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HomeMy WebLinkAbout2020-09-22 - AGENDA REPORTS - SCV PFA LEASE REVENUE BONDS - RECREATIONAL FACILIT (2)O Agenda Item: 9 P CITY OF SANTA CLARITA AGENDA REPORT PUBLIC HEARINGS CITY MANAGER APPROVAL:1 DATE: September 22, 2020 SUBJECT: SANTA CLARITA PFA LEASE REVENUE BONDS - RECREATIONAL FACILITY SERIES 2020A AND SERIES 202OA-T 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 (Recreational Facility), Series 2020A and Series 2020A-T, in the Aggregate Principal Amount not to exceed $15,000,000, approving the execution and delivery of a Site and Facility Lease, a Lease Agreement, a Continuing Disclosure Certificate, a Bond Purchase Agreement, a Form of Preliminary Official Statement, a Final Official Statement; approving the retention of certain professional firms; 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 (Recreational Facility), Series 2020A and Series 2020A-T, in the Aggregate Principal Amount not to exceed $15,000,000, approving the execution and delivery of a Site and Facility Lease, a Lease Agreement, an Assignment Agreement, an Indenture, a Bond Purchase Agreement, a Form of Preliminary Official Statement, a Final Official Statement; and authorizing the taking of certain actions in connection therewith. BACKGROUND During the April 28, 2020, City Council meeting, several residents commented during Public Participation to urge the City Council to save the local ice rink, located at 27745 Smyth Drive. The ice rink was built in 2000 and was heavily utilized by the community and attracted patrons Page 1 Packet Pg. 48 O regionally for competitive ice sports until the facility closed in March 2020. In response to residents that spoke that evening, the City Council directed the City Manager to review what role the City of Santa Clarita (City) could play in opening the ice rink. An internal City working group comprised of staff from the City Manager's Office, Recreation and Community Services, Public Works, Community Development and Administrative Services, conducted a review which included an inspection, an evaluation performed by Rink Management Services, a Property Detail Report, and two appraisals. City staff recommended acquisition of the property. Staff arrived at this conclusion based on a number of factors, including re -analyzing studies conducted in 2010 and 2013, which evaluated the local conference center market and potential market demand for a conference center. While the vast majority of use would support ice sports, potential uses include business meetings, conferences, tradeshows, and other recreational type activities. This will enhance the City's efforts to increase recreational opportunities to the community and will provide additional facility space for local and regional events. As a large event space, it will serve efforts to increase local hotel patronage and induce visitor spending, with the goal of boosting economic activity and generating local tax revenues while also supporting the ongoing operation of the facility. Acquisition and Operations On August 25, 2020, the City Council approved the acquisition of the property, including approximately 4.4 +/- acres of land with a single -story building including a ground floor of 71,286 square feet and mezzanine space of 21,465 square feet, for a total building size of 92,751 square feet, all of the assets within the building needed to run the facility, and an existing cell tower lease agreement. (the "Recreational Facility"). Under a unique public/private partnership, this investment allows for a private operator to manage the facility, in addition to hosting a wide variety of entertainment events. Since approved, the City has solicited proposals for the operation of the facility, including the ice rinks, pro shop, and restaurant. The total cost of the property acquisition is $14,495,000. This includes the $14,200,000 purchase price and $45,000 for title, escrow and due diligence costs as well as $250,000 for initial capital improvement costs. Funding from the proposed bond issuance will be used to reimburse the City for the $14,200,000 purchase price. The remaining costs will be funded from the Facilities Fund Balance (Fund 723). Bond R-mance The City's intent is to finance the costs of acquiring the Recreational Facility through the issuance of municipal revenue bonds. The City's Public Financing Authority (PFA) will issue its Lease Revenue Bonds (Recreational Facility) in two bond series, Series 2020A and Series 2020A-T (the "Bonds"). Approximately 75 percent of the Bonds will be issued as Tax -Exempt Series A Bonds and 25 percent as Taxable Series A-T Bonds. This gives the City flexibility in terms of the potential private use of the Recreational Facility, its future management contracts, Page 2 Packet Pg. 49 O and revenues generated by private use. Any future lease agreements or management contracts will be brought to the City Council for their consideration. Proceeds of the Bonds will be put into an acquisition fund held by the bond trustee and used to reimburse the City for the acquisition of the Recreational Facility. Under the PFA bond structure, the City will lease the City -owned Recreational Facility to the PFA pursuant to a Site and Facility Lease, and the PFA will leaseback the Recreational Facility 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 Recreational Facility. 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, including the 2019 Sheriff s Station issuance. In 2018, the Authority issued $15.3 million in taxable and tax-exempt bonds for its Streetlights and Retrofit Program. The costs of financing this acquisition will be funded entirely by the proposed bond issue. The proposed Bonds are expected to be rated by Standard and Poor's Corporation and are expected to be sold with "AA+" category bond ratings. A Request for Proposal (RFP) was sent out to bond underwriters with relevant experience and four proposals were received. Bonds are proposed to be sold through a negotiated sale with the selected underwriter in October with closing scheduled for later in that month following the real estate closing of the ice rink acquisition. The proposed term of the bonds is 30 years and the payments are expected to be level. The taxable Series A-T bonds will be repaid first. The final interest cost will depend on market interest rates at time of sale. The estimated all in true interest cost is 2.85. The bond markets have been relatively stable at the present time 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 8 years of bond call protection and will be redeemable beginning in 2028. The public disclosures required under SB 450, effective January 1, 2018, are incorporated herein. The estimates have been determined as of September 2, 2020. 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 2.85%. 2) The finance charge of the bonds, which means the sum of all fees and charges paid to third parties is estimated to be $306,410. 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 ofproceeds 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 ofthe bonds is estimated to be $14,200,000. 4) The total payment amount, which 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 $21, 619, 890. The action today by the City is to hold a public hearing relating to the issuance of the Bonds and Page 3 Packet Pg. 50 O for City Council to approve the issuance of the Bonds, along with the related bond documents. The action today by the PFA is to also approve the issuance of the Bonds, along with related bond documents. At the conclusion of the public hearing, City Council and the PFA will consider adoption of the resolutions authorizing the issuance of the Bonds. A resolution for each the City and the PFA is attached and would authorize the issuance of a not to exceed amount of $15,000,000 in aggregate Tax -Exempt Bonds and Taxable Bonds. Final sizing will be determined at time of bond sale. The Bonds will be sold on a negotiated basis. The resolution also approves the various documents in connection with the issuance of the Bonds. 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, (c) U.S. Bank National Association, as Trustee, and (d) Digital Assurance Certification as dissemination agent. 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 dates, maturity dates of the Bonds; revenues and accounts specifically pledged to the repayment of the Bonds; the project fund; flow of funds, default and remedy provisions; redemption and defeasance provisions in the event the Bonds are prepaid or redeemed early; and covenants of the issuer. It is drafted by Bond Counsel and executed by the PFA and U.S. Bank National Association, as trustee. Site and Facility Lease: Document in which the City leases the site and facility 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 facility 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 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 that the City will agree to provide to the bond markets. Disclosure is required annually and on an exceptional basis for any major "material" event. This document is drafted by Page 4 Packet Pg. 51 O Bond Counsel and executed by the City. Bond Purchase Agreement: The Bond Purchase Agreement is the contract among the PFA, the City and the Underwriter, pursuant to which the Underwriter agrees to buy the Bonds when issued, subject to certain termination events, for resale to investors. The bond sale is scheduled for October, with a closing in the latter part of October. The document is drafted by underwriter's counsel, reviewed by City staff, City Attorney and Bond Counsel and executed by the City, PFA and underwriter. 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/PFA and staff are ultimately responsible for ensuring that the POS is accurate, contains no misleading information and does not omit any information necessary to make the POS not misleading to investors. More specific details of the financing can be found in the drafts of the documents referenced above. The documents being recommended for approval are available in the office of the City Clerk. ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT Under current bond market conditions, annual debt service payments are anticipated to be approximately $730,000, beginning 2021 through 2050, payable from City's General Fund. Potential future revenue of the facility may constitute available funds to help offset the impact on the General Fund, but there is no pledge of such revenues. ATTACHMENTS Public Hearing Notice City Resolution Approving Bond Issue Authority Resolution Approving Bond Issue Form of Indenture (available in City Clerk's Reading File) Form of Site and Facility Lease (available in City Clerk's Reading File) Form of Lease Agreement (available in City Clerk's Reading File) Form of Assignment Agreement (available in City Clerk's Reading File) Form of Preliminary Official Statement with Continuing Disclosure Certificate as Appendix D (available in City Clerk's Reading File) Form of Bond Purchase Agreement (available in City Clerk's Reading File) Page 5 Packet Pg. 52 9.a CITY OF SANTA CLARITA NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN: A public hearing will be held before the City Council of the City of Santa Clarita in the City Hall Council Chambers, 23920 Valencia Boulevard, first floor, Santa Clarita, California on the 22nd day of September 2020, at or after 6:00 p.m., pursuant to Section 6586.5(a)(2) of the Government Code of the State of California regarding the proposed issuance of Lease Revenue Bonds (Recreational Facility) Series 2020A (the "Tax -Exempt Bonds") and Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds"), by the Santa Clarita Public Financing Authority. The Bond proceeds are expected to be applied to finance the costs of acquiring an approximate 4.4-acre parcel of land and improvements thereon, located at 27745 Smyth Drive, Santa Clarita 91355, to be used for recreational facilities. Any person interested in these matters is invited to attend, according to the instructions for participation that will be included in the posted City Council meeting agenda, and present testimony either for or against the above item. If you challenge the proposed action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice or in written correspondence delivered to the City Council at or prior to the public hearing. Dated: September 10, 2020 Mary Cusick, MMC City Clerk Publish Dated: September 15, 2020 Packet Pg. 53 9.b RESOLUTION NO. 20- 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 (RECREATIONAL FACILITY), SERIES 2020A AND SERIES 2020A-T, IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $15,000,000, APPROVING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, A CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT, A FINAL OFFICIAL STATEMENT AND A BOND PURCHASE AGREEMENT; 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 acquire a parcel of land and improvements thereon located at 27745 Smyth Drive within the City (the "Project"), to be used for recreational facilities; and WHEREAS, the City has requested that the Authority issue its Lease Revenue Bonds (Recreational Facility) Series 2020A (the "Tax -Exempt Bonds") and its Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds") for the purpose of financing the acquisition costs of the Project 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, as a condition precedent to the Bonds to provide financing for the Project, Section 6586.5 of the California Government Code requires that the City approve the proposed financing by the Authority and that the City make certain findings with respect to such financing, as hereinafter set forth, and said Section 6586.5 further requires that such approval be given and findings be made only after noticed public hearing thereon; and WHEREAS, as required by Section 6586.5, the City has caused publication of a notice of a public hearing on the financing of the Project once at least five days prior to the hearing in a newspaper of general circulation in the City; and WHEREAS, this City Council held a public hearing at which all interested persons were provided the opportunity to speak on the subject of financing the Project; and Packet Pg. 54 9.b 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 through a negotiated sale of the Bonds in accordance with the terms of the Bond Purchase Agreement for the Bonds (the "Bond Purchase Agreement") to be entered into by the Authority, the City and the underwriter, 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 and Facility Lease (the "Site Lease") pursuant to which the City will lease the approximate 4.4 acre site located at 27745 Smyth Drive in the City (the "Site") and approximate 93,000 square -foot building thereon (the "Facility," and together with the Site, the "Recreational Facility"), 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 Recreational Facility (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; and (e) the Bond Purchase Agreement. 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. Packet Pg. 55 9.b 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. The 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 in an aggregate amount not to exceed $15,000,000. The Bonds are hereby approved to finance the acquisition costs of the Project 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, is hereby approved. Any Authorized Officer is hereby Packet Pg. 56 9.b 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 the Bond Purchase Agreement. The City hereby approves the Bond Purchase Agreement in the form thereof on file with the City Clerk. Any Authorized Officer is hereby authorized to execute the Bonds Purchase Agreement with such revisions, amendments and completions as shall be approved by the Authorized Officer executing the same, with the advice of Bond Counsel in consultation with the City Attorney, such approval to be conclusively evidenced by the execution and delivery thereof, provided that, the Bond Purchase Agreement shall provide for a true interest cost (including original issue discount shown) not greater than 3.5%, and an underwriter's discount not greater than 1% of the principal amount of Bonds. 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) U.S. Bank National Association, as Trustee, and (d) Digital Assurance Certification LLC, as Dissemination Agent, 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. Packet Pg. 57 9.b PASSED, APPROVED, AND ADOPTED this 22nd day of September 2020. 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 No. 20- was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the 22nd day of September 2020, by the following vote: AYES: COUNCIL,MEMBERS: NOES: COUNCIL,MEMBERS: ABSENT: COUNCIL,MEMBERS: CITY CLERK Packet Pg. 58 9.c RESOLUTION NO. RESOLUTION OF THE BOARD OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (RECREATIONAL FACILITY), SERIES 2020A AND SERIES 2020A-T, IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $15,000,000, APPROVING THE EXECUTION AND DELIVERY OF AN INDENTURE, A SITE AND FACILITY LEASE, A LEASE AGREEMENT, AN ASSIGNMENT AGREEMENT, A PRELIMINARY OFFICIAL STATEMENT, A FINAL OFFICIAL STATEMENT AND A BOND PURCHASE AGREEMENT; 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 acquire a parcel of land and improvements thereon located at 27745 Smyth Drive within the City (the "Project"), to be used for recreational facilities; and WHEREAS, the City has requested that the Authority issue its Lease Revenue Bonds (Recreational Facility) Series 2020A (the "Tax -Exempt Bonds") and its Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds") for the purpose of financing the acquisition costs of the Project 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 Packet Pg. 59 9.c WHEREAS, it is proposed that the Bonds be sold through a negotiated sale of the Bonds in accordance with the terms of the Bond Purchase Agreement for the Bonds (the "Bond Purchase Agreement") to be entered into by the Authority, the City and the underwriter, 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 and Facility Lease (the "Site Lease") pursuant to which the City will lease the approximate 4.4 acre site located at 27745 Smyth Drive in the City (the "Site") and approximate 93,000 square -foot building thereon (the "Facility," and, together with the Site, the "Recreational Facility") 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 Recreational Facility (the "Leased Property") from the Authority, the form of which is on file with the Secretary of the Authority; and WHEREAS, under the Lease, the City will be obligated to make base rental payments to the Authority which the Authority will use to pay debt service on the Bonds; and WHEREAS, 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, as required by Section 6586.5 of the Act, the City has caused publication of a notice of a public hearing on the financing of the Project once at least five days prior to the hearing in a newspaper of general circulation in the City; and WHEREAS, the City Council held a public hearing at which all interested persons were provided the opportunity to speak on the subject of financing the Project, and, following the hearing, found that issuance of the Bonds for the purpose of financing the Project will result in significant public benefits of the type described in Section 6586 of the Act; and WHEREAS, the Board of Directors has duly considered these transactions and wishes at this time to approve these transactions and make certain findings regarding significant public benefits to the Authority's members with respect to these transactions; 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; and Packet Pg. 60 9.c (f) the Bond Purchase Agreement. 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. Determiniations. Pursuant to the Act, the Board hereby finds and determines that the issuance of the Bonds to finance the Project and the transactions related thereto will result in significant public benefits to its members within the contemplation of Section 6586 of the Act. SECTION 3. Approval of Bonds. The Authority hereby authorizes the issuance by the Authority of the Bonds in the principal amount not to exceed $15,000,000. SECTION 4. 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 5. 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 6. 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 7. 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 Packet Pg. 61 9.c 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 8. Approval of the Preliminary Official Statement and the Official Statement. The Preliminary Official Statement, in substantially the form on file with the Secretary and presented to the Board at this meeting, is hereby approved with such revisions, amendments and completions as shall be approved by an Authorized Officer to make the Preliminary Official Statement final as of its date, except for the omission of certain information, as permitted by Section 240.15c2-12(b)(1) of Title 17 of the Code of Federal Regulations ("Rule 15c2-12"). Any Authorized Officer is authorized to execute a certificate relating to the finality of the Preliminary Official Statements under Rule 15c2-12. An Authorized Officer is authorized and directed to execute and deliver the final Official Statement in substantially the form of the Preliminary Official Statement, with such additions and changes as may be approved by 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 9. Approval of the Bond Purchase Agreement. The Authority hereby approves the Bond Purchase Agreement in the form thereof on file with the Secretary. Any Authorized Officer is hereby authorized to execute the Bonds Purchase Agreement with such revisions, amendments and completions as shall be approved by the Authorized Officer executing the same, 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; provided that, the Bond Purchase Agreement shall provide for a true interest cost (including original issue discount shown) not greater than 3.5%, and an underwriter's discount not greater than 1% of the principal amount of Bonds. SECTION 10. 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 11. 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 12. 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. Packet Pg. 62 9.c SECTION 13. Effective Date of Resolution. This resolution shall take effect immediately upon its adoption. PASSED, APPROVED, AND ADOPTED this 22nd day of September 2020. 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 No. was duly adopted by the Board of the Santa Clarita Public Financing Authority at a regular meeting thereof, held on the 22nd day of September 2020, by the following vote: AYES: BOARDMEMBERS: NOES: BOARDMEMBERS: ABSENT: BOARDMEMBERS: SECRETARY Packet Pg. 63 9/1/20 INDENTURE by and between SANTA CLARITA PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of October 1, 2020 Relating to $[A principal amount] Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A and $[A-T principal amount] Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T 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.................................................................11 SECTION 1.03. Authorization and Purpose of Bonds..........................................12 SECTION 1.04. Equal Security............................................................................12 ARTICLE II ISSUANCE OF BONDS.............................................................................12 SECTION 2.01. Designation................................................................................12 SECTION 2.02. Terms of Bonds..........................................................................12 SECTION 2.03. Redemption of Bonds.................................................................14 SECTION 2.04. Form of Bonds...........................................................................16 SECTION 2.05. Execution of Bonds....................................................................16 SECTION 2.06. Transfer of Bonds......................................................................16 SECTION 2.07. Exchange of Bonds....................................................................17 SECTION 2.08. Temporary Bonds......................................................................17 SECTION 2.09. Registration Books.....................................................................17 SECTION 2.10. Bonds Mutilated, Lost, Destroyed or Stolen...............................18 SECTION 2.11. Use of Depository......................................................................18 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...............................................................20 SECTION 3.04. Project Fund...............................................................................20 SECTION 3.05. Insurance and Condemnation Fund............................................21 SECTION 3.06. Validity of Bonds.......................................................................21 SECTION 3.07. Additional Bonds.......................................................................21 ARTICLE IV REVENUES; FLOW OF FUNDS...............................................................22 SECTION 4.01. Pledge of Revenues; Assignment of Rights................................22 SECTION 4.02. Lease Revenue Fund; Receipt, Deposit and Application of Revenues...................................................................................23 SECTION 4.03. Rebate Fund...............................................................................24 SECTION 4.04. Investments................................................................................25 SECTION 4.05. Valuation and Disposition of Investments..................................26 ARTICLE V COVENANTS OF THE AUTHORITY.......................................................26 SECTION 5.01. Punctual Payment......................................................................26 SECTION 5.02. Extension of Payment of Bonds.................................................26 SECTION 5.03. Against Encumbrances...............................................................26 100802390.3 i TABLE OF CONTENTS (continued) Page SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment ...........27 SECTION 5.05. Accounting Records and Financial Statements ...........................27 SECTION 5.06. Additional Obligations...............................................................27 SECTION5.07. Lease.........................................................................................27 SECTION 5.08. Tax Covenants...........................................................................27 SECTION 5.09. Further Assurances.....................................................................32 ARTICLE VI THE TRUSTEE..........................................................................................32 SECTION 6.01. Appointment of Trustee.............................................................32 SECTION 6.02. Acceptance of Trusts..................................................................32 SECTION 6.03. Fees, Charges and Expenses of Trustee......................................36 SECTION 6.04. Notice to Owners of Default.......................................................36 SECTION 6.05. Intervention by Trustee..............................................................36 SECTION 6.06. Removal of Trustee....................................................................36 SECTION 6.07. Resignation by Trustee...............................................................36 SECTION 6.08. Appointment of Successor Trustee.............................................37 SECTION 6.09. Merger or Consolidation............................................................37 SECTION 6.10. Concerning any Successor Trustee.............................................37 SECTION 6.11. Appointment of Co-Trustee........................................................37 SECTION 6.12. Indemnification; Limited Liability of Trustee .............................38 ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE...............38 SECTION 7.01. Amendment...............................................................................38 SECTION 7.02. Effect of Supplemental Indenture...............................................39 SECTION 7.03. Endorsement or Replacement of Bonds After Amendment ......... 40 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF OWNERS ........................40 SECTION 8.01. Events of Default.......................................................................40 SECTION 8.02. Remedies; No Acceleration........................................................41 SECTION 8.03. Application of Revenues and Other Funds After Default ............ 41 SECTION 8.04. Power of Trustee to Control Proceedings...................................42 SECTION 8.05. Appointment of Receivers..........................................................42 SECTION 8.06. Non-Waiver...............................................................................42 SECTION 8.07. Rights of Owners.......................................................................43 SECTION 8.08. Termination of Proceedings.......................................................43 ARTICLE IX MISCELLANEOUS....................................................................................43 SECTION 9.01. Limited Liability of Authority....................................................43 SECTION 9.02. Benefits of Indenture Limited to Parties.....................................44 SECTION 9.03. Defeasance; Discharge of Indenture...........................................44 TABLE OF CONTENTS (continued) Page SECTION 9.04. Successor is Deemed Included in All References to Predecessor................................................................................45 SECTION 9.05. Content of Certificates and Opinions..........................................45 SECTION 9.06 Execution of Documents by Owners..........................................45 SECTION 9.07. Disqualified Bonds.....................................................................46 SECTION 9.08. Waiver of Personal Liability......................................................46 SECTION 9.09. Partial Invalidity........................................................................46 SECTION 9.10. Destruction of Canceled Bonds..................................................46 SECTION 9.11. Funds and Accounts...................................................................47 SECTION 9.12. Payment on Business Days.........................................................47 SECTION9.13. Notices.......................................................................................47 SECTION 9.14 Unclaimed Moneys....................................................................48 SECTION 9.15 Governing Law..........................................................................48 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 ft INDENTURE This INDENTURE is dated as of October 1, 2020, 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 U.S. BANK NATIONAL ASSOCIATION, 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 the acquisition of a parcel of land and the improvements thereon (the "Project") to be used for recreational facilities; and WHEREAS, the City has requested that the Authority issue its Lease Revenue Bonds (Recreational Facility) Series 2020A (the "Tax -Exempt Bonds") and its Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds"), for the purpose of financing the acquisition of an approximately 93,000 square foot recreation facility (the "Facility") located on an approximately 4.4 acre parcel located at 27745 Smyth Drive within the City (the "Site" and together with the Facility, the "Recreational Facility"); 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 and Facility Lease, dated as of October 1, 2020 (the "Site Lease"), between the City and the Authority, whereby the Authority has agreed to lease the Recreational Facility from the City; and WHEREAS, the Authority and the City have entered into a Lease Agreement, dated as of October 1, 2020 (the "Lease"), between the Authority and the City, whereby the Authority has agreed to lease the Recreational Facility (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 October 1, 2020, 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, 2021. "Bonds" mean collectively, the Tax -Exempt Bonds and the Taxable Bonds, 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 October , 2020, 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. 11 "Facility" means the approximately 93,000 square foot building on the Site as it may be improved, repaired, rehabilitated, and modified for recreational facilities, as more fully described on Exhibit A to the Lease. "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 October 1, 2020, as originally executed or as it may from time to time be amended or supplemented in accordance herewith. "Independent Certified Public Accountant" means any certified public accountant or firm of certified public accountants appointed and paid by the Authority, and who, or each of whom: (a) is in fact independent and not under domination of the Authority or the City; (b) does not have any substantial interest, direct or indirect, in the Authority or the City; and (c) is not connected with the Authority or the City as an officer or employee of the Authority or the City but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City. "Information Services" means the Electronic Municipal Market Access System (referred to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at http://emma.msrb.org; provided, however, in accordance with then current guidelines of the Securities and Exchange Commission, Information Services shall mean such other organizations providing information with respect to called Bonds as the Authority may designate in writing to the Trustee. 5 "Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to Section 3.05. "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, 2020. "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 October 1, 2020, 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" or "Recreational Facility" means, collectively, the Site and the Facility, 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. 31 "Original Purchaser" means, with respect to the Bonds, the initial purchaser of the Bonds. "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 7 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. (e) Federal funds or banker's acceptances with a maximum term of one year of any bank that at the time of purchase has an unsecured, uninsured and unguaranteed obligation rating of "Prime -I" or "AY' by Moody's and "A-l" 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. 0) 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). n. (k) 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. (1) 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. (m) 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. (n) 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, 2021. "Project" means the acquisition of the Recreational Facility. "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; (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, including the purchase price for the Site and the improvements thereon; and I (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 Tax -Exempt Bonds, obligations imposed under section 148(f) the Code in respect of such issue. "Record Date" means, with respect to any Interest Payment Date, the fifteenth (15'') 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. "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 10 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 4.4 acre parcel located at 27745 Smyth Drive, Santa Clarita. "Site Lease" means that certain Site and Facility Lease, dated as of October 1, 2020, by and between the City and the Authority, pursuant to which the Authority leases the Site and improvements thereon 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. "Tax -Exempt Bonds" means the Santa Clarita Public Financing Authority, Lease Revenue Bonds (Recreational Facility), Series 2020A, authorized, executed and delivered hereunder. "Taxable Bonds" means the Santa Clarita Public Financing Authority, Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T, authorized, executed and delivered hereunder. "Term Bonds" mean, collectively, the Bonds maturing on June 1, 20 "Trust Office" means the corporate trust office of the Trustee in Los Angeles, California or such other offices as may be specified to the Authority by the Trustee in writing or, solely for purposes of the surrender of the Bonds for payment, transfer or exchange, the corporate trust operations or agency office designated by the Trustee. "Trustee" means U.S. Bank National Association, 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. 11 "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 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 Tax -Exempt 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 (Recreational Facility), Series 2020A." The Tax -Exempt Bonds shall be issued in the original aggregate principal amount of $[A principal amount]. The Taxable 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, Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T." The Taxable Bonds shall be issued in the original aggregate principal amount of $[A-T 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: 12 Tax -Exempt Bonds Maturity Date Principal Interest (June 1) Amount Rate $[A principal amount] Taxable Bonds Maturity Date Principal Interest (June 1) Amount Rate 13 Maturity Date Principal Interest (June 1) Amount Rate $[A-T 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. 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 14 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. (1) Optional Redemption of Tax -Exempt Bonds. The Tax -Exempt Bonds maturing on or after June 1, 20 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) 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 Tax -Exempt Bonds to be redeemed, plus accrued but unpaid interest to the date fixed for redemption, without premium. (2) Optional Redemption of Taxable Bonds at Make Whole Redemption Price Make and Hold. The Taxable Bonds may be redeemed, at the written direction of the Authority, in whole or in part in integral multiples of $5,000, on any Business Day prior to June 1, 20 , from prepayments of Base Rental Payments made at the option of the City pursuant to Section 11(b) of the Lease, at the "Make -Whole Redemption Price" for such Taxable Bonds to be redeemed determined by the Designated Investment Banker equal to the greater of (i) the issue price as shown on the inside cover page of the Official Statement (but not less than 100% of the principal amount of the Taxable Bonds to be redeemed), or (ii) an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest on the Taxable Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Taxable Bonds are to be redeemed, discounted to the date on which such Taxable Bonds are to be redeemed on a semi- annual basis, assuming a 360-day year consisting of twelve 30-day months, at the "Treasury Rate" plus basis points, plus accrued and unpaid interest on the Taxable Bonds to be redeemed on the redemption date. (3) Optional Redemption of Taxable Bonds. The Taxable 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 15 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 Taxable Bonds to be redeemed, plus accrued but unpaid interest to the date fixed for redemption, without premium. (c) Mandatory Sinking Account Redemption. The Tax -Exempt Term Bonds maturing on June 1, 20 and June 1, 20 shall be subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule on June 1, in each year shown below until maturity, 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. Tax -Exempt Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1) To be Redeemed Maturity Tax -Exempt Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1) To be Redeemed * Maturity The Taxable 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 on June 1, in each year shown below until maturity, 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. Taxable Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1) To be Redeemed 16 * Maturity Tax -Exempt Term Bonds Maturing June 1, 20 Redemption Date (June 1) * Maturity Principal Amount To be Redeemed 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 17 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 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 or extraordinary mandatory 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. If, at the time of a redemption of less than all of the Bonds of a maturity of a Series, the Bonds of such maturity are registered in book -entry only form and the securities depository, or its nominee, is the sole Owner of such Bonds, the Bonds of such maturity shall be redeemed on a "Pro-Rata Pass Through Distribution of Principal" basis in accordance with the securities depository's procedures; provided, however, that such redemption shall be made in accordance with the operational arrangements of the securities depository then in effect. The underwriters of the Bonds have advised the Authority that the Bonds will be made eligible, in the case of a partial redemption of a maturity thereof, to be treated by the securities depository in accordance with its rules and procedures, as a "pro rata pass -through distribution of principal." The Trustee shall send notice to the securities depository in accordance with such rules and procedures to effect a pro rata reduction of principal of the applicable Bonds to accomplish partial redemption of the Bonds through a pass through distribution of principal. In connection with each such redemption, the Trustee shall include in the notice of redemption sent by the Trustee pursuant to Section 2.03(d) the dollar amount per $5,000 principal amount payable on account of principal and accrued interest to effect a pro-rata reduction through a pass -through distribution of principal on the related redemption date. The securities depository shall be responsible for distributing the principal and accrued interest among its direct participants, as applicable, pro rata in accordance with its rules and procedures for a pro rata pass through distribution of principal based upon the beneficial interest in the Bonds being redeemed that the securities depository's records list as owned by each securities depository direct participant as of the record date for such payment. Any failure of the Trustee to make such selection or of the securities depository or its participants or any other intermediary, to make such selection or proportional allocation, for whatever reason, will not affect the sufficiency of the validity of the redemption of the Bonds. If, at the time of a redemption of less than all of the Bonds of a maturity of a Series, the Bonds of such maturity are registered in book -entry only form and the securities depository, or its nominee, is the sole Owner of such Bonds, but the securities depository's operational arrangements do not allow for allocation of such redemption on a pro rata pass -through distribution of principal bases, the portion of the Bonds of such maturity of a series to be redeemed shall be selected in accordance with the securities depository's then existing rules and procedures and may be by lot. (f) Partial Redemption of Bonds. In the event only a portion of any Bond of a Series is called for redemption, then upon surrender of such Bond the Authority shall execute and the IN 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 of a Series 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-1 and Exhibit A-2 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 or Deputy Secretary duly appointed by the Authority Board, and shall be delivered to the Trustee for authentication by it. In case any officer of the Authority who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though the individual who signed the same had continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the Authority by any individual who on the actual date of the execution of such Bond shall be the proper officer although on the nominal date of such Bond such individual shall not have been such officer. 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 19 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). Prior to any transfer of the Bonds outside the book -entry system (including, but not limited to, the initial transfer outside the book -entry system) the transferor 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, as amended. The Trustee shall conclusively 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). SECTION 2.08. Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds definitive Bonds of like tenor, series designation, maturity and aggregate principal amount in Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. SECTION 2.09. Registration Books. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all 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 20 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 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. 21 (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. 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. 22 SECTION 3.02. Application of Proceeds of Sale of Bonds. (a) Upon the receipt of payment for the Tax -Exempt Bonds on the Closing Date, the Trustee shall apply $ of the net proceeds of the Tax -Exempt Bonds (which equals the principal amount of the Tax -Exempt Bonds, less an underwriting discount of $ , plus/less a net original issue premium/discount of $ , and which amount includes the good faith deposit of $[500,000.00] received by the Trustee from as initial purchaser of the Tax -Exempt 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 .] (2) The Trustee shall deposit in the Costs of Issuance Fund the amount of (3) The Trustee shall deposit in the Project Fund the amount of (b) Upon the receipt of payment for the Taxable Bonds on the Closing Date, the Trustee shall apply $ of the net proceeds of the Taxable Bonds (which equals the principal amount of the Taxable Bonds, less an underwriting discount of $ , plus/less a net original issue premium/discount of $ , and which amount includes the good faith deposit of $[500,000.00] received by the Trustee from as initial purchaser of the Taxable 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 .] (2) The Trustee shall deposit in the Costs of Issuance Fund the amount of (3) The Trustee shall deposit in the Project Fund the amount of (c) 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 23 Authority certifying that all Costs of Issuance related to the Bonds have been paid or provided for, the Trustee shall transfer any remaining amounts in the Costs of Issuance Fund to the Lease Revenue Fund and the Trustee shall then close the Costs of Issuance Fund. SECTION 3.04. 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 24 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 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; (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) 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; (g) 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; and (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 25 (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 subject to the Assignment Agreement, 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 26 Fund), the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority: (a) Interest Account. The Trustee shall establish and maintain a separate account to be known as the "Interest Account" [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 or mandatory sinking account amount 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, including the and mandatory sinking account amounts. (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 27 an amount for the payment of, any Rebate Requirement (as defined in the Tax Certificate) in accordance with a computation made by the City. 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 Tax -Exempt 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 Tax - Exempt 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. 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 Tax -Exempt 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. 29 ARTICLE V COVENANTS OF THE AUTHORITY SECTION 5.01. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal, interest and premium (if any) to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of applicable Revenues and other assets pledged for such payment as provided in this Indenture. SECTION 5.02. Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Authority to issue Additional Bonds, or issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds. 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 30 shall be available for inspection by the Authority and the City during regular business hours with reasonable prior notice. SECTION 5.06. Additional Obligations. The Authority covenants that no additional bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in whole or in part, other than the Additional Bonds. SECTION 5.07. Lease. The Trustee, as assignee of the Authority's rights under the Lease with respect to the Revenues pursuant to Section 4.01 hereof and the Assignment Agreement(s), shall receive amounts due from the City pursuant to the Lease with respect to the Revenues. The Authority will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Lease required to be complied with, kept, observed and performed by it and, together with the Trustee, will enforce the Lease against the City in accordance with its terms. So long as any Bond remains 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "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 Tax -Exempt Bonds are invested and that is not acquired to carry out the governmental purposes of the Tax -Exempt Bonds. 31 "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 Tax -Exempt Bonds. "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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the Authority covenants that at all times prior to the payment and cancellation of the last Tax -Exempt 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 Tax -Exempt 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 32 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 Tax -Exempt 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 Tax -Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the Authority will not: (i) permit any Nongovernmental Person to hold any ownership, proprietary or possessory interest in any of the Original Facilities; or (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 Tax -Exempt Bonds or to any Original Facility). For purposes of the preceding sentence, the Authority will treat proceeds of the Tax -Exempt Bonds as used ratably for the same purposes as were the proceeds of the Original Issue. (d) No Private Loan. Except as would not cause any Tax -Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the Authority has not used, and will not use, Gross Proceeds of any Tax - Exempt Bond to make or finance loans to any Nongovernmental Person. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take -or - pay, output or similar contract or arrangement; or (3) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. (e) Not to Invest at Higher Yield. Except as would not cause any Tax -Exempt Bond to become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the Authority shall not at any time prior to the final maturity of the Tax -Exempt Bonds directly or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any Investment acquired with Gross Proceeds, whether then held or previously disposed of, would materially exceed the Yield of such Tax -Exempt Bond within the meaning of such section 148. (f) Not Federally Guaranteed. The Authority covenants that, except to the extent permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, it will not take or omit to take any action that would cause any Tax -Exempt Bond to be "federally 33 guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder. (g) Information Report. The Authority covenants that it will timely file or cause to be filed any information required by section 149(e) of the Code with respect to the Tax -Exempt 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. (h) Rebate of Arbitrage Profits. The Authority covenants that the requirements of section 148(f) of the Code will be satisfied in order that the Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt Bond is discharged. However, to the extent permitted by law, the Authority may commingle Gross Proceeds of the Tax -Exempt Bonds with its other money, provided that the Authority 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 Tax -Exempt 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 Tax -Exempt Bonds equals (A) in the case of a Final Computation Date as defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (B) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such a date. In all cases such Rebate payments shall be made by the Authority (or by the Trustee at the direction of the Authority) at the times and in the amounts as are or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and such payments shall be accompanied by Form 8038-T 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 34 is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under section 1.148-3(h) or other provision of the Tax Regulations. (i) Not to Divert Arbitrage Profits. The Authority covenants that, except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at no time prior to the final maturity of the Tax -Exempt 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 Tax -Exempt Bonds not been relevant to each party. 0) Tax -Exempt Bonds Not Hedge Bonds. (1) The Authority represents that none of the Original Issue was, and covenants that the Tax -Exempt 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. (k) Elections. The Authority hereby directs and authorizes any Responsible Officer to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Responsible Officer (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Tax -Exempt Bonds, in the Tax Certificate relating to the Tax -Exempt Bonds or similar or other appropriate certificate, form or document. SECTION 5.09. Further Assurances. The Authority will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture. ARTICLE VI THE TRUSTEE SECTION 6.01. Appointment of Trustee. U.S. Bank National Association, 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 35 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. (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. 36 (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 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 37 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. (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 to and the Trustee in its discretion elects to act upon such Instructions, the Trustee's understanding of such Instructions shall be deemed controlling in the absence of manifest error. 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. 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 39 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 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, .N 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 41 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, 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; 42 (e) to maintain the exclusion of interest on the Tax -Exempt 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. 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. 43 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. 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; 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 'LI Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and if the Trustee is indemnified as provided in Section 6.02(c). Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is hereby appointed (and the successive respective Owners issued hereunder by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney -in -fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney -in -fact. SECTION 8.05. Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer. SECTION 8.06. Non -Waiver. A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be. SECTION 8.07. Rights of Owners. No Owner shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) such Owners shall have tendered to the Trustee indemnity acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and such tender of indemnity shall have been made to, the Trustee. 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 M 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. 47 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. 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 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 50 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: U.S. Bank National Association Global Corporate Trust 633 W. Fifth Street, 24th Floor LM-CA-T24T Los Angeles, CA 90071 (213) 615-6062 Email fonda.hallgusbank.com 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 51 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. 52 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: Mary Cusick, Deputy Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY Cameron Smyth, Chair U.S. BANK NATIONAL ASSOCIATION, as Trustee By Authorized Officer 53 EXHIBIT A -I [FORM OF TAX-EXEMPT BOND] UNLESS THIS TAX-EXEMPT 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 TAX-EXEMPT BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. No. SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE BOND (RECREATIONAL FACILITY) SERIES 2020A RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP: % JUNE 1, 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 Tax -Exempt Bond (unless this Tax -Exempt 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 Tax - Exempt Bond is authenticated on or prior to November 15, 2020, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Tax -Exempt Bond, interest is in default on this Tax -Exempt Bond, this A-1-1 Tax -Exempt Bond shall bear interest from the Interest Payment Date to which interest hereon has previously been paid or made available for payment), payable semiannually on June 1 and December 1 in each year, commencing December 1, 2020 (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 U.S. Bank National Association, 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 (15'') 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 Tax -Exempt Bond is one of a duly authorized issue of bonds of the Authority designated the "Santa Clarita Public Financing Authority, Lease Revenue Bonds (Recreational Facility), Series 2020A" (herein, the "Tax -Exempt Bonds"), in an aggregate principal amount of $[A principal amount] issued under an Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and the Trustee. Concurrently with the issuance of the Tax - Exempt Bonds, the Authority is also issuing the $[A-T principal amount] Santa Clarita Public Financing Authority, Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds"), issued pursuant to the Indenture. 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. A-1-2 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 October 1, 2020 (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. 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 Tax -Exempt Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount, interest rate and maturity of fully registered Tax -Exempt Bonds of other authorized denominations. This Tax -Exempt 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 Tax -Exempt 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 and the same series designation 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 Tax -Exempt Bond during the period in which the Trustee is selecting Tax -Exempt Bonds for redemption or any Tax -Exempt 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. A-1-3 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 Tax -Exempt 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 Tax -Exempt 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. This Tax -Exempt 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. A-1-4 IN WITNESS WHEREOF, the Authority has caused this Tax -Exempt Bond to be executed in its name and on its behalf by the manual or facsimile signatures of its Chair and Deputy Secretary as of the Dated Date identified above. ATTEST: Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY Chair A-1-5 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Tax -Exempt Bonds described in the within -mentioned Indenture and registered on the Bond Registration Books. Dated: , 20 U.S. BANK NATIONAL ASSOCIATION, as Trustee Authorized Officer A-1-6 ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto , whose tax identification number is , the within - mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: Signature guaranteed: NOTE: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. NOTICE: Signature must be guaranteed by a member of an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or other similar program. A-1-7 EXHIBIT A-2 [FORM OF TAX-EXEMPT BOND] UNLESS THIS TAXABLE 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 TAXABLE BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. No. SANTA CLARITA PUBLIC FINANCING AUTHORITY FEDERALLY TAXABLE LEASE REVENUE BOND (RECREATIONAL FACILITY) SERIES 202OA-T RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP: % JUNE 1, 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 Taxable Bond (unless this Taxable 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 Taxable Bond is authenticated on or prior to November 15, 2020, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Taxable Bond, interest is in default on this Taxable Bond, this Taxable Bond shall bear interest 100802390.3 A-2-1 from the Interest Payment Date to which interest hereon has previously been paid or made available for payment), payable semiannually on June 1 and December 1 in each year, commencing December 1, 2020 (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 U.S. Bank National Association, 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 (15'') 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 Taxable Bond is one of a duly authorized issue of bonds of the Authority designated the "Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility), Series 2020A-T" (herein, the "Taxable Bonds"), in an aggregate principal amount of $[A-T principal amount] issued under an Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and the Trustee. Concurrently with the issuance of the Taxable Bonds, the Authority is also issuing the $[A principal amount] Santa Clarita Public Financing Authority, Lease Revenue Bonds (Recreational Facility), Series 2020A (the "Tax -Exempt Bonds," and together with the Taxable Bonds, the "Bonds"), issued pursuant to the Indenture. 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 100802390.3 A-2-2 October 1, 2020 (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. 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 Taxable Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount, interest rate and maturity of fully registered Taxable Bonds of other authorized denominations. This Taxable 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 Taxable 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 and the same series designation 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 Taxable Bond during the period in which the Trustee is selecting Taxable Bonds for redemption or any Taxable 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 Taxable Bond do 100802390.3 A-2-3 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 Taxable 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. This Taxable 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. 100802390.3 A-2 -4 IN WITNESS WHEREOF, the Authority has caused this Taxable Bond to be executed in its name and on its behalf by the manual or facsimile signatures of its Chair and Deputy Secretary as of the Dated Date identified above. SANTA CLARITA PUBLIC FINANCING AUTHORITY Chair ATTEST: Deputy Secretary 100802390.3 A-2-5 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Taxable Bonds described in the within -mentioned Indenture and registered on the Bond Registration Books. Dated: , 20 U.S. BANK NATIONAL ASSOCIATION, as Trustee Authorized Officer 100802390.3 A-2-6 EXHIBIT B FORM OF COSTS OF ISSUANCE REQUISITION COSTS OF ISSUANCE REQUISITION NO. with reference to Santa Clarita Public Financing Authority (Recreational Facility) $[A principal amount] $[A-T principal amount] Lease Revenue Bonds Federally Taxable Lease Revenue Bonds Series 2020A Series 2020A L The Santa Clarita Public Financing Authority (the "Authority") hereby requests U.S. Bank National Association, as trustee (the "Trustee"), pursuant to that certain Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and the Trustee, under the terms of which the Authority has issued its Lease Revenue Bonds (Recreational Facility), Series 2020A and its Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T, 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. IL 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: 100802390.3 B-1 EXHIBIT C FORM OF PROJECT FUND REQUISITION REQUISITION OF THE CITY PROJECT FUND REQUISITION NO. (to be numbered sequentially) with reference to Santa Clarita Public Financing Authority (Recreational Facility) $[A principal amount] $[A-T principal amount] Lease Revenue Bonds Federally Taxable Lease Revenue Bonds Series 2020A Series 2020A L The City of Santa Clarita (the "City") hereby requests U.S. Bank National Association, as trustee (the "Trustee"), pursuant to that certain Indenture, dated as of October 1, 2020 (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 (Recreational Facility), Series 2020A and its Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T, 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. IL 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 SCHEDULE I 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: Aggregate Amount Draws Including This Draw C-2 EXHIBIT D FORM OF NET PROCEEDS REQUISITION REQUISITION NO. (to be numbered sequentially) with reference to Santa Clarita Public Financing Authority (Recreational Facility) $[A principal amount] $[A-T principal amount] Lease Revenue Bonds Federally Taxable Lease Revenue Bonds Series 2020A Series 2020A L The Santa Clarita Public Financing Authority (the "Authority") hereby requests U.S. Bank National Association, as trustee (the "Trustee"), pursuant to that certain Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and the Trustee, under the terms of which the Authority has issued its Lease Revenue Bonds (Recreational Facility), Series 2020A and its Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T, 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. IL 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 9/ l /20 AFTER RECORDATION PLEASE RETURN TO: Norton Rose Fulbright US LLP 555 South Flower Street, Suite 4100 Los Angeles, California 90071 Attention: Maryann L. Goodkind, Esq. SITE AND FACILITY LEASE Dated as of October 1, 2020 by and between CITY OF SANTA CLARITA and SANTA CLARITA PUBLIC FINANCING AUTHORITY Relating to the $[A principal amount] Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A and $[A-T principal amount] Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T 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 SECTION 2. SITE AND FACILITY..................................................................................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 SECTION 14. 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 AND FACILITY 0 SITE AND FACILITY LEASE This SITE AND FACILITY LEASE, dated as of October 1, 2020 (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, in order to finance the acquisition of a parcel of land and the improvements thereon (the "Project"), to be used for recreational facilities, the City is leasing the property located at 27745 Smyth Drive within the City, as described in Exhibit A attached hereto (the "Site"), and improvements thereon (the "Facility," and together with the Site, the "Recreational Facility") to the Authority; and WHEREAS, the Authority has determined to issue its Lease Revenue Bonds (Recreational Facility), Series 2020 (the "Bonds") and any Additional Bonds pursuant to an Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"); and WHEREAS, the Authority, concurrently with the execution of this Site Lease, will lease the Recreational Facility (the "Leased Property") to the City pursuant to a Lease Agreement, dated as of October 1, 2020 (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 AND FACILITY LEASE. The City hereby leases the Recreational Facility to the Authority and the Authority hereby leases the Recreational Facility from the City, on the terms and conditions hereinafter set forth. SECTION 3. TERM. The term of this Site Lease shall commence on October , 2020. This Site Lease shall constitute a lease of the City's interest in the Recreational Facility. 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 Recreational Facility 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 Recreational Facility 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 in each case 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 or in equity; provided however, that: (i) no merger of this Site Lease and of the Lease shall be deemed to occur as a W 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) 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 Recreational Facility in as 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 Recreational Facility 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. 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. il 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 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 Recreational Facility 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; RECITALS. 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. The Recitals to this Site Lease are agreed by the parties to be true and correct and are a part 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. 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: ATTEST: Secretary City Clerk SANTA CLARITA PUBLIC FINANCING AUTHORITY Chair CITY OF SANTA CLARITA City Manager no A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT. STATE OF CALIFORNIA COUNTY OF LOS ANGELES On before me, (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: A-1 9/1/20 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 October 1, 2020 by and between SANTA CLARITA PUBLIC FINANCING AUTHORITY and CITY OF SANTA CLARITA Relating to $[A principal amount] Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A and $[A-T principal amount] Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T 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......................................................................................................4 SECTION 4. USE OF PROCEEDS....................................................................................6 SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS ..................6 SECTION 6. CHANGES TO THE LEASED PROPERTY.................................................7 SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY....................................7 SECTION8. INSURANCE................................................................................................8 SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION; APPLICATION OF NET PROCEEDS.......................................................10 SECTION 10. DEFAULT..................................................................................................12 SECTION 11. PREPAYMENT AND CREDITS................................................................14 SECTION 12. MECHANICS' LIENS................................................................................15 SECTION 13. QUIET ENJOYMENT................................................................................15 SECTION 14. INDEMNIFICATION.................................................................................15 SECTION 15. ASSIGNMENT...........................................................................................16 SECTION 16. ABATEMENT OF RENTAL......................................................................17 SECTION 17. COVENANTS OF THE CITY....................................................................17 SECTION 18. CONTINUING DISCLOSURE...................................................................21 SECTION19. WAIVER....................................................................................................22 SECTION 20. NET LEASE...............................................................................................22 SECTION 21. AMENDMENTS........................................................................................22 SECTION 22. ESSENTIALITY.........................................................................................23 SECTION 23. LAW GOVERNING...................................................................................23 SECTION24. NOTICES...................................................................................................23 SECTION 25. VALIDITY AND SEVERABILITY...........................................................23 SECTION 26. SECTION HEADINGS...............................................................................23 SECTION 27. NO MERGER.............................................................................................23 SECTION 28. EXECUTION..............................................................................................24 EXHIBIT A DESCRIPTION OF THE LEASED PROPERTY EXHIBIT B BASE RENTAL PAYMENT SCHEDULE LEASE AGREEMENT This Lease Agreement, dated as of October 1, 2020 (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 the acquisition of a parcel of land and the improvements thereon located at 27745 Smyth Drive within the City (the "Project"), and to be used for recreational facilities; 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 (Recreational Facility) Series 2020A (the "Tax -Exempt Bonds") and its Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds"), for such purposes to assist the City; and WHEREAS, the Bonds are to be issued pursuant to an Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and U.S. Bank National Association, as 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 and Facility Lease, dated as of October 1, 2020 (the "Site Lease"), whereby the Authority has agreed to lease the approximate 4.4 acre site (the "Site") from the City and the improvements thereon (the "Facility," and, together with the Site, the "Recreational Facility"); and WHEREAS, the Authority, pursuant to the Lease, will sublease the Recreational Facility (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. "Event of Default" means the Events of Default set forth in Section 10. "Expiration Date" means June 1, 20 "Facility" means the approximately 93,000 square foot building on the Site as it may be improved, repaired, rehabilitated, and modified for use as recreational facilities, as more fully described on Exhibit A. "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" or "Recreational Facility" means the Site and the Facility. 2 "Net Proceeds" means proceeds of any casualty or title insurance or condemnation awards, paid with respect to the Leased Property remaining after payment therefrom of all expenses in the collection thereof. "Permitted Encumbrances" means, with respect to the Leased Property, as of any particular time, (i) the Site Lease; (ii) this Lease, (iii) the Indenture, the Assignment Agreement and the Trustee's and the Authority's interests in the Leased Property, (iv) liens for taxes and assessments not then delinquent, (v) utility, access and other easements and rights of way, restrictions and exceptions that as certified in a Certificate of the City will not interfere with or impair the use intended to be made of the Leased Property; (vi) encumbrances upon any additions and improvements to the Leased Property as permitted in this Lease and 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 , and (xi) the Site Agreement, dated June 26, 2003, [as amended] between the City, as lessor and successor to Ice Station Valencia, LLC, and as lessee and successor to Sprint PCS Assets, L.L.C. [list any other leases]. "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 4.4 acre parcel of City property located at 27745 Smyth Drive within the City, as more fully described on Exhibit A to the Site Lease. 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 October , 2020. 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 9 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 rd 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 9 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 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 (a) all utility services supplied to the Leased Property, (b) the cost of operation of the Leased Property, and (c) the costs of maintenance of and repair to the Leased Property resulting from ordinary wear and tear or want of care on the part of the City. The City shall, at the City's sole cost and expense, keep and maintain the Leased Property clean and in a safe and good condition and repair. The Authority shall have no obligation to alter, remodel, improve, repair, decorate, or paint the Leased Property or any part thereof, and the parties hereto affirm that the Authority has made no representations or warranties to the City respecting the condition of the Leased Property. The City shall comply with all statutes, ordinances, regulations, and other requirements of all governmental entities that pertain to the occupancy or use of the Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the Leased Property. The City waives the right to make repairs at the Authority's expense under Subsection 1 of Section 1932 and Section 1942 of the California Civil Code, or any other such law, statute, or ordinance now or hereafter in effect. [The parties hereto contemplate that the Leased Property will be used for public purposes by the City and, therefore, that the Leased Property will be exempt from all taxes presently assessed and levied with respect to real and personal property, respectively.] In the event that the use, possession or acquisition by the Authority or the City of the Leased Property is found to be subject to taxation in any form, the City will pay during the term hereof, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the Leased Property; provided, that with respect to any 31 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 and 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; 7 (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 Tax -Exempt 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 E'? the extent such self-insurance is 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 I Authority, in an amount not less than the aggregate principal amount of the Outstanding Bonds. All policies or certificates issued by the respective insurers for insurance, with the exception of workers' compensation insurance, shall provide that such policies or certificates shall not be canceled or materially changed without at least 30 days' prior written notice to the Authority and the Trustee. Certificates of comprehensive general liability and workers' compensation insurance shall be furnished by applicable insurers to the City, and, at least ten 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, 10 then the City and the Authority shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Property or portion thereof, in accordance with the provisions of this Section 9. If Net Proceeds are insufficient to repair or replace the Leased Property or portion thereof, the City shall, to the extent permitted by law, use its best efforts to fund any deficiency from any legally available funds. 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 11 than the full amount of the Outstanding Bonds, such redemption shall only be made to the extent the remaining fair rental value of the Leased Property is sufficient to support the remaining Base Rental Payments supporting debt service on the Outstanding Bonds 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: 12 (1) Enforcement of Payments Without Termination. If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subsection (b)(2) of this Section, the City agrees to remain liable for the payment of all Base Rental Payments and the performance of all conditions herein contained, and the Authority may take whatever action at law or in equity may appear necessary or desirable, to collect each Base Rental Payment as it becomes due hereunder. The City will reimburse the Authority for any deficiency arising out of the re -leasing 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 13 unlawful detainer taken by the Authority will of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City will be or become effective by operation of law, or otherwise, unless and until the Authority has given written notice to the City of the election on the part of the Authority to terminate this Lease. The City agrees that no surrender of the Leased Property, or of the remainder of the term hereof or any termination of this Lease will be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. (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 14 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 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 15 Leased Property or any portion thereof resulting in damage to property or injury to or death to any person. The indemnification arising under this section shall continue in full force and effect notwithstanding the full payment of all rent obligations hereunder, the removal or resignation of the Trustee or the termination hereof for any reason. The City agrees not to withhold or abate any portion of the payments required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the Leased Property. The Authority and the City mutually agree to promptly give notice to each other of any claim or liability hereby indemnified against following either party's learning thereof. 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, 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, unless an opinion of Bond Counsel has been filed pursuant to (e) below, 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. 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. 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 Tax -Exempt 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 Tax -Exempt Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "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 Tax -Exempt Bonds are invested and that is not acquired to carry out the governmental purposes of the Tax -Exempt Bonds. 17 "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 Tax -Exempt Bonds. "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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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. (c) No Private Use or Private Payments. Except as would not cause any Tax - Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the City covenants that at all times prior to the payment and cancellation of the last Tax -Exempt 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 Tax -Exempt 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 IN 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 Tax -Exempt 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 Tax -Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the City will not: (i) permit any Nongovernmental Person to hold any ownership, proprietary or possessory interest in any of the Original Facilities; or (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 Tax -Exempt Bonds or to any Original Facility). (d) No Private Loan. Except as would not cause any Tax -Exempt Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the City has not used, and will not use, Gross Proceeds of any Tax -Exempt Bond to make or finance loans to any Nongovernmental Person. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take -or -pay, output or similar contract or arrangement; or (3) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. (e) Not to Invest at Higher Yield. Except as would not cause any Tax -Exempt Bond to become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the City shall not at any time prior to the final maturity of the Tax -Exempt Bonds directly or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any Investment acquired with Gross Proceeds, whether then held or previously disposed of, would materially exceed the Yield of such Tax -Exempt Bond within the meaning of said section 148. (f) Not Federally Guaranteed. 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 Tax -Exempt Bond to be "federally guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder. 19 (g) Information Report. The City covenants that it will timely file or cause to be filed any information required by section 149(e) of the Code with respect to the Tax -Exempt Bonds with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitrage Profits. The City covenants that the requirements of section 148(f) of the Code will be satisfied in order that the Tax -Exempt 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 Tax -Exempt 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 Tax - Exempt Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Tax -Exempt Bonds with its other money, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (2) not less frequently than each Computation Date, it will calculate or cause to be calculated the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and rulings thereunder. The Trustee may rely conclusively upon the City's determinations, calculations and certifications required by this Section. The Trustee shall have no responsibility to independently make any calculation of determination or to review the City's calculations hereunder. The City covenants that it will maintain a copy of the calculation with its official transcript of proceedings relating to the issuance of the Tax -Exempt 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 Tax -Exempt Bonds equals (A) in the case of a Final Computation Date as defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (B) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such 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 20 it, interest thereon, and any penalty imposed under section 1.148-3(h) or other provision of the Tax Regulations. (i) Not to Divert Arbitrage Profits. The City covenants that, except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at no time prior to the final maturity of the Tax -Exempt 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 Tax -Exempt Bonds not been relevant to each party. 0) Tax -Exempt Bonds Not Hedge Bonds. (1) The City represents that the Tax -Exempt Bonds will not be, "hedge bonds" within the meaning of section 149(g) of the Code. (2) Without limitation of paragraph (1) above, the City warrants as to the Original Issue that: (I) on each date of issuance of that issue, the City reasonably expected that at least 85% of the spendable proceeds of that Original Issue would be expended within the three-year period commencing on such date of issuance, and (II) no more than 50% of the proceeds of that Original Issue at any time has been invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more. (k) 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 Tax -Exempt Bonds, in the Tax Certificate relating to the Tax -Exempt Bonds or similar or other appropriate certificate, form or document. (1) 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 Tax -Exempt 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 October 1, 2020, 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. 21 SECTION 19. WAIVER Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may be established between the parties in the course of administering this Lease be construed to waive or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any term, covenant or condition of this Lease. SECTION 20. NET LEASE Subject to the provisions of Section 16 ("Abatement of Rental"), this Lease shall be deemed and construed to be a "Triple -Net -Lease" and the City hereby agrees that rental provided for herein shall be an absolute net return to the Authority, free and clear of any expenses, taxes, fees, insurance premiums, rebate payments, Leased Property costs, reserve deposits, charges or setoffs whatsoever. SECTION 21. AMENDMENTS. This Lease may be amended in writing as may be mutually agreed by the Authority and the City; provided, that no such amendment which materially adversely affects the rights of the Owners shall be effective unless it shall have been consented to by the Owners of more than a majority in aggregate principal amount of the affected Bonds and any Additional Bonds then Outstanding, and provided further, that no such amendment shall (a) extend the payment date of any Base Rental Payment, without the prior written consent of the Owner of each Bond and any Additional Bond so affected, or (b) reduce the percentage of the Outstanding Bonds the consent of the Owners of which is required for the execution of any amendment hereof. This Lease and the rights and obligations of the Authority and the City hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution by the Authority and the City without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (a) to add to the agreements, conditions, covenants and terms required by the Authority or the City to be observed or performed herein and other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein to or conferred herein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners; (b) to make such provisions for the purpose of curing any ambiguity 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; 22 (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. 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 23 stating, and unless and until the City so elects, the City shall continue to have and enjoy all of its rights and privileges as to the separate estates. SECTION 28. EXECUTION It is agreed that separate counterparts of this Lease may separately be executed by the Authority and the City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City. 24 IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. ATTEST: ATTEST: Secretary City Clerk 25 SANTA CLARITA PUBLIC FINANCING AUTHORITY 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 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 LEASED PROPERTY The approximately 93,000 square foot building to be repaired, improved and/or rehabilitated as a recreational facility by the City of Santa Clarita and/or Santa Clarita Public Financing Authority, on a parcel currently assessed by the County Assessor as APN 2810-043-054, and the real property in the City of Santa Clarita, County of Los Angeles, State of California, described as follows: A-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE Interest Total Annual Debt ment Dates' Principal Interest Debt Service Service 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 1. Base Rental Payments from October , 2020 to and including are funded from capitalized interest. Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date. M. Interest vent Dates(i) Princ 06/01/2041 12/01/2041 06/01/2042 12/01/2042 06/01/2043 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 12/01/2049 06/01/2050 rind al Total amount10.00 Total Annual Debt Interest Debt Service Service (1) Base Rental Payments from October , 2020 to and including are funded from capitalized interest. Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date. M. 9/1/20 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 October 1, 2020 by and between SANTA CLARITA PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee Relating to the $[A principal amount] Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A and $[A-T principal amount] Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T 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 0 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT, dated as of October 1, 2020 (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 U.S. BANK NATIONAL ASSOCIATION, 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, in order to finance the acquisition of a parcel of land and the improvements thereon (the "Project"), to be used for recreational facilities, the Authority has entered into a Site and Facility Lease, dated as of October 1, 2020 (the "Site Lease"), with the City of Santa Clarita, California (the "City"), whereby the Authority has agreed to lease certain real property located at 27745 Smyth Drive within the City, as described in Exhibit A attached hereto (the "Site"), and improvements thereon (the "Facility," and together with the Site, the "Recreational Facility") from the City; and WHEREAS, the Authority has entered into a Lease Agreement, dated as of October 1, 2020 (the "Lease"), with the City, whereby the Authority has agreed to lease the Recreational Facility (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 (Recreational Facility) Series 2020A (the "Tax -Exempt Bonds") and its Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the "Bonds"), authorized and issued pursuant to an Indenture, dated as of October 1, 2020 (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 0 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. 3 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 Cameron Smyth, Chair U.S. BANK NATIONAL ASSOCIATION, as Trustee 13 Authorized Officer il 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 61.1 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: A-1 9/ 17/20 :III III"E,1;1 SIIE[11"]I'EVI .°:III,I 201201 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 judicial decisions, and assuming compliance with certain covenants in the documents pertaining to the Tax -Exempt Bonds and requirements of the Internal Revenue Code of 1986, as amended, as described herein, interest on the Tax -Exempt Bonds is not included in the gross income of the owners thereof for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Tax - Exempt Bonds is not treated as an item of tax preference for purposes of the alternative minimum tax. Bond Counsel is also of the opinion that, under existing law, interest on the Bonds is exempt from personal income taxes of the State of California. The Authority has taken no action to cause, and does not intend, interest on the Taxable Bonds to be excluded pursuant to section 103(a) of the Internal Revenue Code of 1986from the gross income of the owners thereoffor federal income taxpurposes. See "TAXMATTERS" herein. SANTA CLARITA PUBLIC FINANCING AUTHORITY $10,030,000- $3,640,000- Lease Revenue Bonds Federally Taxable Lease Revenue Bonds (Recreational Facility) (Recreational Facility) Series 2020A Series 202OA-T Dated: Date of Delivery Due: June 1, as shown on the inside cover The Santa Clarita Public Financing Authority (the "Authority") is issuing its Lease Revenue Bonds (Recreational Facility), Series 2020A (the "Tax -Exempt Bonds") and its Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 202OA-T (the "Taxable Bonds," and, together with the Tax -Exempt Bonds, the "Bonds"), pursuant to an Indenture, dated as of October 1, 2020, by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), to provide funds to (i) finance the costs of acquiring an approximately 4.4 acre parcel located at 27745 Smyth Drive within the City (the "Site") and an approximately 93,000 square foot recreation facility thereon (the "Facility") and (ii) 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, 2020. 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 Facility (collectively, the "Leased Property") from the Authority. The City is required under the Lease to make Base Rental Payments in each year in consideration for the use of the Leased Property from any source of legally available funds, in an amount sufficient to pay the annual principal of and interest on the Bonds. The City's obligation to make Base Rental Payments is subject to abatement in the event of substantial interference with the use and possession of all or a part of the Leased Property. See "RISK FACTORS — Abatement" herein. The City has covenanted in the Lease to take such action as may be necessary to include and maintain all Base Rental Payments in its annual budget and to make the necessary appropriations therefor, subject to such abatement. The Bonds are special obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided in the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues (other than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and payment of the principal of and interest on the Bonds. The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Revenues and such other moneys and securities as provided in the Indenture. This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used and not 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." The Bonds are offered 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 City and the Authority by Burke, Williams and . Preliminary, subject to change. Sorensen, LLP, Los Angeles, California, as City Attorney and Authority Counsel. It is anticipated that the Bonds will be available for delivery through the book -entry facilities of DTC on or about October , 2020. [UNDERWRITER LOGO] Dated: October , 2020 MATURITY SCHEDULE SANTA CLARITA PUBLIC FINANCING AUTHORITY (Base CUSIPt 80169P) $10,030,000- Lease Revenue Bonds (Recreational Facility) Series 2020A Maturity Maturity Date Principal Interest Date Principal Interest (June 1) Amount Rate Yield CUSIPt (June 1) Amount Rate Yield CUSIPt % Tax -Exempt Term Bond due June 1, 20, Priced to Yield % CUSIPt: $3,640,000- Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T Maturity Maturity Date Principal Interest Date Principal Interest (June 1) Amount Rate Yield CUSIPt (June 1) Amount Rate Yield CUSIPt % Taxable Term Bond due June 1, 20 , Priced to Yield % CUSIPt: C: Priced to call at par on the optional redemption date of June 1, 20 t CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein are provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the Underwriter, the 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. . Preliminary, subject to change. SANTA CLARITA PUBLIC FINANCING AUTHORITY CITY COUNCIL/BOARD OF DIRECTORS Cameron Smyth, Mayor/Chairperson William Miranda, Mayor Pro TemlVice-Chairperson Robert C. Kellar, CouncibnemberBoard Member Laurene F. Weste, Councihnember/Board Member Marsha A. McLean, Councihnember/Board Member CITY OFFICIALS Kenneth W. Striplin, Ed.D., City Manager/Executive Director Frank Oviedo, Assistant City Manager Darren Hernandez, Deputy City Manager Carmen Magaiia, City Treasurer/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 U.S. Bank National Association Los Angeles, California GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or for any other purpose. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority or City in any press release and in any oral statement made with the approval of an authorized officer of the Authority or City, the words or phrases "will likely 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. Particularly because of the evolving nature of the current COVID-19 public health crisis described herein, no assurance can be given that any estimates of future impact described herein will be achieved, and actual results may differ materially from the potential impact described herein. All projections, forecasts, estimates, assumptions and other forward -looking statements herein are expressly qualified in their entirety by this cautionary statement. 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 INTRODUCTION Purposeof the Bonds.......................................................................... Securityfor the Bonds........................................................................ The City of Santa Clarita.................................................................... LeasedProperty.................................................................................. No Debt Service Reserve.................................................................... Existing General Fund Debt and Additional Bonds ............................ ContinuingDisclosure........................................................................ DESCRIPTION OF THE BONDS.................................................................. General............................................................................................... . Redemption......................................................................................... Selection of Bonds for Redemption.................................................... Noticeof Redemption......................................................................... Partial Redemption of Bonds.............................................................. Effectof Redemption.......................................................................... SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ............... General............................................................................................... . LimitedObligation.............................................................................. No Debt Service Reserve.................................................................... Abatement of Base Rental Payments .................................................. Insurance Coverages........................................................................... AdditionalBonds................................................................................ Existing General Fund Indebtedness.................................................. Maintenance, Utilities, Taxes and Assessments ................................. Substitution and Release of Property .................................................. PLANOF FINANCE....................................................................................... General............................................................................................... . ProjectCosts....................................................................................... Diagramof Site................................................................................... TheLeased Property ........................................................................... Future Sublease with County and Memorandum of Understanding ... ESTIMATED SOURCES AND USES OF FUNDS ....................................... DEBT SERVICE REQUIREMENTS.............................................................. THEAUTHORITY......................................................................................... THECITY....................................................................................................... General............................................................................................... . Budgetary Process and Administration ............................................... GeneralFund....................................................................................... Budgeted Revenues and Expenditures ................................................ Management Discussion of Financial Performance ............................ Capital Improvement Program............................................................ AppropriationsLimit.......................................................................... FinancialStatements........................................................................... FiscalPolicies..................................................................................... Page 1 ...............1 ...............1 ...............2 ...............3 ...............3 ...............3 ...............3 ...............4 ...............4 ...............4 ...............5 ...............5 ...............6 ...............6 ...............6 ...............6 ...............7 ...............7 ...............7 ............... 8 ............... 8 ...............9 .............10 .............10 .............12 .............12 .............12 .............15 .............16 .............16 .............17 .............18 .............19 .............19 .............19 .............19 .............20 .............23 .............25 .............25 .............25 .............25 .............26 i TABLE OF CONTENTS (continued) Page Taxable Property and Assessed Valuation....................................................................................26 LargestTaxpayers......................................................................................................................... 29 State Legislative Shift of Property Tax Allocation.......................................................................29 OtherLocal Taxes.........................................................................................................................29 OtherRevenue 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 EmployeeRetirement Plans..........................................................................................................35 Post -Retirement Medical Benefits (OPEB)..................................................................................41 Deferred Compensation Plan/Defined Contribution Plan.............................................................43 RedevelopmentAgencies.............................................................................................................. 44 STATE OF CALIFORNIA BUDGET INFORMATION..........................................................................44 RISKFACTORS.......................................................................................................................................46 Substitutionof Property................................................................................................................ 46 Base Rental Payments Are Not Debt; Bonds are Limited Obligations.........................................47 Abatement..................................................................................................................................... 47 City Pension and OPEB Obligations............................................................................................48 Riskof Uninsured Loss................................................................................................................. 48 Self-Insurance...............................................................................................................................48 EminentDomain........................................................................................................................... 49 Bankruptcy.................................................................................................................................... 50 No Liability of Authority to the Owners.......................................................................................50 No Limitation on Incurring Additional Obligations.....................................................................50 SeismicFactors............................................................................................................................. 50 Risk of Structural and Wildland Fire............................................................................................ 50 Riskof Floods............................................................................................................................... 51 HazardousSubstances...................................................................................................................52 ClimateChange.............................................................................................................................52 Risks Related to Taxation in California........................................................................................52 FutureInitiatives...........................................................................................................................56 Limitationson Remedies..............................................................................................................56 Remedieson Default.....................................................................................................................56 EarlyRedemption Risk.................................................................................................................57 InvestmentRisk............................................................................................................................ 57 NoDebt Service Reserve.............................................................................................................. 57 Lossof Tax Exemption.................................................................................................................57 IRS Audit of Tax -Exempt Bonds.................................................................................................. 57 SecondaryMary Risk....................................................................................................................58 OtherFactors.................................................................................................................................58 RATING.................................................................................................................................................... 58 UNDERWRITING....................................................................................................................................58 CONTINUINGDISCLOSURE.................................................................................................................59 TAXMATTERS........................................................................................................................................60 ii TABLE OF CONTENTS (continued) Page TaxExemption..............................................................................................................................60 Tax Accounting Treatment of Discount and Premium on Certain Bonds .................................... 62 OtherTax Consequences.............................................................................................................. 63 LITIGATION............................................................................................................................................. 63 LEGALOPINION..................................................................................................................................... 63 MUNICIPALADVISOR........................................................................................................................... 63 FINANCIAL STATEMENTS................................................................................................................... 64 MISCELLANEOUS..................................................................................................................................64 EXECUTION AND DELIVERY.............................................................................................................. 64 APPENDIX A — GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA APPENDIX B — AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2019 .... APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGALDOCUMENTS................................................................................. APPENDIX D — FORM OF CONTINUING DISCLOSURE CERTIFICATE ........................ APPENDIX E — FORM OF OPINION OF BOND COUNSEL ............................................... APPENDIX F — BOOK -ENTRY SYSTEM............................................................................. FEW C-1 D-1 E-1 .F-1 III VICINITY MAP OFFICIAL STATEMENT SANTA CLARITA PUBLIC FINANCING AUTHORITY $10,030,000- $3,640,000- Lease Revenue Bonds Federally Taxable Lease Revenue Bonds (Recreational Facility) (Recreational Facility) Series 2020A Series 202OA-T 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 $10, 030, 000* Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility), Series 2020 (the "Tax -Exempt Bonds'), and the $3,640,000" Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 202OA-T (the "Taxable Bonds, " and together with the Tax - Exempt Bonds, 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 6584) of the California Government Code (the "Bond Law"). The Bonds are being issued pursuant to an Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Santa Clarita Public Financing Authority (the "Authority") and U.S. Bank National Association, as trustee (the "Trustee"). The proceeds of the Bonds will be applied to provide funds to (i) finance the costs of acquiring an approximately 93,000 square foot recreational facility and an approximately 4.4 acre parcel located at 27745 Smyth Drive within the City (the "Project") and (ii) 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 and Facility Lease, dated as of October 1, 2020 (the "Site Lease"), by and between the City and the Authority, the Authority will lease from the City certain real property consisting of an approximately 4.4 acre parcel located at 27745 Smyth Drive in the City (the "Site") and the improvements located thereon (the "Facility," and together with the Site, the "Recreational Facility"). See "— Leased Property" below. Pursuant to a Lease Agreement, dated as of October 1, 2020 (the "Lease"), by and between the Authority as lessor, and the City as lessee, the Authority will lease the Recreational Facility (also referred to herein as the "Leased Property") to the City. Pursuant to the Lease, the City will . Preliminary, subject to change. pay to the Authority base rental payments (the "Base Rental Payments") in amounts equal to scheduled debt service on the Bonds. The Bonds are payable 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 October 1, 2020 (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 any 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, 2020, had an estimated population of approximately 221,932 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 and public transit services. Leased Property The Leased Property, also referred to herein as the Recreational Facility, consists of the Site, an approximately 4.4 acre parcel, and the Facility, consisting of an approximately 93,000 square foot facility on the Site, located at 27745 Smyth Drive within the City. The Project consists of financing of the acquisition of the Recreational Facility by the City from Arena Development Group, LLC, a California limited liability company, for the purchase price of $14,200,000. The City purchased the Leased Property on October , 2020. The City also appropriated an additional $45,000 for title, escrow and due diligence costs, as well as $250,000 for initial capital improvement costs for the Facility. See "THE PLAN OF FINANCE" herein. Previously the Facility operated as the Ice Station Valencia ice rink. The Facility had closed due to the COVID -19 pandemic. The Facility was originally constructed in 2000 and included two ice rinks, a lobby, arcade, kitchen, food/concession area, locker rooms, offices, training center and pro shop. The City will lease the Leased Property to the Authority pursuant to the Site Lease. The Authority will leaseback 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. [Description of subleases and management contracts] The Authority and the City have each acknowledged under the Lease that the annual fair rental value of the Leased Property is equal to or greater than the maximum annual Base Rental Payments. See "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 Authority currently has three (3) lease revenue bond issuances outstanding which are secured by lease payments payable by the City from 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. COVID-19 The recent global outbreak of the novel coronavirus COVID-19 ("COVID-19"), a respiratory disease declared to be a pandemic (the "Pandemic") by the World Health Organization, is significantly affecting the national capital markets and national, state and local economies. The State has stated that the negative impact of the Pandemic on revenues will be immediate, affecting the current fiscal year and several fiscal years in the future. The May Revision to the 2020-21 State budget proposal reflected a shortfall of $54.3 billion, and significant reductions in funding for many programs and services were ultimately made in the State's adopted budget for fiscal year 2020-21 in order to address this deficit. Unemployment in the United States has dramatically increased as a result of the outbreak. The State, the County and the City have taken actions designed to mitigate the spread of COVID-19, including requiring the temporary closure of nonessential businesses. The ongoing Pandemic and the actions taken by the federal, State, and local governments have had an immediate impact on City operations and finances, increasing City expenditures and reducing revenues. In May and June, both the State and the County began to lift certain restrictions on businesses and public spaces that were implemented to mitigate the spread of COVID-19 while closely monitoring the spread of the Pandemic. As of July 13, 2020, due to an increase in confirmed cases of COVID-19, certain restrictions on businesses were reimposed. The latest Order of the County Health Officer dated September 4, 2020, "Reopening Safer at Work and in the Community for Control of COVID-19," aligns the County with both the Governor's July 13, 2020 announcement requiring the closure of specific activities and business sectors and the State's August 28, 2020 issuance of a "Blueprint For a Safer Economy" which describes tiered approach to relaxing and tightening restrictions on activities based on specified criteria and as permitted by the Order based on County health conditions and circumstances. [The County is in the most restrictive, or "purple," level of the State's four -tier virus -tracking roadmap]. There can be no assurance that more restrictive safety protocols (including business closures) will not be imposed or reimposed in the future, depending on the course of the Pandemic and other factors. The actual impact of COVID-19 on the City, its economy and its finances will depend on future events, including future events outside of the control of the City, and actions by the federal government, the State and the County. The City cannot predict the extent or duration of the outbreak or what overall impact it may have on the City's financial condition or operations. Any financial information, including projections, forecasts and budgets presented herein do not account for all of the potential effects of COVID-19 unless specifically referenced. For further information concerning the potential effects of the Pandemic on the City, see "THE CITY." 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. Further Information For important information regarding the budget and financial operations of the City, see the section captioned "THE CITY - Budgeted Revenues and Expenditures." For important information regarding the current and potential impact of the COVID-19 Pandemic on the finances and operations of the City, see "RISK FACTORS -Impacts and Potential Impacts of COVID-19 on the City." Certain other demographic, financial and other information with respect to or affecting the City is contained elsewhere in APPENDIX B and in the City's Comprehensive Annual Financial Report For The Year Ended June 30, 2019 and Independent Auditor's Report, which are incorporated by reference therein. Brief descriptions of the Bonds, the Indenture, the Lease Agreement, the Site Lease, the Assignment Agreement and other documents and information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive, and are qualified in their entirety by reference to the forms thereof. See APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS" for further information regarding the City's obligations under the Lease Agreement. See "RISK FACTORS" herein for certain factors that may affect the payment of and security for the Bonds. DESCRIPTION OF THE BONDS General 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, 2020. 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, 2020, 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 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. Optional Redemption. Optional Redemption of the Tax -Exempt Bonds. The Tax -Exempt Bonds maturing on or after June 1, 2029 are subject to redemption prior to their respective maturity dates as a whole or in part on any date on or after June 1, 2028, 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 Tax -Exempt Bonds to be redeemed, plus accrued but unpaid interest thereon to the date fixed for redemption, without premium. Optional Redemption of Taxable Bonds at Make Whole Redemption Price — Make and Hold. The Taxable Bonds may be redeemed, at the written direction of the Authority, in whole or in part in integral multiples of $5,000, on any Business Day prior to June 1, 2030, from prepayments of Base Rental Payments made at the option of the City pursuant to the Lease, at the "Make -Whole Redemption Price" for such Taxable Bonds to be redeemed determined by the Designated Investment Banker equal to the greater of (i) the issue price as shown on the inside cover page of the Official Statement (but not less than 100% of the principal amount of the Taxable Bonds to be redeemed), or (ii) an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest on the Taxable Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Taxable Bonds are to be redeemed, discounted to the date on which such Taxable Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the "Treasury Rate" plus _ basis points, plus accrued and unpaid interest on the Taxable Bonds to be redeemed on the redemption date. Mandatory Sinking Account Redemption. The Tax -Exempt Term Bonds maturing on June 1, 20_ and June 1, 20 shall be subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule on June 1, in each year shown below until maturity, 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. Tax -Exempt Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1 To be Redeemed . Maturity Tax -Exempt Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1 To be Redeemed Redemption Date Principal Amount (June 1 To be Redeemed . Maturity The Taxable 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 on June 1, in each year shown below until maturity, 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. Taxable Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1 To be Redeemed . Maturity Tax -Exempt Term Bonds Maturing June 1, 20 Redemption Date Principal Amount (June 1 To be Redeemed . Maturity 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 will be deemed to be comprised of separate $5,000 portions and such portions shall be treated as separate Bonds, which may be separately redeemed. If, at the time of a redemption of less than all of the Bonds of a maturity of a Series, the Bonds of such maturity are registered in book -entry only form and the securities depository, or its nominee, is the sole Owner of such Bonds, the Bonds of such maturity will be redeemed on a "Pro-Rata Pass Through Distribution of Principal" basis in accordance with the securities depository's procedures; provided, however, that such redemption will be made in accordance with the operational arrangements of the securities depository then in effect. The underwriter of the Bonds has advised the Authority that the Bonds will be made eligible, in the case of a partial redemption of a maturity thereof, to be treated by the securities depository in accordance with its rules and procedures, as a "pro rata pass -through distribution of principal." The Trustee will send notice to the securities depository in accordance with such rules and procedures to effect a pro rata reduction of principal of the applicable Bonds to accomplish partial redemption of the Bonds through a pass —through distribution of principal. In connection with each such redemption, the Trustee will include in the notice of redemption sent by the Trustee the dollar amount per $5,000 principal amount payable on account of principal and accrued interest to effect a pro-rata reduction through a pass -through distribution of principal on the related redemption date. The securities depository will be responsible for distributing the principal and accrued interest among its direct participants, as applicable, pro rata in accordance with its rules and procedures for a pro rata pass through distribution of principal based upon the beneficial interest in the Bonds being redeemed that the securities depository's records list as owned by each securities depository direct participant as of the record date for such payment. Any failure of the Trustee to make such selection or of the securities depository or its participants or any other intermediary, to make such selection or proportional allocation, for whatever reason, will not affect the sufficiency of the validity of the redemption of the Bonds. If, at the time of a redemption of less than all of the Bonds of a maturity of a Series, the Bonds of such maturity are registered in book -entry only form and the securities depository, or its nominee, is the sole Owner of such Bonds, but the securities depository's operational arrangements do not allow for allocation of such redemption on a pro rata pass -through distribution of principal bases, the portion of the Bonds of such maturity of a series to be redeemed will be selected in accordance with the securities depository's then existing rules and procedures and may be by lot. 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 10 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. 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. 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 11 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 equal to or greater than 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. 12 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 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 debt service payments payable from the City's General Fund are due on June 1 and December 1 of each year through 2036. The unpaid balance as of June 30, 2020, was $8,785,000. 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 debt service payments payable from the City's General Fund (but are being funded from the City's assessment revenue from its Open Space Preservation District) are due on April 1 and October 1 of each year through 2037. The unpaid balance as of June 30, 2020, was $12,805,000. See "THE CITY — Outstanding Indebtedness of the City." On June 27, 2019, the Authority issued its Lease Revenue Bonds (Sheriff Station Project), Series 2019 (the "Series 2019 Bonds") in the principal amount of $25,850,000, secured by base rental payments made by the City under a lease of the sheriff station located at 26201 Golden Valley Road within the City, which debt service payments payable from the City's General Fund and are due on June 1 and December 1 of each year through June 1, 2049. The unpaid balance as of June 30, 2020, was $25,850,000. 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, (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, 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, 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 13 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; (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 (n) 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 14 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 thereunder 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. PLAN OF FINANCE General Proceeds of the Bonds will be used to finance the costs of the Project, including the acquisition of the Recreational Facility or Leased Property and pay the costs of issuing the Bonds. The Project consists of financing of the acquisition of an approximately 4.4 acre parcel located at 27745 Smyth Drive within the City, and the improvements thereon consisting of an approximately 93,000 square foot recreation facility, by the City from Arena Development Group, LLC, a California limited liability company, for the purchase price of $14,200,000. The City purchased the Leased Property on October 2020, including all assets within the building needed to run the facility (such assets estimated at over $3 in illion), and an existing cell tower lease agreement generating $3,400/month. The financing plan is to finance the costs of acquiring the Recreational Facility using a portion of the proceeds of the Bonds. The Authority will issue the Bonds in two series, one series being taxable. Approximately 75% of the Bonds will be issued as Tax -Exempt Bonds and 25% as Taxable Bonds. This gives the City flexibility in terms of the potential private use of the Recreational Facility, its future management contracts and revenues generated by private use. The City also appropriated an additional $45,000 for title, escrow and due diligence costs, as well as $250,000 for initial capital improvement costs for the Facility which are not financed with the proceeds of the Bonds. On behalf of the City, Rink Management Services Corporation prepared the Ice Station Valencia Management Report, dated June 30, 2020, which presented a property detail report relating to the Recreational Facility and its potential uses. The City may appropriate additional amounts to further repair, improve and rehabilitate the Leased Property in the future. While the vast majority of the planned use of the Recreational Facility would support ice sports, potential uses include business meetings, conferences, tradeshows and other recreational type activities and events that would benefit the City. The City has solicited proposals for the operation of the Recreational Facility, including the two (2) ice rinks, pro shop and restaurant, as well in addition to hosting a wide variety of entertainment events. 15 LOCATION OF LEASED PROPERTY 16 LEASED PROPERTY Leased Property The Leased Property, or Recreational Facility, will consist of the Site, an approximately 4.4 acre parcel owned by the City at 27745 Smyth Drive within the City, along with the Facility, an approximately 93,000 square foot recreational facility located thereon. The Recreational Facility was purchased by the City on October , 2020 for $14,200,000. The Leased Property was previously operated as the Ice Station Valencia ice rink. The Facility had closed due to the COVID -19 pandemic. The Facility was originally constructed in 2000 and included two ice rinks, a lobby, arcade, kitchen, food/concession area, locker rooms, offices, training center and pro shop. The present zoning of the parcel allows for retail commercial, warehouse uses, clean industrial uses, offices related to industrial use, research and development. The Recreational Facility exceeds the parking requirement with 328 parking spaces, including 7 handicapped spaces and 1 van handicapped space. The Facility is a concrete block and stucco, single -story (type 11 construction), Class A building, built in December 2000. The Facility includes 71,286± square feet on the ground floor with 21,465± square feet of mezzanine space. The building has 3,500± square feet of office space, including mercantile space and a meeting room, 30 feet of roof height, central air conditioning, twelve restrooms and sprinklers. The roof is composition covered with skylights. 17 The Recreational Facility will be leased from the City to the Authority pursuant to the Site Lease and the Authority will then leaseback the Recreational Facility or "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 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. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds are as follows: Sources: Principal amount of Bonds Plus Net Premium Uses: Deposit to Project Fund Costs of Issuance(') Total Sources Total Uses Tax -Exempt Bonds Taxable Bonds (1) 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. 18 DEBT SERVICE REQUIREMENTS The following table sets forth the debt service requirements for the Bonds, assuming mandatory sinking payments. Bond Year Ending June 1 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 2050 Totals Tax -Exempt Bonds Taxable Bonds Principal Interest Principal Interest Total W 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 Treasurer of the City 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 70.8 square miles and, as of January 1, 2020, had an estimated population of approximately 221,932 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, 2019 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 20 available for inspection by the public in the office of the City Clerk at least ten days prior to the hearing. • At the conclusion of the public hearing, the City Council further considers the proposed budget and makes any revisions thereof that it deems advisable and on or before June 30 it adopts the budget with revisions, if any, by the affirmative vote of at least a majority of the total members of the Council. • From the effective date of the budget, the several amounts stated as proposed expenditures become appropriated to the several departments, offices and agencies for the objects and purposes named, provided that the City Manager may transfer funds from one object or purpose to another within the same fund, department, office or agency. All appropriations lapse at the end of the budget period to the extent that they have not been expended or lawfully encumbered. At any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by the affirmative vote of at least a majority of the total members of the City Council. The City Council employs, at the beginning of each fiscal year, an independent certified public accounting firm which, at such time or times as specified by the City Council, at least annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the fiscal year, a report is submitted by such firm to the City Council and a copy of the financial statements as of the close of the fiscal year is published. Budgetary control is maintained through a mid -year budget review and an adjustment process. Budgetary adjustments are considered within the framework of the adopted budget and the City Council directions, goals and policies. The budget as adopted by the City Council can be amended during the fiscal year if necessary and proper by action of the City Council. General Fund The following tables summarize the audited financial statements for the City's General Fund for the Fiscal Years ended June 30, 2015 through June 30, 2019. 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, 2019." Table 1 sets forth the City's General Fund balance sheet based upon audited financial statements for Fiscal Years ended June 30, 2015 through June 30, 2019. 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, 2015 through June 30, 2019. [Remainder of page intentionally left blank.] 21 TABLE I CITY OF SANTA CLARITA GENERAL FUND BALANCE SHEET As of June 30 2015 2016 2017 2018 2019 Assets Cash and investments $113,799,150 $130,261,818 $152,219,199 $153,380,261 $173,685,562 Accounts receivable 373,279 480,986 729,681 676,014 533,922 Interest receivable 258,503 384,607 688,378 782,857 990,697 Taxes receivable 7,986,753 9,017,822 9,163,168 9,958,518 9,995,980 Notes to RDA Successor Agency 7,225,964 9,254,794 9,462,202 9,440,601 9,553,358 Allowance for doubtful accounts - - - - - Prepaid costs 118,400 202,769 126,097 275,867 391,457 Due from other governments 975,587 4,760,873 405,775 103,765 100,000 Due from other funds 2,040,570 3,117,635 4,380,533 3,838,034 4,366,894 Advances to other funds 11,036,236 11,054,805 17,256,104 13,828,350 11,779,557 Restricted Assets — cash and investments w/ fiscal agents 825,698 99 - - 25,000,000 Total Assets $144,640,140 $168,536,208 $194,431,137 $192,284267 $236,397,427 Liabilities and Fund Balance Liabilities: Accounts payable and accrued liabilities $ 7,448,001 $ 5,216,293 $7,976,998 $ 7,351,373 $ 10,630,416 Deposits payable 3,070,803 2,944,401 17,744,541 17,074,062 13,490,241 Due to other governments 7,700,000 7,700,000 7,700,000 7,700,000 7,700,000 Unearned revenues 598,658 605,545 695,630 723,600 1,064,906 Total Liabilities $ 18,817,462 $ 16,466,239 $ 34,117,169 $ 32,849,035 $ 32,885,563 Deferred inflows of resources Unavailable(deferred)revenues $ 9,320,047 $ 10,925,053 $ 11,298,702 $ 11,253,355 $ 11,549,625 Total deferred inflows of resources $ 9,320,047 $ 10,925,053 $ 11,298,702 $ 11,253,355 $ 11,549,625 Fund Balance: Nonspendable $ 11,024,338 $ 11,108,252 $ 15,742,945 $ 12,390,885 $ 12,050,141 Committed - - - - Assigned 55,336,807 79,367,084 79,367,084 88,674,761 120,981,128 Unassigned 50,141,486 50,669,580 53,905,237 47,116,231 58,930,970 Total Fund Balance $116,502,631 $141,144,916 $149,015,266 $148,181,877 $191,962,239 Total Liabilities and Fund Balance $144,640, 440 $168,536,208 $194,431,137 $192,284,267 $236,397,427 Source: City of Santa Clarzta Comprehensive Annual Financial Reports. 22 TABLE 2 CITY OF SANTA CLARITA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30 2015 2016 2017 2018 2019 Revenues: Taxes $78,232,263 $ 84,035,464(2) $81,462,981 $ 84,657,643 $ 87,434,427 Licenses and permits 5,567,280 7,283,898 7,408,357 7,688,342 9,951,586 Intergovernmental 1,125,699 292,869 241,992 377,151 203,119 Charges for services 9,139,349 9,376,146 8,397,274 8,756,356 8,178,848 Investment income 1,073,899 2,211,873 537,605 277,852 6,580,274 Fines and forfeitures 452,052 528,836 706,870 794,423 1,219,536 Other revenue 14,501 589,553 61,788 363,978 230,675 Total Revenues $95,605,043 $104,318,639 $98,816,867 $102,915,745 $113,798,465 Expenditures: Current: General government $21,366,674 $13,520,450 $15,097,325 $23,789,790(3) $19,913,852 Public safety 21,069,111 22,003,693 23,306,998 24,793,460 26,444,456 Recreation and community services 20,673,945 21,103,557 20,283,686 21,068,481 14,997,717 Public works 12,079,362 12,043,887 21,541,973 21,141,020 20,976,185 Community development 5,270,770 5,959,372 5,989,628 6,475,435 6,750,603 Neighborhood Services - - 593,591 715,633 - Capital Outlay 5,849,555 703,663 341,442 6,794,657 175,092 Debt service Principal retirement 22,422 - - - - Interest and fiscal charges - - - - Total Expenditures $86,331,839 $75,334,622 $87,154,643 $104,778,476 $89,257,905 Excess (Deficiency) of Revenues Over (Under) Expenditures $9,273,204 $28,984,017 $11,662,224 ($1,862,731) $24,540,560 Other Financing Sources (Uses): Transfers in $2,217,935 $1,491,715 $1,384,023 $4,451,281 $30,939,545(4) Transfers out (3,880,387) (5,833,447) (5,175,897) (3,421,939) (11,699,743) Total Other Financing Sources (Uses) (1,662,452) (4,341,732) (3,791,874) 1,029,342 19,239,802 Net change in fund balance $7,610,752 $24,642,285 $7,870,350 $(833,389) $43,780,362 Fund Balance, July 1 $108,891,879 $116,502,631 $141,144,916 $149,015,266 $148,181,877 Fund Balance, June 30 $116,502,631 $141,144, 116 $149,015,266 $148,181,877 $191,962, 339 (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. (4) Includes receipt of Series 2019 Bonds. Source: City ofSanta Clarita Comprehensive Annual Financial Reports. 23 COVID-19 Pandemic The outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus, has been characterized as a pandemic (the "COVID-19 Pandemic") by the World Health Organization and is currently affecting many parts of the world, including the State of California and local governmental agencies within the State, as well as the entire United States. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States and on March 13, 2020, the President of the United States declared the outbreak of COVID-19 in the United States a national emergency. Subsequently, the President's Coronavirus Guidelines for America and the United States Centers for Disease Control and Prevention called upon Americans to take actions to slow the spread of COVID-19 in the United States. The COVID-19 Pandemic has resulted in the imposition of restrictions on mass gatherings and widespread temporary closings of businesses, universities and schools. The United States is restricting certain non -US citizens and permanent residents from entering the country. On March 4, 2020, the Governor of California proclaimed a state of emergency in California as a result of the threat of COVID-19. Under the California Emergency Services Act, during a state of emergency, the Governor has authority over all agencies of the state government and can exercise the State's police powers. His powers also include the power to promulgate, issue, and enforce orders and regulations as he deems necessary. The County of Los Angeles (the "County") Department of Public Health issued various orders closing businesses and directing people to stay in their homes or at their place of residence, except for very limited purposes (the "Safer at Home" order). Beginning on May 6, 2020, several modifications were made to the Safer at Home order to allow for businesses and recreational facilities to re -open, provided that safety protocols are followed. Due to growing numbers of reported cases, some of those modifications have been reversed by State and County orders. There can be no assurance that more restrictive safety protocols (including business closures) will not be imposed or reimposed in the future, depending on the course of the COVID-19 pandemic and other factors. These actions are focused on "social distancing," or limiting instances where the public can congregate or interact with each other, which affects the operation of businesses and impacts enterprise operations and the economy. The shelter in place orders from the State and the County are ongoing and are expected to continue to be enforced until the threat to public health from the COVID-19 pandemic can be adequately managed. The City has held recent meetings of its Council remotely, unhindered by the COVID-19 Pandemic. The City's employees and consultants have continued to work on site and remotely, leveraging available technology to continue City operations. The City currently does not expect its business operations to be materially curtailed. The ongoing COVID-19 pandemic and the social distancing measures implemented to contain its spread have had an immediate adverse impact on City operations, increasing City expenditures and reducing receipts, the latter by altering the behavior of businesses and people in a manner that has negatively impacted global and local economies. Estimates of such impacts are likely to materially change as the pandemic unfolds and the City obtains additional information on the total amount of its COVID-19-related expenditures and revenue losses. The actual impact of COVID-19 on the City, its economy, and its budget and finances will heavily depend on future events, including future events outside of the control of the City, and actions by the County, the State and federal government as well as nations across the world. The City believes that it may be some time before it is able to determine the full impact COVID-19 will have on the City's economy and its financial condition. Fiscal Year 2019-20. Primarily due to the impact of the pandemic on revenues, the City undertook several updates of its estimated fiscal year 2019/20 revenues. The year-end estimated budget 24 was reduced for fiscal year 2019/20 General Fund revenues by $10,501,994 from the $114,877,715 fiscal year 2019/20 amended budget, to $104,375,721. Fiscal Year 2020-21. The City's fiscal year 2020/21 Budget, adopted June 23, 2020, estimates General Fund revenues for fiscal year 2020/21 will be approximately $110,197,700, all of which was appropriated in the fiscal year 2020/21 budget. These estimated revenues are based on assumptions formulated in the early days of the pandemic. While the estimated revenues were based on the assumption that the County's Safer at Home orders would slowly ease beginning in summer 2020, the depth of the pandemic required that those orders stay in effect until June 13, to be replaced with a "Safer L.A." order that, while allowing the resumption of some business activity, still imposed major restrictions. Since that time, both the Governor and the County Health Officer have required new restrictions due to increasing cases and hospitalizations, and new orders relaxing and tightening restrictions based on health conditions and circumstances. The length and extent of the restrictions, and timing of reopening plans, and thus the impact on City revenues, is impossible to predict. While the fiscal year 2020/21 Budget projects declines in most economically -sensitive revenues, it still projects an overall net increase in General Fund revenues. Some of that increase is attributed to property tax, which is based on assessed valuation from January 2020. Other projected revenues reflect receipts earned in fiscal year 2019/20 but expected to be received in fiscal year 2020/21. Fiscal year 2020/21 estimates have not been revised since the fiscal year budget was adopted on June 23, 2020. The uncertainty facing the City as a result of COVID-19 is expected to require the City regularly revisit the fiscal year 2020/21 General Fund revenue projections and make adjustments throughout the year as the trends and potential shortfalls become clearer. The fiscal year 2020/21 budget includes only $2.2 million in new General Fund operating appropriations that were considered critical contractual obligations. The City's General Fund was able to accommodate a $7.2 million transfer to the Facilities Fund for future facilities, while maintaining a $300,000 surplus. The fiscal year 2020/21 budget also estimates that some special fund revenues will decline by approximately 10%. Several special funds face the risk of additional revenue reductions. Budgeted Revenues and Expenditures Table 3 includes the City's General Fund adopted final budget and actual results for the Fiscal Years 2018/19 and 2019/20. 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. Budgetary control is maintained through a mid -year budget review and ongoing adjustments. The City's unassigned fund balance for the General Fund has ranged between $47 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, 2019, the balance of the City's operating reserve totaled $17,640,000 which is included in the unassigned fund balance in the General Fund. An operating reserve of $17,710,000 is maintained as a part of the fiscal year 2020/21 budget.] 2019120 Budget. The 2019/20 Adopted Budgeted General Fund included a 14% increase in property tax revenues and a 0% increase in sales tax revenues. General Fund sales tax revenue continues to be one of the largest revenue source to operate general governmental functions, accounting for 32% or $37 million as projected in the 2019/20 budget. Property tax revenues account for 33% of the General 25 Fund budget, or $38 million, in 2019/20. This increase is in proportion to the growth of assessed valuation citywide. Development revenues are projected flat at $9 million. Primarily due to the impact of the pandemic on revenues, the City undertook several updates of its estimated fiscal year 2019/20 revenues. Budget estimates for 2019/20 were calculated assuming stay at home orders remained in effect through June 30. As a part of the City's analysis, personnel expenditures were reduced by approximately $1.2 million and the transfer to Facilities Fund was reduced from $6.2 million to $600,000. The City's end -of year estimate for fiscal year 2019/20 revenues was contained in the adopted 2020-21 General Fund budget. Based on the year-end forecast contained in this report, the City estimated General Fund revenues would decrease by approximately $10.5 million, expenditure savings of $4.3 million was incorporated and transfers out to the Facilities Fund was reduced by $6.2 million. Unaudited actuals for fiscal year 2019/20 revenues have demonstrated the anticipated declines are not as significant as originally anticipated resulting in a reduction of only $400,000. Unaudited actual sales tax revenues for 2019/20 exceeded estimates by approximately $5.5 million, falling only $300,000 short of the original adopted budget. Special fund revenues were anticipated to decline in 2019/20 by 10-20%, which includes revenues derived from gas taxes and sales taxes collected by the Los Angeles County Metropolitan Transportation Authority and transferred to the City. 2020-21 Budget. Table 3 provides information on the Current General Fund Budget for fiscal year 2020/21. The City adopted the fiscal year 2020/21 budget on June 23, 2020 (the "20/21 Budget"). The City Council conducted a Public Hearing for the budget on June 9 and June 23. Despite projected declines in certain economically -sensitive tax revenues such as transient occupancy, and sales taxes, the 20/21 Budget estimates overall modest net decrease in General Fund revenue of 3.9% below the prior year original adopted budget. At the time of budget development, the pandemic's effect on the local economy was just beginning and the revenue projections were not based on any actual economic data or fully equivalent historical precedence that could indicate how the pandemic would impact the local economy. Some of the assumptions on which the 20/21 Budget was based could now prove either optimistic or pessimistic. The following are some of the assumptions included in the 20/21 Budget and a description of the associated risks should those assumptions not materialize: • The recession assumptions for economically sensitive revenues were based on a single nonessential business closure event ending by the end of June 2020, with the City being able to safely return to full -service delivery with the pandemic constrained, thus restoring revenues from departmental receipts without a decline in those revenues. As of the date of this Official Statement, while some businesses had been permitted to re -open provided that certain safety protocols are followed, including reductions in capacity for many businesses, a number of businesses have been ordered to reclose due to a rise in diagnosed cases of COVID-19 in Los Angeles County and throughout the State. • At the time the 20/21 Budget was adopted, sales tax revenue was anticipated to increase by 2.9% over 2019/20 year end estimates, which was attributed to approximately $1 million in deferred revenues as a result of the state's sales tax deferral program prompted by the pandemic. • The transient occupancy tax revenue assumed flat receipts. • The 20/21 Budget assumes growth in property tax receipts, as assessed valuation is projected to increase. Over the longer term, this tax could be affected by the recession if it spills over into the housing 26 market. The most acute risk is likely to be the documentary transfer tax, which assumes the recent modest growth will stop, but does not include any decline in this historically volatile revenue source. None of the fiscal year 2020/21 revenue forecasts have been updated since the adopted 20/21 Budget was passed. The 20/21 Budget includes adequate funding to pay for all existing labor agreements and associated salary increases, and includes only $2.2 million in new operating appropriations for critical contractual agreements. The budget includes a $7.2 million transfer to the City's Facilities Fund for use on future facility needs and maintains a $300,000 surplus. The 20/21 Budget is also exposed to risks to special fund revenues, which could be further reduced if the economic impacts of the COVID-19 response extend for longer than expected. Special funds that derive their revenues from sales tax and gas tax are at particular risk. The 20/21 Budget attempted to anticipate these risks and revenues will be evaluated and adjusted during the City's mid -year budget review as needed. General Fund sales tax revenues continue to be one of the largest revenue source to operate general governmental functions, accounting for 29% or $32.1 million in the 20/21 Budget. Property tax revenues account for 36% of the 20/21 Budget, or $39.5 million. The uncertainty facing the City as a result of COVID-19 will require the City to regularly revisit the fiscal year 2020-21 General Fund revenue projections and make adjustments to expenditures throughout the fiscal year as the trends become clearer. The following table presents the 20/21 Budget and the adopted budgets for the two preceding fiscal years. With respect to both the historical budgetary information and the projected budgetary information set forth below, it is not possible to predict whether the trends set forth in the tables will continue in the future. [Remainder of page intentionally left blank.] 27 TABLE 3 CITY OF SANTA CLARITA GENERAL FUND COMPARISON FOR FISCAL YEARS ENDED JUNE 30, 2019 AND JUNE 30, 2020 AND CURRENT BUDGET FOR FISCAL YEAR ENDED JUNE 30, 2021 Final Adopted Amended Budget Actual Results Budget Unaudited Current Budget 2018-19 2018-19 2019-20 2019-20 2020-21 REVENUES Taxes $ 85,216,627 $ 87,434,427 $ 87,565,870 $ 87,494,898 $ 84,428,586 Licenses and permits 7,965,291 9,951,586 7,934,282 7,538,877 8,694,672 Intergovernmental 261,651 203,119 75,130 368,595 180,389 Charges for services 7,583,216 8,178,848 7,535,177 6,710,624 7,297,992 Investment income 2,215,065 6,580,274 2,924,976 6,666,398 1,515,404 Fines and forfeitures 1,273,230 1,219,536 1,426,730 787,607 981,000 Other revenue 6,970,780 230,675 7,015,563 5,653,133 7,141,731 Total Revenues $111,485,860 $113,798,465 $114,477,728 $115,220,132 $110,239,774 EXPENDITURES Operating: Personnel 46,813,137 42,139,926 39,804,920 35,959,787 40,136,664 Operating 46,686,934 39,612,655 45,434,785 42,087,196 46,492,092 Capital Outlay 327,150 81,580 - 1,260,652 - Capital Improvement Projects: Personnel - 167,009 - 153,351 - Operating(i) 49,697,284 7,291,871 1,150,000 21,468,377 47,901,735 Capital Outlay 704,487 (35,136) - 357,176 514,543 Total Expenditures $144,228,992 $ 89,257,905 $ 86,389,705 $101,286,538 $135,045,036 Excess (Deficiency) of Revenues Over (Under) Expenditures $ (32,743,132) $ 24,540,560 $ 28,088,023 $ 13,933,594 $ (24,805,262) OTHER FINANCING SOURCES (USES): Other Financing Uses Transfer in 5,857,274 30,939,545 7,671,000 7,737,052 8,107,000 Transfers (out) (12,439,452) (11,699,743) (27,619,852) (27,050,736) (22,887,794) Total Other financing sources (uses) $ (6,582,178) $ 19,239,802 $ (19,948,852) (19,313,684) (14,780,794) Net Change in Fund Balance (39,325,3101 $ 43,780, 662 $ 8,139,171 (5,380,090) (39,586,0561 Fund Balance at Beginning of Year $148,181,877 Fund Balance at End of Year 191962239 (1) Reductions due to appropriated funds for projects which were not spent in such fiscal year. Source: City of Santa Clarita Comprehensive Annual Financial Reports. 28 COVID-19 Expenditures and Potential Reimbursement COVID-19-related federal aid includes $2.7 million from the Coronavirus Relief Fund and $19.2 million from other federal programs consisting of $78,000 from the Bureau of Justice Assistance for Public Safety, $856,000 in Community Development Block Grant (CDBG) funds, and $18.3 million in CARES Act funds for Transit. The City is also eligible to receive partial reimbursement for unemployment costs incurred between March 13 and December 31, 2020 under the CARES Act and it is estimated the City may be eligible to receive approximately $370,000. The City anticipates that the Federal Emergency Management Agency ("FEMA") will also reimburse 75% of all eligible emergency COVID-related costs, which will include only extraordinary costs of the City related to COVID-19. According to a "Frequently Asked Questions" publication from the federal Treasury Department released on June 24, 2020, the Coronavirus Relief Fund can be used to pay the remaining 25% of eligible expenses. With respect to FEMA reimbursement -related expenditures, the City currently estimates that it has spent $305,000 in General Fund moneys as of June 30, 2020 and will incur an additional $355,000 through December 31, 2020, resulting in total estimated expenditures of $660,000 from the beginning of the pandemic through December 31, 2020, which the City anticipates will be reimbursed by FEMA (75%) or the CARES Act funding (remaining portion). During fiscal year 2019/20, the City incurred $366,000 in expenditures related to the COVID-19 response, all of which are anticipated to be reimbursed by FEMA or CARES Act funding. While the City has or expects to receive certain funds from the State and the federal government described above and potentially additional funds, the City does not have the ability to ascertain how it will use most of these funds at this time. In addition, all of the relief funding that the City expects from the State and the federal government is directed only at reimbursing or providing funding for direct COVID- 19-related expenditures and the City has not received and, absent additional funding programs, does not currently expect to receive, funding from the State or the federal government to offset revenue losses as a result of COVID-19. Neither estimates of federal and State grant assistance offered in response to the pandemic nor additional expenditures related to COVID-19 are included in the fiscal year 2020/21 adopted budget. Social Justice and Civil Unrest. In response to the social justice demonstrations and actions of civil unrest stemming from the death of George Floyd at the hands of Minneapolis police officers, which occurred in and around the City beginning on May 29, 2020, the Police, Fire and other departments were required to deploy additional resources to protect public health and safety. As a result of neighboring cities within Los Angeles County experiencing significant unrest and incidents of looting, vandalism, and arson, resources were deployed locally within the City as a precaution for two days surrounding the City's largest protest. The protest within the City was peaceful and there were no damages. The State, County and City all declared emergencies due to these incidents, allowing access some emergency funding. The number of demonstrations has subsided, and the focus of various stakeholders has turned to the Police Department's budget and social justice programs. 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, 2019 is presented in the City's audited financial statements for the fiscal year ended June 30, 2019 attached hereto as APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2019." WE 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 2020/21-2024/25 CIP consists of improvements and projects totaling $32,606,004 for fiscal year 2020/21 and lists $102,751,200 of improvements and projects for fiscal years 2022-25. 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 a formal appropriations limit for each fiscal year. The City's appropriations limit for fiscal year 2019/20 was $428,431,747. The City's appropriations limit for fiscal year 2020/21 is $444,856,663. 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, 2019." The City retained the firm of Eide Bailly LLP, 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, 2019. The City is the recipient of the GFOA Certificate of Achievement for Excellence in Financial Reporting for the last thirty fiscal years. The audited combined financial statements of the City are available on the City's website at https://www.santa-clarita.com/ciiS7-hall/departments/administrative- services/annual-financial-re ports. 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. 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. 30 • 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, 2021. Information on the Budget may be found on the City's website: httDs://www.santa- clarita.com/ciiSl-hall/departments/city-manager-s-office/cite-budget. The information presented in the City's website is not part of this Official Statement and should not be relied on in making investment decisions with respect to the Bonds. Taxable Property and Assessed Valuation Property tax revenues account for 36% of the 2020/21 General Fund budget, or $39.5 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." 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 1'/2% 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. 31 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 1'/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. During fiscal year 2019/20 property owners who were impacted by COVID-19 Pandemic were allowed to claim a waiver of penalties and interest, which are imposed by State law if the property tax bill becomes delinquent. The second installment of this year's property tax bills became delinquent if not paid by April 10, 2020. Waiver requests were approved on a case by case basis. Properties eligible for a penalty waiver were the taxpayer's primary residence or properties associated with a small business, including vacation rentals. [[Property tax delinquencies did not increase a consequence of economic difficulties of property owners.]] 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. For the 2020 assessment roll, the City was the fifth 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. Based on the County's estimate of countywide growth in assessed value and other data, the City assumed 4.5% growth in its property tax base in the fiscal year 2020/21 budget. TABLE 4 CITY OF SANTA CLARITA Assessed Valuation (OOOs) January 1 Valuation Date Local Secured Utility Unsecured Total 2011 $20,317,662 $3,696 $847,579 $21,168,938 2012 20,111,075 3,696 870,669 20,985,441 2013 23,410,799 3,696 854,976 24,269,472 2014 25,220,113 3,696 888,132 26,111,942 2015 26,473,499 3,696 853,667 27,330,863 2016 27,622,848 3,696 797,363 28,423,909 2017 29,903,220 4,576 819,549 30,727,345 2018 31,627,924 4,576 848,468 32,480,968 2019 34,319,756 4,284 850,777 35,174,818 2020 36,333,533 4,284 884,857 37,222,674 Source: Los Angeles County Assessor. 32 The following table represents the breakdown for assessed valuation of the City among the types of different property for the last five fiscal years. TABLE 5 CITY OF SANTA CLARITA ASSESSED VALUATION BY PROPERTY TYPE FOR THE YEAR ENDED JUNE 30 2017 2018 2019 2020 Type: Residential $21,784,467 $23,734,570 $25,140,365 $27,571,753 $29,068,019 Commercial 3,248,600 3,399,444 3,557,018 3,681,744 3,866,268 Industrial 1,706,030 1,790,583 1,861,079 1,878,969 1,955,686 Vacant Land 449,270 554,513 593,952 702,751 677,706 All Others 1,235,541 1,248,236 1,328,554 1,339,600 1,654,994 Total $28,423,909 $30,7 77,345 $32,480,968 $35,174,817 $37,222,674 Source: City ofSanta 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 2010/11 through 2019/20 are reflected on the following table. TABLE 6 CITY OF SANTA CLARITA Secured Tax Charges and Delinquencies Year Total Current Levy Amount Paid June 30 Percent Delinquent June 30 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 2018/19 28,692,974 28,469,759 0.8 2019/20 Source: County of Los Angeles, Department of Auditor -Controller. 33 Largest Taxpayers The following table lists the major taxpayers in the City in terms of their 2019/20 assessed valuation. TABLE 7 CITY OF SANTA CLARITA Principal Property Taxpayers 2019/20 % of Total No. of City Assessed Owner/Taxpayer Parcels Total Assessed Value Value Valencia Town Center Venture LP 17 $ 398,897,533 1.13% Park Sierra Properties 15 145,491,510 0.41 Bel Valencia LLC 9 137,957,038 0.39 WESTCO IV LLC 2 124,403,923 0.35 Saugus Colony Limited 19 123,330,893 0.35 IVT River Oaks Valencia LLC 7 117,300,000 0.33 EQR Valencia LLC 218 109,324,749 0.31 EQR The Oaks LLC 28 107,049,908 0.30 Valencia Biomedical Park LLC 15 105,713,260 0.30 ARC SLSTCCA001 LLC 4 103,429,572 0.29 Subtotal 334 $ 1,472,898,386 4.18% All Others $33,752,327,642 95.82% TOTAL $35,225,226,028 100.00% Source: Hdl Coren & Cone, LA County Assessor 2019120 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 collects a franchise tax on its cable television, trash collection and utility franchises. Business License Fees. Business licenses are offered by the County. The County issues business licenses and remits business license fee revenues to the City. 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. 34 The following table shows the tax revenues of the General Fund for the past three fiscal years and the budgeted amounts for 2020/21. Sales and Use Tax Property Taxes Franchise Taxes Real Property Transfer Tax Transient Occupancy Tax Motor Vehicle Tax in Lieu Satellite Wagering Tax TABLE 8 CITY OF SANTA CLARITA Tax Revenues By Source Actual Actual Unaudited Current Budget 2017/18 2018/19 2019/20 2020/21 $37,252,523 34,360,615 8,073,102 1,320,018 3,489,281 113,883 $3 8,546,183 36,223,107 7,936,664 1,227,947 3,352,776 103,964 $36,722,465 38,263,709 8,139,163 1,418,026 2,702,974 172,618 $32,100,000 39,486,641 8,521,145 1,140,000 2,800,000 110,000 48,220 43,788 35,312 40,000 Total General Fund Tax $84,657,642 $87,434,429 $87,454,267 $84,197,786 Source: City of Santa Clarita. Sales and use taxes provide one of the major sources of revenues to the General Fund, comprising approximately 32% of the City's 2019/20 year-end General Fund revenues and approximately 42% 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. At the time the fiscal year 2020/21 Budget was adopted, sales tax revenue was anticipated to increase by 2.9% over 2019/20 estimates, which was attributed to approximately $1 million in deferred revenues as a result of the state's sales tax deferral program prompted by the pandemic. Sales tax revenues for fiscal year 2019/20 at the time of the 2020/21 budget adoption were $31.2 million; however, 35 unaudited actual sales tax revenues for 2019/20 exceeded estimates by approximately $5.5 million, falling only $300,000 short of the original adopted budget. 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, 2019 through June 30, 2022. 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 $50,000 general liability deductible for all third -party bodily injury claims and a $1,000 property damage deductible for all first -party property damage claims. All third -parry general liability claims above $50,000 and up to a limit of $10,000,000 are handled by SDRMA. The City has an excess liability policy through another carrier that provides a $15,000,000 layer (to access if needed) on top of the $10,000,000 base general liability coverage. The City's property coverage policy includes property damage, boiler & machinery, pollution, cyber, and flood. For workers' compensation coverage, the City is self -insured 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 $1,896,696 for the property/liability program and the workers' compensation program (based on estimated wages). At June 30, 2019, $430,000 was accrued by the City for general liability claims, and $3,224,276 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. In addition to general liability, excess and worker's compensation, the City maintains policy coverages for auto, mobile equipment, trailers, underground tank and earthquake damage. 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. 36 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. 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 April 23, 2019, and is effective for fiscal years 19/20 and 20/21. 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 August 31, 2020 in all funds of the City had a weighted average maturity of 747 days and were comprised of the following: Principal % of Type Amount Total 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 $ 13,825,665 5.34% 1,626,317 0.63 61,967,292 23.92 258,327 0.10 22,590,000 8.72 66,695,990 25.75 42,334,347 16.34 36,618,458 14.14 2,237,245 0.86 10,862,423 4.19 Source: City of Santa Clarita Finance Department. Outstanding Indebtedness of the City $259,016,064 100.00% 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. 37 TABLE 9 CITY OF SANTA CLARITA General Fund Outstanding Indebtedness (as of June 30, 2020) Amount Final Category of Indebtedness Original Issue Outstanding Maturity Lease Revenue Refunding Bonds (Golden Valley Road) Series 2016A $10,320,000 $8,785,000 2036 Lease Revenue Refunding Bonds (Open Space and Parkland Acquisition Program), Series 2016B' 14,020,000 12,805,000 2037 Lease Revenue Bonds (Sheriff Station Project) Series 2019 25,850,000 25,850,000 2049 Capital lease payable 586,227 497,583 2024 & 2025 Compensated Absences 4,120,186 Indefinite Claims payable 5,036,107 1. While the lease payments for these bonds are payable from the City's General Fund the City has paid and intends to continue to pay lease payments from assessments levied for the City's Open Space preservation District. Source: City ofSanta Clarita. The City entered into equipment leases for copiers effective August 2019 and May 2020 with estimated annual payments of $107,333 and $18,107, respectively, for a total of $125,430 annually, payable from General Fund revenues. 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. 38 TABLE 10 CITY OF SANTA CLARITA Direct and Overlapping Debt Statement Source: California Municipal Statistics, Inc. 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 webs ite also contains PERS' most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are `forward -looking" statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans. General. The City's defined benefit pension plan, California Public Employees' Retirement System (CalPERS), provides pensions for all permanent full-time general and some part-time employees of the City. CalPERS is an agent multiple -employer defined benefit pension plan administered by the California Public Employees' Retirement System. CalPERS 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. CalPERS 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 httDs://www.calDers.ca.�4ov. The most recent annual report issued by CalPERS to the City was in June 2020 (the "June 2020 CalPERS Report"). The June 2020 CalPERS Report includes information based on the June 30, 2019 actuarial valuation of assets included therein (the "2019 Actuarial Valuation"). Additional information about the CalPERS 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.] 40 The Plan's provisions and benefits in effect as of June 30, 2019 are summarized as follows: Formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of annual salary Required employee contribution rates* Required employer contribution rates Required UAL contribution Applies to: Tier 1 2.7% at 55 5 years of service monthly for life 50-55 2.7% 8% Tier 1 Employees hired before April 9, 2011" Miscellaneous Tier 2 2% at 60 5 years of service monthly for life 50-60 2.0% 7% 8.560% $2,921,910 Tier 2 Employees hired between April 9, 2011, and December 31, 2012, or those hired January 1, 2013, or later, who have been a Classic CalPERS member with a public agency or in a Classic reciprocal plan within the last 6 months)** Tier 3 2% at 62 5 years of service monthly for life 52-62 2.0% 5.75% Tier 3 Employees hired January 1, 2013, or later" *For unrepresented Tier 1 participants, the City pays 1 % of the required employee contribution. For the SEIU Tier 1 participants, the City pays 1 % 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. ** 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 Clarita 2018/19 CAFR. At June 30, 2019, 1,139 employees were covered by the benefit terms: (i) 236 inactive employees or beneficiaries currently receiving benefits; (ii) 454 employees entitled to but not yet receiving benefits, and (iii) 449 active employees. This information was obtained from the PERS Annual Valuation Report as of June 30, 2018 and is the most recent information available. Recent Actuarial Changes and Related Developments. In recent years, the Ca1PERS Board of Administration (the "Ca1PERS 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 41 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 member employers. Lowering the Ca1PERS 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 Ca1PERS Board approved revised actuarial policies that aimed at returning the Ca1PERS 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). Ca1PERS 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 Ca1PERS 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 Ca1PERS 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 Ca1PERS 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 Ca1PERS 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 Ca1PERS 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 Ca1PERS 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 42 the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through PERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2019, the average active employee contribution rate is 7.568% of annual pay, and the employer's contribution rate is 8.560% 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 during the year ended June 30, 2019, were $12,499,992. 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 Ca1PERS for 2015 and thereafter reflect GASB 68. GASB 68 requires additional reporting that Ca1PERS 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 Ca1PERS, from fiscal year 2009/10 through fiscal year 2026-27, 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, and 2018/19 when the City contributed $6,862,166 excess payment. The City estimates that approximately 70% 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 2018/19 were from June 30, 2017 public agency valuations. Historical Ca1PERS Contribution Amounts by City Measurement Actuarially Period determined City (ending June 30) Contribution City Contribution Covered- Contributions Deficiency Employee as a % of (excess) Payroll Covered Payroll 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 2019 5,637,826 (12,499,992) (6,862,166) 33,054,867 37.82 Source: City of Santa Clarita 2018/19 CAFR 43 The City is working toward a funded status of at least 90% within the next three years. The table below highlights the voluntary excess City contribution payments made to Ca1PERS over the last three fiscal years and expected to be made to Ca1PERS over the next three fiscal years: Ca1PERS Excess Contribution Amounts by City FISCAL YEAR 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Actual Actual Projected Projected Projected Projected Ongoing Additional UAL Payment -- $1,862,263 $1,652,981 $1,900,000 $1,850,000 $1,800,000 One -Time Payment $5,000,000 5,000,000 8,000,000 -- -- -- Total Excess Payments $5,000,000 $6,862,263 Projected Funding Status 75.8% Source: City of Santa Clarita, Department of Finance. 79.0% $9,625,981 85.9% $1,900,000 $1,850,000 $1,800,000 87.9% 89.9% 91.7% The projected mandatory contribution rates for fiscal year 2020-21 through 2026-27 are provided by Ca1PERS in its June 2020 report. The Ca1PERS projections assumed that all actuarial assumptions (including among other assumptions, a 7% return) will be realized and that no future changes to assumptions, contributions, benefits or funding will occur during the projection period. A complete explanation of the Ca1PERS assumptions can be found in the 2019 Actuarial Valuation. Annual Contribution Rates to Ca1PERS 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 8.560 -- 2,921,910 2020 9.211 -- 3,466,495 20210) 9.398 -- 3,591,974 2022(2) 9.04 -- 3,552,911 2023(2) 8.8 -- 3,912,000 2024(2) 8.6 -- 4,241,000 2025(2) 8.4 -- 4,557,000 2026(2) 8.2 -- 4,367,000 2027(2) 7/9 -- 3,649,000 (1) Projected annual payment to retirement plan based on projected contribution rates on Ca1PERS actuarial report dated June 2020. (2) Projected annual payment to retirement plan based on projected contribution rates on Ca1PERS plus Unfunded Accrued Liability (UAL) in Ca1PERS June 2020 Report. Source: City of Santa Clarita, Department of Finance. In June 2020, Ca1PERS reported a preliminary 6.7% net return on investments for the fiscal year ended June 30, 2019. In the two prior fiscal years ended June 30, 2018 and 2017, the reported return was 8.6% and 11.2%, respectively. Ca1PERS weighted average investment returns for the past five, ten and 44 twenty years ending June 30, 2019 are 5.8%, 9.1% and 5.8%, respectively. As discussed above, the Ca1PERS Board voted in December 2016 to phase in an assumed 7% rate of return by fiscal year 2019- 20. Ca1PERS 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 of Plan. Based on the 2019 Actuarial Valuation (which is the most recent actuarial valuation available), CalPERS reported an unfunded liability, as of June 30, 2019, of $45.8 million for the City's miscellaneous employees as compared to $48.9 million the previous year. Based upon this report, the City reported that its Ca1PERS obligation had a funded ratio of 79.0% based upon the market value of plan assets with respect to the City's miscellaneous employees. As noted above, Ca1PERS has changed is discount rate assumptions. The funding status as of June 30, 2019 was calculated using an Ca1PERS Discount Rate of 7.00%. Also, as noted above Ca1PERS has changed its amortization and smoothing policies in 2013. Beginning with the June 30, 2015 Actuarial Valuations (that set fiscal year 2015-16 Ca1PERS contribution rates), Ca1PERS 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, Ca1PERS 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, 2019). 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. Actuarial Accrued Valuation Liability Date (AAL) — (June 30) Entry Age Ca1PERS Funding History (Overfunded) Market Value Unfunded Funded of Assets AAL Ratio (Overfunded) Unfunded AAL Annual as a % of Covered Covered 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 2018 202,221,979 153,364,091 48,857,888 75.8 30,719,107 159.05 2019 217,977,186 172,175,765 45,801,421 79.0 33,122,226 138.28 Source: Ca1PERS annual valuation report dated June 2020. 45 [For the measure period ended June 30, 2018 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2017 total pension liability. The June 30, 2017 and the June 30, 2018 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, 2017 Entry Age Normal Cost Method Level Percent of Payroll Market Value 7.15% 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 June 30, 2018 Total Pension Liability Service Cost $ 4,920,377 Interest 13,037,446 Difference between Expected and Actual Experience 1,709,604 Changes of Assumptions (1,615,911) Benefit Payments, Including Refunds of Employee Contributions (5,601,353) Net Change in Total Pension Liability 12,450,163 Total Pension Liability — Beginning 182,588,700 Total Pension Liability - Ending (a) $195,038,863 Plan Fiduciary Net Position Contributions — Employer $ 9,664,637 Contributions — Employee 2,203,916 Net Investment Income 11,713,900 Administrative Expenses (211,742) Benefit Payments, Including Refunds of Employee Contributions (5,601,353) Other Miscellaneous Income/(Expenses) (402,101) Plan to Plan Reserve Movement (355) Net Change in Fiduciary Net Position 17,366,902 Plan Fiduciary net Position - Beginning 135,882,204 Plan Fiduciary net Position - Ending (b) 1532 99.106 Plan Net Pension Liability/(Asset) - Ending (a)-(b) $ 41,789,757 Plan Fiduciary Net Position as a Percentage of the Total Pension 78.57% Liability Source: City of Santa Clarita 2018/19 CAFR. 46 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). 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 2018/19, the City's cash contributions were $698,250 and estimated implied subsidy of $225,000 resulting in total payments of $923,250. 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 429 active employees, 122 retirees receiving benefits and 24 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, 2019 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2018 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 7.5% for Non -Medicare and 6.5% for Medicare decreasing to an ultimate rate of 4.0% in 2076, (d) inflation at 2.75% per annum, (e) aggregate payroll increase at 3.00%, (f) discount rate of 5.17% for 2019, 5.60% for 2018, (g) Municipal Bond Index of 3.50% for 2019, 3.87% for 2018, 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 47 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, 2019 was 16 years.] As of the most recent actuarial valuation date on June 30, 2019, the Plan was 87.12% funded. The actuarial OPEB liability for benefits was $47.45 million, and the Plan Fiduciary net position of assets was $41.34 million, resulting in a net OPEB liability of $6.1 million. The covered payroll (annual payroll of active employees covered by the Plan) was $33.9 million, and the ratio of net OPEB liability to the covered payroll was 18.03%. 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, 2019 measurement period as shown in the City's comprehensive annual financial report is as follows: Measurement Period June 30, 2019 Changes in Total OPEB Liability Service Cost $ 1,701,975 Interest 2,823,979 Actual vs. Expected Experience (7,334,973) Assumption Changes 2,078,284 Benefit Payments (1,093,711) Net Change in Total OPEB Liability (1,824,446) Total OPEB Liability — Beginning 49,273,073 Total OPEB Liability - Ending (a) $47,448,627 Plan Fiduciary Net Position Contributions — Employer $ 923,250 Net Investment Income 2,618,633 Benefit Payments (1,093,711) Administrative Expenses (73,935) Net Change in Fiduciary Net Position 2,374,237 Plan Fiduciary net Position - Beginning 38,964,300 Plan Fiduciary net Position - Ending (b) $41,338,537 Plan Net OPEB Liability/(Asset) - Ending (a)-(b) $ 6,110,090 Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 87.12% Covered employee payroll $33,895,751 Net OPEB liability as a percentage of covered -employee payroll 18.03% Source: City of Santa Clarita 2018/19 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.] 48 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, 2019, there were 1,589 participants in the plans and the City's contributions totaled $204,099, while employees' contributions totaled $2,150,228. Redevelopment Agencies Until February 1, 2012, the California Redevelopment Law (Part I of Division 24 of the Health & Safety Code of the State) authorized the redevelopment agency of any city or county to receive an allocation of tax revenues resulting from increases in assessed values of properties within designated redevelopment project areas (the "incremental value") occurring after the year the project area was formed. In effect, local taxing authorities, such as the City, realized tax revenues only on the assessed value of such property at the time the redevelopment project was created for the duration of such redevelopment project. The State Legislature approved two bills, AB X1 26 and AB X1 27, during the 2011-12 State budget process. AB X1 26 contemplated the elimination of redevelopment agencies State-wide, and AB X1 27 proposed to authorize the continued existence of redevelopment agencies that agreed to remit a percentage of their "tax increment" to the State's taxing entities. The California Redevelopment Association and the League of California Cities filed a petition with the California Supreme Court (the "Court"), requesting the Court to review the constitutionality of AB XI 26 and AB XI 27. On December 29, 2011, the Court issued its opinion and upheld AB X1 26, but invalidated AB X1 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 DOF 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, 2019, the loan amount reported in the General Fund was $9,553,358, of which $2,947,529 represents unpaid accrued interest. Impact of State of California Budget A number of the City's revenues are collected and subvened 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. IR Approximately 66% of the City's General Fund revenues are collected by the State or otherwise allocated by State law. During prior State fiscal crises, the State has reallocated a portion of such revenues to assist in its own budget balancing. Proposition IA, adopted in 2004, amended the State Constitution to impose limits on the State's ability to reallocate local revenue. (See "RISK FACTORS — Risks Related to Taxation in California — Proposition IA.") 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, although the Legislature has frequently failed to meet this deadline. 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 budget decisions. Once the budget 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. On May 14, 2020, Governor Newsom released the May Revision for the 2020-21 State budget proposal. The May Revision estimated a budget shortfall of $54.3 billion, mainly due to a $41 billion reduction in anticipated revenues and $8.6 billion increase in expenditures related to COVID-19. After negotiations between the Governor and State legislative leaders, a budget was approved by the Legislature on June 26, 2020 and sent to the Governor for approval, who signed it on June 30. The budget transfers funds from State reserves, defers payments to schools and community colleges, makes hundreds of millions of dollars in cuts to higher education, court operations and housing grants, and incorporates employee furloughs of two days a month. The budget also assumes the receipt of additional federal aid in response to the COVID-19 pandemic, with various cuts to be triggered if such funding is not made available. The State budget provides certain funding for emergency response and for homelessness, from which the City expects to benefit. 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.�wvbud.do/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.treasureLca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority, and neither the City nor the Authority take any 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. Information Regarding Federal Budget The City does not anticipate an adverse impact in its Federal funding for Fiscal year 2020-21, given that the federal appropriations had been determined prior to the COVID-19 crisis. The City is receiving $2.6 million in direct allocations for housing and community development. The City also expects to receive up to $2.4 million a year in funding for streets and highways, capital projects, public safety, environmental quality and human services. The Coronavirus Aid, Relief and Economic Act (the "CARES Act") provides funding to states and local governments for expenditures incurred due to COVID-19. The CARES Act provided $9.5 billion to California, of which $2.7 million has been allocated to the City. 50 RISK FACTORS Purchase of the Bonds will constitute an investment subject to certain risks, including the risk of nonpayment of principal and interest. Before purchasing any of the Bonds, prospective investors should carefully consider, among other things, the risk factors described below. However, the following is not meant to be an exhaustive listing of all the risks associated with the purchase of the Bonds. Moreover, the order of presentation of the risk factors does not necessarily reflect the order of their importance. Substitution of Property Pursuant to the Lease, the City will have, so long as the Lease is in effect, the option at any time and from time to time, to substitute other real property and/or improvements for any portion of the Leased Property or release any identifiable real property and/or improvements constituting the Leased Property, provided that the City shall satisfy all of the requirements set forth in the Lease. See APPENDIX C — "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. 41h 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 51 result could occur if state constitutional expenditure limitations were to prohibit the City from appropriating and spending all of its otherwise available revenues. Abatement In the event of the loss of, damage to or destruction or condemnation of the Leased Property that causes the City not to have the use and possession of all or a substantial part of such Leased Property, the City's obligation to make the Base Rental Payments due under the Lease will be abated and, notwithstanding the provisions of the Lease specifying the extent of such abatement and rental interruption insurance covering loss of use of the Leased Property in an amount adequate to cover 24 months of Base Rental Payments, the resulting Base Rental Payments (and such other funds) may not be sufficient to pay all of the remaining principal of and interest on the Bonds. See APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease — Abatement of Rental." Economic Condition in Local, State and National Economies The financial condition of the City can be significantly affected by generally prevailing conditions in the local, State and national economies. Such conditions and factors may impact the amounts available to the City to pay Base Rental Payments due under the Lease Agreement. A number of the City's sources of revenues are collected and subvened by the State (such as sales taxes and motor - vehicle license fees) or allocated in accordance with State law (most importantly, property taxes). Approximately 66% of the City's General Fund revenues are collected by the State or allocated by State law. The nation and the State are presently experiencing a severe economic recession resulting from the COVID-19 Pandemic. See "INTRODUCTION - COVID -19," and "THE CITY - COVID-19 Pandemic," herein, and "Impacts and Potential Impacts of COVID-19 on the City" below. There can be no assurances that the current or future recession or otherwise declining conditions in the local, State or national economies will not materially adversely affect the financial condition of the City in the future. See "THE CITY - Impact of State of California Budget." Impacts and Potential Impacts of COVID-19 on the City The outbreak of COVID-19 has had an adverse effect on, among other things, the national economy, the global supply chain, international travel and travel -related industries. The outbreak has negatively affected the national and local economy and financial markets, and is expected to continue to negatively affect economic output worldwide and within the State and the City. Unemployment in the United States has dramatically increased as a result of the COVID-19 Pandemic. Both the State and the County have taken actions designed to mitigate the spread of COVID-19, including requiring the temporary closure of non -essential businesses. The ongoing Pandemic and the actions taken by the federal, State, and other local governments have had an immediate impact on City operations and finances, increasing City expenditures and reducing revenues. The City's most recent estimate of the impact of the Pandemic and related events on its fiscal year 2019/20 General Fund revenues is a reduction of approximately $400,000. The City currently estimates that it has incurred $305,000 as of June 30, 2020 and will incur approximately $355,000 in additional emergency expenditures related to COVID-19 through December 31, 2020. These expenditures have been financed from budget appropriations from the General Fund and the City anticipates that all or a significant portion of these expenditures will be offset by State and federal funding sources. Neither estimates of State and federal reimbursements nor any additional expenditures related to COVID-19 are reflected in the City's fiscal year 2020/21 Budget. See "THE CITY - COVID-19 Expenditures and Potential Reimbursement." 52 Other potential impacts to the City associated with the Pandemic include, but are not limited to, challenges to the City's public health and safety infrastructure. Although various measures are being implemented to address the impacts of the Pandemic on the City's operations and finances, the City cannot predict the effectiveness and duration of these measures. The actual impact of the Pandemic on the City, its economy and its finances will depend on future events, including future events outside of the control of the City. 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 (Ca1PERS') 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. While the City currently maintains earthquake insurance, the Lease does not require earthquake insurance on the Leased Property. 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, 2019." Eminent Domain 53 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; (n) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court -approved secured debt which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the Authority's debt without the consent of the Trustee or all of the Owners of the Bonds, which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable. However, the 54 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 of force majeure, such as damaging storms, fires and explosions, strikes, sabotage, riots and spills of hazardous substances, among other events. The City cannot predict what force majeure events may occur in the future. 55 Risk of Structural and Wildland Fire The City contracts fire protection services from the Consolidated Fire Protection District of Los Angeles County, otherwise known as the Los Angeles County Fire Department (the "Fire Department"). The City receives urban and wildland fire protection services from the Fire Department. Mutual aid agreements are maintained with several local, State, and federal agencies. According to information contained in the Safety Element of the City's General Plan, historical records kept by the U.S. Department of Forestry indicate that wildland fires occur regularly within the planning area, with large fires occurring approximately every 10 years. Fire danger rises based on the age and amount of vegetation; therefore, fire incidents tend to be cyclical in an area as vegetation intensity increases with age, and dead vegetation accumulates. The Santa 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, Placenta Canyon, Hasley Canyon, White's Canyon, Bouquet Canyon, and all areas along the interface between urban development and natural vegetation in hillside areas. Fire hazards increase with any drought periods, and are highest for structures at the fringe of forested or wildland areas. In addition to the damage caused directly by a foothill fire, further damage may be caused by resulting mudslides during subsequent rains. The Fire Department has adopted programs directed at wildland fire prevention, including adoption of the State Fire Code standards for new development in hazardous fire areas. Fire prevention requirements include provision of access roads, adequate road width, and clearance of brush around structures located in hillside areas. Additionally, proof of adequate water supply for fire flow is required within a designated distance for new construction in fire hazard areas. Last year's 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. The recently reported Lake Fire near Lake Hughes in the Angeles National Forest did not have a direct impact on 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. Risk of Floods According to information contained in the Safety Element of the City's General Plan, the Santa Clarita Valley contains many natural streams and creeks that function as storm drain channels, conveying surface water runoff into the Santa Clara River. As described in the Conservation and Open Space Element of the City's General Plan, both the City and County have acted to protect the Santa Clara River floodplain from development in order to maintain the river's natural character and to protect future development from flood hazards. Localized flooding has been experienced intermittently in some areas of the valley due to local drainage conditions. During heavy rains some areas of Castaic, Newhall, Friendly Valley, and Bouquet Canyon have experienced mudflows or flooding. Local flooding can be exacerbated by erosion and mudslides when heavy rains occur after wildfires. Two areas of the City known to experience intermittent flooding are portions of Placenta Canyon, Sand Canyon, and Newhall Creek. 56 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. 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. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Super Fund Act", is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. 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 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 57 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. 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 Constitutional Amendments Affecting Tax Revenues. Article XIIIA of the California Constitution limits the amounts of ad valorem tax on real property to 1% of "full cash value" as determined by the county assessor. Article XIIIA defines "full cash value" to mean "the City Assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value', or thereafter the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment period." Furthermore, all real property valuation may be increased to reflect the inflation rate, as shown by the consumer price index, not to exceed 2% per year, or may be reduced in the event of declining property values caused by damage, destruction or other factors. Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the voters voting on the proposition approving such bonds, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while totally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change any State tax law resulting in increased tax revenues. Article XIIIB of the California Constitution limits the annual appropriations from the proceeds of taxes of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the governmental entity. Article XIIIB includes a requirement that if an entity's revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax or fee schedules over the subsequent two years. 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 XIIIIID to the California Constitution. Among other provisions, Proposition 218 requires majority voter approval for the imposition, extension or increase of general taxes and two-thirds voter approval for the imposition, extension or increase of special taxes by a local government, which is defined in Proposition 218 to include cities. Proposition 218 also provides that any general tax imposed, extended or increased without voter approval by any local government on or after January 1, 1995 and prior to November 6, 1996 will continue to be imposed only if approved by a majority vote in an election held within two years of November 6, 1996. Proposition 218 also provides that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. This extension of the initiative power is not limited by the terms of Proposition 218 to impositions after November 6, 1996 and absent other legal authority, could result in retroactive reduction in any existing taxes, assessments, fees and charges. In addition, Proposition 218 limits the application of assessments, fees and charges and requires certain existing, new and increased assessments, fees and charges to be submitted to property owners for approval or rejection, after notice and public hearing. Neither the City nor the Authority expects the provisions of Proposition 218 to have any immediate material effect on the revenues from which Base Rental Payments are expected to be appropriated. 58 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 taxes adopted without voter approval prior to Guardino; (4) whether Proposition 62 applies only to new taxes or to tax increases as well. W 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 ]A. 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. 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) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity. Neither the City nor the Authority expects provisions of Proposition 26 to materially impede the City's ability to pay Base Rental Payments when due. Future Initiatives From time to time, other initiative measures may be adopted, which may affect the City's revenues and its ability to expend said revenues. The above -mentioned measures and any future measures could restrict the City's ability to raise additional funds for its General Fund. Limitations on Remedies The enforceability of the rights and remedies of the owners of the Bonds and the Trustee, and the obligations incurred by the Authority and the City, respectively, may be subject to the following, among others: the limitations on legal remedies against joint powers authorities and cities in California; the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; principles of equity that may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the U.S. Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modification of their rights. See also, `Bankruptcy" above. Remedies on Default 61 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-m- 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 Tax -Exempt 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 Tax -Exempt 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 Tax -Exempt 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. 62 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 Tax -Exempt Bonds. Prospective purchasers of the Tax -Exempt 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 Tax -Exempt Bonds are outstanding or that any such changes will not adversely affect the exclusion of interest on the Tax -Exempt Bonds from gross income for federal income tax purposes. If the exclusion of interest on the Tax -Exempt Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Tax - Exempt 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 Tax -Exempt Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Tax - Exempt Bonds might be affected as a result of such an audit of the Tax -Exempt 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. 63 Except as otherwise required in the Continuing Disclosure Certificate, the Authority and the City undertake no responsibility either to bring to the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of the rating obtained may have an adverse effect on the marketability or market price of the Bonds. UNDERWRITING The Bonds are being purchased by (the "Underwriter"). The Underwriter has agreed to purchase the Bonds at a price of $ (representing the aggregate principal amount of the Bonds of $ plus a net original issue premium of $ and less an Underwriter's discount of $ ). The Bond Purchase Agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof The offering prices may be changed from time to time by the Underwriter. 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 31 following the end of the City's Fiscal Year (currently its Fiscal Year ends on June 30) (the "Annual Report"), commencing with the report for the Fiscal Year ending June 30, 2020, 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.or /. 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 twelve bond issues: $17,230,000 City of Santa Clarita Community Facilities District No. 2016-1 (Vista Canyon) Special Tax Bonds, 2020 Series (the "2020 CFD Bonds"); 2. $25,850,000 Santa Clarita Public Financing Authority Lease Revenue Bonds (Sheriff Station Project) Series 2019 (the "2019 Bonds"); 64 3. $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"). 4. $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"). 5. $10,320,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Golden Valley Road) Series 2016A, dated June 22, 2016 (the "2016A Bonds"). 6. $14,020,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Open Space and Parkland Acquisition) Series 2016B, dated June 22, 2016 (the "2016B Bonds"). 7. $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"). 8. $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"). 9. $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"). 10. $15,525,000 City of Santa Clarita Certificates of Participation (Open Space and Parkland Acquisition Program) 2007 Series (the "2007 Certificates"). 11. $13,785,000 Santa Clarita Public Financing Authority Lease Revenue Bonds, Series 2007 (Golden Valley Road) (the "2007 Bonds"). 12. [$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; and 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 65 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. The City undertook a review of its adopted Fiscal Policies and has revised its Fiscal Policies to include a formal continuing disclosure policy that will help assure compliance with existing and future continuing disclosure undertakings (including those for related entities) through creation of a disclosure practices working group including a City staff disclosure coordinator. The City believes that its procedures with the Dissemination Agent will be sufficient in the normal due course to assure substantial compliance with its continuing disclosure undertakings in the future, including the Continuing Disclosure Certificate with respect to the Bonds. TAX MATTERS Tax -Exempt Bonds Tax Exemption. In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the Authority, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance by each of the Authority and the City with certain covenants in the Indenture, the Tax Certificate and other documents pertaining to the Tax -Exempt Bonds and requirements of the Internal Revenue Code, regarding the use, expenditure and investment of proceeds of the Tax -Exempt Bonds and the timely payment of certain investment earnings to the United States, interest on the Tax -Exempt Bonds is not included in the gross income of the owners of the Tax -Exempt Bonds for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Tax -Exempt Bonds to be included in gross income retroactive to the date of issuance of the Tax -Exempt Bonds. In the further opinion of Bond Counsel, interest on the Tax -Exempt Bond is exempt from personal income taxes imposed by the State of California. In the further opinion of Bond Counsel, interest on the Tax -Exempt Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax. Ownership of, or the receipt of interest on, tax-exempt obligations may result in collateral federal income 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 Tax -Exempt Bonds should consult their tax advisors as to the applicability of any collateral tax consequences. Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate or other documents pertaining to the Tax -Exempt Bonds may be changed, and certain actions may be taken or not taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. Bond Counsel expresses no opinion as to the effect of any change to any document pertaining to the Tax -Exempt 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 Norton Rose Fulbright US LLP or in reliance upon the advice of counsel other than Norton Rose Fulbright US LLP with respect to the exclusion from gross income of the interest on the Tax -Exempt Bonds for federal income tax purposes. Bond Counsel's opinion is not a guarantee of result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and judicial decisions and the representations and covenants of the Issuer described above. No ruling has been sought from the Internal Revenue Service (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 Tax -Exempt Bonds is commenced, under current procedures the IRS is likely to treat the Authority as the "taxpayer," and the owners of the Tax -Exempt Bonds 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 Tax -Exempt Bonds, the Authority may have different or conflicting interests from the owners. Additionally, public awareness of any future examination of the Tax -Exempt Bonds could adversely affect the value and liquidity of the Tax -Exempt Bonds during the pendency of the examination, regardless of its ultimate outcome. Tax Accounting Treatment of Bond Premium and Original Issue Discount. Bond Premium. To the extent a purchaser acquires a Tax -Exempt Bond at a price in excess of the amount payable at its maturity, such excess will constitute "bond premium" under the Internal Revenue Code. The Internal Revenue Code and applicable Treasury Regulations provide generally that bond premium on a tax-exempt obligation is amortized over the remaining term of the obligation (or a shorter period in the case of certain callable obligations) based on the obligation's yield to maturity (or shorter period in the case of certain callable obligations). The amount of premium so amortized reduces the owner's basis in such obligation for federal income tax purposes, though such amortized premium is not deductible for federal income tax purposes. This 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. Original Issue Discount. The excess, if any, of the stated redemption price at maturity of Tax - Exempt Bonds of a particular maturity over the initial offering price to the public of the Tax -Exempt Bonds of that maturity at which a substantial amount of such Tax -Exempt Bonds is sold to the public is "original issue discount." Original issue discount accruing on a Tax -Exempt Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes under the same conditions and limitations as are applicable to interest payable on such Tax -Exempt Bond. Original issue discount on a Tax -Exempt Bond purchased pursuant to the initial public offering at the initial public offering price at which a substantial amount of the Tax -Exempt Bonds is sold to the public accrues on a semiannual basis over the term of the Tax -Exempt Bond on the basis of a constant yield; and within each semiannual period accrues on a ratable daily basis. The amount of original issue discount on a Tax - Exempt Bond accruing during each period is added to the adjusted basis of such Tax -Exempt Bond, which will affect the amount of taxable gain upon disposition (including sale, redemption or payment on maturity) of such Tax -Exempt Bond. The Internal Revenue Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers that purchase Tax -Exempt Bonds other than at the initial offering price and pursuant to the initial public offering. Bond Counsel is not opining on the accounting for or consequence to a Tax -Exempt Bond purchaser of bond premium or original issue discount. Accordingly, persons considering the purchase of Tax -Exempt Bonds with bond premium or original issue discount should consult with their own tax advisors with respect to the determination of bond premium or original issue discount on such Tax - Exempt Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Tax -Exempt Bonds. Information Reporting and Backup Withholding. Interest paid on the Tax -Exempt Bonds will be subject to information reporting in a manner similar to interest paid on taxable obligations. Although M such reporting requirement does not, in and of itself, affect the excludability of such interest from gross income for federal income tax purposes, such reporting requirement causes the payment of interest on the Tax -Exempt Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not "exempt recipients," and (b) either fail to provide certain identifying information (such as the beneficial owner's taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a beneficial owner are allowed as a refund or credit against such beneficial owner's federal income tax liability so long as the required information is furnished to the IRS. Future Developments. Existing law may change to reduce or eliminate the benefit to owners of the Tax -Exempt Bonds of the exclusion of the interest on the Tax -Exempt Bonds from gross income for federal income tax purposes or of the exemption of interest on the Tax -Exempt Bonds from State of California personal income taxation. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the Tax -Exempt Bonds. Prospective purchasers of the Tax -Exempt Bonds should consult with their own tax advisors with respect to any proposed or future change in tax law. A copy of the form of opinion of Bond Counsel relating to the Tax -Exempt Bonds is included in APPENDIX E hereto. Taxable Bonds State Income Tax. In the opinion of Bond Counsel, under existing law interest on the Taxable Bonds is exempt from personal income taxes of the State. Except as stated in the immediately preceding sentence, Bond Counsel will express no opinion as to any federal or state tax consequence of the receipt of interest on, or the ownership or disposition of, the Taxable Bonds. A copy of the form of opinion of Bond Counsel relating to the Taxable Bonds is included in Appendix E. Federal Income Tax Considerations. The following is a general summary of the United States federal income tax consequences of the purchase and ownership of the Taxable Bonds. The discussion below is based upon the laws, Treasury Regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly, with retroactive effect) or possibly differing interpretations. No assurances can be given that future changes in the law will not alter the conclusions reached herein. The discussion below does not purport to deal with United States federal income tax consequences applicable to all categories of investors. Further, the discussion below does not discuss all aspects of United States federal income taxation that may be relevant to a particular investor in the Taxable Bonds in light of the investor's particular investment circumstances or to certain types of investors subject to special treatment under United States federal income tax laws (including insurance companies, tax-exempt organizations, financial institutions, broker -dealers and persons who have hedged the risk of owning the Taxable Bonds). The discussion below is therefore limited to certain issues relating to initial investors who will hold the Taxable Bonds as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986 (the "Code"), and who acquire such Taxable Bonds for investment and not as a dealer or for resale. Except as specifically discussed below, the discussion below addresses the United States federal income tax consequences applicable only to beneficial owners of the Taxable Bonds who are "United States persons" within the meaning of Section 7701(a)(30) of the Code ("United States persons") and does not address any consequence to persons other than United States persons. Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the "IRS") with respect to any of the United States federal income tax 68 consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMINING THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TAXABLE BONDS. Stated Interest on the Taxable Bonds. The stated interest on the Taxable Bonds will be included in the gross income, as defined in Section 61 of the Code, of the beneficial owners thereof and will be subject to United States federal income taxation when received or accrued, depending on the tax accounting method applicable to the beneficial owners thereof. Original Issue Discount. If a substantial amount of the Taxable Bonds of any stated maturity is purchased at original issuance for a purchase price (the "Issue Price") that is less than their face amount by more than one quarter of one percent times the number of complete years to maturity, the Taxable Bonds of such maturity will be treated as being issued with "original issue discount." The amount of the original issue discount will equal the excess of the principal amount payable on such Taxable Bonds at maturity over the Issue Price of such Taxable Bonds, and the amount of the original issue discount on the Taxable Bonds will be amortized over the life of the Taxable Bonds using the "constant yield method" provided in the Treasury Regulations. As the original issue discount accrues under the constant yield method, the beneficial owners of the Taxable Bonds, regardless of their regular method of accounting, will be required to include such accrued amount in their gross income as interest. This can result in taxable income to the beneficial owners of the Taxable Bonds that exceeds actual cash distributions to the beneficial owners in a taxable year. The amount of the original issue discount that accrues on the Taxable Bonds each taxable year will be reported annually to the IRS and to the beneficial owners. The portion of the original issue discount included in each beneficial owner's gross income while the beneficial owner holds the Taxable Bonds will increase the adjusted tax basis of the Taxable Bonds in the hands of such beneficial owner. Premium. If a beneficial owner purchases a Taxable Bond for an amount that is greater than its stated redemption price at maturity, such beneficial owner will be considered to have purchased the Taxable Bond with "amortizable bond premium" equal in amount to such excess. A beneficial owner may elect to amortize such premium using a constant yield method over the remaining term of the Taxable Bond and may offset interest otherwise required to be included in respect of the Taxable Bond during any taxable year by the amortized amount of such premium for the taxable year. Bond premium on a Taxable Bond held by a beneficial owner that does not make such an election will decrease the amount of gain or increase the amount of loss otherwise recognized on the sale, exchange, redemption or retirement of a Taxable Bond. However, if the Taxable Bond may be optionally redeemed after the beneficial owner acquires it at a price in excess of its stated redemption price at maturity, special rules would apply under the Treasury Regulations which could result in a deferral of the amortization of some bond premium until later in the term of the Taxable Bond. Any election to amortize bond premium applies to all taxable debt instruments held by the beneficial owner on or after the first day of the first taxable year to which such election applies and may be revoked only with the consent of the IRS. Medicare Contribution Tax. Pursuant to Section 1411 of the Code, as enacted by the Health Care and Education Reconciliation Act of 2010, an additional tax is imposed on individuals beginning January 1, 2013. The additional tax is 3.8% of the lesser of (i) net investment income (defined as gross income from interest, dividends, net gain from disposition of property not used in a trade or business, and certain other listed items of gross income), or (ii) the excess of "modified adjusted gross income" of the individual over $200,000 for unmarried individuals ($250,000 for married couples filing a joint return and .: a surviving spouse). Holders of the Taxable Bonds should consult with their own tax advisors concerning this additional tax, as it may apply to interest earned on the Taxable Bonds as well as gain on the sale of a Taxable Bond. Disposition of Taxable Bonds and Treatment of Market Discount. A beneficial owner of Taxable Bonds will generally recognize gain or loss on the redemption, sale or exchange of Taxable Bonds equal to the difference between the redemption or sales price (exclusive of the amount paid for accrued interest) and the beneficial owner's adjusted tax basis in the Taxable Bonds. Generally, the beneficial owner's adjusted tax basis in the Taxable Bonds will be the beneficial owner's initial cost, increased by the original issue discount (if any) previously included in the beneficial owner's income to the date of disposition. Any gain or loss generally will be capital gain or loss and will be long-term or short-term, depending on the beneficial owner's holding period for the Taxable Bonds. Under current law, a purchaser of a Taxable Bond who did not purchase that Taxable Bond in the initial public offering (a "subsequent purchaser") generally will be required, on the disposition (or earlier partial principal payment) of such Taxable Bond, to recognize as ordinary income a portion of the gain, if any, to the extent of the accrued "market discount." In general, market discount is the amount by which the price paid for a Taxable Bond by a subsequent purchaser is less than the sum of the Issue Price of the Taxable Bond and the amount of original issue discount previously accrued on the Taxable Bonds. The Code also limits the deductibility of interest incurred by a subsequent purchaser on funds borrowed to acquire Taxable Bonds with market discount. As an alternative to the inclusion of market discount in income upon disposition, a subsequent purchaser may elect to include market discount in income currently as it accrues on all market discount instruments acquired by the subsequent purchaser in that taxable year or thereafter, in which case the interest deferral rule will not apply. The re -characterization of gain as ordinary income on a subsequent disposition of such Taxable Bonds could have a material effect on the market value of the Taxable Bonds. Legal Defeasance. If the Authority elects to defease the Taxable Bonds by depositing in escrow sufficient cash and/or obligations to pay when due outstanding Taxable Bonds (a "legal defeasance"), under current tax law, a beneficial owner of Taxable Bonds may be deemed to have sold or exchanged its Taxable Bonds. In the event of such a legal defeasance, a beneficial owner of Taxable Bonds generally would recognize gain or loss in the manner described above. Ownership of the Taxable Bonds after a deemed sale or exchange as a result of a legal defeasance may have tax consequences different from those described above, and each beneficial owner should consult its own tax advisor regarding the consequences to such beneficial owner of a legal defeasance of the Taxable Bonds. Backup Withholding. Under Section 3406 of the Code, a beneficial owner of the Taxable Bonds who is a United States person may, under certain circumstances, be subject to "backup withholding" on payments of current or accrued interest on the Taxable Bonds or with respect to proceeds received from a disposition of the Taxable Bonds. This withholding applies if such beneficial owner of Taxable Bonds: (i) fails to furnish to the payor such beneficial owner's social security number or other taxpayer identification number ("TIN"); (ii) furnishes the payor an incorrect TIN; (iii) fails to properly report interest, dividends, or other "reportable payments" as defined in the Code; or (iv) under certain circumstances, fails to provide the payor with a certified statement, signed under penalty of perjury, that the TIN provided to the payor is correct and that such beneficial owner is not subject to backup withholding. Backup withholding will not apply, however, with respect to payments made to certain beneficial owners of the Taxable Bonds. Beneficial owners of the Taxable Bonds should consult their own tax advisors regarding their qualification for exemption from backup withholding and the procedures for obtaining such exemption. 70 Withholding on Payments to Nonresident Alien Individuals and Foreign Corporations. Under Sections 1441 and 1442 of the Code, nonresident alien individuals and foreign corporations are generally subject to withholding at the rate of 30% on periodic income items arising from sources within the United States, provided such income is not "effectively connected" with the conduct of a United States trade or business, within the meaning of Section 864 of the Code. Assuming the interest received by the beneficial owners of the Taxable Bonds is not treated as effectively connected income, such interest will be subject to 30% withholding, or any lower rate specified in an income tax treaty, unless such income is treated as "portfolio interest," within the meaning of Sections 871 and 881 of the Code." Interest will be treated as portfolio interest under such sections if: (i) the beneficial owner provides a statement to the payor certifying, under penalties of perjury, that such beneficial owner is not a United States person and providing the name and address of such beneficial owner; (ii) such interest is treated as not effectively connected with the beneficial owner's United States trade or business; (iii) interest payments are not made to a person within a foreign country that the IRS has included on a list of countries having provisions inadequate to prevent United States tax evasion; (iv) interest payable with respect to the Taxable Bonds is not deemed contingent interest within the meaning of the portfolio debt provision; (v) such beneficial owner is not a controlled foreign corporation, within the meaning of Section 957 of the Code; and (vi) such beneficial owner is not a bank receiving interest on the Taxable Bonds pursuant to a loan agreement entered into in the ordinary course of the bank's trade or business. Assuming payments on the Taxable Bonds are treated as portfolio interest within the meaning of Sections 871 and 881 of the Code, then no backup withholding under Section 1441 and 1442 of the Code and no backup withholding under Section 3406 of the Code is required with respect to beneficial owners or intermediaries who have furnished Form W-813EN, Form W-8BEN-E, Form W-8EXP or Form W- 8IMY, as applicable, provided the payor does not have actual knowledge or reason to know that such person is a United States person. Foreign Account Tax Compliance Act. Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to a foreign financial institution, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain United States persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, the Foreign Account Tax Compliance Act ("FATCA") imposes a 30% withholding tax on the same types of payments to a non- financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each substantial United States owner. Failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of interest and principal under the Taxable Bonds and sales proceeds of Taxable Bonds held by or through a foreign entity. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and will apply to "foreign passthru payments" but no earlier than two years after the date of publication of final regulations defining the term "foreign passthru payment." Prospective investors should consult their own tax advisors regarding FATCA and its effect on them. Reporting of Interest Payments. Subject to certain exceptions, the stated interest on the Taxable Bonds will be reported to the IRS. Such information will be filed each year with the IRS on Form 1099- INT (or other appropriate reporting form) which will reflect the name, address and taxpayer identification number of the owner. A copy of such Form 1099-INT will be sent to each beneficial owner of a Taxable Bond for federal income tax purposes. The preceding discussion of certain United States federal income tax consequences is for general information only and is not tax advice. Accordingly, each investor should consult with its own tax advisor 71 as to particular tax consequences to it of purchasing, owning, and disposing of the Taxable Bonds, including the applicability and effect of any state, local or foreign tax law, and of any proposed change in applicable law. 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 Fulbright 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, 2019, included in APPENDIX B hereto, have been audited by Eide Bailly LLP (EB), EB 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 EB with respect to any event subsequent to the date of its report. 72 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. 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. EXECUTION AND DELIVERY The execution and delivery of this Official Statement has been authorized by the Authority and the City. SANTA CLARITA PUBLIC FINANCING AUTHORITY Executive Director CITY OF SANTA CLARITA City Manager 73 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 fi^om 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. " The economic and demographic information below is provided as general background. Although it has been collected from sources that the City considers to be reliable, the City has made no independent verification of the information provided by non -City sources and the City takes no responsibility for the completeness or accuracy thereof. The current state of the economy of the City, the County, the State of California and the United States of America may not be reflected in the data discussed below, because more up-to-date information is not publicly available. In particular, the impact of the COVID-19 pandemic on the local economy and workforce is not reflected in the information within. 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 70.8 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 70.8 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. A-1 In general, the climate in the City is sunny, warm and dry in the summer and semi -moist and mild in the winters. The annual rainfall of 15 to 18 inches occurs primarily between November and March. Municipal Government The City provides general government services either with its own employees or through contracts. The City has a Council Manager form of municipal government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments. The City Council is composed of five members elected biannually at large to four-year staggered terms. The Mayor is selected by the City Council from among its members. Beginning in 2016, the City's General Municipal Election was consolidated with Los Angeles County General Election held on November 8, 2016. As of July 1, 2019, the City had a staff of 450.35 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 Occupation Cameron Smyth, Mayor November 2020 Associate Vice President — State Affairs William Miranda, Mayor Pro Teen November 2022 Business Consultant Robert C. Kellar, Councilinember November 2020 Retired Police Officer/Realtor Laurene F. Weste, Councilinember November 2022 Community Advocate Marsha A. McLean, Councilinember November 2022 Business Owner Current City Management Staff includes the following: Mr. Ken Striplin has been the City Manager for the City since January 1, 2013. He has worked for the City since 1995, serving in a leadership capacity in every City department during his tenure. Previously Mr. Striplin has served the City as Assistant City Manager, Assistant to the City Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In addition, Mr. Striplin has served as Interim Director of two departments: Field Services and Planning and Economic Development. He holds Bachelor of Arts and Master of Public Administration degrees from California State University, Northridge, and a Doctor of Education in Organizational Leadership from Pepperdine University. Mr. Frank Oviedo has been the Assistant City Manager since January 7, 2013. Mr. Oviedo brings over 15 years of experience in city government. Prior to joining the City, he was the Deputy City Manager for the City of Elk Grove from 2002-2009 and was the City Manager of Wildomar from 2009- 2012. During Frank's career, he has worked in every city department in three cities, with a steady progression of management responsibilities in local government. Frank Oviedo earned a Bachelor's degree from California State University Fresno and a Master's degree in Public Administration from Arizona State University. Mr. Darren Hernandez, Deputy City Manager, leads the Department of Neighborhood Services. Darren joined the City of Santa Clarita in January 2004 as Director of Administrative Services and was named Deputy City Manager in July 2007. Previously Mr. Hernandez has served as the Director of Finance & City Treasurer of La Habra, California; Village Manager of Walden, New York; Assistant to the City Manager of Kalamazoo, Michigan; and, Executive Assistant to the Controller of the State of New York. He has a Bachelor of Arts degree from the State University of New York and studied public administration as a graduate student at the Maxwell School of Syracuse University. Ms. Carmen Magana is the 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 A-2 the Chief Financial Officer of the City and the Successor Agency. Ms. Magaiia 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. Magaiia received a Bachelor's degree from California State University, Northridge in Business Administration and Finance and a Master's degree in Public Administration, Public Sector Management and Leadership. Municipal Services The City provides park and recreation services, transit services, trash collection, street maintenance, building inspection and planning services. As a "contract city," the City purchases certain public services through contracts with other agencies and private companies. Contracting for services enables the City to accomplish the essential administrative and operational functions of a municipality with a relatively small workforce and payroll, and a minimum of facilities and equipment. The primary example of this is the contract for public safety services, whose sworn and civilian personnel are provided by the Los Angeles County Sheriff Department. Fire protection is provided by the Los Angeles County Fire Protection District. Other regularly contracted services include refuse and recycling collection, landscaping and public transit services. Population The following table shows the City's and County's population as of January 1, 2012 through January 1, 2020. CITY OF SANTA CLARITA AND LOS ANGELES COUNTY Population Year Los Angeles County City of Santa Clarita 2012 9,956,882 178,982 2013 10,025,712 207,170 2014 10,078,930 208,440 2015 10,126,423 209,391 2016 10,158,196 210,031 2017 10,193,753 215,891 2018 10,209,676 216,387 2019 10,184,378 221,703 2020 10,172,951 221,932 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2012-2020, with 2010 Census Benchmark. Sacramento, California, May 2020, as ofJanuary 1. Income The U.S. Census Bureau American FactFinder reports that the median income of households in the City for 2018 is $94,282 compared to $71,228 for the State and $60,293 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. A-3 Education The City is served by 48 elementary schools, 6 middle schools, 10 high schools and numerous private and parochial schools. Three colleges are located in the Santa Clarita Valley, California Institute of the Arts, The Master's University, 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. Assessed Valuation In Fiscal Year 2019/20, the City was the fifth 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. CITY OF SANTA CLARITA Assessed Valuation (OOOs) Fiscal Year Local Secured Utility Unsecured Total 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 27,622,848 3,696 797,363 28,423,909 2017/18 29,903,220 4,576 819,549 30,727,345 2018/19 31,627,924 4,576 848,468 32,480,968 2019/20 34,319,756 4,284 850,777 35,174,818 2020/21 36,333,533 4,284 884,857 37,222,674 Source: Los Angeles County Assessor. 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%. Based on the CoreLogic, Inc.'s 2019 Home Sales Report, 1,237 units were sold in 2019 within the City with a median sales price of $619,250, a 5% increase from the 2018 median sales price of $585,000. Construction Activity The following table shows the valuation of building permits issued in the City for the last five calendar years in which the data is available. A-4 CITY OF SANTA CLARITA Building Permits and Valuations Year Residential Permits Residential Value Non -Residential Value Total 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 2019 1.865 219.555.761 139.270.994 358.826.755 Source: City 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 2021. 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 2021. River Village (Area D) is a 184 multi -family unit project on 32 acres. Design plans were approved in August 2018 and units are currently under construction with completion anticipated for late 2021. 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 nearing completion with 6 buildings totaling approximately 1 million square feet. Phase 2 is expected to begin grading in the fall and will total just over 1 million square feet. Completion of Phase 2 is anticipated in 2022. Four new buildings will be constructed at the Southern California Innovation Park, including a 136,900 square -foot office building and three buildings approved under the Jobs Creation Overlay Zone (JCOZ) totaling nearly 123,000 square feet.. The Tourney Place office building will add 46,000 square - feet of office space to the City. A 101,000 square -foot expansion to the former Sears box has been approved at the Valencia Town Center that will include a new Costco, a gym, and a movie theater expected to begin construction in 2021. 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 just completed construction in August 2020. 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 in the fourth quarter of 2020. 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 first quarter of 2020. A-5 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. Riverwalk was approved with 136 residential units and 10,000 square feet of retail and office space Civic Uses. The new Santa Clarita Valley Sheriff's Station will provide a 46,000 square foot state-of-the-art Sheriffs Station that will include a Type I detention facility, with a 4,000 square foot vehicle maintenance building, communications tower, and a heliport. This project is under construction and is scheduled to be completed in 2021. The new Canyon Country Community Center will include the construction of a 25,000-square- foot community center, plaza and courtyards, parking, walkways, landscaping, and street improvements. This project is under construction and is scheduled to be completed in 2021. Employment Over the past four months, the pandemic has caused an unprecedented loss of jobs and an increase in unemployment. The California Employment Development Department has reported preliminary unemployment figures for July 2020 of 10.2% for the U.S., 13.3% statewide, 18.2% for the County, and 17.2% for the City (not seasonally adjusted). The increase in statewide unemployment from 5.5% for the State in March represents the largest percentage loss of jobs and the highest unemployment rate in the State's data series that dates back to 1976. The previous high in unemployment in this series was 12.3% at the height of the Great Recession in 2010. The following table summarizes the City's employment and unemployment rates for 2015 through 2019 calendar years. CITY OF SANTA CLARITA Civilian Labor Force, Employment and Unemployment Annual Averages 2015 2016 2017 2018 2019 Civilian Labor Force Employment 95,100 96,200 112,300 113,600 113,500 Unemployment 5,800 4,500 4,600 4,900 4,700 Total 89,300 91,700 107,700 108,600 108,800 Unemployment Rate (a) 6.0% 4.7% 4.1% 4.3% 4.1% (a) The unemployment rate is calculated using unrounded data. Source: California Employment Development Department, April 19, 2020 with March 2019 Benchmark. A-6 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 Amusement Park 3,200 Princess Cruises Travel 2,092 Henry Mayo Newhall Memorial Hospital Hospital 1,917 Boston Scientific Medical Device 1,000 The Master's College Education 796 Walmart Retail 705 California Institute of the Arts Education 700 Woodward HRT (formerly H.R. Textron) Aerospace 680 Scorpion Internet Marketing & Design Marketing 653 Advanced Bionics Medical Device 575 Quest Diagnostics (formerly Specialty Labs) Medical R&D 550 Subtotal 12,868 Other 8,657 Private Subtotal within Top 50 21,525 Gov. Subtotal within Top 50 9,162 Total within Top 50 30,687 Source: 2020 Economic Outlook -for the Santa Clarita Valley. [Remainder of page intentionally left blank.] A-7 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 2018(') 7,192 770,510 (1) First Quarter 2018. Source: California Board of Equalization and California Department of Tax and Fee Administration. 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 of Business Permits Taxable Transactions Retail and Food Services Motor Vehicle and Parts Dealers 162 $ 679,007,877 Home Furnishings and Appliance Stores 281 120,191,550 Bldg. Material and Garden Equip. & Supplies 103 207,054,620 Food and Beverage Stores 139 106,667,989 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 558 351,265,464 Other Retail Stores 2,327 217,893,290 Retail and Food Total 4,616 S2,647,223,787 All Other Outlets 2,477 590,907,976 Totals All Outlets 7,093 S3,238,131,763 Source: California Department of Tax and Fee Administration. A-8 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 2015 through 2019 Annual Averages Wage and Salary Employment:(2) 2015 2016 2017 2018 2019 Agriculture 5,000 5,300 5,800 4,600 4,500 Mining and Logging 2,900 2,500 2,200 1,900 1,900 Construction 126,200 133,900 137,700 146,300 149,300 Manufacturing 367,800 360,300 350,100 341,200 339,200 Wholesale Trade 225,700 225,200 224,500 223,200 220,500 Retail Trade 419,300 421,500 422,500 424,800 417,300 Transportation, Warehousing, Utilities 171,500 182,300 191,800 203,600 213,800 Information 207,500 229,200 214,500 216,400 217,300 Finance and Insurance 135,600 138,100 137,400 136,500 135,500 Real Estate and Rental and Leasing 80,000 81,600 83,700 86,700 88,400 Professional and Business Services 593,800 603,200 613,400 630,400 642,800 Educational and Health Services 741,100 767,600 794,300 821,300 843,600 Leisure and Hospitality 486,600 510,000 523,900 536,500 544,700 Other Services 151,000 153,300 154,100 158,800 158,400 Federal Government 47,400 47,700 48,000 47,300 47,400 State Government 87,400 89,900 92,500 91,700 92,500 Local Government 433,700 438,600 438,600 451,600 454,300 Total all Industries (1) 4,282,300 4,390,800 4,441,400 4,522,700 4,571,400 (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, Placenta Canyon Nature Center, Saugus Train Station, Vasquez Rocks County Park and the City's community parks are also available for hiking and picnicking. William S. Hart Park features a Spanish colonial mansion museum. Within the City, there are 35 park facilities, nearly 11,000 acres of City -owned open space and 150 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. A-9 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2019 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS C-1 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this "Disclosure Certificate"), dated as of October 1, 2020, 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)(1) of the Rule and specified in Section 3(a) of this Disclosure Certificate. "Audited Financial Statements" means the financial statements (if any) of the City for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(1) of the Rule and specified in Section 3(b) of this Disclosure Certificate. "Bonds" mean, collectively, the $10,030,000* Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility), Series 2020A and the $3,640,000* Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 2020A-T. "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 Treasurer 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. . Preliminary, subject to change. D-1 "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 http://emma.msrb.org. "Notice Event" means any of the events enumerated in paragraph (b)(5)(1)(C) of the Rule and listed in Section 4(a) of this Disclosure Certificate. "Obligated Person" means any person, including the City, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the Bonds (other than providers of municipal bond insurance, letters of credit, or other liquidity facilities). With respect to the Bonds, only the City constitutes the Obligated Person. D-2 "Official Statement" means that Official Statement, dated October , 2020, prepared by the Issuer and the City in connection with the Bonds. "SEC" means the United States Securities and Exchange Commission. "Trustee" means U.S. Bank National Association, as trustee under the Indenture, dated as of October 1, 2020, 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 2020- 21. 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; D-3 (iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with the MSRB; (iv) upon receipt, promptly file the text of each Notice Event received under Sections 4(a) and 4(b)(11) with the MSRB, identifying the Notice Event as instructed by the City pursuant to Section 4(a) or 4(b)(11) 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)(11) or Section 2(c) of this Disclosure Certificate; (f) The City may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. (g) Any Information received by the Disclosure Dissemination Agent before 6:00 p.m. Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this Disclosure Certificate and that is accompanied by a Certification and all other information required by the terms of this Disclosure Certificate will be filed by the Disclosure Dissemination Agent with the MSRB 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 similar to information found in Table 9; (ii) General fund balance sheet, statement of revenues, expenditures and changes in fund balance budget and actual results for preceding Fiscal Year similar to information found in Tables 1, 2 and 3; (iii) Assessed valuations similar to information found in Table 4; (iv) Largest local secured taxpayers similar to information found in Table 7; and [(v) Tax revenue by sources similar to information found in Table 8]. (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 D-4 accordance with GAAP as described in the Official Statement will be included in the Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d). Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the City is an Obligated Person, which have been previously filed with the Securities and Exchange Commission or available to the public on the MSRB Internet website. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The City will clearly identify each such document so incorporated by reference. Any Annual Financial Information containing modified operating data or financial information is required to explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. SECTION 4. Reporting of Notice Events. (a) The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event: 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;' ' 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 D-5 13. The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive Certificate to undertake such an action or the termination of a definitive Certificate relating to any such actions, other than pursuant to its terms, if material; 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 of ten (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 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. I1 • Dissemination Agent shall promptly file a notice of such occurrence with the MSRB in accordance with Section 2(e)(iv) hereof. SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, Notice Event notices, and Failure to File Event notices, the City shall indicate the full name of the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided information relates. SECTION 6. Additional Disclosure Obligations. The City acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule lOb-5 promulgated under the Securities Exchange Act of 1934, may apply to the City, and that the failure of the Disclosure Dissemination Agent to so advise the City shall not constitute a breach by the Disclosure Dissemination Agent of any of its duties and responsibilities under this Disclosure Certificate. The City acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Certificate. SECTION 7. Voluntary Filings. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Certificate or including any other information in any Annual Report, Audited Financial Statements, Notice Event notice, or Failure to File Event notice, in addition to that required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report, Audited Financial Statements, Notice Event notice, or Failure to File Event notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report, Audited Financial Statements, Notice Event notice, or Failure to File Event notice. SECTION 8. Termination of Reporting Obligation. The obligations of the City and the Disclosure Dissemination Agent under this Disclosure Certificate shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the City is no longer an Obligated Person with respect to such Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required with respect to such Bonds. 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 D-7 shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein. SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent. (a) Article VI of the Indenture is hereby made applicable to this Disclosure Certificate as if this Disclosure Certificate were (solely for this purpose) contained in the Indenture. The Disclosure Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder. The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. and the City agrees to indemnify and save the Disclosure Dissemination Agent, the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to this Disclosure Certificate or arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Disclosure Dissemination Agent's negligence or willful misconduct. The Disclosure Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the City has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Certificate. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information or any other information, disclosures or notices provided to it by the City and shall not be deemed to be acting in any fiduciary capacity for the City, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the City's failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the City has complied with this Disclosure Certificate. The Disclosure Dissemination Agent may conclusively rely upon certifications of the City at all times. The obligations of the City under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, 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. D-8 Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right but not the duty to adopt amendments to this Disclosure Certificate necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days prior written notice of the intent to do so together with a copy of the proposed amendment to the City. No such amendment shall become effective if the City shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Trustee of the Bonds, the Disclosure Dissemination Agent, the participating underwriter (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: I1 • 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: $10,030,000* Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility), Series 2020A and $3,640,000* Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility), Series 202OA-T Date of Issuance: October , 2020 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 cc: Trustee . Preliminary, subject to change. Digital Assurance Certification LLC, as Disclosure Dissemination Agent D-10 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 $10,030,000* Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A Ladies and Gentlemen: $3,640,000* Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T 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 $10,030,000* Lease Revenue Bonds (Recreational Facility), Series 2020A (the "Tax -Exempt Bonds") and its $3,640,000* Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T (the "Taxable Bonds," and together with the Tax -Exempt Bonds, the `Bonds"). The Bonds are being issued under the provisions of the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title I (commencing with Section 6584) of the California Government Code (the "Bond Law"), and pursuant to an Indenture, dated as of October 1, 2020 (the "Indenture"), by and between the Authority and U.S. Bank National Association, 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 October 1, 2020 (the "Lease"), by and between the Authority, as lessor, and the City, as lessee, (ii) any proceeds of Bonds originally deposited with the Trustee and all moneys on deposit in the funds and accounts (other than the Rebate Fund) established under the Indenture, (iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the applicable Base Rental Payments. The City has leased certain real property and improvements (the "Leased Property") to the Authority pursuant to the Site and Facility Lease, dated as of October 1, 2020 (the "Site Lease"), by and between the City and the Authority. Pursuant to the Assignment Agreement, dated as of October 1, 2020 (the . Preliminary, subject to change. E-1 "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. 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. 2. The Indenture has been duly and validly authorized, executed and delivered by the Authority and, assuming the enforceability thereof against the Trustee, constitutes the legally valid and binding obligation of the Authority, enforceable against the Authority in accordance with its terms. The Indenture creates a valid pledge, to secure the payment of principal of and interest on the Bonds, of the Revenues and certain other amounts held by the Trustee in certain funds and accounts established pursuant to the Indenture, subject to the provisions of the Indenture permitting the application thereof for other purposes and on the terms and conditions set forth therein. The Lease and Site Lease have been duly and validly authorized, executed and delivered by the Authority and the City and constitute the legally valid and binding obligations of the Authority and the City, enforceable against the Authority and the City in accordance with their terms. 4. The Assignment Agreement has been duly and validly authorized, executed and delivered by the Authority and, assuming the enforceability thereof against the Trustee, constitutes the legally valid and binding obligation of the Authority, enforceable against the Authority in accordance with its terms Under existing statutes, regulations, rulings and court decisions, and assuming compliance with the covenants mentioned below, interest on the Tax -Exempt Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 (the "Code") from the gross income of the owners thereof for federal income tax purposes. We are further of the opinion that under existing statutes, regulations, rulings and court decisions, the Tax -Exempt Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of the Code and, therefore, that interest on the Tax -Exempt Bonds will not be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. We are further of the opinion that interest on the Bonds is exempt from personal income taxes of the State of California under present state law. The Code imposes certain requirements that must be met subsequent to the issuance and delivery of the Tax -Exempt Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Non-compliance with such requirements could cause the interest on the Tax -Exempt E-2 Bonds to fail to be excluded from the gross income of the owners thereof retroactive to the date of issuance of the Tax -Exempt Bonds. Pursuant to the Indenture and the Lease, and in the Tax Certificate 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 regarding or affecting, the exclusion of interest on the Tax -Exempt Bonds from the gross income of the owners thereof for federal income tax purposes. In reaching our opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by each of the Authority and the City with such covenants. Further, except as stated in the preceding paragraph, we express no opinion as to any federal or state tax consequence of the receipt of interest on, or the ownership or disposition of, the Tax -Exempt Bonds. Furthermore, we express no opinion as to any federal, state or local tax law consequence with respect to the Tax -Exempt Bonds, or the interest thereon, if any action is taken with respect to the Tax -Exempt Bonds or the proceeds thereof predicated or permitted upon the advice or approval of other counsel. 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, E-3 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 fi^om DTC and the Authority 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. 1. 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. 2. 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. 3. 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 F-1 behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. 4. 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. 5. 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. 6. 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. 7. 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). 8. 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. 9. 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 F-2 that a successor depository is not obtained, certificates representing the Bonds are required to be printed and delivered. 10. 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. 11. 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. F-3 $ SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (RECREATIONAL FACILITY) SERIES 2020A SANTA CLARITA PUBLIC FINANCING AUTHORITY FEDERALLY TAXABLE LEASE REVENUE BONDS (RECREATIONAL FACILITY) SERIES 202OA-T BOND PURCHASE AGREEMENT , 2020 Santa Clarita Public Financing Authority 23920 Valencia Boulevard Santa Clarita, California 91355 City of Santa Clarita 23920 Valencia Boulevard Santa Clarita, California 91355 Ladies and Gentlemen: Raymond James & Associates, Inc. (the "Underwriter") hereby offers to enter into this Bond Purchase Agreement (the "Bond Purchase Agreement") with the Santa Clarita Public Financing Authority (the "Authority"), a joint exercise of powers entity duly organized and existing under the laws of the State of California (the "State"), and the City of Santa Clarita (the "City"), a general law city duly organized and existing under the laws of the State, which upon written acceptance of this offer will be binding upon the Authority, the City, and the Underwriter. This offer is made subject to the written acceptance of the Authority and the City on or before 11:59 p.m., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to the acceptance hereof by the Authority and the City. Capitalized terms used and not defined herein shall have the same meanings as set forth in the Indenture, dated as of October 1, 2020 (the "Indenture"), by and among the Authority, the City and U.S. Bank National Association, as trustee (the "Trustee"). Section 1. Purchase and Sale of the Bonds (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to sell and deliver to the Underwriter, all (but not less than all) of the $ aggregate principal amount of the Authority's Lease Revenue Bonds (Recreational Facility) Series 2020A (the "2020A Bonds") and $ aggregate principal amount of the Authority's Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T (the "2020A-T Bonds," and together with the 2020A Bonds, the "Bonds"). The Bonds will bear interest at the rates and will mature on the dates, and 4831-5220-8586.2 will be subject to redemption, all set forth on Schedule I attached hereto. The purchase price for the 2020A Bonds shall be $ , being the principal amount of the 2020A Bonds, plus original issue premium of $ , and less an Underwriter's discount of $ . The purchase price for the 202OA-T Bonds shall be $ being the principal amount of the 202OA-T Bonds, less an Underwriter's discount of $ (b) The Authority and the City each acknowledges and agrees that (1) the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm's-length commercial transaction between the Authority and the City, on one hand, and the Underwriter, on the other; (11) in connection with such transaction, including the process leading thereto, the Underwriter is acting solely as a principal and not as an agent or a fiduciary of the Authority or the City; (111) the Underwriter has neither assumed an advisory or fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Authority or the City on other matters) nor has it assumed any other contractual obligation to the Authority or the City except the obligations expressly set forth in this Bond Purchase Agreement; (iv) the Underwriter has financial and other interests that differ from those of the Authority and the City; and (v) the Authority and the City have each consulted with its own legal and financial advisors to the extent it deemed appropriate in connection with the offering of the Bonds. Section 2. Description and Purpose of the Bonds (a) The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable as provided in the Indenture. (b) The Bonds are authorized to be issued pursuant to the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the "Act"). The Bonds are limited obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from and secured by a pledge, charge and lien upon the Revenues (as defined in the Indenture), which are derived from Base Rental Payments and other payments made by the City and received by the Authority, and all interest or other investment income thereon, pursuant to the Lease Agreement, dated as of October 1, 2020 (the "Lease"), by and between the Authority and the City, and certain other moneys and securities held by the Trustee as provided in the Indenture. (c) The proceeds of the 2020 Bonds will be used to: (1) finance the costs of acquiring an approximately 93,000 square foot recreational facility and an approximately 4.4 acre parcel located at 27745 Smyth Drive within the City; and (11) pay the costs incurred with the issuance and sale of the Bonds. Section 3. Public Offering The Underwriter agrees to make a bona fide public offering of all the Bonds initially at the public offering prices (or yields) set forth on Schedule I attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Schedule I. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. 4831-5220-8586.2 Section 4. Delivery of Official Statement; Continuing Disclosure (a) The Authority and the City have delivered or caused to be delivered to the Underwriter prior to the execution of this Bond Purchase Agreement, copies of the preliminary official statement with respect to the Bonds, dated , 2020 (the "Preliminary Official Statement"). Such Preliminary Official Statement is the official statement deemed final by the City for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") and approved by the Authority and the City for distribution by the Underwriter by the Authority Resolution and the City Resolution (each as defined herein). As authorized by the Authority Resolution and the City Resolution, the Authority and the City hereby ratify and confirm their authorization of the use by the Underwriter before the date hereof of the Preliminary Official Statement. (b) Within seven (7) business days from the date hereof, and in any event not later than two business days prior to the Closing Date, the Authority and the City shall deliver to the Underwriter a final Official Statement, executed on behalf of the City by authorized representatives of the City and on behalf of the Authority by authorized representatives of the Authority, which shall include information permitted to be omitted from the Preliminary Official Statement by paragraph (b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the Authority, the City and the Underwriter (the "Final Official Statement") and such additional conformed copies thereof as the Underwriter may reasonably request to meet potential customer requests for copies of the Final Official Statement to comply with the Rule and rules of the Municipal Securities Rulemaking Board (the "MSRB"). It is acknowledged by the Authority and the City that the Underwriter may deliver the Preliminary Official Statement and a Final Official Statement electronically over the internet and in printed paper form. For purposes of this Bond Purchase Agreement, the printed paper form of the Preliminary Official Statement and the Final Official Statement are deemed controlling. The Underwriter agrees to file a copy of the Final Official Statement, including any supplements prepared by the City, with the MSRB on its Electronic Municipal Markets Access ("EMMA") system. The Final Official Statement shall be in substantially the same form as the Preliminary Official Statement and, other than information previously permitted to have been omitted by the Rule, the Authority and the City shall only make such other additions, deletions, revisions and recent developments in the Final Official Statement as shall be approved by the Underwriter. The Underwriter hereby agrees to cooperate and assist in the preparation of the Final Official Statement. The Authority and the City hereby agree to deliver to the Underwriter an electronic copy of the Final Official Statement in a form that permits the Underwriter to satisfy its obligations under the rules and regulations of the MSRB and the U.S. Securities and Exchange Commission ("SEC"). The Authority and the City hereby authorize the Underwriter to use the Final Official Statement and the information contained therein in connection with the offering and sale of the Bonds. The Final Official Statement, including the cover pages, the appendices thereto and all information incorporated therein by reference are hereinafter referred collectively to as the "Official Statement." (c) To enable the Underwriter to comply with the Rule, the City will execute a Continuing Disclosure Certificate concurrently with issuance of the Bonds substantially in the form attached as Appendix E to the Official Statement (the "Continuing Disclosure Certificate"). Section 5. Closing At 8:30 a.m. California time on , 2020, or such other time as shall be agreed upon by the Underwriter, the Authority and the City (the "Closing Date"), the City will deliver or cause to be delivered to the Underwriter at the offices of Norton Rose Fulbright US LLP, bond counsel to the Authority ("Bond Counsel") in Los Angeles, California (or such other location as may be designated by the Underwriter and approved by the Authority and the City) the closing documents hereinafter mentioned and, through the facilities of The Depository Trust Company, the Bonds in the form of registered book -entry bonds 4831-5220-8586.2 evidenced by one certificate for each maturity, interest rate and series of Bonds (which may be typewritten) in denominations of $5,000 or any multiple thereof, duly executed by the Authority and authenticated by the Trustee, and subject to the terms and conditions hereof the Underwriter will accept delivery of the Bonds in book -entry form, and the Underwriter will pay the purchase price of the Bonds set forth in Section I by Federal Funds wire (such delivery and payment being herein referred to as "Closing"). Section 6. Representations, Warranties and Agreements of the Authority The Authority represents, warrants and covenants with the Underwriter that: (a) the Authority is a joint exercise of powers entity duly organized and existing under the laws of the State with full legal right, power and authority to issue, sell and deliver the Bonds to the Underwriter pursuant to the Indenture, and execute, deliver and perform its obligations, as the case may be, under this Bond Purchase Agreement, the Indenture, Lease, the Site and Facility Lease, dated as of October 1, 2020 (the "Site Lease"), by and between the City and the Authority, the Assignment Agreement, dated as of October 1, 2020 (the "Assignment Agreement"), by and between the Authority and the Trustee, and the Bonds (collectively, the "Authority Legal Documents"), and to carry out and consummate all transactions contemplated by each of the aforesaid documents and the Official Statement; (b) Resolution No. adopted by the Authority on , 2020 approving and authorizing the issuance of the Bonds and the execution and delivery by the Authority of the Authority Legal Documents and the preparation and distribution of the Preliminary Official Statement and the Official Statement (the "Authority Resolution") was duly adopted at a meeting of the governing board of the Authority called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and is in full force and effect and has not been amended or repealed; (c) when delivered by the Authority and paid for by the Underwriter in accordance with the provisions of this Bond Purchase Agreement, the Bonds will have been duly authorized, executed and delivered and will constitute the valid and binding limited obligations of the Authority in conformity with, and entitled to the benefit and security of, the Indenture; (d) the Authority has duly authorized and approved the issuance of the Bonds and the execution and delivery of the Authority Legal Documents and when executed and delivered, the Authority Legal Documents, assuming due authorization, execution and delivery by the other respective parties thereto, as applicable, will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally; (e) at the date hereof and as of the Closing Date, except as otherwise disclosed in the Preliminary Official Statement and the Official Statement, the Authority will be in compliance with the covenants and agreements contained in the Authority Legal Documents, and no event of default and no event has occurred and is continuing which, with the passage of time or giving of notice, or both, would constitute an event of default thereunder shall have occurred and be continuing; (f) the Authority will comply with the requirements of the Tax Certificate executed by the Authority in connection with the delivery of the 2020A Bonds; (g) any certificate signed by any officer of the Authority and delivered to the Underwriter pursuant to the Authority Legal Documents shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein and that such officer shall have been duly authorized 4831-5220-8586.2 to execute the same; (h) the Indenture creates a valid pledge of and grant of a first, direct and exclusive charge and lien on the Revenues (as defined in the Indenture) purported to be pledged thereby, subject to no prior pledges, liens or security interests; (1) the information under the headings "THE AUTHORITY" and "LITIGATION" in the Preliminary Official Statement as of its date and as of the date hereof, and in the Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Official Statement contains and up to and including the Closing will contain no misstatement of any material fact and does not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading; (j) the Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds; (k) as of the time of acceptance hereof and as of the time of the Closing, to the best of its knowledge, the Authority is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable Judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority is a party or it or any of its assets is otherwise subject, and, to the best of its knowledge, no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach or default would materially adversely affect the security of the Bonds or the Authority's performance under the Authority Legal Documents; and, to the best of its knowledge, as of such times, except as disclosed in the Preliminary Official Statement and the Official Statement, the authorization, execution and delivery of the Authority Legal Documents and the Bonds and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance agreement or other instrument to which the Authority (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor, to the best of its knowledge, will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the Bonds and the Authority Legal Documents; and (1) as of the time of acceptance hereof and the Closing, except as disclosed in the Preliminary Official Statement and the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending (notice of which has been properly served on and received by the Authority) or, to the best of the Authority's knowledge after reasonable investigation, threatened in writing (i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (11) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance, sale or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, the Authority Legal Documents or the 4831-5220-8586.2 consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the 2020A Bonds from gross income for Federal income tax purposes or contesting the powers of the Authority or its authority to issue the Bonds; (111) which may result in any material adverse change relating to the Authority; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, to the best of its knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (1) through (iv) of this sentence. All representations, warranties and agreements of the Authority shall remain operative and in full force and effect, and shall survive the delivery of the Bonds. Section 7. Representations, Warranties and Agreements of the City The City represents, warrants and covenants with the Underwriter that: (a) the City is a general law city duly organized and existing under the laws of the State; (b) the City has full legal right, power and authority to execute, deliver and perform its obligations, as the case may be, under this Bond Purchase Agreement, the Indenture, the Lease, the Site Lease and the Continuing Disclosure Certificate (collectively, the "City Legal Documents") and to carry out and consummate all transactions contemplated by each of the aforesaid documents and the Official Statement; (c) Resolution No. adopted by the City Council of the City on 2020 approving and authorizing the execution and delivery by the City of the City Legal Documents and the preparation and distribution of the Preliminary Official Statement and the Official Statement (the "City Resolution") was duly adopted at a meeting of the City Council of the City called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and is in full force and effect and has not been amended or repealed; (d) by adoption of the City Resolution, the City has duly authorized and approved the execution and delivery by the City of the City Legal Documents and when executed and delivered, the City Legal Documents, assuming due authorization, execution and delivery by the other respective parties thereto, as applicable, will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally; (e) at the date hereof and as of the Closing Date, except as otherwise disclosed in the Preliminary Official Statement and the Official Statement, the City will be in compliance with the covenants and agreements contained in the City Legal Documents, and no event of default and no event has occurred and is continuing which, with the passage of time or giving of notice, or both, would constitute an event of default thereunder shall have occurred and be continuing; (f) the City will comply with the requirements of the Tax Certificate executed by the City in connection with the delivery of the 2020A Bonds; (g) any certificate signed by any officer of the City and delivered to the Underwriter pursuant 4831-5220-8586.2 to the City Legal Documents shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein and that such officer shall have been duly authorized to execute the same; (h) to the best of its knowledge, there is no public vote or referendum pending or proposed within the State, the results of which could materially adversely affect the transactions contemplated by the City Legal Documents or the Official Statement or the validity or enforceability of the Bonds; (1) the Lease creates a valid pledge of and grant of a first, direct and exclusive charge and lien on the Base Rental Payments (as defined in the Lease) purported to be pledged thereby, subject to no prior pledges, liens or security interests; (j) the Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Official Statement contains and up to and including the Closing will contain no misstatement of any material fact and does not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading (excluding therefrom the information relating to DTC and its book -entry only system and under the caption "UNDERWRITING," as to which no representations or warranties are made); (k) the City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not affect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds; (1) as of the time of acceptance hereof and as of the time of the Closing, to the best of its knowledge, the City is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable Judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument relating to the City to which the City is a parry or any of its assets is otherwise subject, and to the best of its knowledge, no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach or default would materially adversely affect the security of the Bonds or the City's performance under the City Legal Documents; and, to the best of its knowledge, as of such times, except as disclosed in the Preliminary Official Statement and the Official Statement, the authorization, execution and delivery of the City Legal Documents and the Bonds and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance agreement or other instrument relating to the City (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor, to the best of its knowledge, will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the Bonds and the City Legal Documents; (m) as of the time of acceptance hereof and the Closing, except as disclosed in the Preliminary Official Statement and the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending (notice of which has been properly served on and received by the City) or, to the best of the City's knowledge after 4831-5220-8586.2 reasonable investigation, threatened in writing (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (11) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance, sale or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, the City Legal Documents or the consummation of the transactions contemplated thereby or hereby; (111) which may result in any material adverse change relating to the City; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, to the best of its knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (1) through (iv) of this sentence; (n) for purposes of the Rule, the City has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriter, except for the information specifically permitted to be omitted by paragraph (b)(1) of the Rule; (o) except as otherwise disclosed in the Preliminary Official Statement and the Official Statement, the City has not previously failed to comply in any material respect with any continuing disclosure obligation undertaken pursuant to the Rule; and (p) except for information which is permitted to be omitted pursuant to the Rule, the Preliminary Official Statement is, as of its date and as of the date hereof (excluding therefrom the information relating to DTC and its book -entry only system, and under the caption "UNDERWRITING," as to which no representations or warranties are made) was and is true and correct in all material respects and did not and does not contain any untrue or misleading statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. All representations, warranties and agreements of the City shall remain operative and in full force and effect, and shall survive the delivery of the Bonds. Section 8. Conditions to the Obligations of the Underwriter The Underwriter hereby enters into this Bond Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein and the representations and warranties to be contained in the documents and instruments to be delivered on the Closing Date and upon the performance by the Authority, the City and the Trustee of their respective obligations both on and as of the date hereof. Accordingly, the Underwriter's obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy of the representations and warranties of the Authority and the City contained herein as of the date hereof and as of the Closing Date, to the accuracy of the statements of the officers and other officials of the Authority, the City and the Trustee made in any certificate or document furnished pursuant to the provisions hereof, to the performance by the Authority, the City and the Trustee of their respective obligations to be performed hereunder and under the Authority Legal Documents and the City Legal Documents to which it is a party at or prior to the date hereof and at or prior to the Closing Date, and also shall be subject to the following additional conditions: (a) On the Closing Date, the Authority Legal Documents shall have been duly authorized, executed and delivered by the Authority and the City Legal Documents shall have been duly authorized, 4831-5220-8586.2 executed and delivered by the City, all in substantially the forms heretofore submitted to the Underwriter, with only such changes as shall have been agreed to in writing by the Underwriter, and shall be in full force and effect; and there shall be in full force and effect such resolutions of the governing board of the Authority and the City Council of the City as, in the opinion of the Bond Counsel, shall be necessary or appropriate in connection with the transactions contemplated hereby; (b) On the Closing Date, all necessary action of the Authority and the City relating to the issuance and sale of the Bonds will have been taken and will be in full force and effect and will not have been amended, modified or supplemented; (c) On or prior to the Closing Date, the Underwriter shall have received the following documents, in each case satisfactory in form and substance to the Underwriter: (1) Authority Agreements, Authority Resolution, and Joint Powers Agreement. The Authority Agreements, each duly executed and delivered by the respective parties thereto, and certified copies of the Authority Resolution and the Joint Powers Agreement; (11) City Agreements and City Resolution. The City Agreements, each duly executed by the respective parties thereto, and a certified copy of the City Resolution (defined herein); (111) Official Statement. A copy of the Official Statement, executed by an authorized officer of the Authority and of the City; (iv) Opinion of Bond Counsel. The approving opinion, dated the date hereof and addressed to the Authority, of Bond Counsel in substantially the form of Appendix D to the Official Statement; (v) Supplemental Opinion ofBond Counsel. A supplemental opinion of Bond Counsel addressed to the Underwriter in form and substance acceptable to the Underwriter, and dated the date of the Closing substantially in the form attached as Exhibit B; (vi) Defeasance Opinion of Bond Counsel. A defeasance opinion of Bond Counsel, dated the Closing Date, and addressed to U.S. Bank National Association, as trustee for the Prior Bonds, in the form and substance acceptable to the Underwriter; (vii) Letter of Disclosure Counsel. A letter of Norton Rose Fulbright US LLP, as Disclosure Counsel, dated the Closing Date, and addressed to the Underwriter, the Authority and the City substantially in the form attached hereto as Exhibit C; (viii) Opinion o Authority Counsel. An opinion of the City Attorney, as Counsel to the Authority dated the Closing Date and addressed to the Underwriter, in form and substance similar to the opinion of City Attorney set forth in (ix) below; (ix) Opinion of the City Attorney. An opinion of the City Attorney to the City dated the Closing Date and addressed to the Underwriter, to the effect that: (A) the City is a general law city duly organized and existing under the laws of the State; (B) the City Resolution was duly adopted at a meeting of the City Council of the City that was called and held pursuant to law and with all public notice required by law 4831-5220-8586.2 and at which a quorum was present and acting throughout, and is in full force and effect and has not been amended or repealed; (C) other than as otherwise disclosed in the Preliminary Official Statement and the Official Statement, and to the best of such counsel's knowledge, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending (notice of which has been properly served on and received by the City) or threatened against or affecting the City, (1) to restrain or enjoin the execution, delivery or sale of the Bonds or the collection or payment of Revenues that are the source of security under the Lease, or the pledge thereof, or (11) contesting the validity or enforceability of the City Legal Documents, (111) contesting the existence of the City or the title of any official of the City to such person's office, (iv) contesting the power of the City or its authority with respect to the City Legal Documents,(v) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto, or (vi) asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (D) to the best of such counsel's knowledge, the execution and delivery by the City of the City Legal Documents, the adoption of the City Resolution, and compliance by the City with the provisions of the foregoing, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the City a breach or default under any agreement or other instrument to which the City is a party or by which it is bound; (x) Opinion of Underwriter's Counsel. The opinion of Nixon Peabody LLP ("Underwriter's Counsel"), dated the Closing Date and addressed to the Underwriter, to the effect that, the on the basis of the information made available to them, no facts came to their attention in connection with the preparation of the Official Statement which cause them to believe that the Official Statement as of its date (excluding therefrom financial and statistical data, projections, statements relating to DTC, Cede & Co. and the operation of the book -entry system and the appendices, as to all of which no view need be expressed) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect, and the Continuing Disclosure Certificate provides a suitable basis for the Underwriter, in connection with the Offering (as defined in Rule 15c2-12) of the Bonds to make a reasonable determination as required by section (b)(5) of such Rule; (xi) Certificate of the Authority. A certificate of the Authority, dated the Closing Date, to the effect that: (a) by all necessary official action of the Authority, the Authority has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations contained in the Authority Legal Documents, and as of the date of Closing, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded; (b) when executed and delivered, the Authority Legal Documents will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by 4831-5220-8586.2 bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally or by limitations on legal remedies against public agencies in the State; (c) the Authority has complied, and will at the Closing be in compliance in all respects, with the terms of the Authority Legal Documents; (d) the representations, warranties and covenants of the Authority contained herein are true and correct in all materials respects on and as of the date of Closing as if made on the date of Closing and the Authority has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the Authority at or prior to the Closing Date; (e) no event affecting the Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (f) except as otherwise disclosed in the Official Statement and to the best knowledge of such signing officer after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending (notice of which has been properly served on and received by the Authority) or threatened in writing against the Authority, challenging the creation, organization or existence of the Authority, or the validity of the Authority Legal Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the Authority Legal Documents or contesting the authority of the Authority to enter into or perform its obligations under any of the Authority Legal Documents, or under which a determination adverse to the Authority would have a material adverse effect upon the financial condition or the revenues of the Authority; NO Certificate of the CitX. A certificate of the City, dated the Closing Date, to the effect that: (a) by all necessary official action of the City, the City has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations contained in the City Legal Documents, and as of the date of Closing, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded; (b) when executed and delivered, the City Legal Documents will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally or by limitations on legal remedies against public agencies in the State; (c) the City has complied, and will at the Closing be in compliance in all respects, with the terms of the City Legal Documents; (d) the representations, warranties and covenants of the City contained herein are true and correct in all materials respects on and as of the date of Closing as if made on 4831-5220-8586.2 the date of Closing and the City has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (e) no event affecting the City has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (f) except as otherwise disclosed in the Official Statement and to the best knowledge of such signing officer after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending (notice of which has been properly served on and received by the City) or threatened in writing against the City, challenging the creation, organization or existence of the City, or the validity of the City Legal Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the City Legal Documents or contesting the City of the City to enter into or perform its obligations under any of the City Legal Documents, or under which a determination adverse to the City would have a material adverse effect upon the financial condition or the revenues of the City; (xiii) Certificate of the Trustee. A certificate of a duly authorized official of the Trustee, dated the Closing Date, to the effect that: (A) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States, having the full power and being qualified to enter into and perform its duties under the Indenture and to authenticate and deliver the Bonds to the Underwriter; (B) the Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriter pursuant to the Indenture; (C) when delivered to and paid for by the Underwriter at the Closing, the Bonds will have been duly authenticated and delivered by the Trustee; (D) the execution and delivery of the Indenture and compliance with the provisions on the Trustee's part contained therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the Trustee is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or blue sky laws or regulations), which conflict, breach or default would materially impair the ability of the Trustee to perform its obligations under the Indenture, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the lien created by the Indenture under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Indenture; and (E) to the best of the knowledge of the Trustee, it has not been served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or body, nor is any such action or other proceeding threatened against the Trustee, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain, or enjoining the execution and delivery of the Bonds or the collection of revenues to be applied to pay the principal, premium, if any, and interest with respect to the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Indenture, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or funding would materially adversely affect the validity or enforceability of the Indenture or the power and authority of the Trustee to enter into and perform 4831-5220-8586.2 its duties under the Indenture and to authenticate and deliver the Bonds to or upon the order of the Underwriter; (xiv) General Resolution of the Trustee. A certified copy of the general resolution of the Trustee authorizing the execution and delivery of the Indenture; (xv) Opinion of Counsel to the Trustee. The opinion, dated the Closing Date and addressed to the Underwriter and the City, of Counsel to the Trustee, to the effect that: (A) the Trustee has been duly organized as a national banking association under the laws of the United States with trust powers, having full power and authority to enter into and to perform its duties as Trustee under the Indenture; (B) the Trustee has duly authorized, executed and delivered the Indenture, and by all proper corporate action has authorized the acceptance of the trusts of the Indenture; (C) the Indenture constitutes the legally valid and binding agreement of the Trustee, enforceable against the Trustee in accordance with its terms, and (D) the Bonds have been validly authenticated and delivered by the Trustee to the Underwriter; (xvi) Tax Certificate. A Tax Certificate of the Authority and the City in form and substance acceptable to Bond Counsel; (xvii) Evidence of Insurance. Evidence of insurance on the Leased Property as required by Article VI of the Lease; (xviii) Title Insurance. A copy of the pro forma title insurance policy committed to be issued by the title insurance company; (xix) IRS Form 8038-G. Evidence that the federal tax information form 8038-G has been prepared for filing; (xx) MACNotices of Sale. A copy of the Notice of Proposed Sale and Report of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855(g) of the California Government Code; (xxi) DTC Blanket Letter of Roresentations. A copy of the Authority's executed Blanket Letter of Representation to The Depository Trust Company; (xxii) Rating Letter. Evidence of a rating of " " by S&P Global Ratings ("S&P"), being in full force and effect as of the Closing Date; and (xxiii) Additional Documents. Such additional legal opinions, certificates, instruments or evidences thereof and other documents as the Counsel to the Underwriter or Bond Counsel may request to evidence the due authorization, execution and delivery of the Bonds and the conformity of the Bonds, the Authority Legal Documents and the City Legal Documents with the terms of the Bonds and the descriptions thereof in the Official Statement; (d) the Underwriter shall have the right to terminate this Bond Purchase Agreement, without liability therefor, by notification to the Authority and the City if at any time at or prior to the Closing: (1) any event shall occur or facts are discovered which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or 4831-5220-8586.2 (11) The market price or marketability or the ability of the Underwriter to enforce contracts for the sale of the Bonds, at the initial offering prices set forth in the Official Statement, shall, in the reasonable judgment of the Underwriter, have been materially adversely affected by reason of any of the following: (1) legislation enacted or introduced in the Congress or recommended for passage by the President of the United States, or a decision rendered by a court established under Article III of the Constitution of the United States or by the United States Tax Court, with the purpose or effect, directly or indirectly, of causing inclusion in gross income for purposes of federal income taxation of the interest received by owners of the Bonds, or an order, ruling, regulation (final, temporary or proposed) or official statement issued or made: (a) by or on behalf of the United States Treasury Department or by or on behalf of the Internal Revenue Service, with the purpose or effect, directly or indirectly, of causing inclusion in gross income for purposes of federal income taxation of the interest received by the owners of the Bonds; or (b) by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, to the effect that the Bonds, or obligations of the general character of the Bonds, including any and all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended; (2) any outbreak or escalation of hostilities affecting the United States, the declaration of a national or international emergency, war or engagement in, or escalation of, major military hostilities by the United States or the occurrence of any other national emergency or calamity relating to the effective operation of the government or the financial community in the United States; (3) the declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading on any national securities exchange or any governmental authority securities exchange; (4) the imposition by the New York Stock Exchange, other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds, or obligations of the general character of the Bonds, or securities generally, or the material increase of any such restrictions now in force; (5) an order, decree or injunction of any court of competent jurisdiction, or order, filing, regulation or official statement by the Securities and Exchange Commission, or any other governmental agency issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws, as amended and then in effect; (6) there shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal, or negative change in credit watch status by any national rating service to the outstanding indebtedness of the Authority or the City; (7) any event occurring, or information becoming known which in the reasonable judgment of the Underwriter makes untrue in any material adverse respect any 4831-5220-8586.2 statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, in either such event, the Authority or the City refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as supplemented to supply such statement or information, or to the effect of the Official Statement so supplemented is to materially adversely affect the market price of marketability or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (8) the occurrence, since the date hereof, of any materially adverse change in the affairs or financial condition of the City; (9) the suspension by the SEC of the trading in the outstanding bonds of the Authority or the City; (10) any amendment shall have been made to the federal or State Constitution or action by any federal or State court, legislative regulatory body or authority materially adversely affecting the tax status of the Authority or the City its property, income securities (interest thereon); (11) other disruptive events, occurrences or conditions in the securities or debt markets; (12) the purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; or (13) legislation enacted by the legislature of the State, or a decision rendered by a court of the State, or a ruling, order, or regulation (final or temporary) made by State authority, which would have the effect of changing, directly or indirectly, the State tax consequences of interest on obligations of the general character of the Bonds. If the Authority or the City shall be unable to satisfy the conditions contained in this Bond Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the Authority or the City shall be under further obligation hereunder, except as further set forth in Section 9 and Section 10. Section 9. Expenses (a) The Underwriter shall be under no obligation to pay, and the Authority shall pay or cause to be paid the expenses incident to the performance of the obligations of the City hereunder including but not limited to (1) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the Authority Legal Documents and the City Legal Documents and the cost of preparing, printing, issuing and delivering the definitive Bonds, (11) the fees and disbursements of the Municipal Advisor, accountants, or other experts or consultants retained by the Authority or the City, (111) the fees and disbursements of counsel to the Authority and to the City, and Bond Counsel, (iv) the fees and disbursements of Disclosure Counsel, (v) the fees and disbursements of the Trustee, and (vi) the cost of preparation and printing of the Preliminary Official Statement and any supplements and amendments 4831-5220-8586.2 thereto and the cost of preparation and printing of the Official Statement and any supplements and amendments thereto, including the requisite number of copies thereof for distribution by the Underwriter. The Authority and the Underwriter intend that the Authority will pay all expenses of City's employees that are incidental to implementing this Bond Purchase Agreement, including, but not limited to, meals, transportation, and lodging, of those employees, and the Authority shall reimburse the Underwriter if the Underwriter pays for any of such expenses on behalf of the City. (b) The Underwriter shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to: (1) the fees and disbursements of Underwriter's Counsel; (11) all advertising expenses in connection with the offering of the Bonds; and (111) all out-of- pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds (including travel and other expenses, CDIAC and blue sky filing fees, CUSIP Service Bureau fees, and any other fees and expenses), except as provided in Section 9(a) or as otherwise agreed to by the Underwriter and the City from the Underwriter's discount set forth in Section 1. Section 10. Covenants of the City The City covenants with the Underwriter that: (a) If between the date hereof and the date which is not less than 25 days after the End of the Underwriting Period for the Bonds (as defined below), an event occurs, or facts or conditions become known of which the City has knowledge which in the opinion of counsel to the Underwriter or counsel to the City, might or would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was made, not misleading, the City will notify the Underwriter, and, if in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will forthwith prepare and furnish to the Underwriter (at the expense of the City) a reasonable number of copies of an amendment of or supplement to the Official Statement (in the form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to prospective purchasers, not misleading. If such notification shall be after the Closing, the City shall forthwith provide to the Underwriter such certificates as the Underwriter may deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. For the purposes of this subsection, between the date hereof and the date which is 25 days after the End of the Underwriting Period for the Bonds, the City will furnish such information with respect to itself as the Underwriter may from time to time reasonably request; (b) If the information contained in the Official Statement is amended or supplemented pursuant to subparagraph (a) of this Section 10, at the time of such supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date which is 25 days after the "End of the Underwriting Period" for the Bonds, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein), excluding therefrom the information relating to DTC and its book -entry only system and under the caption "UNDERWRITING"), will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was made, not misleading; (c) As used herein and for the purposes of the foregoing, the term "End of Underwriting Period" for the Bonds shall mean the earlier of (1) the Closing Date unless the City shall have been notified 4831-5220-8586.2 in writing to the contrary by the Underwriter on or prior to the Closing Date or (11) the date on which the End of the Underwriting Period for the Bonds has occurred under the Rule, provided, however, that the City may treat as the End of the Underwriting Period for the Bonds the date specified as such in a notice from the Underwriter stating the date which is the End of the Underwriting Period; (d) The City will advise the Underwriter immediately of receipt by the City of any notification with respect to the suspension of the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose; (e) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; provided, however, that the City shall not be required to register as a dealer or broker or foreign corporation in any such state or jurisdiction or consent to service of process therein; (f) The City will perform all actions as may be requested by the Underwriter (including delivery of an appropriate certificate with respect to the Preliminary Official Statement) in order for the Underwriter to comply with the applicable provisions of the Rule; and (g) Between the date hereof and the Closing Date, without the prior written consent of the Underwriter, the City will not have issued any bonds, notes, or other obligations for borrowed money, in each case payable from Revenues. Section 11. Establishment of Issue Price (a) The Underwriter agrees to assist the Authority in establishing the issue price of the 2020A Bonds and shall execute and deliver to the Authority at Closing an "issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit A, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the 2020A Bonds. All actions to be taken by the Authority under this section to establish the issue price of the 2020A Bonds may be taken on behalf of the Authority by Columbia Capital Management, LLC (the "Municipal Advisor") to the Authority and any notice or report to be provided to the Authority may be provided to the Municipal Advisor. (b) Except as otherwise set forth in Schedule A to Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the 2020A Bonds (the "10% test" is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Bond Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of 2020A Bonds. (c) The Underwriter confirms that it has offered the 2020A Bonds to the public on or before the date of this Bond Purchase Agreement at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in Schedule A to Exhibit A attached hereto, except as otherwise set forth therein. Schedule A to Exhibit A also sets forth, as of the date of this Bond Purchase Agreement, the maturities, if any, of the 2020A Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold -the -offering -price rule"). So long as the hold-the-offering- 4831-5220-8586.2 price rule remains applicable to any maturity of the 2020A Bonds, the Underwriter will neither offer nor sell unsold 2020A Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5th) business day after the sale date; or (11) the date on which the Underwriter has sold at least 10% of that maturity of the 2020A Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the 2020A Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. (e) The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the 2020A Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker -dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold 2020A Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the 2020A Bonds of that maturity or all 2020A Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule, if applicable, in each case if and for so long as directed by the Underwriter. The Authority acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on (1) in the event a selling group has been created in connection with the initial sale of the 2020A Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the - offering -price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (11) in the event that a retail distribution agreement was employed in connection with the initial sale of the 2020A Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the hold -the -offering -price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker -dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold -the -offering -price rule as applicable to the 2020A Bonds. (f) The Underwriter acknowledges that sales of any 2020A Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: (1) "public" means any person other than an underwriter or a related party, (11) "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 2020A 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 2020A 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 2020A Bonds to the public), (111) a purchaser of any of the 2020A Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (1) 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), (11) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct 4831-5220-8586.2 ownership by one partnership of another), or (111) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date of execution of this Bond Purchase Agreement by all parties. Section 12. Notices Any notice or other communication to be given to the Authority and the City under this Bond Purchase Agreement may be given by delivering the same in writing at the Authority's and the City's addresses set forth above and any such notice or other communication to be given to the Underwriter shall be delivered to the following address: Raymond James & Associates, Inc. 39 E. Union Street Pasadena, CA 91103 Attention: Jose Vera, Managing Director Telephone: (213) 629-6077 Section 13. Parties in Interest This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter and no other person shall acquire or have any right hereunder or by virtue hereof. All the representations and warranties of the parties hereto contained in this Bond Purchase Agreement shall remain operative and in full force and effect until the earlier of (a) delivery of and payment for the Bonds hereunder and (b) any termination of this Bond Purchase Agreement. Section 14. Execution in Counterparts; Electronic Transmission This Bond Purchase Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute the Purchase Agreement by signing any such counterpart. Section 15. Headings The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be part hereof. Section 16. Effectiveness This Bond Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution by the Underwriter and the acceptance hereof by the duly authorized representatives of the Authority and the City and shall be valid and enforceable as of the time of such acceptance. Section 17. Choice of Law The validity, interpretation and performance of this Bond Purchase Agreement shall be governed by the laws of the State, without regard to conflicts of law. 4831-5220-8586.2 Section 18. Severability In the event any provision of this Bond Purchase Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 19. Entire Agreement The Bond Purchase Agreement, when accepted by the Authority and the City in writing as heretofore specified, shall constitute the entire agreement among the Authority, the City and the Underwriter. Section 20. Headings The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be part hereof. Section 21. No Assignment The rights and obligations created by this Bond Purchase Agreement shall not be subject to assignment by the Underwriter, the Authority or the City without the prior written consent of the other parties hereto. [The remainder of this page intentionally left blank] 4831-5220-8586.2 IN WITNESS WHEREOF, the parties hereto, by their representatives thereunto duly authorized, have executed and delivered this Agreement, effective as of the day and year first above written. Accepted at [AM/PM] as of the date hereof: SANTA CLARITA PUBLIC FINANCING AUTHORITY Authorized Signatory CITY OF SANTA CLARITA Authorized Signatory RAYMOND JAMES & ASSOCIATES, INC. Authorized Signatory 4831-5220-8586.2 SCHEDULE I SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (RECREATIONAL FACILITY) SERIES 2020A Maturity Date (June 1) Principal Amount [TO COME] Interest Rate Yield Price REDEMPTION PROVISIONS 4831-5220-8586.2 SANTA CLARITA PUBLIC FINANCING AUTHORITY FEDERALLY TAXABLE LEASE REVENUE BONDS (RECREATIONAL FACILITY) SERIES 202OA-T Maturity Date (June 1) Principal Amount [TO COME] Interest Rate Yield Price REDEMPTION PROVISIONS 4831-5220-8586.2 EXHIBIT A ISSUE PRICE CERTIFICATE SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (RECREATIONAL FACILITY) SERIES 2020A ISSUE PRICE CERTIFICATE The undersigned, on behalf of Raymond James & Associates, Inc. (the "Underwriter"), hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the "Bonds"). 1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A. 2. Initial Offering Price of the Hold -the -Offering -Price Maturities. (a) The Underwriter 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 dated , 2020, among the issuer (as defined herein), the City of Santa Clarita and the Underwriter, the Underwriter has agreed in writing that, (1) for each Maturity of the Hold -the -Offering -Price Maturities, it 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 (11) 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) has 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. 3. Defined Terms. (a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the "General Rule Maturities." (b) Hold -the -Offering -Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the "Hold -the -Offering -Price Maturities." (c) 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 (1) the close of the fifth business day after the 4831-5220-8586.2 Sale Date (i.e. , 2020), or (11) the date on which the Underwriter has 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. (d) Issuer means the Santa Clarita Public Financing Authority. (e) 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. (f) 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. (g) Related Party means any entity if an Underwriter and such entity are subject, directly or indirectly, to (1) more than 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), (11) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (111) 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). (h) 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 , 2020. (1) Underwriter means (1) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (11) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) 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 representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Underwriter's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Norton Rose Fulbright US LLP, Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of Internal Revenue Service Form 8038-G, and other federal income tax advice it may give to the Issuer from time to time relating to the Bonds. Except as expressly set forth above, the certifications set forth herein may not be relied upon or used by any third party or for any other purpose. Dated: , 2020 RAYMOND JAMES & ASSOCIATES, INC. 4831-5220-8586.2 Name: 4831-5220-8586.2 SCHEDULE A SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING PRICES OF THE HOLD -THE -OFFERING -PRICE MATURITIES Maturity Hold -the - Date Offering Yield to Call Call Premium (June 1) Amount Rate Yield Price Price Maturity Date Price (Discount) 4831-5220-8586.2 SCHEDULE B PRICING WIRE OR EQUIVALENT COMMUNICATION 4831-5220-8586.2 I M 111.] 1101.1 FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL 2020 Raymond James & Associates, Inc. Pasadena, California Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T (Supplemental Opinion) Ladies and Gentlemen: This letter is addressed to you, as Underwriter, pursuant to Section 8(c)(v) of the Bond Purchase Agreement, dated , 2020 (the "Purchase Agreement"), among you, the Santa Clarita Public Financing Authority (the "Authority") and the City of Santa Clarita (the "City"), providing for the purchase of the above captioned bonds (the "Bonds"). The Bonds are being issued pursuant to the Indenture, dated as of October 1, 2020 (the "Indenture"), among the Authority, the City and U.S. Bank National Association, as trustee (the "Trustee"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, in the Purchase Agreement. We have delivered our final legal opinion (the "Bond Opinion") as bond counsel to the Authority concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the Authority. You may rely on such opinion as though the same were addressed to you. In connection with our role as bond counsel to the Authority, we have reviewed the Purchase Agreement, the Indenture, the Lease, the Site Lease, the Tax Certificate, opinions of counsel to the Authority, the City, the Trustee and others, certificates of the Authority, the City, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to provide the opinions or conclusions set forth herein. The opinions and conclusions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions or conclusions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority and the City. We have assumed, without undertaking to verify, the accuracy of the factual matters 4831-5220-8586.2 represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the third paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such documents. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Lease, the Site Lease, the Tax Certificate and the Purchase Agreement and their enforceability may be subject to bankruptcy, insolvency, reorganization, receivership, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities and joint powers agencies in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinions with respect to the state or quality of title to or interest in any real or personal property described in or as subject to the lien of Lease, the Site Lease or the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such property. Finally, we undertake no responsibility for the accuracy, except as expressly set forth in numbered paragraph 3 below, completeness or fairness of the Official Statement dated , 2020 (the "Official Statement") or other offering material relating to the Bonds and express no opinion relating thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions or conclusions: 1. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. 2. The Purchase Agreement has been duly executed and delivered by, and is a valid and binding agreement of, the Authority and the City. 3. The statements contained in the Official Statement under the captions "DESCRIPTION OF THE BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," "TAX MATTERS," "APPENDIX CSUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS" and APPENDIX D — "FORM OF OPINION OF BOND COUNSEL," excluding any material that may be treated as included under such captions by cross reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture, the Lease and the Site Lease, and the form and content of our Bond Opinion, are accurate in all material respects. 4831-5220-8586.2 This letter is furnished by us as bond counsel to the Authority. No attorney -client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This letter is delivered to you as Underwriter of the Bonds, is solely for your benefit as such Underwriter in connection with the original issuance of the Bonds on the date hereof, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. Very truly yours, 4831-5220-8586.2 EXHIBIT C'. FORM OF OPINION OF DISCLOSURE COUNSEL 2020 Raymond James & Associates, Inc. Pasadena, California Santa Clarita Public Financing Authority Santa Clarita, California City of Santa Clarita Santa Clarita, California Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility) Series 2020A Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 202OA-T Ladies and Gentlemen: [TO COME] Respectfully submitted, 4831-5220-8586.2