is collected by the State and deposited monthly into the City's General
Fund.
Of the remaining 2.25% Los Angeles County sales tax, 2.00% is authorized locally under
Propositions A and C and Measures M and R for transportation including bus, rail and some streets and
road projects. These funds are collected by the State but administered by the Los Angeles County
Metropolitan Transportation Authority. A portion of these funds are returned to the Cities for use on
approved projects. 0.25% is authorized under Measure H for homeless projects.
30
Other Revenue Sources
Licenses and Permits. These City General Fund revenues consist primarily of business license
taxes and building construction permit fees.
Fines, Forfeitures and Penalties. These City General Fund revenues include parking citations,
municipal court fines, asset seizure proceeds and other fines for municipal code violations.
Use of Money and Property. These City General Fund revenues consist primarily of investment
earnings.
Charges for Services. The City charges recording fees, booking fees, court filing fees, plan
checking, building inspection, waste collection and other municipal services.
Employee Relations and Collective Bargaining
The City has a collective bargaining agreement with the Service Employees International Union
(SEIU) Local 721. The contract's term is July 1, 2016 through June 30, 2019. A new contract is currently
under negotiation.
Risk Management
The City joined the Special Districts Risk Management Authority (SDRMA) in the fall of 2005.
SDRMA is a joint powers authority formed under California Government Code Section 6500 that serves
public agencies in California as a self-insurance risk pool. Through SDRMA, the City currently holds a
$5,000 general liability deductible for all third -party bodily injury and property damage claims. All third -
party general liability claims above $5,000 and up to a limit of $10,000,000 are handled by SDRMA.
[Limits for third -party claims consist of $10 million by SDRMA and $5 million in excess by Evanston
Insurance Company. The City also holds a Difference in Conditions Policy in the amount of $30 million
for earthquake, flood, and fire coverage.] The City's workers' compensation coverage is also administered
by SDRMA. The City is self-insured for workers' compensation up to $250,000, but has purchased
coverage through SDRMA for individual claims exceeding $250,000 up to a maximum of $5,000,000 for
employers liability. The annual member contribution is $1,625,564 for the property/liability program and
the workers' compensation program (based on estimated wages). At June 30, 2018, $90,000 was accrued
by the City for general liability claims, and $2,685,229 was accrued for workers' compensation claims and
judgments. These accruals represent estimates of amounts to be paid for incurred and reported claims, as
well as IBNR claims based upon past experience and modified for current trends and information. Settled
claims have not exceeded any of these coverage amounts in any of the last three fiscal years.
In addition to general liability, the City maintains individual policies for autos, property, flood,
special events, and earthquake damage where appropriate. The City maintains earthquake insurance on its
public buildings and while the City intends to initially insure the Leased Property, the Lease does not require
the City to obtain or maintain earthquake insurance on the Leased Property.
In addition, the City purchases property pollution, storage tank, and cyber liability coverage, with
limits of a minimum of $1,000,000, subject to variety of applicable sub -limits and deductibles.
No assurances can be given that the City's security and operational control measures will ensure
against any and all cybersecurity threats and attacks. A cybersecurity incident or breach could damage the
City's Information Technology systems and cause disruption to City services and operations. The cost of
any such disruption or remedying damage caused by future attacks could be substantial. The City will
continue to assess cyber threats and protect its data and systems.
31
City Investment Policy and Portfolio
The City has adopted policies and procedures for the management of the investment of unexpended
funds for the City itself and for other entities of the City, including the Authority, for which the City
provides financial management services. The three basic objectives of the policies and procedures are:
safety of invested funds, maintenance of sufficient liquidity to meet cash flow needs and attainment of the
maximum yield possible consistent with the first two objectives. The most recently revised Investment
Policy for the City was adopted on May 22, 2018, and became effective July 1, 2018. Under the City's
Investment Policy and in accordance with the Government Code, the City may invest in the following types
of investments: bankers acceptances to a maximum term of 180 days; commercial paper to a maximum
maturity of 270 days; "A" rated corporate notes; certificates of deposit; obligations of the United States
Treasury; repurchase agreements to a maximum term of 1 year; obligations of the State of California,
municipal bonds; mutual funds; the Local Agency Investment Fund (LAIF) managed by the State Treasurer,
the Los Angeles County Pooled Investment Fund (LACPIF) administered by the Los Angeles County
Treasurer and Tax Collector and a Local Government Investment Pool (LGIP).
In accordance with the Government Code, the City requires certain collateralization for public
deposits in banks and savings and loans, and has long-established safekeeping and custody procedures.
Currently, PFM Asset Management assists the City in managing its investment portfolio.
Estimated investments as of March 31, 2019 in all funds of the City had a weighted average
maturity of 817 days and were comprised of the following:
Local Agency Investment Fund
LA County Pool Investment Fund
California Asset Management Program
Money Market Funds
Negotiable CD
Noncallable Agencies
U.S. Treasury Securities
Corporate Bonds
Supranationals
Asset -Backed Securities
TOTAL
Principal % of
Amount Total
$ 23,634,420
8.77%
1,583,192
0.59
20,058,943
7.44
25,438,611
9.44
37,501,720
13.91
27,989,381
10.38
58,858,494
21.84
45,348,550
16.82
15,671,339
5.81
13,459,542
4.99
$269,544,191
100.00%
Source: City ofSanta Clarita Finance Department.
Outstanding Indebtedness of the City
The City has the following outstanding General Fund indebtedness, exclusive of obligations to be
paid from specifically pledged revenues, such as general obligation bonds, revenue bonds payable from
other than the General Fund, tax allocation bonds and assessment district bonds. The City has never
defaulted on any of its obligations.
TABLE 9
CITY OF SANTA CLARITA
General Fund Outstanding Indebtedness
(as of April 30, 2019)
Amount Final
Category of Indebtedness Original Issue Outstanding Maturity
32
Private Placement Lease $ 6,985,000 $2,882,003 2020
Lease Revenue Refunding Bonds (Golden Valley Road)
Series 2016A 10,320,000 9,185,000 2036
Lease Revenue Refunding Bonds (Open Space and
Parkland Acquisition Program), Series 201613' 14,020,000 13,145,000 2037
(plus deferred amount for issuance premium) 1,672,352 1,512,560
Capital lease payable 135,389 32,200 2020
Compensated Absences 3,303,789 Indefinite
Claims payable 2,775,229
1. While the lease payments for these bonds are payahle f om the City's General Fund, the City has paid and intends to continue to pay
lease payments f om assessments levied for the City's Open Space Preservation District.
Source: City ofSanta Clarna.
In June 2018, the Authority issued its $11,295,000 2018 Revenue Bonds (Streetlights Acquisition
and Retrofit Program), Series A and its $4,005,000 2018 Taxable Revenue Bonds (Streetlights Acquisition
and Retrofit Program), Series 2018B. The bonds are payable from and secured by a pledge of and first lien
on amounts on deposit in the Streetlighting fund, including assessment revenues and ad -valorem tax
revenues.
Principal payments on the Series 2018A Revenue Bonds are due annually in various amounts
commencing September 1, 2018 through September 1, 2048, for the Series A bonds. The unpaid balance
as of June 30, 2018, was $11,295,000.
Principal payments on the Series 2018B Taxable Revenue Bonds are due annually in various
amounts commencing September 1, 2018 through September 1, 2028, for the Series B bonds. The unpaid
balance as of June 30, 2018, was $4,005,000.
The City anticipates entering into an equipment lease for copiers effective July 2019 with an
estimated $111,952 payable annually from General Fund revenues. It is anticipated that such lease may
constitute a "financial obligation" reportable under the City's undertaking as specified in the Continuing
Disclosure Certificate.
Direct and Overlapping Debt
Set forth below for the City is a direct and overlapping debt report (the "Debt Report") prepared by
California Municipal Statistics, Inc. The Debt Report is included for general information purposes only.
The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in
connection therewith. The Debt Report generally includes long term obligations sold in the public credit
markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such
long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they
necessarily obligations secured by land within the City. In many cases long-term obligations issued by a
public agency are payable from the general fund or other revenues of such public agency.
33
TABLE 10
CITY OF SANTA CLARITA
Direct and Overlapping Debt Statement
2018-19 Assessed Valuation: $32,625,928,276
2.149%
$ 46,459,588
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
% Applicable
Debt 4/1/19
Santa Clarita Community College District
73.794%
$ 184,317,728
William S. Hart Union High School District
73.785
252,311,232
William S. Hart Union High School District Community Facilities District No. 90-1
100.
265,000
William S. Hart Union High School District Community Facilities District No. 2015-1
100.
24,930,000
Castaic Union School District
28.873
6,151,521
Newhall School District
60.703
4,789,467
Newhall School District School Facilities Improvement District No. 2011-1
61.540
36,191,674
Saugus Union School District
88.024
16,734,884
Saugus Union School District School Facilities Improvement District No. 2014-1
88.225
33,432,864
Saugus Union School District Community Facilities District No. 2006-1, Improvement Areas 1,2,3
96.235-100.
60,626,371
Saugus Union School District Community Facilities District No. 2006-2, Improvement Areas 1,2,3
100.
30,585,000
Saugus-Castaic Schools Community Facilities District No. 2006-1C
100.
16,465,000
Saugus -Hart Schools Community Facilities District No. 2000-1
100.
9,490,000
Sulphur Springs Union School District
92.808
44,885,605
Sulphur Springs Union School District Community Facilities District Nos. 2002-1 and 2006-1
100.
43,755,000
City of Santa Clarita Open Space and Parkland Assessment District
100.
13,145,000
City of Santa Clarita Landscaping and Lighting Streetlightiing Zones A and B
100.
14,575,000
City of Santa Clarita Community Facilities District No. 2002-1
100.
13,990,000
City of Santa Clarita 1915 Act Bonds
100.
625,000
Los Angeles County Regional Park and Open Space Assessment District
2.149
292,69
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
$807,559,040
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Los Angeles County General Fund Obligations
2.149%
$ 46,459,588
Los Angeles County Superintendent of Schools Certificates of Participation
2.149
125,241
Los Angeles County Sanitation District No. 32 Authority
75.375
6,451,003
Santa Clarita Community College District Certificates of Participation
73.794
6,519,700
William S. Hart Union High School District Certificates of Participation
73.785
32,993,208
Castaic Union School District Certificates of Participation
28.873
988,900
Saugus Union School District Certificates of Participation
88.024
9,352,550
Sulphur Springs Union School District Certificates of Participation
92.808
23,550,030
City of Santa Clarita General Fund Obligations
100.
11362,480 (1)
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
$137,802,700
OVERLAPPING TAX INCREMENT DEBT (Successor Agency):
100. %
$33,180,000
COMBINED TOTAL DEBT
$978,541,740 (2)
(1) Excludes lease revenue bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease
obligations.
Ratios to 2018-19 Assessed Valuation:
Direct Debt ($27,720,000)................................................................. 0.08
Total Overlapping Tax and Assessment Debt .................................... 2.48
Total Direct Debt ($32,658,411)...................................................... 0.12
Combined Total Debt........................................................................... 3.00
Ratios to Redevelopment Successor Agency Incremental Valuation ($437,609,440):
Total Overlapping Tax Increment Debt .............................................. 7.58
Source: California Municipal Statistics, Inc.
34
Employee Retirement Plan
This sub -caption contains certain information relating to the California Public Employees
Retirement System (PERS'). Neither the City nor the Authority has independently verified the information
provided by PERS or makes any representations or expresses any opinion as to the accuracy of the
information provided by PERS.
The comprehensive annual financial reports of PERS are available on its Internet website at
www.calpers.ca.gov. The PERS website also contains PERS' most recent actuarial valuation reports and
other information concerning benefits and other matters. Such information is not incorporated by reference
herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are `forrvard-
looking" statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a
variety of assumptions, one or more of which may not materialize or may be changed in the future.
Actuarial assessments will change with the future experience of the pension plans.
General. The City's defined benefit pension plan, California Public Employees' Retirement System
(Ca1PERS), provides pensions for all permanent full-time general and some part-time employees of the
City. Ca1PERS is an agent multiple -employer defined benefit pension plan administered by the California
Public Employees' Retirement System. Ca1PERS acts as a common investment and administrative agent
for its participating member employers and are included within Public Employees' Retirement Fund A
(PERF A). Benefits provisions under the Plan are established by State statute and may be amended by City
resolution. The plan provides retirement and disability benefits, annual cost -of -living adjustments and death
benefits to plan members and their beneficiaries based on the employee's years of service, age and final
compensation. Employees vest after five years of service and may receive statutorily reduced retirement
benefits at age 50.
Ca1PERS issues a publicly available financial report, which includes a full description of the
pension plan regarding benefit provisions, and assumptions and membership information that can be
obtained at https://www.calpers.ca.�4ov. The most recent annual report issued by Ca1PERS to the City was
in July 2018 (the "July 2018 Ca1PERS Report'). The July 2018 Ca1PERS Report includes information
based on the June 30, 2017 actuarial valuation of assets included therein (the "2017 Actuarial Valuation").
Additional information about the Ca1PERS Plans can also be found in Note 12 to the City's Audited
Financial Statements attached as Appendix B to this Official Statement.
[Remainder of page intentionally left blank.]
35
The Plan's provisions and benefits in effect as of June 30, 2018 are summarized as follows:
Miscellaneous
Tier 1 Tier 2 Tier 3
Formula 2.7% at 55 2% at 60 2% at 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service
Benefit payments monthly for life monthly for life monthly for life
Retirement age 55 60 62
Monthly benefits, as a % of annual salary 2.7% 2.0% 2.0%
Required employee contribution rates* 8% 7% 5.75°/%
Required employer contribution rates 15.845% 15.845% 15.845%
Tier 1 Tier 2 Tier 3
Applies to: Employees hired Employees hired Employees hired
before April 9, 2011** between April 9, 2011, January 1, 2013, or
and December 31, later
2012, or those hired
January 1, 2013, or
later, who have been a
Classic CAPERS
member with a public
agency or in a Classic
reciprocal plan within
the last 6 months). **
"For unrepresented Tier I participants, the City pays 2% of the required employee contribution. For the SEIU Tier I participants, the City pays 2% of the required
employee contributions. The City does not pay any portion of the employee contribution for Tier 2 or Tier 3 participants. These payments are classified as employee
contributions in accordance with GASB 68.
r: r: Those hired as part-time seasonal (PTS) who later convert to regular full-time will qualify for Tier 1. 2 or 3 depending on their conversion date.
Source: City of Santa Clarim 2017/18 CAFR.
At June 30, 2017, 1,002 employees were covered by the benefit terms: (i) 190 inactive employees
or beneficiaries currently receiving benefits; (ii) 407 employees entitled to but not yet receiving benefits,
and (iii) 405 active employees. This information was obtained from the PERS Annual Valuation Report as
of June 30, 2017 and is the most recent information available.
Recent Actuarial Changes and Related Developments. In recent years, the Ca1PERS Board of
Administration (the "CaIPERS Board") has taken several steps, as described below, intended to reduce the
amount of the unfunded accrued actuarial liability of its managed plans. Many of the assumptions and
policies implemented by the Ca1PERS Board have increased and are likely to continue to increase both the
required contributions and the unfunded liabilities of its member employers, including the City.
On March 14, 2012, the Ca1PERS Board voted to lower the Ca1PERS' rate of expected price
inflation and its investment rate of return (net of administrative expenses) (the "Ca1PERS Discount Rate")
from 7.75% to 7.5%. On February 18, 2014, the Ca1PERS Board voted to keep the Ca1PERS Discount Rate
unchanged at 7.5%. On November 17, 2015, the Ca1PERS Board approved a new funding risk mitigation
policy to incrementally lower the Ca1PERS Discount Rate by establishing a mechanism whereby such rate
is reduced by a minimum of 0.05% to a maximum of 0.25% in years when investment returns outperform
the existing Ca1PERS Discount Rate by at least four percentage points. On December 21, 2016, the
Ca1PERS Board voted to lower the Ca1PERS Discount Rate to 7.0% over a three year phase-in period in
accordance with the following schedule: 7.375% in fiscal year 2017/18, 7.25% in fiscal year 2018/19 and
7.00% in fiscal year 2019/20. The new discount rate went into effect July 1, 2018 for the City and other
36
member employers. Lowering the CalPERS Discount Rate means member employers like the City will see
increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1,
2013, under the PEPRA (defined below) will also see their contribution rates rise.
On January 1, 2013, the Public Employees' Pension Reform Act of 2013 ("PEPRA") took effect.
Among other things, PEPRA created a new benefit tier for public employees hired on or after January 1,
2013. The City believes that the provisions of PEPRA will help control its pension benefit liabilities in the
future.
In April 2013, the CalPERS Board approved revised actuarial policies that aimed at returning the
CalPERS system to fully -funded status within 30 years. These policies include a rate -smoothing method
with a 30 -year fixed amortization period for gains and losses (rather than the current 30 -year rolling
amortization method). CalPERS delayed the implementation of the new policy until fiscal year 2015/16,
and as described below further revised these policies in subsequent years.
Also, on February 20, 2014, the CalPERS Board approved new demographic assumptions
reflecting (i) expected longer life spans of public agency employees and related increases in costs for the
CalPERS system and (ii) trends of higher rates of retirement for certain public agency employee classes,
including police officers and firefighters. The increase in liability due to the new assumptions will be
amortized over 20 years with increases phased in over five years, beginning with the contribution
requirement for fiscal year 2016/17.
The CalPERS Board is required to undertake an experience study every four years under its
Actuarial Assumptions Policy and State law. As a result of the most recent experience study, on December
20, 2017, the CalPERS Board approved new actuarial assumptions, including (i) lowering the inflation rate
to 2.625% for the June 30, 2017 actuarial valuation and to 2.50% for the June 30, 2018 actuarial valuation,
(ii) lowering the payroll growth rate to 2.875% for the June 30, 2017 actuarial valuation and 2.75% for the
June 30, 2018 actuarial valuation, and (iii) certain changes to demographic assumptions relating to the
salary scale for most constituent groups, and modifications to the morality, retirement, and disability
retirement rates.
On February 14, 2018, the CalPERS Board approved a new actuarial amortization policy with an
effective date for actuarial valuations beginning on or after June 30, 2019, which includes (i) shortening the
period over which actuarial gains and losses are amortized from 30 years to 20 years, (ii) requiring that
amortization payments for all unfunded accrued liability bases established after the effective date be
computed to remain a level dollar amount throughout the amortization period, (iii) removing the 5 -year
ramp -up and ramp -down on unfunded accrued liability bases attributable to assumptions changes and non-
investment gains/losses established on or after the effective date and (iv) removing the 5 -year ramp -down
on investment gains/losses established after the effective date. While CalPERS expects that reducing the
amortization period for certain sources of unfunded liability will increase future average funding ratios,
provide faster recovery of funded status following market downturns, decrease expected cumulative
contributions, and mitigate concerns over intergenerational equity, such changes may result in increases in
future employer contribution rates.
There can be no assurances that CalPERS will not make additional changes to its actuarial
assumptions and policies in the future impacting upon the City's required funding contributions and its
unfunded accrued liability.
Funding Policy. Section 20814(c) of the California Public Employees' Retirement Law (PERL)
requires that the employer contribution rates for all public employers be determined on an annual basis by
the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan
contributions are determined through PERS' annual actuarial valuation process. The actuarially determined
37
rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year,
with an additional amount to finance any unfunded accrued liability. The employer is required to contribute
the difference between the actuarially determined rate and the contribution rate of employees. For the year
ended June 30, 2019, the average active employee contribution rate is 7.568% of annual pay, and the
employer's contribution rate is [13.738]% of annual payroll. Employer contribution rates may change if
plan contracts are amended. It is the responsibility of the employer to make necessary accounting
adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where
members are paying a portion of the employer contribution. The employer contributions as of June 30,
2018, were $9,662,191.
Annual Payments and Contribution Rates. Under GASB 27, an employer reported an annual
pension cost ("APC") equal to the annual required contribution ("ARC") plus an adjustment for the
cumulative difference between the APC and the employer's actual plan contributions for the year. The
cumulative difference was called the net pension obligation. In order to calculate the dollar value of the
ARC for inclusion in the financial statements, the applicable contribution rate was multiplied by the payroll
of the covered employees that were paid during the relevant period.
Effective for financial statements beginning after July 1, 2014, GASB 68 replaces GASB 27.
Hence, the annual reports issued by CalPERS for 2015 and thereafter reflect GASB 68. GASB 68 requires
additional reporting that CalPERS is intending to provide upon request by its members.
Set forth below is a history and projection of the City's contributions and projected payments to
CaIPERS, from fiscal year 2008/09 through fiscal year 2024-25, as determined by the annual actuarial
valuation. It does not account for prepayments or benefit changes made during a fiscal year. The City
contributed 100% of its APC in each completed year shown, except for 2017/18, when the City contributed
a $5,000,000 excess payment. The City estimates that approximately 81% of the payments to these plans is
made from the City's General Fund.
The schedule below illustrates the 10 -year trend of City contributions. The actuarial methods and
assumptions used to set the actuarially determined contributions for fiscal year 2017/18 were from June 30,
2016 public agency valuations.
Historical CaIPERS Contribution Amounts by City
Measurement
Period
(ending June 30)
Actuarially
determined City
Contribution
City
Contribution
Deficiency
(excess)
Covered-
Employee
Payroll
Contributions
as a % of
Covered Payroll
2009
2,865,328
(2,865,328)
26,145,818
10.96
2010
2,919,550
(2,919,550)
25,336,721
11.52
2011
2,916,852
(2,916,852)
24,940,516
11.70
2012
3,224,628
(3,224,628)
24,807,314
13.00
2013
3,319,326
(3,319,326)
25,256,659
13.14
2014
3,562,246
(3,562,246)
26,879,556
13.25
2015
3,740,138
(3,740,145)
27,234,699
13.73
2016
3,958,892
(3,959,503)
27,934,377
14.17
2017
4,484,140
(4,484,140)
29,966,168
14.96
2018
4,662,191
(9,662,191)
(5,000,000)
29,655,553
32.58
Source: City of Santa Clarita 2017/18 CAFR.
38
The City is working toward a funded status of at least 90% within the next four years. The table
below highlights the voluntary excess City contribution payments made to CalPERS over the last two fiscal
years and expected to be made to CalPERS over the next four fiscal years:
CalPERS Excess Contribution Amounts by City
FISCAL YEAR
2017/18 2018/19 2019/20(2) 2020/21(2) 2021/22(2) 2022/23(2)
Ongoing Additional
Annual Contribution Rates
UAL Payment
$1,862,263
$1,400,000 $1,500,000 $1,600,000 $1,800,000
One -Time Payment
$5,000,000 5,000,000(')
5,000,000
Total Excess Payments
$5,000,000 $6,862,263
$6,400,000 $1,500,000 $1,600,000 $1,800,000
Projected Funding Status
74.9% 81.9%
86.3% 88.4% 90.5% 92.3%
(1) Expected to be paid prior to June 30, 2019.
(2) Estimated.
Source: City of Santa Clarita, Department of Finance.
The projected mandatory contribution rates for fiscal year 2019-20 through 2024-25 are provided
by CalPERS in its July 2018 report. The CalPERS projections assumed that all actuarial assumptions
(including among other assumptions, a 7.25% return in fiscal year 2019-20 and a 7% return for the
remaining year projection period) will be realized and that no future changes to assumptions, contributions,
benefits or funding will occur during the projection period. The July 2018 CalPERS Report states that due
to the adopted changes in the CalPERS Discount Rate effective for the next valuation in combination with
the five year phase-in ramp (as discussed above), the increase in the required contributions are expected to
continue for six years from fiscal year 2019-20 through fiscal year 2024-25. A complete explanation of the
CalPERS assumptions can be found in the 2017 Actuarial Valuation.
(1) Projected annual payment to retirement plan based on projected contribution rates on CalPERS actuarial report
dated July 2017
(2) Projected annual payment to retirement plan based on projected contribution rates on CalPERS plus Unfunded
Accrued Liability (UAL) in CalPERS July 2018 Report.
Source: City of Santa Clarita, Department of Finance.
39
Annual Contribution Rates
to CalPERS Retirement Plan by City
Fiscal Year
Ended
Employer Unfunded
Liability
June 30
Normal Cost % Unfunded Rate
Payments
2014
8.721% 4.582%
n/a
2015
8.160 5.578
n/a
2016
8.216 5.969
n/a
2017
8.482 6.553
n/a
2018(')
8.258
$2,300,635
2019(2)
8.560
2,921,910
2020(2)
9.211
3,466,495
2021(2)
9.9
3,897,000
2022(2)
9.9
4,383,000
2023(2)
9.9
4,758,000
2024(2)
9.9
5,060,000
2025(2)
9.9
5,347,000
(1) Projected annual payment to retirement plan based on projected contribution rates on CalPERS actuarial report
dated July 2017
(2) Projected annual payment to retirement plan based on projected contribution rates on CalPERS plus Unfunded
Accrued Liability (UAL) in CalPERS July 2018 Report.
Source: City of Santa Clarita, Department of Finance.
39
In July 2018, CaIPERS reported a preliminary 8.6% net return on investments for the fiscal year
ended June 30, 2018. In the two prior fiscal years ended June 30, 2017 and 2016, the reported return was
11.2% and 0.6%, respectively. CaIPERS weighted average investment returns for the past five, ten and
twenty years ending June 30, 2017 are 8.8%, 4.4% and 6.6%, respectively. As discussed above, the
CaIPERS Board voted in December 2016 to phase in an assumed 7% rate of return by fiscal year 2019-20.
CaIPERS has publicly indicated that it expects actual investment returns in the next ten years to be less than
the 7% assumed rate of return. Actual investment returns lower than the actuarially assumed level (in and
of itself) will result in decreased funding status and increased required contribution by the City.
Funding Status ofPlan. Based on the 2017 Actuarial Valuation (which is the most recent actuarial
valuation available), CaIPERS reported an unfunded liability, as of June 30, 2017, of $45.3 million for the
City's miscellaneous employees as compared to $44.5 million the previous year. Based upon this report,
the City reported that its CaIPERS obligation had a funded ratio of 74.9% based upon the market value of
plan assets with respect to the City's miscellaneous employees. As noted above, CaIPERS has changed is
discount rate assumptions. The funding status as of June 30, 2017 was calculated using an CaIPERS
Discount Rate of 7.25%. Also, as noted above CaIPERS has changed its amortization and smoothing
policies in 2013. Beginning with the June 30, 2015 Actuarial Valuations (that set fiscal year 2015-16
CaIPERS contribution rates), CaIPERS no longer uses an actuarial value of assets and instead employs an
amortization and rate smoothing policy that will account for all gains and losses over a fixed 30 -year period
with the increases and decreases in the rate phased over a 5 -year period. Also as noted above, CaIPERS has
changed smoothing policies (shortening the period from 30 to 20 -years) for valuations on and after June
30, 2019.
The table below summarizes the funded status of the City's retirement plan as of the most recent
actuarial valuation date (June 30, 2017). Additional information regarding the City's employee retirement
plan, annual pension costs, the funding status thereof and significant accounting policies related thereto is
set forth in Note 12 to the City's comprehensive annual financial report, attached hereto as APPENDIX B.
CaIPERS Funding History
Actuarial (Overfunded)
Accrued Unfunded AAL
Valuation Liability (Overfunded) Annual as a % of
Date (AAL)— Market Value Unfunded Funded Covered Covered
(June 30) Entry Age of Assets AAL Ratio Payroll Payroll
2011
$ 99,379,470
$ 74,744,441
$24,635,029
75.2%
$25,381,221
97.06%
2012
108,651,771
78,013,291
30,638,480
71.8
24,198,291
126.61
2013
120,474,192
91,449,328
29,024,864
75.9
26,096,656
111.22
2014
138,805,002
111,331,265
27,473,737
80.2
27,201,293
100.00
2015
150,580,794
116,659,735
33,921,059
77.5
27,751,652
122.23
2016
164,514,560
119,981,401
44,533,159
72.9
28,113,472
158.40
2017
180,918,299
135,595,787
45,322,512
74.9
28,541,470
158.79
Source: Ca1PERS annual valuation report dated July 2018
40
For the measure period ended June 30, 2017 (the measurement date), the total pension liability was
determined by rolling forward the June 30, 2016 total pension liability. The June 30, 2016 and the June 30,
2017 total pension liabilities were based on the following actuarial methods and assumptions:
Valuation Date:
Actuarial Cost Method:
Amortization Method:
Asset Valuation Method:
Actuarial Assumptions
Discount Rate:
Investment Rate of Return:
Projected Salary Increases:
Inflation:
June 30, 2016
Entry Age Normal Cost Method
Level Percent of Payroll
Market Value
7.375%
7.50% of net pension, investment and
administrative expenses, including inflation
Varies by Entry Age and Service
2.75%
The Schedule of Changes in the City's Net Pension Liability and Related Ratios during the
measurement period is as follows:
Measurement Period Jane 30. 2017
Total Pension Liability
Service Cost $ 4,921,221
Interest 12,166,752
Difference between Expected and Actual Experience (1,505,660)
Changes of Assumptions 11,654,992
Benefit Payments, Including Refunds of Employee Contributions (4,406,046)
Net Change in Total Pension Liability 22,831,259
Total Pension Liability — Beginning 159,757,441
Total Pension Liability - Ending (a) $182,588,700
Plan Fiduciary Net Position
Contributions —Employer
$ 4,484,866
Contributions —Employee
2,224,721
Net Investment Income
13,510,656
Administrative Expenses
(117,534)
Benefit Payments, Including Refunds of Employee Contributions
(4,406,046)
Net Change in Fiduciary Net Position
15,636,663
Plan Fiduciary net Position - Beginning
120,245,541
Plan Fiduciary net Position - Ending (b)
$135,882,204
Plan Net Pension Liability/(Asset) - Ending (a) -(b) $ 46,706,496
Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 74.42°/%
Source: City of Santa Clarita 2017/18 CAFR.
Post -Retirement Medical Benefits (OPEB)
The City has elected through resolution to provide healthcare benefits as a single -employer defined
benefit plan to retirees, spouses, and eligible dependents of the City. This plan provides postemployment
medical insurance benefits through the PERS Health Plan (the Plan).
41
Funding Policy. In December 2011, the City adopted the Public Agencies Post -Retirement Health
Care Plan Document and Trust Agreement, a tax -qualified irrevocable trust, organized under IRC Section
115, established to pre -fund OPEB. The Plan Trustee is U.S. Bank and Public Agencies Retirement
Services (PARS) is the Trust Administrator. The Plan and its contribution requirements are established by
a memorandum of understanding with the applicable employee bargaining units and may be amended by
agreements between the City and the bargaining units. The annual contribution is based on the actuarially
determined contribution. For the fiscal year 2017/18, the City's cash contributions were $970,000 and
estimated implied subsidy of $257,000 resulting in total payments of $1,227,000.
Eligibility. City employees who have a service retirement from the City at age 50 with five or more
years of service are eligible to receive post -employment medical benefits. Employees who have a disability
retirement are also eligible. The benefit for employees hired before January 1, 2008 is up to $1,017 per
month. The maximum benefit will be adjusted when the lowest cost employee rate, plus one, exceeds
$1,017. No minimum years of service were required for the unrepresented employees hired before January
1, 2008 and retired before January 1, 2012 and represented employees hired before January 1, 2008 and
retired after January 1, 2012 and before January 1, 2014. For other employees hired before January 1, 2008,
the following vesting applies:
Years of Service Vested Percentage
0 to 5 years 0%
5 to 9 years 50%
10 to 14 years 75%
15 years and greater 100%
Employees hired after January 1, 2008 receive the PERS minimum and are not subject to a vesting
schedule. As of the most recent valuation, the total participants in the Plan are 496, with 367 active
employees, 109 retirees receiving benefits and 20 inactive entitled but not yet receiving benefits.
Net OPEB Liability. The City's net OPEB actuarial valuations of an ongoing plan involve estimates
of the value of reported amounts and assumptions about the probability of occurrence of events far into the
future. Examples include assumptions about future employment, mortality, and the healthcare cost trend
rate. Amounts determined regarding the funded status of the Plan and contributions are subject to continual
revision, as actual results are compared with past expectations, and new estimates are made about the future.
The City's net OPEB liability was measured as of June 30, 2018 and the total OPEB liability used to
calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2016 and based
on the following assumptions: (a) the City contributes full cash benefit of the Actuarially Determined
Contribution (ADC) and implied subsidy benefit is on a pay-as-you-go basis, (b) a 6.50% investment rate
of return, which is based on the expected return on funds invested by PARS, (c) an annual healthcare cost
trend rate of 6.5% for Non -Medicare and 6.7% for Medicare decreasing to an ultimate rate of 5.0% in 2021
and thereafter, (d) inflation at 3.00% per annum, (e) aggregate payroll increase at 3.00%, (f) discount rate
of 5.60% for 2018, 5.46% for 2017, (g) Municipal Bond Index of 3.87% for 2018, 3.58% for 2017, and (h)
actuarial cost method is Entry Age Normal Level Percentage of Payroll. The value of assets was determined
using techniques that spread the effects of short-term volatility in the market value of investments over a
five-year period. The net OPEB liability is being amortized as a level percentage of projected payroll on an
open basis. The remaining amortization period at June 30, 2018 was 16 years.
As of the most recent actuarial valuation date on June 30, 2018, the Plan was 79.08% funded. The
actuarial OPEB liability for benefits was $49.27 million, and the Plan Fiduciary net position of assets was
$38.96 million, resulting in a net OPEB liability of $10.3 million. The covered payroll (annual payroll of
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active employees covered by the Plan) was $30.6 million, and the ratio of net OPEB liability to the covered
payroll was 33.65%. Additional information regarding the City's net OPEB liability, the funding status
thereof and significant accounting policies related thereto is set forth in Note 13 to the City's comprehensive
annual financial report, attached hereto as APPENDIX B.
The Schedule of Changes in the City's Net OPEB Liability and Related Ratios during the June 30,
2017 measurement period as shown in the City's comprehensive annual financial report is as follows:
Measurement Period June 30. 2017
Changes in Total OPEB Liability
$ 1,227,000
Service Cost
$ 1,711,000
Interest
2,633,073
Assumption Changes
(1,071,000)
Benefit Payments
(1,054,000)
Net Change in Total OPEB Liability
2,219,073
Total OPEB Liability — Beginning
47,054,000
Total OPEB Liability - Ending (a)
$49,273,073
Plan Fiduciary Net Position
Contributions — Employer
$ 1,227,000
Net Investment Income
2,963,587
Benefit Payments
(1,054,041)
Administrative Expenses14(
6,319)
Net Change in Fiduciary Net Position
2,990,227
Plan Fiduciary net Position - Beginning
35,974,073
Plan Fiduciary net Position - Ending (b)
538,964,300
Plan Net OPEB Liability/(Asset) - Ending (a) -(b) $ 10,308,773
Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 79.08°/%
Covered employee payroll $30,634,000
Net OPEB liability as a percentage of covered -employee payroll 33.65°/%
Source: City of Santa Clarita 2017/18 CAFR.
The City received an updated preliminary results report by Bartel Associates LLC, of the City's
Retiree Healthcare Plan June 30, 2018 Actuarial Valuation Plan Funding for 2018/19 and 2019/20, dated
April 11, 2019, which shows the City with a funded ratio of 104.5% for the measurement period ending
June 30, 2018.
Deferred Compensation Plan/Defined Contribution Plan
The City has established deferred compensation/defined contribution plans for certain
classifications of management under IRC Section 401(a). City participation in contributions to the plans is
mandatory. The City is obligated to contribute amounts ranging from $2,000 to $18,000 per participant per
year. Employee contributions to certain plans are voluntary. During the year ended June 30, 2018, there
were 1,139 participants in the plans and the City's contributions totaled $199,022, while employees'
contributions totaled $2,052660.
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Redevelopment Agencies
Until February 1, 2012, the California Redevelopment Law (Pari 1 of Division 24 of the Health &
Safety Code of the State) authorized the redevelopment agency of any city or county to receive an allocation
of tax revenues resulting from increases in assessed values of properties within designated redevelopment
project areas (the "incremental value") occurring after the year the project area was formed. In effect, local
taxing authorities, such as the City, realized tax revenues only on the assessed value of such property at the
time the redevelopment project was created for the duration of such redevelopment project.
The State Legislature approved two bills, AB X126 and AB X127, during the 2011-12 State budget
process. AB Xl 26 contemplated the elimination of redevelopment agencies State-wide, and AB Xl 27
proposed to authorize the continued existence of redevelopment agencies that agreed to remit a percentage
of their "tax increment' to the State's taxing entities. The California Redevelopment Association and the
League of California Cities filed a petition with the California Supreme Court (the "Court'), requesting the
Court to review the constitutionality of AB Xl 26 and AB Xl 27. On December 29, 2011, the Court issued
its opinion and upheld AB Xl 26, but invalidated AB Xl 27. As a result of the decision, all California
redevelopment agencies, including the Former Redevelopment Agency, were dissolved as of February 1,
2012. Certain tax revenues allocable to the Former Redevelopment Agency will continue to be allocated to
the Successor Agency to the Former Redevelopment Agency, to pay certain financial obligations approved
by the Successor Agency's Oversight Board and State Department of Finance ("DOF"), and some of those
revenues may be redirected to other taxing agencies, such as the County, school districts and the City.
Prior to the dissolution of the Former Redevelopment Agency, the General Fund advanced the
Former Redevelopment Agency funding for various redevelopment activities. These advances were made
in the form of promissory notes and were transferred to the Successor Agency upon dissolution. In fiscal
year 2014-2015, the DOT approved final loan amounts from the General Fund to the Former
Redevelopment Agency for $7,225,964 using a LAIF rate of 0.26%, which was in effect when the Oversight
Board reinstated the loans on February 25, 2015. On September 22, 2015, the Committee on Budget and
Fiscal Review of the California State Senate approved SB 107. A mandate of this legislation included a
recalculation of the notes to the Successor Agency using a 3% simple interest from the origination of the
note, instead of the LAIF rate. For fiscal year 2015-2016 and subsequent, the loan amounts will increase
by the 3% interest only. As of June 30, 2018, the loan amount reported in the General Fund was $9,440,601,
of which $2,749,354 represents unpaid accrued interest.
STATE OF CALIFORNIA BUDGET INFORMATION
A number of the City's revenues are collected and subvented by the State (such as sales tax and
motor -vehicle license fees) or allocated in accordance with State law (most importantly, property taxes).
Therefore, State budget decisions can have an impact on City finances. During prior State fiscal crises, the
State has often chosen to reallocate a portion of such revenues to assist in its own budget balancing, although
Constitutional initiatives passed in 2004 and 2010 limit the State's ability to divert revenues from localities
(including the City) in the future.
The State's fiscal year begins on July 1 and ends on June 30. The State Constitution requires the
Governor to submit a budget for each fiscal year to the Legislature by the preceding January 10 (the
"Governor's Budget'). The Constitution requires the Legislature to pass a budget bill by June 15, after
which the Governor has 12 calendar days to either sign or veto the enrolled budget. The Legislature has
adopted timely the past four State budgets, although the Legislature has failed to meet the June 15 deadline
in prior years. Because more than half of the State's General Fund income is derived generally from the
April 15 personal income tax, the Governor submits a "May Revision" to his proposed budget. The
Legislature typically waits for the May Revision before making final budget decisions. Once the budget
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bill has been approved by a majority vote of each house of the Legislature, it is sent to the Governor for
signature. Increases in taxes require approval of a two-thirds majority of each house.
The following information concerning the State's budget has been obtained from publicly available
information which the City and the Authority believe to be reliable; however, neither the City nor the
Authority take any responsibility as to the accuracy or completeness thereof and have not independently
verified such information. Information about the State budget is regularly available at various State -
maintained websites. Text of the State budget may be found at the State Department of Finance website,
www. ebudeet. ca. gov. An impartial analysis of the budget is posted by the Office of the Legislative Analyst
at www.lao.ca.gov. In addition, various State of California official statements, many of which contain a
summary of the current and past State budgets, may be found at the website of the State Treasurer,
www. treasurer. ca. gov. The information referred to is prepared by the respective State agency maintaining
each website and not by the City, and the City takes no responsibility for the continued accuracy of the
Internet addresses or for the accuracy or timeliness of information posted there, and such information is
not incorporated herein by these references.
On June 27, 2018, Governor Brown approved the final 2018-19 State Budget (the "2018-19
Budget'), a $201.4 billion plan which includes funding of $97.2 billion ($56.1 billion General Fund and
$41.1 billion other funds) for K-12 education programs and a $6.16 billion increase in one-time and ongoing
appropriations for K-12 school districts in Fiscal Year 2018-19. The 2018-19 Budget also includes $500
million in grants for cities to use to address homelessness and the `No Place Like Home' bond program to
accelerate the delivery of housing projects to serve individuals with mental illness. Altogether, the 2018-19
Budget includes $5 billion related to affordable housing and homelessness, across multiple State
departments and programs and increases the value of welfare grants through the CalWORKS program by
approximately $360 million. The 2018-19 Budget also includes $79 million for programs to help those in
the U.S. illegally by funding legal services programs and assistance for young adults who signed up with
the Deferred Action for Childhood Arrivals program.
On January 10, 2019, Governor Newsom submitted his proposed 2019-20 Budget (the "2019-20
Budget'), a $209.1 billion spending plan which includes $144.2 billion from the state's General Fund, $59.5
billion from special funds, and $5.4 billion in bond funds. Looking forward, the 2019-20 Budget assumes
economic growth will slow, projecting revenue increases of about 3% per year for the next three years. The
proposed 2019-20 Budget transfers $1.8 billion into the State's rainy day fund, for a total fund balance of
$15.3 billion in 2019-20. For discretionary reserves, the 2019-20 Budget allocates $2.3 billion to the special
fund for economic uncertainties and adds $700 million to the safety net reserve to protect Medi -Cal and
CaIWORKS during an economic downturn. The plan proposes $3 billion in additional one-time funds to
Ca1PERS and Ca1STRS to pay down unfunded liabilities, while allocating $4.1 billion to pay off budgetary
debts and prior deferral payments. The 2019-20 Budget proposes linking transportation funding to local
housing targets, while also allocating $1.3 billion in one-time funds to spur low- and moderate -income
housing production via local government grants and developer loans. The plan includes $500 million for
local governments to build emergency shelters, navigation centers, and supportive housing for the state's
homeless population. The budget proposes streamlining the California Environmental Quality Act (CEQA)
to expedite such construction. The budget includes a large investment in early childhood education and
child care. The 2019-20 Budget includes $415 million to address forest health and to prevent and fight
wildfires, as well as $172 million to improve the State's emergency response communications.
While the State's general fiscal condition has improved since the recession, there can be no
assurances that the State will not experience future budget challenges. Neither the City nor the Authority
can anticipate how any future State budget challenges might impact the revenues or expenditures of the
City.
RISK FACTORS
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Purchase of the Bonds will constitute an investment subject to certain risks, including the risk of
nonpayment of principal and interest. Before purchasing any of the Bonds, prospective investors should
carefully consider, among other things, the risk factors described below. However, the following is not
meant to be an exhaustive listing of all the risks associated with the purchase of the Bonds. Moreover, the
order ofpresentation of the riskfactors does not necessarily reflect the order of their importance.
Substitution of Property
Pursuant to the Lease, the City will have, so long as the Lease is in effect, the option at any time
and from time to time, to substitute other real property and/or improvements for any portion of the Leased
Property or release any identifiable real property and/or improvements constituting the Leased Property,
provided that the City shall satisfy all of the requirements set forth in the Lease. See APPENDIX C —
"SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease
— Substitution and Release of Property."
Base Rental Payments Are Not Debt; Bonds are Limited Obligations
The obligation of the City to make the Base Rental Payments under the Lease does not constitute
an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which
the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to
make Base Rental Payments constitutes a debt of the City, the State or any political subdivision thereof
(other than the Authority) within the meaning of any constitutional or statutory debt limitation or restriction.
The Bonds are not general obligations of the Authority, but are limited obligations payable solely
from and secured by a pledge of Revenues and amounts held in the funds and accounts created under the
Indenture, consisting primarily of applicable Base Rental Payments. The Authority has no taxing power.
The Bonds are being issued by the Authority pursuant to the Act. The Supreme Court of the State
in its 1998 decision of Rider v. City of San Diego, 18 Cal. 4h 1035, upheld the validity of a joint powers
agency financing and found that bonds issued pursuant to the Act and payable from lease payments made
pursuant to a lease with the City of San Diego were not subject to the State constitutional provisions that
require two-thirds voter approval of indebtedness incurred by a city, county or school district. No voter
approval of the Bonds or the Lease has been sought.
Although the Lease does not create a pledge, lien or encumbrance upon the funds of the City for so
long that the Leased Property is available for its use, the City covenants to take such action as may be
necessary to include Base Rental Payments and Additional Rental Payments due under the Lease from any
source of legally available funds in its annual budget and to make the necessary annual appropriations for
all such Base Rental Payments and Additional Rental Payments. The City is currently liable and may
become liable on other obligations payable from general revenues, some of which may have a priority over
the Base Rental Payments, or which the City, in its discretion, may determine to pay prior to the Base Rental
Payments.
The City has the capacity to enter into other obligations payable from the City's General Fund,
without the consent of or prior notice to the Owners of the Bonds. To the extent that additional obligations
are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event
the City's revenue sources are less than its total obligations, the City could choose to fund other activities
before making Base Rental Payments and other payments due under the Lease. The same result could occur
if state constitutional expenditure limitations were to prohibit the City from appropriating and spending all
of its otherwise available revenues.
Abatement
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In the event of the loss of, damage to or destruction or condemnation of the Leased Property that
causes the City not to have the use and possession of all or a substantial part of such Leased Property, the
City's obligation to make the Base Rental Payments due under the Lease will be abated and,
notwithstanding the provisions of the Lease specifying the extent of such abatement and rental interruption
insurance covering loss of use of the Leased Property in an amount adequate to cover 24 months of Base
Rental Payments, the resulting Base Rental Payments (and such other funds) may not be sufficient to pay
all of the remaining principal of and interest on the Bonds. See APPENDIX C — "SUMMARY OF
CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease — Abatement of
Rental."
City Pension and OPEB Obligations
The City has significant pension and post -employment retirement benefits ("OPEB") payable to its
employees and pensioners. These obligations, and particularly the pension obligations, are in the nature of
"defined benefit plans" where the City's obligations to its employees and pensioners are fixed, without
regard to the earnings on the City's or the State's (CalPERS') retirement system investments. If investment
returns on the City's or Ca1PERS plans are not realized as expected, or if pension or other OPEB benefits
increase because of demographic or other factors, the City's payments for its pension and OPEB obligations
could increase, thus decreasing the revenues available to make Base Rental Payments.
Further, the City's pension obligations are constitutionally protected under California law, meaning
that the City has limited ability to alter its obligations outside of a municipal bankruptcy (Chapter 9)
proceeding. Even in a bankruptcy proceeding, the City may have limited ability to avoid paying its pension
obligations, and in particular, any obligation to make payments to Ca1PERS, potentially resulting in an
adverse impact on the treatment in bankruptcy of other City creditors, including the Bond Owners. See
"RISK FACTORS — Bankruptcy" below.
Risk of Uninsured Loss
The City covenants under the Lease to maintain certain insurance policies on the Leased Property.
These insurance policies do not cover all types of risk. The Leased Property could be damaged or destroyed
due to earthquake or other casualty for which the Leased Property is uninsured. The Lease does not
require earthquake insurance. Additionally, the Leased Property could be the subject of an eminent
domain proceeding. Under these circumstances an abatement of Base Rental Payments could occur and
could continue indefinitely. There can be no assurances that amounts received as proceeds from insurance
or from condemnation of the Leased Property will be sufficient to repair the Leased Property or to redeem
the Bonds and any other obligations secured by Base Rental Payments.
Certain of the City's insurance policies provide for deductibles. Should the City be required to
meet such deductible expenses, the availability of General Fund revenues to make Base Rental Payments
may be correspondingly affected.
Self -Insurance
The City may self -insure for all insurance with the exception of rental interruption. Should the
City self -insure, no assurance can be given that such self-insurance at the time of any casualty or loss will
be adequate to cover any claims that may arise. For a discussion of (i) the insurance requirements for the
Leased Property, and (ii) the conditions under which the City is permitted to self -insure, see "SOURCES
OF PAYMENT OF THE BONDS — Insurance by the City." For a general description of the City's
insurance and risk management programs, see "FINANCIAL INFORMATION RELATING TO THE
CITY — Risk Management' and "APPENDIX B — AUDITED FINANCIAL STATEMENTS OF THE
CITY FOR THE FISCAL YEAR ENDED JUNE 30.2018."
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Eminent Domain
If the Leased Property is taken permanently under the power of eminent domain or sold to a
government threatening to exercise the power of eminent domain, the term of the Lease will cease as of the
day possession is taken. If less than all of the Leased Property is taken permanently, or if the Leased
Property or any part thereof is taken temporarily, under the power of eminent domain, (a) the Lease will
continue in full force and effect and will not be terminated by virtue of such taking, and (b) there will be a
partial abatement of Base Rental Payments as a result of the application of net proceeds of any eminent
domain award to the prepayment of the Base Rental Payments, in an amount to be agreed upon by the City
and the Authority such that the resulting Base Rental Payments represent fair consideration for the use and
occupancy of the remaining usable portion of the Leased Property. The City covenants in the Lease to
contest any eminent domain award which is insufficient to either: (i) prepay the Base Rental Payments in
whole, if all the Leased Property is condemned; or (ii) prepay a pro rata share of Base Rental Payments, in
the event that less than all of the Leased Property is condemned.
Bankruptcy
The City is a unit of State government and therefore is not subject to the involuntary procedures of
the United States Bankruptcy Code (the `Bankruptcy Code"). However, pursuant to Chapter 9 of the
Bankruptcy Code, the City may seek voluntary protection from its creditors for purposes of adjusting its
debts. If the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of
the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Among the
adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the
Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the
commencement of any judicial or other action for the purpose of recovering or collecting a claim against
the City; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing
of a bankruptcy petition; (iii) the existence of unsecured or court -approved secured debt which may have a
priority of payment superior to that of the Base Rental Payments under the Lease as they relate to Revenues
due to Owners of Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the City's
debt (a "Plan") without the consent of the Trustee or all of the Owners of Bonds, which Plan may
restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court
finds that the Plan is fair and equitable.
In addition, the City could either reject the Lease or assume the Lease despite any provision of the
Lease which makes the bankruptcy or insolvency of the City an event of default thereunder. In the event
the City rejects the Lease, the Trustee, on behalf of the Owners of the Bonds, would have a pre-petition
claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the
objections of the Trustee or Owners of the Bonds. Moreover, such rejection would terminate the Lease and
the City's obligations to make payments thereunder.
The Authority is a public agency and, like the City, is not subject to the involuntary procedures of
the Bankruptcy Code. The Authority may also seek voluntary protection under Chapter 9 of the Bankruptcy
Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the Authority would
be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9
proceeding. Such a bankruptcy could adversely affect the payments under the Indenture. Among the
adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which,
until relief is granted, would prevent collection of payments from the Authority or the commencement of
any judicial or other action for the purpose of recovering or collecting a claim against the Authority; (ii) the
avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy
petition; (iii) the existence of unsecured or court -approved secured debt which may have priority of payment
superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption of a plan for the
adjustment of the Authority's debt without the consent of the Trustee or all of the Owners of the Bonds,
48
which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the
Bankruptcy Court finds that the Plan is fair and equitable. However, the bankruptcy of the Authority, and
not the City, should not affect the Trustee's rights under the Lease. The Authority could still challenge the
assignment, and the Trustee and/or the Owners of the Bonds could be required to litigate these issues to
protect their interests.
No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability
to the Owners of the Bonds with respect to the payment when due of the Base Rental Payments by the City,
or with respect to the performance by the City of other agreements and covenants required to be performed
by it contained in the Lease or the Indenture, or with respect to the performance by the Trustee of any right
or obligation required to be performed by it contained in the Indenture.
No Limitation on Incurring Additional Obligations
Neither the Lease nor the Indenture contains any limitations on the ability of the City to enter into
other obligations (other than Additional Bonds as defined in the Indenture) that may constitute additional
claims against its General Fund revenues. To the extent that the City incurs additional obligations, the
funds available to make Base Rental Payments may be decreased. The City is currently liable on other
obligations payable from General Fund revenues. See "THE CITY- Outstanding Indebtedness of the City"
herein.
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 City did not
have use of the building for approximately 100 days during that time.
The City has adopted a Seismic Safety Element to the City's General Plan and implemented the
Element's recommendation by ordinance. The ordinance specifies development restrictions and
requirements for engineering and geologic reports based on the type of project, intensity of use and
proximity to the identified hazard zones. City development has generally avoided these areas of highest
risk and General Plan policy will prevent development in high risk areas.
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 within the City, the property owner could become
unwilling to pay its property tax bills or the City may be required to expend unexpected funds for repairs.
In such event, revenues to or expenditures from the General Fund of the City could be negatively affected.
Pursuant to the Lease, the City is not required to maintain earthquake or flood insurance.
Depending on its severity, an earthquake could result in abatement of Base Rental Payments under the
Lease. See "RISK FACTORS -- Abatement' above. Should an earthquake, landslide, flood or other natural
hazards occur that results in substantial interference with the use of the Leased Property, under the
abatement provisions of the Lease, the City would not be obligated to make the Base Rental Payments. The
Leased Property may also be at risk from other events offorce majeure, such as damaging storms, fires and
explosions, strikes, sabotage, riots and spills of hazardous substances, among other events. The City cannot
predict what force majeure events may occur in the future.
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Risk of Structural and Wildland Fire
The City contracts fire protection services from the Consolidated Eire Protection District of Los
Angeles County, otherwise known as the Los Angeles County Eire Department (the "Eire Department').
The City receives urban and wildland fire protection services from the Eire 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 Clarita 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, Placerita 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 and Hill and Woosley fires in
Los Angeles County did not have a direct impact on the City. The Rye Canyon fire in December 2017
within the City did not result in any damage to structures.
In the event of damage to real property within the City, the property owner could become unwilling
to pay its property tax bills or the City may be required to expend unexpected funds for repairs. In such
event, revenues to or expenditures from the General Fund of the City could be negatively affected.
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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 Placerita 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
City. In the event of damage to real property within the City, the property owner could become unwilling
to pay its property tax bills or the City may be required to expend unexpected funds for repairs. In such
event, revenues to or expenditures from the General Fund of the City could be negatively affected.
Hazardous Substances
The public works activities of the City may, from time to time, result in the use of hazardous
substances on the facilities owned and operated by the City, including, but not limited, to the Leased
Property. A portion of the Leased Property is intended to be used as a vehicle fueling station. Accordingly,
it is possible that spills, discharges or other adverse environmental consequences of such use in the future
could cause an adverse effect on the fair rental value of the Leased Property and lead, in an extreme case,
to abatement, in whole or in part, of Base Rental Payments. See "RISK FACTORS — Abatement' above.
Climate Change
In August 2012, the City completed its Climate Action Plan (CAP) as part of the One Valley One
Vision (OVOV) general plan process. OVOV serves as the new general plan document for the City. The
State requires all cities that create a new general plan document to consider its impacts on greenhouse gas
emissions. In order to do so, cities must complete a CAP. The CAP must achieve the emission reduction
goals outlined by the Global Warming Solutions Act of 2006 (AB 32). AB 32 requires that statewide
greenhouse gas emissions must be reduced to 1990 levels by the year 2020. Measures identified in the
City's CAP will not only meet but exceed the State's AB 32 greenhouse gas emission reduction mandate.
A large portion of the greenhouse gas emissions reductions would be achieved by the decrease in vehicle
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miles traveled in the City via changes in land use patterns and a greater emphasis of transit and alternative
transportation programs. Other significant reductions are due to the creation or acquisition of new vegetated
space in line with the goals of the City's Open Space Preservation District and water use measures.
Applying estimated reductions from CAP measures shows that the resulting 2020 net emissions are
expected to be approximately 4% below the 2005 baseline level. The reduction represents a level that is
17% below the 2020 business- as -usual (BAU) emissions level and is consistent with the overall Statewide
Goals of AB 32. [update]
Future climate change bills or measures could restrict the City's ability to raise additional funds for
its General Fund.
Risks Related to Taxation in California
ConstitutionalAmendments Affecting Tax Revenues. Article XIIIA of the California Constitution
limits the amounts of ad valorem tax on real property to 1% of "full cash value" as determined by the county
assessor. Article XIIIA defines "full cash value" to mean "the City Assessor's valuation of real property
as shown on the 1975-76 tax bill under 'full cash value', or thereafter the appraised value of real property
when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment
period." Furthermore, all real property valuation may be increased to reflect the inflation rate, as shown by
the consumer price index, not to exceed 2% per year, or may be reduced in the event of declining property
values caused by damage, destruction or other factors.
Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the
voters prior to July 1, 1978, and any bonded indebtedness for the acquisition or improvement of real
property approved on or after July 1, 1978 by two-thirds of the voters voting on the proposition approving
such bonds, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while totally
precluding the imposition of any additional ad valorem, sales or transaction tax on real property. In
addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change
any State tax law resulting in increased tax revenues.
Article XIIIB of the California Constitution limits the annual appropriations from the proceeds of
taxes of the State and any city, county, school district, authority or other political subdivision of the State
to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population
and services rendered by the governmental entity. Article XIIIB includes a requirement that if an entity's
revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by
revising tax or fee schedules over the subsequent two years.
On November 5, 1996, California voters approved an initiative to amend the California
Constitution known as the Right to Vote on Taxes Act ("Proposition 218"), which added Article XIIIC and
XIIID to the California Constitution. Among other provisions, Proposition 218 requires majority voter
approval for the imposition, extension or increase of general taxes and two-thirds voter approval for the
imposition, extension or increase of special taxes by a local government, which is defined in Proposition
218 to include cities. Proposition 218 also provides that any general tax imposed, extended or increased
without voter approval by any local government on or after January 1, 1995 and prior to November 6, 1996
will continue to be imposed only if approved by a majority vote in an election held within two years of
November 6, 1996. Proposition 218 also provides that the initiative power shall not be prohibited or
otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. This
extension of the initiative power is not limited by the terms of Proposition 218 to impositions after
November 6, 1996 and absent other legal authority, could result in retroactive reduction in any existing
taxes, assessments, fees and charges. In addition, Proposition 218 limits the application of assessments,
fees and charges and requires certain existing, new and increased assessments, fees and charges to be
submitted to property owners for approval or rejection, after notice and public hearing. Neither the City
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nor the Authority expects the provisions of Proposition 218 to have any immediate material effect on the
revenues from which Base Rental Payments are expected to be appropriated.
Implementing Legislation. Legislation enacted by the California Legislature to implement Article
XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other law, local
agencies may not levy any property tax, except to pay debt service on indebtedness approved by the voters
prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA of $4.00
per $100 assessed valuation (based on the traditional practice of using 25% of full cash value as the assessed
value for tax purposes). The legislation further provided that, for Fiscal Year 1978-79 only, the tax levied
by each county was to be appropriated among all taxing agencies within the county in proportion to their
average share of taxes levied in certain previous years.
Future assessed valuation growth allowed under Article XIIIA (i.e., new construction, change of
ownership, and 2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions
that serve the tax rate area within which the growth occurs. Local agencies and schools will share the
growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each
agency's allocation in the following year. The Authority is unable to predict the nature or magnitude of
future revenue sources that may be provided by the State to replace lost property tax revenues. Article
XIIIA effectively prohibits the levying of any other ad valorem property tax above those described above,
even with the approval of the affected voters.
Constitutional Challenges to Property Tax System. There have been many challenges to Article
XIIIA of the California Constitution. The United States Supreme Court heard the appeal in Nordlinger v.
Hahn, a challenge relating to residential property. Based upon the facts presented in Nordlinger, the United
States Supreme Court held that the method of property tax assessment under Article XIIIA did not violate
the federal Constitution. Neither the Authority nor the City can predict whether there will be any future
challenges to California's present system of property tax assessment and cannot evaluate the ultimate effect
on the Agency's receipt of tax increment revenues should a future decision hold unconstitutional the method
of assessing property.
Statutory Revenue Limitations -- Proposition 62. Proposition 62 is a statewide statutory initiative
adopted by the voters at the November 4, 1986 general election. It added Sections 53720 to 53730 to the
Government Code to require that all new local taxes be approved by the voters. The statute provides that
all local taxes are either general taxes or special taxes. General taxes are imposed for general governmental
purposes. Special taxes are imposed for specific purposes only. General taxes may not be imposed by local
government unless approved by a two-thirds vote of the entire legislative body and a majority of the voters
voting on the proposed general tax. Special taxes may not be imposed by local government unless approved
by a majority of the entire legislative body and by two-thirds of the voters voting on the special tax. Soon
after Proposition 62 was adopted by the voters, legal challenges to taxes adopted contrary to its provisions
were filed. In 1991, in the most significant case, City of Woodlake v. Logan, the California Court of Appeal
held that the statutory voter approval requirement for general taxes was unconstitutional. The California
Supreme Court refused to review Woodlake.
On September 28, 1995, the California Supreme Court, on a 5-2 vote, in a decision entitled Santa
Clara County Local Transportation Authority v. Guardino (Case No. S036269), "disapproved" Woodlake
and held that the voter approval requirements of Proposition 62 are valid. On December 14, 1995, the
Supreme Court made minor nonsubstantive changes to its written opinion and denied the petition for
rehearing. The decision provides that the voter approval requirements of Proposition 62 for both general
and special taxes are valid. The Guardino case fails to say (1) whether the decision is retroactively
applicable to general taxes adopted prior to the decision; (2) whether taxpayers have any remedies for refund
of taxes paid under a tax ordinance that was not voter approved; (3) what statute of limitations applies to
53
taxes adopted without voter approval prior to Guardino; (4) whether Proposition 62 applies only to new
taxes or to tax increases as well.
The Court of Appeals in a December 15, 1997 decision entitled McBearty v. City of Brawley (Case
No. D027877) addressed some of these issues. In Brawley, a taxpayer challenged the city's utility tax that
was passed by the city council in 1991 without a vote of the electorate. The Court of Appeals held that (i)
a three year statute of limitations applies to challenges to a tax ordinance subject to Proposition 62; and (ii)
the statute of limitations did not begin to run until September 1995 when the Guardino case determined that
Proposition 62 was constitutional. The effect of the holding in Brawley is that any tax ordinances passed
between November 1986 and December 1995 that were not approved by the electorate would be subject to
a challenge until December 1998. The court ordered the city to either cease collecting the tax or seek voter
approval to continue levying the tax. However, in Howard Jarvis Taxpayers Association v. City of La
Habra, decided on June 4, 2001, the California Supreme Court overruled part of McBearty, finding that the
three year statute of limitations applicable to such taxes does not run from the date of the Guardino decision,
but rather the continued imposition and collection of such tax is an ongoing violation, upon which the
limitations period begins with each new collection.
Several questions raised by the Guardino decision remain unresolved. Proposition 62 provides that
if a jurisdiction imposes a tax in violation of Proposition 62, the portion of the one percent general ad
valorem tax levy allocated to that jurisdiction is reduced by $1 for every $1 in revenue attributable to the
improperly imposed tax for each year that such tax is collected. The practical applicability of this provision
has not been fully determined. Potential future litigation and legislation may resolve some or all of the
issues raised by the Guardino decision.
Neither the Authority nor the City can predict the outcome of any pending or future litigation
concerning the validity of Proposition 62, nor can either predict the scope of the Guardino or Brawley
decisions discussed above. Proposition 62 could affect the ability of the City to continue the imposition of,
or to retain, certain taxes, and restrict the City's ability to raise revenue.
Proposition IA. Proposition IA ("Proposition IA"), proposed by the Legislature in connection
with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to
reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004/05 and
2005-06. Proposition IA provides that the State may not reduce any local sales tax rate, limit existing local
government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to
certain exceptions. Proposition IA generally prohibits the State from shifting to schools or community
colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth
under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues
among local governments within a county must be approved by two-thirds of both houses of the Legislature.
Proposition IA provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools
and community colleges up to 8% of local government property tax revenues, which amount must be repaid,
with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state
financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met.
Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary
exchanges of local sales tax and property tax revenues among local governments within a county.
Proposition IA provides that if the State reduces the vehicle license fee ("VLF") rate below 0.65%
of vehicle value, the State must provide local governments with equal replacement revenues. Further,
Proposition IA requires the State to suspend State mandates affecting cities, counties and special districts,
excepting mandates relating to employee rights, schools or community colleges, in any year that the State
does not fully reimburse local governments for their costs to comply with such mandates.
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Proposition 22. On November 2, 2010, voters in the State approved Proposition 22. Proposition
22, known as the "Local Taxpayer, Public Safety, and Transportation Protection Act of 2010," eliminates
or reduces the State's authority to (i) temporarily shift property taxes from cities, counties and special
districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for state -mandated
costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax
increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to
pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax
revenues.
Proposition 26. On November 2, 2010, voters in the State also approved Proposition 26.
Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of "tax" to include
"any levy, charge, or exaction of any kind imposed by a local government" except the following: (1) a
charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided
to those not charged, and which does not exceed the reasonable costs to the local government of conferring
the benefit or granting the privilege; (2) a charge imposed for a specific government service or product
provided directly to the payor that is not provided to those not charged, and which does not exceed the
reasonable costs to the local government of providing the service or product; (3) a charge imposed for the
reasonable regulatory costs to a local government for issuing licenses and permits, performing
investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative
enforcement and adjudication thereof, (4) a charge imposed for entrance to or use of local government
property, or the purchase, rental, or lease of local government property; (5) afine, penalty, or other monetary
charge imposed by the judicial branch of government or a local government, as a result of a violation of
law; (6) a charge imposed as a condition of property development; and (7) assessments and property -related
fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local
government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other
exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the
governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or
reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity.
Neither the City nor the Authority expects provisions of Proposition 26 to materially impede the City's
ability to pay Base Rental Payments when due.
Future Initiatives
From time to time, other initiative measures may be adopted, which may affect the City's revenues
and its ability to expend said revenues. The above-mentioned measures and any future measures could
restrict the City's ability to raise additional funds for its General Fund.
Limitations on Remedies
The enforceability of the rights and remedies of the owners of the Bonds and the Trustee, and the
obligations incurred by the Authority and the City, respectively, may be subject to the following, among
others: the limitations on legal remedies against joint powers authorities and cities in California, the federal
bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; principles
of equity that may limit the specific enforcement under State law of certain remedies; the exercise by the
United States of America of the powers delegated to it by the U.S. Constitution; and the reasonable and
necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the
State and its governmental bodies in the interest of serving a significant and legitimate public purpose.
Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could
subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or
otherwise, and consequently may entail risks of delay, limitations or modification of their rights. See also,
"Bankruptcy" above.
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Remedies on Default
If the City defaults in the observance or performance of any agreement, condition, covenant or term
contained in the Lease required to be observed or performed by it (including without limitation the payment
of any Base Rental Payments or Additional Rental Payments due under the Lease), subject to the provisions
of the Lease, the Authority may at any time thereafter (with or without notice and demand and without
limiting any other rights or remedies the Authority may have) recover rent and other monetary charges as
they become due under the Lease all without terminating the City's right to possession of the Leased
Property, regardless of whether or not the City has abandoned the Leased Property, and the Authority shall
have the right and the City irrevocably appoints the Authority as its agent and attorney-in-fact for such
purpose to attempt to sublet or re -let the Leased Property at such rent, upon such conditions and for such
term and to do all other acts to maintain or preserve the Leased Property, including the removal of persons
or property therefrom or taking possession thereof, as the Authority deems desirable or necessary; and the
City waives any and all claims for any damages that may result to the Leased Property thereby, provided,
that no such actions will be deemed to terminate the Lease and the City shall continue to remain liable for
any deficiency that may arise out of such re -letting taking into account expenses incurred by the Authority
due to such re -letting, payable at the same time and manner as provided for Base Rental Payments under
the Lease. IN THE EVENT OF SUCH DEFAULT, THE AUTHORITY MUST THEREAFTER
MAINTAIN THE LEASE IN FULL FORCE AND EFFECT AND MAY ONLY RECOVER RENT AND
OTHER MONETARY CHARGES AS THEY BECOME DUE.
Early Redemption Risk
Early redemption of the Base Rental Payments and redemption of the Bonds may occur in whole
or in part without premium, on any date if the Leased Property or a portion thereof is lost, destroyed or
damaged beyond repair or taken by eminent domain and from the proceeds of title insurance, or on any
Interest Payment Date, without a premium, if the City exercises its right to prepay Base Rental Payments
in whole or in part pursuant to the provisions of the Lease and the Indenture.
Investment Risks
The City administers a pooled investment program of moneys in its funds and accounts, including
moneys in the City's General Fund which will be used to make Base Rental Payments. The City has
established an investment policy which it believes to be prudently conservative. Nevertheless, the City's
investments will be subject to market fluctuations and other risks over which the City has no control, and
which could impair the City's ability to make Base Rental Payments.
No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the payment of debt
service on the Bonds.
Loss of Tax Exemption
As discussed under the caption "TAX MATTERS," interest on the Bonds could fail to be excluded
pursuant to section 103(a) of the Code from the gross income of the owners thereof for purposes of federal
income taxation, in some cases retroactive to the date of execution and delivery of the Bonds, as a result of
future acts or omissions of the Authority or the City in violation of certain covenants contained in the
Indenture or the Lease, respectively. Should such an event of taxability occur, the Bonds are not subject to
special redemption or any increase in interest rate and will remain outstanding until maturity or until
redeemed pursuant to the Indenture.
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In addition, Congress has considered in the past and may consider in the future, legislative
proposals, including some that carry retroactive effective dates that, if enacted, would alter or eliminate the
exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the
Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending
or proposed federal tax legislation. The City can provide no assurance that federal tax law will not change
while the Bonds are outstanding or that any such changes will not adversely affect the exclusion of interest
on the Bonds from gross income for federal income tax purposes. If the exclusion of interest on the Bonds
from gross income for federal income tax purposes were amended or eliminated, it is likely that the market
price for the Bonds would be adversely impacted.
IRS Audit of Tax -Exempt Bonds
The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt
bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for
audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be
affected as a result of such an audit of the Bonds (or by an audit of similar bonds).
Secondary Market Risk
There can be no assurance that there will be a secondary market for purchase or sale of the Bonds,
and from time to time there may be no market for them, depending upon prevailing market conditions, the
financial condition or market position of firms who may make the secondary market and the financial
condition of the City.
Other Factors
The City in general has been, or in the future may be, affected by a number of other factors which
could impact its financial condition. In addition to the factors discussed above, such factors include, among
others, (a) effects of compliance with rapidly changing environmental, safety, licensing, regulatory and
legislative requirements, (b) legislative changes, voter initiatives, referenda and statewide propositions,
(c) acts of terrorism or cyber -terrorism, (d) natural disasters or other physical calamities, in addition to
earthquakes discussed above, including, but not limited to, wildfires and floods and (e) changes to the
climate. Any of these factors (as well as other factors) could have an adverse effect on the financial
condition of the City.
The City is unable to predict what impact such factors will have on the business operations and
financial condition of the City, but the impact could be significant. This Official Statement includes a brief
discussion of certain of these factors. This discussion does not purport to be comprehensive or definitive,
and these matters are subject to change subsequent to the date hereof.
RATING
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. This rating reflects 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
57
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.
UNDERWRITING
(the "Initial Purchaser") has purchased the Bonds from the
Authority at a competitive sale at an aggregate purchase price of $ (representing the aggregate
principal amount of the Bonds, plus/less a premium/discount of $ less a purchaser discount of
$ ). The public offering prices may be changed from time to time by the Initial Purchaser. The Initial
Purchaser may offer and sell Bonds to certain dealers and others at prices lower than the offering prices
shown on the inside cover page hereof.
CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority is
material to any decision to purchase, hold or sell the Bonds and the Authority will not provide any such
information.
The City has 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 1 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, 2019,
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
Rule 15c2 -12(b)(5) promulgated under the Securities Exchange Act of 1934 ("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 ten bond issues:
1. $11,295,000 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series
A (the "2018A Bonds") and its $4,005,000 2018 Taxable Revenue Bonds (Streetlights
Acquisition and Retrofit Program) Series B (the "2018B Bonds" and together with the
2018A Bonds, the "2018 Streetlighting Bonds").
2. $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").
3. $10,320,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds
(Golden Valley Road) Series 2016A, dated June 22, 2016 (the "2016A Bonds").
4. $14,020,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds
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(Open Space and Parkland Acquisition) Series 2016B, dated June 22, 2016 (the "2016B
Bonds").
5. $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").
6. $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").
7. $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").
8. $15,525,000 City of Santa Clarita Certificates of Participation (Open Space and Parkland
Acquisition Program) 2007 Series (the "2007 Certificates").
9. $13,785,000 Santa Clarita Public Financing Authority Lease Revenue Bonds, Series 2007
(Golden Valley Road) (the "2007 Bonds").
10. $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 year (FY) 2015 was late in filing the
AFS by 14 days, due to the failure to file the unaudited versions of the AFS when the
audited version was unavailable prior to the applicable deadline. 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 FY 2015 was late in filing the AFS by 22 days, due to
the failure to cross reference the AFS filed for the 2008 Housing Bonds prior to the
applicable deadline. The Successor Agency did not file in a timely manner notice of late
annual financial information; and
3. With respect to the 2005 Certificates, material event notices were not timely filed for bond
insurer rating upgrades in 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
59
compliance with its continuing disclosure undertakings in the future, including the Continuing Disclosure
Certificate with respect to the Bonds.
TAX MATTERS
Tax -Exemption
The Internal Revenue Code of 1986 (the "Code") imposes certain requirements that must be met
subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded from
the gross income of the owners thereof for federal income tax purposes. Noncompliance with such
requirements could cause the interest on the Bonds to be included in the gross income of the owners thereof
for federal income tax purposes retroactive to the date of issuance of the Bonds. Each of the Authority and
the City has covenanted to maintain the exclusion of the interest on the Bonds from the gross income of the
owners thereof for federal income tax purposes.
In the opinion of Norton Rose Eulbright US LLP, Bond Counsel, under existing statutes,
regulations, rulings and court decisions, and assuming compliance with the covenants mentioned herein,
interest on the Bonds is excluded from the gross income of the owners thereof for federal income tax
purposes. In the further opinion of Bond Counsel, under existing statutes, regulations, rulings and court
decisions, interest on the Bonds is not treated as an item of tax preference for purposes of computing the
alternative minimum tax. Receipt or accrual of interest on Bonds owned by a corporation whose taxable
year began on or before December 31, 2017, may affect the computation of the alternative minimum taxable
income. The corporate alternative minimum tax is repealed with respect to taxable years beginning on and
after January 1, 2018.
Pursuant to the Lease and the Indenture and in the Tax Certificate to be delivered by the Authority
and the City in connection with the issuance of the Bonds, each of the Authority and the City will make
representations relevant to the determination of, and will make certain covenants regarding or affecting, the
exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax
purposes. In reaching the conclusions supporting the opinions described in the immediately preceding
paragraph, Bond Counsel will assume the accuracy of such representations and the present and future
compliance by each of the Authority and the City with 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 or accrual of interest on, or the ownership or disposition of, the Bonds.
Furthermore, Bond Counsel will express no opinion as to the effect of any change to any document
pertaining to the Bonds or of any action taken or not taken where such change is made or action is taken or
not taken without the approval of Bond Counsel or in reliance upon the advice of counsel other than Bond
Counsel with respect to the exclusion from gross income for federal income tax purposes of the interest on
the Bonds for federal income tax purposes. Bond Counsel has not undertaken to advise in the future whether
any event after the date of issuance of the Bonds may affect the tax status of interest on the Bonds or the
tax consequences of the ownership of, or the receipt or accrual of interest on, the 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 Authority and the City described above. No ruling has been sought from the IRS with
respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel's opinion is not binding
on the IRS. The IRS has an ongoing program of examining the tax-exempt status of the interest on
municipal obligations. If an examination of the Bonds is commenced, under current procedures the Service
is likely to treat the Authority as the "taxpayer," and the owners would have no right to participate in the
examination process. In responding to or defending an examination of the tax-exempt status of the interest
on the Bonds, the Authority and/or the City may have different or conflicting interests from the owners.
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Public awareness of any future examination of the Bonds could adversely affect the value and liquidity of
the Bonds during the pendency of the examination, regardless of its ultimate outcome.
Existing law may change to reduce or eliminate the benefit to bondholders of the exemption of
interest on the Bonds from personal income taxation by the State of California or of the exclusion of the
interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. Any
proposed legislation or administrative action, whether or not taken, could also affect the value and
marketability of the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors
with respect to any proposed or future change in tax law.
A copy of the form of opinion of Bond Counsel relating to the Bonds is included in APPENDIX E
hereto
Tax Accounting Treatment of Bond Premium and Original Issue Discount on Bonds
To the extent that a purchaser of a Bond acquires that Bond at a price in excess of its "stated
redemption price at maturity" (within the meaning of section 1273(a)(2) of the Code), such excess will
constitute "bond premium" under the Code. The Code and the Treasury Regulations promulgated
thereunder provide generally that bond premium on a tax-exempt obligation must be amortized over the
remaining term of the obligation (or a shorter period in the case of certain callable obligations); the amount
of premium so amortized will reduce the owner's basis in such obligation for federal income tax purposes,
but such amortized premium will not be deductible for federal income tax purposes. Such reduction in
basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal
income tax purposes upon a sale or other taxable disposition of the obligation. The amount of premium
that is amortizable each year by a purchaser is determined by using such purchaser's yield to maturity. The
rate and timing of the amortization of the bond premium and the corresponding basis reduction may result
in an owner realizing a taxable gain when its Bond is sold or disposed of for an amount equal to or in some
circumstances even less than the original cost of the Bond to the owner.
Bond Counsel is not opining on the accounting for or consequence to a Bond purchaser of bond
premium on the Bonds. Persons considering the purchase of Bonds with initial bond premium should
consult with their own tax advisors with respect to the determination of amortizable bond premium on such
Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning
and disposing of such Bonds.
California Personal Income Tax
In the opinion of Bond Counsel, interest on the Bonds is exempt from personal income taxes of the
State of California.
Other Tax Consequences
Ownership of, or the receipt or accrual of interest on, tax-exempt obligations may result in collateral
tax consequences to certain taxpayers, including, without limitation, financial institutions, property and
casualty insurance companies, certain foreign corporations doing business in the United States, certain S
corporations with excess passive income, individual recipients of Social Security or Railroad Retirement
benefits, taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry
tax-exempt obligations and taxpayers who may be eligible for the earned income tax credit. Bond Counsel
expresses no opinion with respect to any collateral tax consequences and, accordingly, prospective
purchasers of the Bonds should consult their tax advisors as to the applicability of any collateral tax
consequences.
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LITIGATION
There is no controversy of any nature now pending against and notice of which has been received
by the City or the Authority or, to the best knowledge of their respective officers, threatened, seeking to
restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way contesting or affecting
the validity of the Bonds or any proceedings of the City or the Authority taken with respect to the issuance
or sale thereof or the pledge or application of any moneys or security provided for the payment of the Bonds
or the use of the Bond proceeds. There are no pending lawsuits that challenge the validity of the Bonds,
the corporate existence of the City or the Authority, or the title of the officers thereof to their respective
offices.
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 E.
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
Eulbright US LLP, Los Angeles, California, Disclosure Counsel.
MUNICIPAL ADVISOR
The City has retained Columbia Capital Management, LLC, Glendale, California (the "Municipal
Advisor"), as municipal 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 municipal advisor to the City and 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.
FINANCIAL STATEMENTS
The City's financial statements for the Fiscal Year ended June 30, 2018, included in APPENDIX
B hereto, have been audited by Vavrinek, Trine, Day & Co. LLP (VTD), VTD was not requested to consent
to the inclusion of its report in APPENDIX B and it has not undertaken to update its report or to take any
action intended or likely to elicit information concerning the accuracy, completeness or fairness of the
statements made in the Official Statement, and no opinion is expressed by VTD with respect to any event
subsequent to the date of its report.
MISCELLANEOUS
All quotations from, and summaries and explanations of the Indenture, the Site Lease, the Lease
and the Assignment Agreement, the Bond Law, 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.
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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.
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.
City
EXECUTION AND DELIVERY
The execution and delivery of this Official Statement has been authorized by the Authority and the
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
/s/
Executive Director
CITY OF SANTA CLARITA
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City Manager
APPENDIX A
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 between the Santa Susana and San Gabriel mountain ranges approximately 35
miles northwest from the City of Los Angeles. The City encompasses 66 square miles and 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 "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, public libraries and cultural events.
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 66 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
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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, 2018, the City had a staff of 442.35 funded equivalent full time
positions. The current members of the City Council, term expiration and their principal occupations are as
follows:
City Council Term Expires
Marsha A. McLean, Mayor
November 2022
Cameron Smyth, Mayor Pro Tem
November 2020
Robert C. Kellar, Councilmember
November 2020
William Miranda, Councilmember
November 2022
Laurene F. Weste, Councilmember
November 2022
Current City Management Staff includes the following
Occupation
Business Owner
Associate Vice President — State Affairs
Retired Police Officer/Realtor
Business Consultant
Community Advocate
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 appointed Treasurer and 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.
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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 Sheriff Department. Eire protection is provided by the Los Angeles County Eire
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, 2019.
CITY OF SANTA CLARITA AND LOS ANGELES COUNTY
Population
Year
Los Angeles County
City of Santa Clarita
2011
9,885,948
177,613
2012
9,972,649
179,487
2013
10,040,960
206,801
2014
10,098,952
207,232
2015
10,155,753
207,948
2016
10,185,851
208,550
2017
10,226,920
212,375
2018
10,254,658
212,378
2019
10,253,716
218,103
Source: State of California, Department ofFinance, E-4 Population Estimates for Cities, Counties, and the State,
2011-2019, with 2010 Census Benchmark Sacramento, California, May 2019, as ofTanuary 1.
Income
The U.S. Census Bureau American FactFinder reports that the median income of households in the
City for 2017 is $90,544 compared to $67,169 for the State and $57,652 for the nation. Eighty-five percent
of the households received earnings and sixteen 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.
Education
The City is served by 48 elementary schools, 6 middle schools, 7 high schools and numerous private
and parochial schools. Three colleges are located in the Santa Clarita Valley, California Institute of the
Arts, The Masters College and College of the Canyons. California State University — Northridge in the
northern part of the San Fernando Valley is nearby and serves as an additional resource for higher-level
education.
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Housing
As of January 1, 2019, the California Department of Finance reported that there were 46,784 single
family detached units in the City, 9,001 single family attached units, 18,392 multifamily housing units and
2,603 mobile home units. The vacancy rate is approximately 6.0%. For 2017, the average median price
within the City of a single family home was $567,925 and of a condominium was $359,167.
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.
CITY OF SANTA CLARITA
Building Permits and Valuations
Year Residential Permits Residential Value Non -Residential Value Total
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
2017 2,088 193,928,950 117,854,007 311,782,957
2018 1,993 170,234,197 98,154,780 268,388,977
Source: 00- of Santa Clarita Permit System
Development Activity within the City
The following projects are currently under construction within the City. These projects have
received planning entitlements, and have pulled the requisite grading, building, and other applicable
permits.
Housing. Aliento development was approved in January 2002 and is estimated to be completed in
July 2020. The community includes 495 single family units (95 of which are age qualified), 2 recreation
centers, a trailhead park, and 900 acres of open space.
The Galloway Senior housing project at Five Knolls, including a senior residential community with
140 age -restricted units, a YMCA, and a senior center, was approved in 2015. The project is under
construction and is estimated to be completed in 2019/20.
River Village (Area D) is a 184 multi --family unit project on 32 acres. Design plans were approved
in August 2018.
Commercial The Center at Needham Park, a business park with 4 million square feet of planned
industrial and commercial use was approved in 2003. Phase 1 is currently under construction, including 7
buildings, and is estimated to be completed in 2019/20.
Two new buildings will be constructed at the Southern California Innovation Park, including a
136,900 square -foot office building and 10,776 square -foot daycare facility. The Tourney Place office
building will add 46,000 square -feet of office space to the City. The Canyon County Commerce Park will
create 30,000 square -feet of office space and 30,000 square -feet of retail space.
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A Homewood Suites and Hampton Inn will add 185 hotel rooms for the City. Homewood Suites
is phase 1 and is currently under construction. The Luxen Hotel, a 42 room boutique hotel, is also under
construction. Also under construction is a 182 -room Residence Inn/Springhill Suites and 108 -room
Holiday Inn Express. A new 7 -screen, 500 -seat Laemmle Theatre is scheduled to open later in 2019.
Mixed Use. Newhall Crossings, a mixed use project, containing 20,000 square feet of retail and
47 residential units, was approved in 2016 and is estimated to be completed in 2019.
Vista Canyon Ranch development was approved in 2011 and is projected to include 1,100
residential units, 950,000 square feet of commercial (office, retail, hotel, theater), and parking structures by
its completion in 2023. The development will contain open space, public parks, trails, and a new Metrolink
and bus transit station. Phase 1 is currently under construction.
Also under construction is the Valencia Town Center Square project, which includes 60 units and
10,000 square feet of commercial space and a subterranean automated self -parking system.
The Sand Canyon Plaza project was approved in September 2017, and includes 580 residential
units, an assisted living facility, and a 140,000 square -foot commercial center. Construction is anticipated
to begin later in 2019.
Civic Uses. The Henry Mayo Newhall Hospital Master Plan was approved in 2008, and a new 142 -
bed inpatient tower is under construction, to be completed later in 2019.
Employment
The following table summarizes the City's employment and unemployment rates for 2013 through
2017 calendar years.
CITY OF SANTA CLARITA
Civilian Labor Force, Employment and Unemployment
Annual Averages
2013 2014 2015 2016 2017
Civilian Labor Force
Employment 85,200 88,400 89,700 91,600 88,764
Unemployment 5,500 7,200 5 900 4 600 4 000
Total 90,700 95,600 95,600 96,200 92,764
Unemployment Rate() 6.0% 7.6% 6.1% 4.8% 4.2%
(a) The unemployment rate is calculated using unrounded data.
Source: California Employment Development Department.
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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
Walmart
California Institute of the Arts
Woodward HRT (formerly H.R. Textron)
Quest Diagnostics (formerly Specialty Labs)
Advanced Bionics
Amusement Park
3,200
Travel
2,177
Hospital
1,982
Medical Device
900
Education
765
Retail
705
Education
700
Aerospace
680
Medical R&D
660
Medical Device
581
Subtotal 12,350
Other 9,781
Private Subtotal within Top 50 22,131
Gov. Subtotal within Top 50 8,686
Total within TOD 50 30.817
Source: 2019 Economic Outlookfor the Santa Clarita Valley.
Commercial Activity and Sales Tax
The following tables show total taxable transactions and sales tax revenues within the City over the last
seven 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
2016
7,009
3,151,492
2017
7.093
3.238.131
Source: California Board ofEgualizationand California Department ofTax and Fee Admin istration.
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The following table shows a breakdown of the taxable sales within the City for 2017 calendar year (the
latest calendar year in which annual information is available).
CITY OF SANTA
CLARITA
Taxable Sales
— 2017
Type ofBusiness
Permits
Taxable Transactions
Retail and Food Services
Motor Vehicle and Parts Dealers
162
$ 679,607,877
Home Furnishings and Appliance Stores
281
120,191,850
Bldg. Material and Garden Equip. & Supplies
103
207,054,620
Food and Beverage Stores
139
136,089,455
Gasoline Stations
47
278,304,868
Clothing and Clothing Accessories Stores
743
135,163,263
General Merchandise Stores
256
419,900,850
Food Services and Drinking Places
558
453,017,714
Other Retail Stores
2 327
217,893,290
Retail and Food Total
4,616
$2,647,223,787
All Other Outlets
2 477
590,907,976
Totals All Outlets
7,093
$3,238,131,763
Source: California Department of Tax and FeeAdministration.
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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 2013 through 2017
Annual Averages
Wage and Salary Employment: (2) 2013 2014 2015 2016 2017
Agriculture
5,500
5,200
5,000
5,300
5,800
Mining and Logging
3,400
3,100
2,900
2,500
2,200
Construction
114,600
118,500
126,200
133,900
137,700
Manufacturing
375,600
371,100
367,800
360,300
350,100
Wholesale Trade
218,700
222,500
225,700
225,200
224,500
Retail Trade
405,800
413,100
419,300
421,500
422,500
Transportation, Warehousing, Utilities
157,500
163,400
171,500
182,300
191,800
Information
197,000
198,800
207,500
229,200
214,500
Finance and Insurance
138,300
134,500
135,600
138,100
137,400
Real Estate and Rental and Leasing
74,700
76,700
80,000
81,600
83,700
Professional and Business Services
584,800
591,700
593,800
603,200
613,400
Educational and Health Services
702,100
720,700
741,100
767,600
794,300
Leisure and Hospitality
438,900
464,100
486,600
510,000
523,900
Other Services
145,700
150,500
151,000
153,300
154,100
Federal Government
47,200
46,700
47,400
47,700
48,000
State Government
83,600
85,300
87,400
89,900
92,500
Local Government
420,500
424,200
433,700
438,600
438,600
Total all Industries (L)
4,113,600
4,189,800
4,282,300
4,390,800
4,441,400
(1) Totals may not add due to rounding.
Source: State of California Employment Development Department
Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarita Valley.
Among them are Six Flags Magic Mountain Amusement Park and Gene Autry's Melody Ranch. For water
enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid. The
Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks County
Park and the City's community parks are also available for hiking and picnicking. William S. Hart Park
features a Spanish colonial mansion museum. Within the City, there are 34 park facilities, nearly 10,000
acres of City -owned open space and 140 miles trails and paseos designed for commuting and recreational
use, including walking, hiking, biking and skating. Frazier Park and Mountain High are within a 40 mile
drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild and The Main, multi -use
arts center, as well as the Friendly Valley, Valencia Country Club, Sand Canyon Country Club and Vista
Valencia golf courses. Santa Clarita residents enjoy the City's distinctive trail system. There are three
libraries located in the valley.
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APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (this "Disclosure Certificate"), dated June , 2019, is
executed and delivered by the City of Santa Clarita, California (the "City"), for the benefit of the Holders
(hereinafter defined) of the Bonds (hereinafter defined) in order to provide certain continuing disclosure
with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time
(the "Rule").
SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Certificate
shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official
Statement (hereinafter defined). The capitalized terms shall have the following meanings:
"Annual Report" means an Annual Report described in and consistent with Section 3 of this
Disclosure Certificate.
"Annual Filing Date" means the date, set in Section 2(a) and Section 2(f), by which the Annual
Report is to be filed with the MSRB.
"Annual Financial Information" means annual financial information as such term is used in
paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Certificate.
"Audited Financial Statements" means the financial statements (if any) of the City for the prior
fiscal year, certified by an independent auditor as prepared in accordance with generally accepted
accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and
specified in Section 3(b) of this Disclosure Certificate.
"Bonds" means $[principal amount]* Santa Clarita Public Financing Authority Lease Revenue
Bonds (Sheriff Station Project), Series 2019.
"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.
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"Disclosure Dissemination Agent" shall mean Digital Assurance Certification LLC, or any
successor Dissemination Agent designated in writing by the District and which has filed with the
District a written acceptance of such designation.
"Failure to File Event" means the City's failure to file an Annual Report on or before the Annual
Filing Date.
"Financial Obligation" means a (a) debt obligation; (b) derivative instrument entered into in
connection with, or pledged as security or a source of payment for, an existing or planned debt
obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that
"financial obligation" shall not include municipal securities as to which a final official statement
has been provided to the MSRB consistent with the Rule.
"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 hap: /lemma. msrb. org.
"Notice Event" means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed
in Section 4(a) of this Disclosure Certificate.
"Obligated Person" means any person, including the City, who is either generally or through an
enterprise, fund, or account of such person committed by contract or other arrangement to support
payment of all, or part of the obligations on the Bonds (other than providers of municipal bond
insurance, letters of credit, or other liquidity facilities). With respect to the Bonds, only the City
constitutes the Obligated Person.
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"Official Statement" means that Official Statement, dated June 2019, prepared by the Issuer
and the City in connection with the Bonds.
"SEC" means the United States Securities and Exchange Commission.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., as trustee under the
Indenture, dated as of June 1, 2019, by and between the Issuer and the Trustee, as amended and
supplemented, providing for the issuance of the Bonds.
SECTION 2. Provision of Annual Reports 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 2018-19. 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;
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(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)(ii) with the MSRB, identifying the Notice Event as instructed by the
City pursuant to Section 4(a) or 4(b)(ii) when filing pursuant to Section 4(c) of this
Disclosure Certificate.
(v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure
Certificate, as applicable), promptly file a completed copy of Exhibit A to this
Disclosure Certificate with the MSRB, identifying the filing as "Failure to provide
annual financial information as required" when filing pursuant to Section 2(b)(ii)
or Section 2(c) of this Disclosure Certificate;
(f) The City may adjust the Annual Filing Date upon change of its fiscal year by providing
written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent,
Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new
Annual Filing Date shall not exceed one year.
(g) Any Information received by the Disclosure Dissemination Agent before 6:00 p.m. Eastern
time on any business day that it is required to file with the MSRB pursuant to the terms of this Disclosure
Certificate and that is accompanied by a Certification and all other information required by the terms of this
Disclosure Certificate will be filed by the Disclosure Dissemination Agent with the MSRB 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) Outstanding indebtedness and lease obligations;
(ii) General fund budget and actual results;
(iii) Assessed valuations; and
(iv) Largest local secured taxpayers.
(b) Audited Financial Statements prepared in accordance with generally accepted accounting
principles ("GAAP") as described in the Official Statement will also be included in the Annual Report. If
audited financial statements are not available, then, unaudited financial statements, prepared in accordance
with GAAP as described in the Official Statement will be included in the Annual Report. Audited Financial
Statements (if any) will be provided pursuant to Section 2(d).
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues with respect to which the City is an Obligated Person, which
have been previously filed with the Securities and Exchange Commission or available to the public on the
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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:
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, 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;
8. Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds, if
material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person;'
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
'For the purposes of the event described in subsection (12), 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.
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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;
14. Appointment of a successor or additional trustee or the change of name of a trustee,
if material;
15. Incurrence of a Financial Obligation of an Obligated Person, if material, or
agreement to covenants, events of default, remedies, priority rights, or other similar
terms of a Financial Obligation of an Obligated Person, any of which affect
security holders, if material; and
16. Default, event of acceleration, termination event, modification of terms, or other
similar events under the terms of a Financial Obligation of an Obligated Person,
any of which reflect financial difficulties.
The City shall, in a timely manner not in excess often (10) 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).
(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.
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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.
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.
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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, 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
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to and interpretations of the provisions of the Rule as announced by the Securities and Exchange
Commission from time to time by giving not less than 20 days prior written notice of the intent to do so
together with a copy of the proposed amendment to the City. No such amendment shall become effective
if the City shall, within 10 days following the giving of such notice, send a notice to the Disclosure
Dissemination Agent in writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
City, the Trustee of the Bonds, the Disclosure Dissemination Agent, the participating underwriters (as
defined in the Rule), and the Holders from time to time of the Bonds, and shall create no rights in any other
person or entity.
SECTION 14. Governing Law. This Disclosure Certificate shall be governed by the laws of the
State of California (other than with respect to conflicts of laws).
The City has caused this Disclosure Certificate to be executed, on the date first written above.
CITY OF SANTA CLARITA, as Obligated Person
By: _
Name:
Title:
ACCEPTED AND AGREED TO:
DIGITAL ASSURANCE CERTIFICATION LLC,
as Disclosure Dissemination Agent
By:
Name:
Title:
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EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer: Santa Clarita Public Financing Authority
Obligated Person: City of Santa Clarita, California
Name of Bond Issue: $[principal amount] Santa Clarita Public Financing Authority Lease
Revenue Bonds (Sheriff Station Project), Series 2019
Date of Issuance: June 12019
NOTICE IS HEREBY GIVEN that the City of Santa Clarita (the "City") has not provided an
Annual Report with respect to the above-named Bonds as required by the Disclosure Certificate of the City.
The City anticipates that the Annual Report will be filed by
Dated: 120
Digital Assurance Certification LLC, as Disclosure
Dissemination Agent
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APPENDIX E
FORM OF OPINION OF BOND COUNSEL
On the delivery date of the Bonds, Norton Rose Fulbright US LLP, Los Angeles, California, Bond
Counsel, proposes to render its final approving opinion substantially in the following form:
[Closing Date]
Santa Clarita Public Financing Authority
23920 Valencia Boulevard
Santa Clarita, California 91355
City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Bonds
(Sheriff Station Project)
Series 2019
Ladies and Gentlemen
We have acted as Bond Counsel to the Santa Clarita Public Financing Authority (the "Authority") in
connection with the issuance by the Authority of its $[principal amount] Lease Revenue Bonds (Sheriff
Station Project), Series 2019 (the "Bonds"). The Bonds are being issued under the provisions of the Marks -
Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1
(commencing with Section 6584) of the California Government Code (the "Bond Law"), and pursuant to
an Indenture, dated as of June 1, 2019 (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 applicable
Revenues and certain other moneys held under the Indenture. The Revenues consist of (i) Base Rental
Payments made by the City of Santa Clarita, California (the "City") pursuant to a Lease Agreement, dated
as of June 1, 2019 (the "Lease"), by and between the Authority, as lessor, and the City, as lessee, (ii) any
proceeds of Bonds originally deposited with the Trustee and all moneys on deposit in the funds and accounts
(other than the Rebate Fund) established under the Indenture, (iii) investment income with respect to such
moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable
to the Trustee relating to the applicable Base Rental Payments.
The City has leased certain real property and improvements (the "Leased Property") to the Authority
pursuant to the Site Lease, dated as of June 1, 2019 (the "Site Lease"), by and between the City and the
Authority. Pursuant to the Assignment Agreement, dated as of June 1, 2019 (the "Assignment
Agreement'), by and between the Authority and the Trustee, the Authority has assigned to the Trustee, for
the benefit of the Owners, certain of the Authority's rights under the Site Lease and the Lease, including
the right to receive Base Rental Payments under the Lease.
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As Bond Counsel, we have reviewed the Indenture, the Site Lease, the Lease, the Assignment Agreement
and certifications of the Authority, the City, the Trustee and others, opinions of counsel to the Authority,
the City and the Trustee, and such other documents, opinions and instruments as we deemed necessary to
render the opinions set forth herein. Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
Based upon the foregoing, we are of the opinion that:
The Bonds constitute valid and binding limited obligations of the Authority as provided in
the Indenture, and are entitled to the benefits of the Indenture.
The Indenture has been duly and validly authorized, executed and delivered by the
Authority and, assuming the enforceability thereof against the Trustee, constitutes the
legally valid and binding obligation of the Authority, enforceable against the Authority in
accordance with its terms. The Indenture creates a valid pledge, to secure the payment of
principal of and interest on the Bonds, of the Revenues and certain other amounts held by
the Trustee in certain funds and accounts established pursuant to the Indenture, subject to
the provisions of the Indenture permitting the application thereof for other purposes and on
the terms and conditions set forth therein.
The Lease and Site Lease have been duly and validly authorized, executed and delivered
by the Authority and the City and constitute the legally valid and binding obligations of
the Authority and the City, enforceable against the Authority and the City in accordance
with their terms.
The Assignment Agreement has been duly and validly authorized, executed and delivered
by the Authority and, assuming the enforceability thereof against the Trustee, constitutes
the legally valid and binding obligation of the Authority, enforceable against the Authority
in accordance with its terms
Under existing statutes, regulations, rulings and court decisions, and assuming compliance
with the covenants mentioned below, interest on the 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 Bonds are not "specified
private activity bonds" within the meaning of section 57(a)(5) of the Code and, therefore,
that interest on the Bonds will not be treated as an item of tax preference for purposes of
computing the alternative minimum tax imposed by section 55 of the Code. 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 Bonds for interest thereon to be and remain excluded pursuant to section
103(a) of the Code from the gross income of the owners thereof for federal income tax
purposes. Non-compliance with such requirements could cause the interest on the Bonds
to fail to be excluded from the gross income of the owners thereof retroactive to the date
of issuance of the Bonds. Pursuant to the Indenture and the Lease, 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 Bonds, each of the Authority and the City is making
representations relevant to the determination of, and is undertaking certain covenants
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regarding or affecting, the exclusion of interest on the Bonds from the gross income of
the owners thereof for federal income tax purposes. In reaching 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 4 above are qualified to the extent the enforceability of
the Bonds, the Indenture, the Lease, the Site Lease and the Assignment 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, the Lease, the Site Lease and the
Assignment 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.
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,
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APPENDIX F
BOOK -ENTRY SYSTEM
The information in this Appendix F 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
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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.
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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.
THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR THE
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY
TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC
PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT
OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS
RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY
OTHER ACTION PREMISED ON SUCH NOTICE.
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