HomeMy WebLinkAbout2008-05-13 - AGENDA REPORTS - SERIES 2008 TAX BONDS (2)Agenda Item:X74 Z
CITY OF SANTA CLARITA
JOINT CITY COUNCIL/REDEVELOPMENT AGENCY
AGENDA REPORT
City Manager Approval:
NEW BUSINESS Item to be presented by: Darren Hernandez
DATE:
May 13, 2008
SUBJECT: PROPOSED ISSUANCE BY THE CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY OF ITS TAX ALLOCATION
BONDS, SERIES 2008 (NEWHALL REDEVELOPMENT
PROJECT) IN A PRINCIPAL AMOUNT NOT TO EXCEED $35
MILLION, AND ITS HOUSING SET-ASIDE TAX ALLOCATION
BONDS, SERIES 2008, IN A AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $12 MILLION
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
1. City Council: Adopt the following resolutions:
Resolution of the City Council Approving the Issuance, Sale, and Delivery by the City of
Santa Clarita Redevelopment Agency of its Tax Allocation Bonds, Series 2008 (Newhall
Redevelopment Project Area)
Resolution of the City Council Approving the Issuance, Sale, and Delivery by the City of
Santa Clarita Redevelopment Agency of its Housing Set -Aside Tax Allocation Bonds, Series
2008
2. Redevelopment Agency: Adopt the following resolutions:
Resolution of the Agency Authorizing the Issuance, Sale, and Delivery of the Agency's Tax
Allocation Bonds, Series 2008; Approving the Execution and Delivery of an Indenture, Sale
Documents, and a Continuing Disclosure Agreement; Approving the Form of a Preliminary
Official Statement;' and Authorizing Certain Other Actions in Connection Therewith
Resolution Authorizing the Issuance, Sale, and Delivery of the Agency's Housing Set -Aside
960, 0 �.-- 3? As, , �D,4
Adopted: Rcst, RDA W -cp
Tax Allocation Bonds, Series 2008; Approving the Execution and Delivery of a Housing
Indenture, Sale Documents, and a Continuing Disclosure Agreement; Approving the Form of
a Preliminary Official Statement; and Authorizing Certain Other Actions in Connection
Therewith
BACKGROUND
Pursuant to California Community Redevelopment Law (codified in Part 1 of Division 24 of the
California Health and Safety Code) (the "Redevelopment Law"), it is proposed that the City of
Santa Clarita Redevelopment Agency (the "Agency") issue its first bond issues secured by tax
increment in the Newhall Redevelopment Project Area (the "Project Area"). It is proposed that
the Agency issue approximately $28.6 million in Tax Allocation Bonds (the "Non -Housing
Bonds") to fund certain redevelopment activities within the Project Area and issue approximately
$8.6 million in Housing Set -Aside Tax Allocation Bonds (the "Housing Bonds") to fund certain
housing projects and programs of the Agency.
The Agency began receiving tax increment in 1998-99 from its only project area, the Newhall
Redevelopment Project Area. Staff, the redevelopment consultant, and financial advisor have
concluded the Project Area is now in a strong position to issue its first debt due to the growth in
tax increment, the need for the unfunded projects, and relatively low interest rates.
The proceeds of the Non -Housing Bond issue would be used to fund a) redevelopment projects,
b) a reserve fund, and c) the cost of issuing the Non -Housing Bonds, including the possible
payment of bond insurance. The net proceeds of the Non -Housing Bonds are expected to be
approximately $26.3 million, and the maximum annual debt service is expected to be $1.8
million. The proposed final bond term is 2042.
The proceeds of the Housing Bond issue would be used to fund a) housing projects and
programs, b) a reserve fund, and c) costs of issuing the Housing Bonds, including the possible
payment of bond insurance. The net proceeds of the Housing Bonds are expected to be
approximately $8 million. The maximum annual debt service for the Housing Bonds is
$540,000. The proposed final bond term is 2042.
Based upon existing revenues, the debt coverage covenants on the Non -Housing Bonds will be
145%, and the Housing Bonds will be 135%. The Non -Housing Bonds would be repaid from the
receipt of future tax increment, excluding amounts for the Housing Set -Aside fund, county
collection charges, and any unsubordinated pass-throughs to other taxing agencies. Pursuant to
Redevelopment Law, the Agency has requested subordinations and should obtain all
subordinations on its pass-through agreements by May 16, other than certain payments due to the
Castaic Lake Water Agency. The Housing Bonds will be repaid from amounts in the Housing
Set -Aside Fund. No growth in tax revenues is required to repay the bond debt. The Agency's
debt to the City would be subordinate to the bonds.
The Agency applied for a bond rating from Standard and Poor's Ratings Service and received a
rating of "A-" on both the Housing Bond Series and the Non -Housing Bond Series. Bond
insurance has been applied for and approved. If bond insurance is used, the Bonds will be rated
"AAA" by Standard and Poor's Ratings Service and "Aaa" by Moody's Investors Service. It is
proposed that both Series of Bond be sold at competitive bid in early June. Based upon current
market interest rates, the Agency can expect an average interest rate of under 5.5% on the Bonds.
Actual interest costs will depend on market conditions at time of sale.
A resolution of the Agency for each of the bond issuance is attached. The Non -Housing
Resolution would authorize the issuance of not to exceed $35 million of tax allocation bonds by
the Agency. The Housing Resolution would authorize the issuance of not to exceed $12 million
of housing set-aside tax allocation bonds by the Agency. Both issues of Bonds will be sold on a
competitive basis at true interest cost of not to exceed 6.5%, with a bidder's discount of not to
exceed 1.5%. The sale of both issues of the Bonds is scheduled for early June at the offices of
C.M. de Crinis & Co., at which time the Executive Director or Treasurer will award each issue of
the Bonds to the best bidder upon review of the bids with the Agency's financial advisor.
Each Resolution also a) approves the form of the Notice of Sale for its issue of Bonds and b)
approves the forms and authorizes the execution of a Preliminary Official Statement, an
Indenture, and a Continuing Disclosure Agreement. Each Preliminary Official Statement is the
offering document distributed to the public which describes the financing, the respective issue of
Bonds, the Newhall Redevelopment Project Area, the Agency, and other material facts. Each
Indenture is the contract with the bondholders and contains the terms of the respective issue of
Bonds, the duties of a trustee, and the covenants and agreements of the Agency with respect to
said issue of Bonds. Each Continuing Disclosure Agreement sets forth the information which the
Agency agrees to make available on an annual basis to the public.
Pursuant to redevelopment law, the Agency must obtain approval of the City prior to issuing its
bonds. Therefore, a resolution of the City approving the bond issues is attached.
No further official action is required of the Board of the Agency or the City Council to issue the
bonds after adoption of the above-described resolutions.
More specific details of the financing can be found in the drafts of the documents referenced
above.
City Council
Adoption of the attached City Non -Housing Bond Resolution approves the issuance by the
Agency of the Non -Housing Bonds.
Adoption of the attached City Housing Bond Resolution approves the issuance by the Agency of
the Housing Bonds.
Redevelopment Azency
Adoption of the Agency Non -Housing Resolution accepts the following documents:
1. Indenture
2. Sale Documents
3. Preliminary Official Statement, including Continuing Disclosure Agreement as
Appendix thereto
Adoption of the Agency Housing Resolution accepts the following documents:
1. Indenture
2. Sale Documents
3. Preliminary Official Statement, including Continuing Disclosure Agreement as
Appendix thereto
ALTERNATIVE ACTIONS
1. The City Council/Redevelopment Agency may choose not to have the Agency issue the
Bonds.
2. Other action as determined by the City Council/Redevelopment Agency.
FISCAL IMPACT
The net proceeds of the Non -Housing Bonds to the Agency are expected to be approximately
$26.3 million, and the maximum annual debt service is expected to be $1.8 million.
The net proceeds of the Housing Bonds to the Agency are expected to be approximately $8
million. The maximum annual debt service for the Housing Bonds is $540,000.
ATTACHMENTS
City Resolution - Housing
City Resolution - Non -Housing
Agency Resolution - Non -Housing
Agency Resolution - Housing
Housing Indenture
Indenture - Non -Housing
Housing NOS
Non -Housing NOS
Housing POS
Non -Housing POS
Notice of Intention to Sell Bonds
Notice of Intention to Sell Housing
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA CLARITA, CALIFORNIA, APPROVING THE ISSUANCE,
SALE AND DELIVERY BY THE CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY OF ITS HOUSING SET-ASIDE TAX
ALLOCATION BONDS, SERIES 2008
WHEREAS, the City of Santa Clarita Redevelopment Agency (the "Agency") is
authorized pursuant to the Community Redevelopment Law, being Part 1 of Division 24
(commencing with Section 33000) of the Health and Safety Code of the State of California (the
"Law") and Part 1.7 of Division 24 of the Health and Safety Code of the State of California to
incur indebtedness for the purpose of financing and refinancing certain redevelopment activities
within and of benefit to its Newhall Redevelopment Project Area (the "Project Area"); and
WHEREAS, to provide funds -to finance certain housing activities, projects, and programs
of benefit to the community, the Agency has determined to issue bonds pursuant to the Housing
Indenture, dated as of June 1, 2008, by and between the Agency and the Trustee, to be designated
as the "City of Santa Clarita, Housing Set -Aside Tax Allocation Bonds, Series 2008" (the
"Housing Bonds"); and
WHEREAS, Section 33640 of the Law requires the Agency to obtain the approval of the
City Council of the City of Santa Clarita (the "City") prior to the issuance of the Housing Bonds;
and
WHEREAS, the City Council, with the aid of its staff, has reviewed the documentation
related to the issuance of the Housing Bonds, which documentation is on file with the City Clerk
of the City of Santa Clarita, and wishes to approve the issuance, sale, and delivery of the Housing
Bonds by the Agency;
NOW, THEREFORE, the City Council of the City of Santa Clarita does hereby resolve as
follows:
SECTION 1. The City hereby approves the issuance, sale, and delivery of the Housing
Bonds by the Agency.
SECTION 2. The Mayor, the City Manager, the Deputy City Manager & Director of
Administrative Services, the City Clerk, or any of them or their appointed and authorized
designees acting in such capacities, are hereby authorized and directed to execute and deliver any
and all documents and instruments and to do and cause to be done any and all acts and things
necessary or proper for carrying out the transactions contemplated by this Resolution or in
connection with the sale of the Housing Bonds.
SECTION 3. The City Clerk shall certify to the adoption of this Resolution, and
thenceforth and thereafter the same shall be in full force and effect. Notwithstanding the
foregoing, such certification and any of the other duties and responsibilities assigned to the City
Clerk pursuant to this Resolution may be performed by a Deputy City Clerk with the same force
and effect as if performed by the City Clerk hereunder.
PASSED, APPROVED AND ADOPTED this day of May, 2008.
MAYOR
ATTEST:
CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that the
foregoing Resolution was duly adopted by the City Council of the City' of Santa Clarita at a
regular meeting thereof, held on the day of May, 2008, by the following vote to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
1
2
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
CERTIFICATION OF
CITY COUNCIL RESOLUTION
I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that this is a true
and correct copy of the original Resolution No. 08, adopted by the City Council of the City
�*
of Santa Clarita, California on ,r 2008, which is now on file in my office.
Witness my hand and seal of the City of Santa Clarita, California, this day of
20_.
Sharon L. Dawson, CMC
City Clerk
By
Susan Caputo
Deputy City Clerk
3
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE, CITY OF SANTA
CLARITA, CALIFORNIA, APPROVING THE ISSUANCE, SALE, AND
DELIVERY BY THE CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY OF. ITS (NEWHALL REDEVELOPMENT PROJECT AREA) TAX
ALLOCATION BONDS, SERIES 2008
WHEREAS, the City of Santa Clarita Redevelopment Agency (the "Agency") is
authorized pursuant to the Community Redevelopment Law, being Part 1 of Division 24
(commencing with Section 33000) of the Health and Safety Code of the State of California (the
"Law") and Part 1.7of Division 24 of the Health and Safety Code of the State of California to
incur indebtedness for the purpose of financing and refinancing certain redevelopment activities
within and of benefit to its Newhall Redevelopment Project Area (the "Project Area"); and
WHEREAS, to provide funds to finance certain public capital improvements benefiting
the Project Area, the Agency has determined to issue bonds pursuant to the Indenture, dated as of
June 1, 2008, by and between the Agency and the Trustee, to be designated as the "City of Santa
Clarita (Newhall Redevelopment Project Area) Tax Allocation Bonds, Series 2008" (the
"Bonds"); and
WHEREAS, Section 33640 of the Law requires the Agency to. obtain the approval of the
City Council of the City of Santa Clarita (the "City") prior to the issuance of the Bonds; and
WHEREAS, the City Council, with the aid of its staff, has reviewed the documentation
related to the issuance of the Bonds, which documentation is on file with the City Clerk of the
City of Santa Clarita, and wishes to approve the issuance, sale and delivery of the Bonds by the
Agency;
J NOW, THEREFORE, the City Council of the City of Santa Clarita does hereby resolve as
follows:
SECTION 1. The City hereby approves the issuance, sale, and delivery of the Bonds by
the Agency.
SECTION 2. The Mayor, the City Manager, the Deputy City Manager & Director of
Administrative Services, the City Clerk, or any of them or their appointed and authorized
designees acting in such capacities, are hereby authorized and directed to execute and deliver any
and all documents and instruments and to do and cause to be done any and all acts and things
necessary or proper for carrying out the transactions contemplated by this Resolution or in
connection with the sale of the Bonds.
SECTION 3. The City Clerk shall certify to the adoption of this Resolution, and
thenceforth and thereafter the same shall be in full force and effect. Notwithstanding the
foregoing, such certification and any of the other duties and responsibilities assigned to the City
Clerk pursuant to this Resolution may be performed by a Deputy City Clerk with the same force
and effect as if performed by the City Clerk hereunder.
PASSED, APPROVED AND ADOPTED this day of May, 2008.
MAYOR
ATTEST:
CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss..
CITY OF SANTA CLARITA)
I, Sharon L. Dawson, CMC, City Clerk of the City of Santa Clarita, do hereby certify that
the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the **** day of,*****, 2008, by the following vote:
AYES:
COUNCILMEMBERS:
NOES:
COUNCILMEMBERS: None
ABSENT:
COUNCILMEMBERS: None
CITY CLERK
I
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
CERTIFICATION OF
CITY COUNCIL RESOLUTION
I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that this is a true
and correct copy of the original Resolution No. 08-'90'm 0, adopted by the City Council of the City
of Santa Clarita, California on **'�**, 2008, which is now on file in my office.
Witness my hand and seal of the City. of Santa Clarita, California, this day of
, 20
Sharon L. Dawson, CMC
City Clerk
By
Susan Caputo
Deputy City Clerk
3
RESOLUTION NO.
RESOLUTION OF THE CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF THE AGENCY'S TAX
ALLOCATION BONDS, SERIES 2008; APPROVING THE EXECUTION AND DELIVERY
OF AN INDENTURE, SALE DOCUMENTS, AND A CONTINUING DISCLOSURE
AGREEMENT; APPROVING THE FORM OF A PRELIMINARY OFFICIAL STATEMENT;
AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City of Santa Clarita Redevelopment Agency (the "Agency") is
authorized pursuant to the Community Redevelopment Law, being Part 1 of Division 24
(commencing with Section 33000) of the Health and Safety Code of the State of California (the
"Law"), to incur indebtedness for the purpose of financing certain redevelopment activities
within and/or of benefit to its Newhall Redevelopment Project Area (the "Project Area"); and
WHEREAS, to provide funds to finance certain public capital improvements benefiting
the Project Area, the Agency has determined to issue its (Newhall Redevelopment Project Area)
Tax Allocation Bonds, Series 2008 (the "Bonds") pursuant, to an Indenture, dated as of June 1,
2008 (the "Indenture"), by and between the Agency and the Trustee and;
WHEREAS, it has been proposed that the Bonds be sold on a competitive basis in
accordance with the terms and provisions of Official Notice of Sale and Bid Form for the Bonds
(the "Sale Documents"), the proposed forms of which have been presented to this Board; and
WHEREAS, the Board of the Agency, with the aid of its staff, has reviewed the
documentation related to the issuance of the Bonds, which documentation is on file with the
Secretary of the Agency;
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA
CLARITA DOES RESOLVE AS FOLLOWS:
SECTION 1. The Agency hereby authorizes the issuance of the Bonds in total aggregate
principal amount not to exceed $35,000,000 in accordance with the Law and the terms and
conditions of the Indenture by and between the Agency and the Trustee.
SECTION 2. The Agency hereby approves the Indenture in substantially the form on
file with the Secretary, together-mith such revisions, amendments and completions as shall be
approved by the Chairperson, the Vice Chairperson, the Executive Director, the Treasurer or the
Secretary of the Agency, or any designee of any of them (each, an "Authorized Officer") with the
advice of bond counsel to the Agency, such approval to be conclusively evidenced by the
execution and delivery thereof by an Authorized Officer. The date, maturity dates, interest rate
or rates, interest payment dates, denominations, forms, registration privileges, manner of
execution, place or places of payment, terms of redemption and other terms of the Bonds shall be
as provided in the Indenture, as finally executed.
SECTION 3. The Agency hereby approves the Sale Documents in the form thereof on
file with the Secretary, together with such additions, deletions or changes therein as shall be
approved by an Authorized Officer, such approval to be conclusively evidenced by the execution
and delivery thereof. Each of the Authorized Officers is hereby authorized to execute the final
form of the Sale Documents, for and in the name and on behalf of the Commission. Sealed
proposals shall be received at the time and place provided for in the Sale Documents. Each
Authorized Officer is hereby authorized to accept the best bid, or to reject all bids therefor, in
accordance with the terms of the Sale Documents.
SECTION 4. The Agency hereby approves the form of Preliminary Official Statement
relating to the Bonds. The Authorized Officers, acting for and on behalf of the Agency, are, and
each of them is, hereby authorized and directed to approve such changes, insertions and
omissions therein as are necessary to enable such Authorized Officer to certify on behalf of the
Agency that the approved Preliminary Official Statement is deemed final as of its date except for
the omission of information as permitted by Section 240.15c2-12 (b)(1) of Title 17 of the Code
of Federal Regulations. The Authorized Officers, acting for and on behalf of the Agency, are,
and each of them is, further authorized and directed to cause the Agency to bring the Preliminary
Official Statement into the form of a final Official Statement, with such changes therein,
however, as such Authorized Officer may approve, such approval to be conclusively evidenced
by the execution and delivery of such final Official Statement.
SECTION 5. The Agency hereby approves a Continuing Disclosure Agreement in
substantially the form on file with the Secretary, together with such additions, deletions or
changes therein as shall be approved by an Authorized Officer, such approval to be conclusively
evidenced by the execution and delivery of such Continuing Disclosure Agreement.
SECTION 6. The agreements and documents approved in Sections 2, 3, 4, and 5 of this
Resolution shall, when executed and delivered pursuant to said sections, contain such additions
and changes (including additions and changes necessary to satisfy the requirements of any
provider of a municipal bond insurance policy for the Bonds) as shall have been approved by the
Authorized Officers. Each of the Authorized Officers is hereby authorized to determine, in
connection with the execution and delivery of the agreements and documents approved in
Sections 2, 3, 4 and 5 hereof, the following with respect to the Bonds:
(a) the aggregate principal amount of the Bonds, which shall not exceed $35,000,000;
the final maturity of the Bonds, which shall be not later than September 1, 2042; and
the true interest cost of the Bonds, which shall not exceed six and one-half percent
(6.5%).
SECTION 7. The form of the Notice of Intention to Sell, on file with the Secretary,
together with such additions thereto and changes therein as may be approved by an Authorized
Officer, is hereby approved, and use of the Notice of Intention to Sell in connection with the
2
offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are
each hereby authorized and directed, for and in the name and on behalf of the Agency, to cause
the Notice 'of Intention to Sell to be published in The Bond Buyer (or such other financial
publication generally circulated throughout the State of California or reasonably expected to be
disseminated among prospective bidders for the Bonds as an Authorized Officer shall approve as
being in .the best interests of the Agency) and in a newspaper of general circulation with the
community, at least 5 days prior to date set for the opening of bids in the Sale Documents with
such additions thereto and changes therein as an Authorized Officer may require or approve, such
requirement or approval to be conclusively evidenced by such publishing of .the Notice of
Intention to Sell.
SECTION 8. Any one of the Authorized Officers is hereby authorized (but not required),
for and in the name and on behalf of the Agency, to procure bond insurance for the Bonds on
such terms and conditions as they may approve following consultation with the financial advisor
to the Agency. An Authorized Officer is hereby authorized to execute and deliver such
commitments or other instruments as they may determine to be necessary or appropriate in
connection with such bond insurance, such determination to be conclusively evidenced by the
execution and delivery thereof.
SECTION 9. The law firm of Fulbright & Jaworski L.L.P., Los Angeles, California, is
hereby retained as Bond Counsel and Disclosure Counsel in connection with the issuance of the
Bonds, upon such terms and conditions as shall be approved by the Executive Director or the
Treasurer, or their designee.
SECTION 10. The Executive Director or the Treasurer is hereby authorized to appoint a
trustee for the Bonds pursuant to the Indenture upon such additional terms and conditions as shall.
be approved by Executive Director or the Treasurer, or their designee.
SECTION 11. The firm of C.M. de Crinis & Co., Inc., Sherman Oaks, California, is
hereby retained as financial advisor in connection with the issuance of the Bonds, upon such
terms and conditions as shall be approved by the Executive Director or the Treasurer, or their
designee.
SECTION 12. Any one of the Authorized Officers is hereby authorized and directed,
jointly and severally, to execute and deliver any and all documents and instruments and to do and
cause to be done any and all acts and things necessary or proper in order to consummate the
issuance, sale and delivery of the Bonds and otherwise to effectuate the purposes of this
Resolution and the transactions contemplated hereby.
SECTION 13. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED AND ADOPTED, this day of May, 2008.
3
ATTEST:
SECRETARY
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
I, Sharon L. Dawson, CMC, Secretary of the City of Santa Clarita Redevelopment
Agency, do hereby certify that the foregoing Resolution was duly adopted by the Redevelopment
Agency of the City of Santa Clarita at a regular meeting thereof, held on the day of
2008, by the following vote:
AYES: AGENCY MEMBERS:
NOES: AGENCY MEMBERS: -
ABSENT: AGENCY MEMBERS:
11
SECRETARY
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
CERTIFICATION OF
CITY COUNCIL RESOLUTION
I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that this is
a true and correct copy of the original Resolution No. adopted by the
Redevelopment Agency of the City of Santa Clarita, California, on
2008, which is now on file in my office.
Witness my hand and seal of the City of Santa Clarita, California, this _ day of
, 2008.
Sharon L. Dawson, CMC
City Clerk
By
Susan Coffinan
Deputy City Clerk
i
RESOLUTION NO.
RESOLUTION OF THE CITY. OF SANTA CLARITA, CALIFORNIA, REDEVELOPMENT
AGENCY AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF THE AGENCY'S'
HOUSING SET-ASIDE TAX ALLOCATION BONDS, SERIES 2008; APPROVING THE
EXECUTION AND DELIVERY OF A HOUSING INDENTURE, SALE DOCUMENTS, AND
A CONTINUING DISCLOSURE AGREEMENT; APPROVING THE FORM OF A
PRELIMINARY OFFICIAL STATEMENT; AND AUTHORIZING CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City of Santa Clarita Redevelopment Agency (the "Agency") is
authorized pursuant to the Community Redevelopment Law, being Part 1 of Division 24
(commencing with Section 33000) of the Health and Safety Code of the State of California (the
"Law"), to incur indebtedness for the purpose of financing certain redevelopment activities
within and/or of benefit to its Newhall Redevelopment Project Area (the "Project Area"); and
WHEREAS, to provide funds to finance certain housing activities, projects and programs
of benefit to the community, the Agency has determined to issue its Housing Set -Aside Tax
Allocation Bonds, Series 2008 (the "Housing Bonds") pursuant to the Housing Indenture, dated
as of June 1, 2008 (the "Housing Indenture"), by and between the Agency and the Trustee and;
WHEREAS, it has been proposed that the Housing Bonds be sold on a competitive basis
in accordance with the terms and provisions of Official Notice of Sale and Bid Form for the
Housing Bonds (the "Sale Documents"), the proposed -forms of which have been presented to this
Board; and
. WHEREAS, the Board of the Agency, with the aid of its staff, has reviewed the
documentation related to the issuance of the Housing Bonds, which documentation is on file with
the Secretary of the Agency;
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA
CLARITA DOES RESOLVE AS FOLLOWS:
SECTION 1. The Agency hereby authorizes the issuance of the Housing Bonds in total
aggregate principal amount not to exceed $12,000,000 in accordance with the Law and the terms
and conditions of the Housing Indenture by and between the Agency and the Trustee. -
SECTION 2. The Agency hereby approves the Housing Indenture in substantially the
form on file with the Secretary, together with such revisions, amendments and completions as
shall be approved by the Chairperson, the Vice Chairperson, the Executive Director, the
Treasurer or the Secretary of the Agency, or any designee of any of them (each, an "Authorized
Officer") with the advice of bond counsel to the Agency, such approval to be conclusively
evidenced by the execution and delivery thereof by an Authorized Officer. The date, maturity
dates, interest rate or rates, interest payment dates, denominations, forms, registration privileges,
manner of execution, place or places of payment, terms of redemption and other terms of the
Housing Bonds shall be as provided in the Housing Indenture, as finally executed.
SECTION 3. The Agency hereby approves the Sale Documents in the form thereof on
file with the Secretary, together with such additions, deletions or changes therein as shall be
approved by an Authorized Officer, such approval to be conclusively evidenced by the execution
and delivery thereof. Each of the Authorized Officers is hereby authorized to execute the final
form of the Sale Documents, for and in the name and on behalf of the Commission. Sealed
proposals shall be received at the time and place provided for in the Sale Documents. Each
Authorized Officer is hereby authorized to accept the best bid, or to reject all bids therefor, in
accordance with the terms of the Sale Documents.
SECTION 4. The Agency hereby approves the form of Preliminary Official Statement
relating to the Housing Bonds. The Authorized Officers, acting for and on behalf of the Agency,
are, and each of them is, hereby authorized and directed to approve such changes, insertions and
omissions therein as are necessary to enable such Authorized Officer to certify on behalf of the
Agency that the approved Preliminary Official Statement is deemed final as of its date except for
the omission of information as permitted by Section 240.15c2-12 (b)(1) of Title 17 of the Code
of Federal Regulations. The Authorized Officers, acting for and on behalf of the Agency, are,
and each of them is, further authorized and directed to cause the Agency to bring the Preliminary
Official Statement into the form of a final Official Statement, with such changes therein,
however, as such Authorized Officer may approve, such approval to be.conclusively evidenced
by the execution and delivery of such final Official Statement.
SECTION 5. The Agency hereby approves a Continuing Disclosure Agreement. in
substantially the form on file with the Secretary, together with such additions, deletions - or
changes therein as shall be approved by an Authorized Officer, such approval to be conclusively
evidenced by the execution and delivery of such Continuing Disclosure Agreement.
SECTION 6. The agreements and documents approved in Sections 2, 3, 4, and 5 of this
Resolution shall, when Executed and delivered pursuant to said sections, contain such additions
and changes (including additions and changes necessary to satisfy the requirements of any
provider of a municipal bond insurance policy for the Housing Bonds) as shall have been
approved by the Authorized Officers. Each of the Authorized Officers is hereby authorized to
determine, in connection with the execution and delivery of the agreements and documents
approved in Sections 2, 3, 4 and 5 hereof, the following with respect to the Housing Bonds:
(a) the aggregate principal amount of the Housing Bonds, which shall not exceed
$12,000,000;
(b) the final maturity of the Housing Bonds, which shall be not later than September 1,
2042; and
(c) the true interest cost of the Housing Bonds, which shall not exceed six and one-half
percent (6.5%).
F)
SECTION 7. The form of the Notice of Intention to Sell, on file with the Secretary,
together with such additions thereto and changes therein as may be approved by an Authorized
Officer, is hereby approved, and use of the Notice of Intention to Sell in connection with the
offering and sale of the Housing Bonds is hereby authorized and approved. The Authorized
Officers are each hereby authorized and directed, for and in the name and on behalf of the
Agency, to cause the Notice of Intention to Sell to be published in The Bond Buyer (or such other
financial publication generally circulated throughout the State of California or reasonably
expected to be disseminated among prospective bidders for the Housing Bonds as an Authorized
Officer shall approve as being in the best interests of the Agency) and in a newspaper of general
circulation with the community, at least 5 days prior to date set for the opening of bids in the Sale
Documents with such additions thereto and changes therein as an Authorized Officer may require
or approve, such requirement or approval to be conclusively evidenced by such publishing of the
Notice of Intention to Sell.
SECTION 8. Any one of the Authorized Officers is hereby authorized (but not required),
for and in the name and on behalf of the Agency, to procure bond insurance for the Housing
Bonds on such terms and conditions as they may approve following consultation with the
financial advisor to the Agency. An Authorized Officer is hereby authorized to execute and
deliver such commitments or other instruments as they may determine to be necessary or
appropriate in connection with such bond insurance, such determination to be conclusively
evidenced by the execution and delivery thereof.
SECTION 9. The law firm of Fulbright & Jaworski L.L.P., Los Angeles, California, is
hereby retained as Bond Counsel and Disclosure Counsel in connection with the issuance of the
Housing Bonds, upon such terms and conditions as shall be approved by the Executive Director
or the Treasurer, or their designee. .
SECTION 10. The Executive Director or the Treasurer is hereby authorized to appoint a
trustee for the Housing Bonds pursuant to the Housing Indenture upon such additional terms and
conditions as shall be approved by Executive Director or the Treasurer, or their designee.
SECTION 11. The firm of C.M. de Crinis & Co., Inc., Sherman Oaks, California, is
hereby retained as financial advisor in connection with the issuance of the Housing Bonds, upon
such terms and conditions as shall be approved by the Executive Director or the Treasurer, or
their designee.
SECTION 12. Any one of the Authorized Officers is hereby authorized and directed,
jointly and severally, to execute and deliver any and all documents and instruments and to do and
cause to be done any and all acts and things necessary or proper in order to consummate the
issuance, sale and delivery of the Bonds and otherwise to effectuate the purposes of this
Resolution and the transactions contemplated hereby.
SECTION 13. This Resolution shall take effect immediately upon its adoption.
3
P ASSED, APPROVED AND ADOPTED, this day of May, 2008.
CHAIR
ATTEST:
SECRETARY
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss
CITY OF SANTA CLARITA )
I, Sharon L. Dawson, CMC, Secretary of the City of Santa Clarita Redevelopment
Agency, do hereby certify that the foregoing Resolution was duly adopted by the Redevelopment
Agency of the City of Santa Clarita at a regular meeting thereof, held on the day of
2008, by the following vote:
AYES: AGENCY MEMBERS: ,
NOES: AGENCY MEMBERS:
ABSENT: AGENCY MEMBERS:
M
SECRETARY
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
CERTIFICATION OF
CITY COUNCIL RESOLUTION
I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that this is
a -true and correct copy of the original Resolution No. adopted by the
Redevelopment Agency of the City of Santa Clarita, California, on
2008, which is now on file in my office.
Witness my hand and seal of the City of Santa Clarita, California, this day of
, 2008.
Sharon L. Dawson, CMC
City Clerk
By
Susan Coffman
Deputy City Clerk
61
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
and
THE BANK OF NEW YORK TRUST COMPANY, N.A.
as Trustee
7
HOUSING INDENTURE
Dated as of June 1, 2008
Relating to
City of Santa Clarita Redevelopment Agency
Housing Set -Aside Tax Allocation Bonds, Series 2008
80004932.3
5/2/08
J
SECTION 1.01
SECTION 1.02
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Definitions................................................................................................................... 2
EqualSecurity..:........................................................................................................16
ARTICLE II
THE BONDS; SERIES 2008 BOND PROVISIONS
SECTION 2.01
Authorization.............................................................................................................16
SECTION 2.02
Terms of Series 2008 Bonds.....................................................................................17
SECTION 2.03
Form of Series 2008 Bonds.......................................................................................17
SECTION 2.04
Redemption of Series 2008 Bonds; Selection of Bonds; Purchase in Lieu of
SECTION 5.04
Redemption; Notice.............................................................................................:.....17
SECTION 2.05
Execution of Bonds...................................................................................................19
SECTION 2.06
Transfer and Registration of Bonds.............................:.............................................20
SECTION 2.07
Exchange of Bonds....................................................................................................20
SECTION 2.08
Bond Registration Books...........................................................................................20
SECTION 2.09
Mutilated, Destroyed, Stolen or Lost Bonds.............................................................20
SECTION 2.10
Temporary Bonds..................................................................................:...........:.......21
SECTION 2.11
Validity of Bonds......................................................................................................21
SECTION 2.12
Book -Entry System...................................................................................................21
ARTICLE III
ISSUANCE OF SERIES 2008 BONDS; APPLICATION OF PROCEEDS OF SALE.
SECTION 3.01. Issuance of Series 2008 Bonds..................................................................................22
SECTION 3.02 Sale of Series 2008 Bonds —Allocation of Proceeds Among Funds and
Accounts.................................................................................................................... 23
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
SECTION 4.01 Conditions for the Issuance of Additional Bonds......................................................23
SECTION 4.02 Procedure for the Issuance of Additional Bonds.......................................................25
ARTICLE V
HOUSING SET-ASIDE REVENUES; CREATION OF FUNDS
SECTION 5.01
Pledge of Housing Set -Aside Revenues....................................................................26
SECTION 5.02
Housing Special Fund; Receipt and Deposit of Housing Set -Aside Revenues;
Housing Debt Service, Fund......................................................................................26
SECTION 5.03
Establishment of Other Funds...................................................................................26
SECTION 5.04
Housing Project Fund. Moneys in the Housing Project Fund shall be used for
the purpose of increasing, improving or preserving the supply of low and
moderate income housing within or of benefit to the project areas of the
Agency, including the Project Area..........................................................................27
SECTION 5.05
Housing Expense Fund...............................................................................................27
SECTION 5.06
Establishment and Maintenance of Accounts for Use of Moneys in the
HousingDebt Service Fund..............:.......................................................................27
80004932.3
1
TABLE OF CONTENTS
(Continued)
Page
SECTION 5.07 Investment of Moneys in Funds and Accounts.........................................................29
ARTICLE VI -
COVENANTS OF THE AGENCY
SECTION 6.01
Punctual Payment......................................................................................................30
SECTION 9.02
SECTION 6.02
Against Encumbrances..............................................................................................30
. Other Remedies of Owners ............................................
SECTION 6.03
Extension or Funding of Claims for Interest.............................................................30
SECTION 9.05
SECTION 6.04
Management and Operation of Properties.................................................................30
Remedies Not Exclusive ................................................
SECTION 6.05
Payment of Claims....................................................................................................30
SECTION 9.08
SECTION 6.06
Records and Accounts; Financial and Project Statements..................................'......30
Control............................................................................
SECTION 6.07
Protection of Security and Rights of Owners............................................................31
SECTION 6.08
Payment of Taxes and Other Charges...........................................:...........................31
SECTION 6.09
Financing the Project.................................................................................................31
SECTION 6.10
Disposition of Property in Project Area....................................................................31
SECTION 6.11
Amendment of Redevelopment Plan.........................................................................31
SECTION6.12
Tax Revenues .................... ............ :.................................................... :......................
31
SECTION 6.13
Further Assurances....................................................................................................
31
SECTION6.14
Tax Covenants...........................................:...............................................................31
SECTION 6.15
Agreements with Taxing Agencies; Other Agreements............................................35
SECTION 6.16
Annual Review of Housing Set -Aside Revenues......................................................35
ARTICLE VII
THE TRUSTEE
SECTION7.01 The Trustee................................................................................................................35
SECTION 7.02 Liability of Trustee....................................................................................................36
SECTION 7.03 Notice to Trustee.......................................................................................................38
ARTICLE VIII
AMENDMENT OF THE INDENTURE
SECTION 8.01 Amendment by Consent of Owners..........................................................................38
SECTION 8.02 Disqualified Bonds....................................................................................................39
SECTION 8.03 Endorsement or Replacement of Bonds After Amendment......................................40
SECTION 8.04 Opinion of Counsel...................................................................................................40
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTION 9.01
Events of Default and Acceleration of Maturities..........
SECTION 9.02
Application of Funds Upon Acceleration..' .....................
SECTION 9.03
. Other Remedies of Owners ............................................
SECTION 9.04
Non-Waiver....................................................................
SECTION 9.05
Actions by Trustee as Attorney -in -Fact .........................
SECTION 9.06
Remedies Not Exclusive ................................................
SECTION 9.07
Owners' Direction of Proceedings .................................
SECTION 9.08
Limitation on Owners' Right to Sue ..............................
SECTION 9.09
Control............................................................................
80004932.3 it
..........................................40
.......................................... 41
..........................................41
..........................................42
..........................................42
... ..................................42
......................................42
..........................................42
..........................................43
TABLE OF CONTENTS
(Continued)
Page
ARTICLE X
DEFEASANCE
SECTION 10.01
Discharge of Indebtedness.........................................................................................43
SECTION 12.02
SECTION 10.02
Unclaimed Moneys....................................................................................................44
SECTION 12.03
Successor Is Deemed Included in All References to Predecessor .............................48
ARTICLE XI
SECTION 12.04
Execution of Documents by Owners.........................................................................48
FINANCIAL GUARANTY INSURANCE POLICY
SECTION 12.05
SECTION 11.01
[Amendments Requiring Consent of Bond Insurer...................................................44
SECTION 12.06
SECTION 11.02
Approval of Any Reorganization..............................................................................45
SECTION 12.07
SECTION 11.03
Consent of Bond Insurer Upon Default.....................................................................45
SECTION 12.08
SECTION 11.04
Notice to Bond Insurer..............................................................................................45
SECTION 12.09
SECTION 11.05
Defeasance Provisions...............................................................................................46
SECTION 12.10
SECTION 11.06
Payment Procedure Pursuant to the Insurance Policy...............................................46
SECTION 12.11
SECTION 11.07
Trustee -Related Provisions........................................................................................47
SECTION 12.12
SECTION 11.08
Bond Insurer as Third Party Beneficiary ...................................................................47
SECTION 12.13
Governing Law............................:.............................................................................50
ARTICLE XII
SECTION12.14
Notices...................................................................:...................................................50
MISCELLANEOUS
APPENDIX A Form of Series 2008 Bond................................................................................................
SECTION 12.01
Liability of Agency Limited to Housing Set -Aside Revenues..................................48
SECTION 12.02
Benefits of Indenture Limited to Parties...................................................................48
SECTION 12.03
Successor Is Deemed Included in All References to Predecessor .............................48
SECTION 12.04
Execution of Documents by Owners.........................................................................48
SECTION 12.05
Waiver of Personal Liability .....................................................................................49
SECTION 12.06
Acquisition of Bonds by Agency..............................................................................49
SECTION 12.07
Content of Certificates and Reports..........................................................................49
SECTION 12.08
Funds and Accounts..................................................................................................49
SECTION 12.09
Article and Section Headings and References...........................................................50
SECTION 12.10
Partial Invalidity ........................................................................................................50
SECTION 12.11
Execution in Several Counterparts............................................................................50
SECTION 12.12
Business Days...........................................................................................................50
SECTION 12.13
Governing Law............................:.............................................................................50
SECTION12.14
Notices...................................................................:...................................................50
APPENDIX A Form of Series 2008 Bond................................................................................................
A-1
APPENDIX B Form of Housing Expense Fund Requisition....................................................................
B-1
80004932.3 111
HOUSING INDENTURE
This Housing Indenture (the "Indenture") is entered into and dated as of June 1, 2008, by
and between the City of Santa Clarita Redevelopment Agency, a public body, corporate and politic,
organjzed and existing under and by virtue of the laws of the State of California (the "Agency"), and The
Bank of New York Trust Company, N.A., a national association organized under the laws of the United
States of America, duly authorized to accept and execute trusts of the character herein set forth as trustee
(the "Trustee").
RECITALS
A. The Agency is a redevelopment agency, a public body, corporate and politic duly created,
established and authorized to transact business and exercise its powers, all under and pursuant to the
Community Redevelopment Law (Part I of Division 24 of the Health and Safety Code of the State of
California and the acts amendatory and supplemental thereto and referred to herein as the "Law") and Part
1.7 of Division 24 of the Health and Safety Code of the State of California and the powers of such agency
include the power to issue bonds for any of its corporate purposes.
B. A redevelopment plan (the "Redevelopment Plan") for a redevelopment project known
and designated as the "Newhall Redevelopment Project Area" (the "Project Area") has been adopted and
approved and all requirements of law for, and precedent to, the adoption and approval of said plan have
been duly complied with.
C. The Redevelopment Plan contemplates that the Agency will issue its bonds to finance a
portion of the cost of such redevelopment.
D. Concurrent with the execution and delivery of this Indenture, the Agency has issued its
Tax Allocation Bonds, Series 2008 (Newhall Redevelopment Project Area) (the "Non -Housing Bonds"),
in the aggregate principal amount of $ , for the purpose of financing additional projects
within the Project Area.
E. For the purpose of providing moneys to finance low and moderate income housing within
and of benefit to the Agency, the Agency has determined to issue its Housing Set -Aside Tax Allocation
Bonds, Series 2008, in the aggregate principal amount of $ (the "Series 2008 Bonds") pursuant
to and secured by this Indenture.
F. The Agency has determined to issue the Series 2008 Bonds pursuant to this Indenture and
to secure the Series 2008 Bonds in the manner provided herein, which manner shall be a lien on Housing
Set -Aside Revenues.
G. All things necessary to cause the Series 2008 Bonds, when authenticated by the Trustee
and issued as in this Indenture provided, to be legal, special obligations of the Agency, enforceable in
accordance with their terms, and to constitute this Indenture a valid agreement for the uses and purposes
herein set forth in accordance with its terms, have been done and taken, and the creation, execution and
delivery of this Indenture and the creation, execution and issuance of the Series 2008 Bonds, subject to
the terms hereof, have in all respects been duly authorized.
NOW THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the 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
80004932.3
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 Owners
thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Agency
does hereby covenant and agree with the Trustee, ,for the benefit of the respective holders from time to
time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; 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 the Bonds and of any certificate, opinion, report,
request or other document herein or therein mentioned have the meanings herein specified.
Accreted Value
The term "Accreted Value" means, with respect to any Capital Appreciation Bonds, as of
any date of calculation, the sum of the initial amount thereof and the interest accrued and compounded
thereon, as determined in accordance with the provisions of the Supplemental Indenture authorizing
issuance of such Bonds, to such date of calculation.
Additional Allowance
The term "Additional Allowance" means, as of the date of calculation, the amount of
Housing Set -Aside Revenues which, as shown in a Consultant's Report, are estimated to be receivable by
the Agency in the next Fiscal Year as a result of increases in the assessed valuation of taxable property in
the project areas of the Agency due to either (i) construction which has been completed for which a
certificate of occupancy (or similar instrument) has been issued by the City or other appropriate
governmental agency but has not yet been reflected on the tax roll, or (ii) transfer of ownership or any
other interest in real property, which is not then reflected on the tax roll, as evidenced by written
documentation of the County or other appropriate governmental agency.
Additional Bonds
The term "Additional Bonds has the meaning given to it in Article IV hereof.
Agency
The term "Agency" means the City of Santa Clarita Redevelopment Agency, a public
body, corporate and politic, duly organized and existing under and pursuant to the Law and Part 1.7 of
Division 24 of the Health and Safety Code of the State of California.
Annual Debt Service: Average Annual Debt Service: Maximum Annual Debt Service
The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest
falling due on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are
retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the Sinking
Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of
sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their
terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be
paid or called and redeemed in such Bond Year.
80004932.3
With respect to Capital Appreciation Bonds, the Accreted Value payment shall be
deemed due on the scheduled redemption or payment date of such Capital Appreciation Bonds.
If any Bonds bear interest payable pursuant to a variable interest rate formula, the interest
rate on such Bonds for periods when the actual interest rate cannot yet be determined shall be assumed to
be equal to the greater of (a) the most recently published Bond Buyer 25 Bond Revenue Index (or
comparable index if such 25 Bond Revenue Index is no longer published) or (b) the average variable rate
of interest borne by such Bonds during the preceding 36 months or, if such Bonds were not outstanding
during all of the preceding 36 months, the highest interest rate borne by variable interest rate debt for
which the interest rate is computed by reference to a variable interest rate formula comparable to that
utilized for such Bonds.
"Annual Debt Service" shall not include (a) interest on Bonds which is to be paid from
amounts constituting capitalized interest 'or (b) principal and interest allocable to that portion of the
proceeds of any Bonds required to remain unexpended and to be held in escrow pursuant to the terms of a
Supplemental Indenture, provided that (i) projected interest earnings on such amounts, if any, deposited
by the Agency in the Interest Account, are sufficient to pay the interest due on such portion of the Bonds
so long as it is required to be held in escrow and (ii) the conditions for the release of such proceeds from
escrow, insofar as they relate to Housing Set -Aside Revenue coverage and satisfaction of the Reserve
Account Requirement, are substantially the same as those for the issuance of Additional Bonds.
The term "Average Annual Debt Service" means the average Annual Debt Service over
all Bond Years.
The term "Maximum Annual Debt Service" means the largest Annual Debt Service
during the period from the date of calculation through the final maturity date of any Outstanding Bonds.
Assessed Value
The term "Assessed Value" shall mean the value of property as determined by the County
and confirmed in a Consultant's Report
Authorized Investments
The term "Authorized Investments" means any of the following:
A. (1) Direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America ("United States Treasury Obligations"), (2) obligations fully
and unconditionally guaranteed as to timely payment of principal and interest by the United States of
America, (3) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by any agency or instrumentality of the United States of America when such obligations are
backed by the full faith and credit of the United States of America, -or (4) evidences of ownership of
proportionate interests in future interest and principal payments on obligations described above 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 government
obligations are not available to any person claiming through the custodian or to whom the custodian may
be obligated.
B. The listed obligations of government-sponsored agencies which are not backed
by the full faith and credit of the United States of America:
80004932.3 3
(1) Federal Home Loan Mortgage Corporation (FHLMC) .
- Participation certificates (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
- Senior Debt obligations
(2) Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit
Banks and Banks for Cooperatives)
- Consolidated system -wide bonds and notes
(3) Federal Home Loan Banks (FHL Banks)
- Consolidated debt obligations
(4) Federal National Mortgage Association (FNMA)
- Senior debt obligations
- Mortgage-backed securities (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
(5) Financing Corporation (FICO)
- Debt obligations
(6) Resolution Funding Corporation (REFCORP)
Debt obligations
C. Nonnegotiable certificates of deposit issued by a nationally chartered bank, a
bank chartered by the State of California or to a foreign banking corporation authorized pursuant to
Section 1756 of the California Financial Code to transact business in the State of California by accepting
deposits, or a State of California or federal savings and loan association, including the Trustee, its parent
holding company and their affiliates, provided that such certificates of deposit are fully collateralized in
the manner required for collateralization of trust funds, and provided that such certificates of deposit shall
be limited to those issued by financial institutions whose long-term unsecured general obligations are
rated Aa or better by Moody's and AA or better by S&P.
D. Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation (FDIC), in banks, including affiliates of the Trustee, its parent company and their
affiliates, which have capital and surplus of at least $50 million.
E. Investment agreements acceptable to the Bond Insurer with domestic banks, U.S.
branches of foreign banks or insurance companies (or corporations whose obligations are- guaranteed by
an insurance company (in the form of an insurance policy) or by an insurance holding company); the
long-term debt or claims paying ability of which,.or, in the case of a guaranteed corporation the long-term
debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the
guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's; provided that by the terms of the
investment agreement:
(1) interest on the investment should be paid to the Trustee at least one (1) Business
Day prior to each payment date for the bonds for application in accordance with
the bond documents;
(2) if invested funds are needed for indenture permitted purposes (excluding
reinvestment or surety substitution), there will be no penalty or recourse to the
Agency, including the cash payment paid by the provider at settlement of the
80004932.3 4
investment agreement. If monies are withdrawn for indenture permitted
purposes, they will be reinvested (replenished) at a rate at least equal to the
original contract rate. The investment agreement provider shall permit
replenishment for up to one (1) year;
(3) the investment agreement shall state that it is the unconditional and generals
obligation of, and is not subordinated to any other general unsecured obligation
of, the provider thereof, and must expressly disclaim any right of set-off or
counter -claim, including with respect to any cost relating to termination of the
investment agreement;
(4) the Agency and the Trustee receive the opinion of domestic counsel (which
opinion shall be addressed to the Agency and the Trustee) that such investment
agreement is legal, valid, binding and enforceable upon the provider in
accordance with its terms. For transactions involving U.S. branches of foreign
banks, the bank shall deliver an opinion of foreign counsel to the effect that in
form and substance is acceptable, and addressed to, the Trustee and the Agency;
(5) the investment agreement shall provide that if during its term:
(a) the provider's (or its guarantor's) rating by either S&P or Moody's (i) is
suspended, (ii) is withdrawn, or (iii) drops below "AA °' or "Aa3
respectively, the Agency must be notified, in writing, within five (5)
business days of said ratings suspension, withdrawal or downgrade
below "AA-" or "Aa3", respectively. The Agency has the right, but not
the obligation, to require the provider within five (5) days of its receipt of
notice to either (x) collateralize the investment agreement by delivering
or transferring in accordance with applicable state and federal laws (other
than by means of entries on the provider's books) to the Agency, the
Trustee or a third party acting solely as agent therefor (the "Holder of the
Collateral") collateral free and clear of any third -party liens or claims, the
market value of which collateral is maintained at one hundred four
percent (104%) of the total principal deposited under the investment
agreement for U.S. direct Treasury obligations, GNMA obligations and
full faith and credit U.S. Government obligations and 105% of the total
principal deposited under the investment agreement for FNMA and
FHLMC; (y) assign the investment agreement and all of its obligations
thereunder to a financial institution mutually acceptable to the Agency
and the Trustee which is rated either in the first or second highest
category by S&P and Moody's; or (z) repay the principal of and accrued
but unpaid interest on the investment, and
(b) the provider's (or its guarantor's) rating by either S&P or Moody's is
(i)withdrawn, (ii) suspended, or (iii) falls . below "A2' or "A3",
respectively, the Agency has the right, but not the obligation, to require
the provider, within five (5) days of receipt of such direction to, (y)
deliver to the bond trustee additional permitted collateral, or (z) repay the
principal of and accrued but unpaid interest on the investment, in either
case with no penalty or premium to the Agency or Trustee; and
80004932.3
(c) the investment agreement shall state and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider
under the terms of the investment agreement, at the time such collateral
is delivered, that the Holder of the Collateral has a perfected first priority
security interest in the collateral, any substituted collateral and all
proceeds thereof (in the case of bearer securities, this means the Holder
of the Collateral is in possession), also the collateral must be marked to
market at least weekly;
(6) the investment agreement must provide that upon an occurrence of default, the
Agency must be notified within five (5) business days and any remedies are at
the direction of the Agency or the Trustee, including, but not limited to,
terminating the investment agreement without penalty.
F. Repurchase agreements with financial institutions, domestic banks, U.S. branches
of foreign banks, any broker dealer with "retail customers" which falls under the jurisdiction of the
Securities Investors Protection Corporation (SIPC), or Insurance companies (or corporations whose
obligations are guaranteed by an insurance company (in the form of an insurance policy) or by an
insurance holding company), the long-term debt or claims paying ability of which, or, in the case of a
guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance
company, claims paying ability, of the guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's;
provided that: (i) the over -collateralization is at one hundred two percent (102%), computed weekly,
consisting of such securities as described in this section, items A. and B; (ii) a third party custodian, the
Trustee or the Federal Reserve Bank shall have possession of such obligations; (iii) the Trustee shall have
perfected a first priority security interest in such obligations; and (iv) failure to maintain the requisite
collateral percentage will require the Trustee to liquidate the collateral.
G. Forward Delivery or Forward Purchase Agreements with underlying securities of
the types outlined in A. and B. above.
H. Money market funds rated in the two highest rating categories by Standard &
Poor's Corporation and Moody's Investor Service, Inc., which invest in U. S. treasuries and U.S. agencies
including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries
of the Trustee provide investment advisory or other management services.
I. The Local Agency Investment Fund (LAIF) created pursuant to Section 16429.1
et seq. of the California Government Code.
Book Entry Bonds
The term "Book Entry Bonds" means Bonds of any Series registered in the name of the
Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of Section 2.12
hereof.
Bond Insurer
The term `Bond Insurer" means the Bond Insurer for any Series of Bonds and with
respect to the Series 2008 Bonds, shall mean
80004932.3 6
Bonds, Series 2008 Bonds, Additional Bonds, Capital Appreciation Bonds, Serial Bonds, Term Bonds
The term "Bonds" means the Series 2008 Bonds and all Additional Bonds.
The term "2008 Bonds" or "Series 2008 Bonds" means the City of Santa Clarita
Redevelopment Agency, Housing Set -Aside Tax Allocation Bonds, Series 2008.
The term "Additional Bonds" means all tax allocation bonds of the Agency authorized
and executed pursuant to the Indenture and issued and delivered in accordance with Article N.
The term "Capital Appreciation Bonds" means any Additional Bonds described as such
when issued.
The term "Serial Bonds" means Bonds for which no mandatory sinking account
payments are provided.
The term "Term Bonds" means Bonds which are payable on or before their specified
maturity dates from mandatory sinking account payments established for that purpose and calculated to
retire such Bonds on or before their specified maturity dates, including Escrow Bonds which are term
bonds.
Bond Year
The term "Bond Year" means each twelve month period extending from September 2 in
one calendar year to September 1 of the succeeding calendar year, both dates inclusive; except that the
first Bond Year shall extend from the Closing Date to September 1, 2008.
Business Day
The term "Business Day" means a day other than a Saturday, a Sunday or a day on which
banks located in the city where the corporate trust office of the Trustee is located are required or
authorized to remain closed.
Certificate of the Agency
The term "Certificate of the Agency" means an instrument in writing signed by the
Chairman, the Executive Director or the Treasurer of the Agency, or by any other officer of the Agency
duly authorized by the Agency for that purpose.
ciiy
The term "City" means the City of Santa Clarita, California.
Closing Date
The term "Closing Date" means the date of delivery of a Series of Bonds to the original
purchaser thereof. The Closing Date for the Series 2008 Bonds is June , 2008.
Code
The term "Code" means the Internal Revenue Code of 1986, and any regulations
promulgated thereunder.
80004932.3 ' 7
Consultant's Report
The term "Consultant's Report" means a report signed by an Independent Financial
Consultant or an Independent Redevelopment Consultant, as may be appropriate to the subject of the
report, and including:
Counly
(1) a statement that the person or firm making or giving such report has read the
pertinent provisions of this Indenture to which such report relates;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the report is based;
(3) a statement that, in the opinion of such person or firm, sufficient examination or
investigation was made as is necessary to enable said Independent Financial Consultant or
Independent Redevelopment Consultant to express an informed opinion with respect to the
subject matter referred to in the report.
The term "County" means the County of Los Angeles, California.
Defeasance Obligations
The term "Defeasance Obligations" means any of the following:
A. U.S. Treasury Certificates, Notes and Bonds (including State and Local
Government Series -- " SLGs");
B. Direct obligations of the Treasury which have been stripped by the
Treasury itself, CATS, TIGRS and similar securities;
C. Resolution Funding Corp. (REFCORP) Only the interest component of
REFCORP strips which have been stripped by request to the Federal
Reserve Bank of New York in book entry form are acceptable;
D. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by
- S&P. If however, the issue is only rated by S&P (i.e., there is no
Moody's rating), then the pre -refunded bonds must have been pre -
refunded with cash, direct U.S. or U.S. guaranteed obligations, or
"AAA" rated pre -refunded municipals to satisfy this condition;
E. Obligations issued by the following agencies which are backed by the
full faith and credit of the U.S.:
U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial
ownership
2. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
3. Federal Financing Bank
80004932.3 8
4. Federal Housing Administration Debentures (FHA)
General Services Administration
Participation certificates
6. Government National Mortgage Association (GNMA or "Ginnie
Mae")
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
U.S. Maritime Administration
Guaranteed Title XI financing
U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed
debentures
U.S. Public Housing Notes and Bonds - U.S. government
guaranteed public housing notes and bonds
Depository
The term "Depository" means any securities depository acting as Depository pursuant to
Section 2.12 hereof. The Depository for the Series 2008 Bonds is DTC.
DTC
The term "DTC" means The Depository Trust Company, New York, New York, and its
successors and assigns or such other securities depositories as the Agency designates to the Trustee in
writing.
[Escrow Bonds
The term "Escrow Bonds" means any of the Bonds identified as escrow bonds, the
proceeds of which are deposited in a Special Escrow Fund, including the 2008 Special Escrow Bonds.]
Final Compounded Amount
The term "Final Compounded Amount' means the Accreted Value of a Capital
Appreciation Bond at maturity.
Financial Guaranty Insurance Policy or Insurance Policy
The term "Financial Guaranty Insurance Policy" or, "Insurance Policy" means the
financial guaranty insurance policy issued by the Bond Insurer insuring the payment when due of the
principal of and interest on the Series 2008 Bonds, as provided therein.
Fiscal Year
The term "Fiscal Year" means the period commencing on July 1 of each year and
terminating on the next succeeding June 30, or any other annual accounting period hereafter selected and
80004932.3 9
designated by the Agency as its Fiscal Year in accordance with the Law and identified in writing to the
Trustee.
Fitch
The term "Fitch" means Fitch IBCA, Inc., its successors and assigns.
Housing Debt Service Fund
The term "Housing Debt Service Fund" means the fund by that name held by the Trustee
pursuant to Section 5.02.
Housing Expense Fund
The term "Housing Expense Fund" means the fund by that name held by the Trustee
pursuant to Section 5.03.
Housing Fund
The term ."Housing Fund" means the Low and Moderate Income Housing Fund
established pursuant to Section 33334.3 of the Law and held by the Agency.
Housing Project Fund
The term "Housing Project Fund" means the City of Santa Clarita Redevelopment
Agency Housing Project Fund held by the Agency pursuant to Section 5.03.
Housing Set -Aside Revenues
The term "Housing Set -Aside Revenues" means, for each Bond Year, the portion of the
taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the
Agency pursuant to the Law in connection with all current and future project areas of the Agency,
including the Project Area as provided in the Redevelopment Plan, which are deposited by the Agency in
the Housing Fund pursuant to Section 33334.2 or Section 33334.6 of the Law, as provided in the
Redevelopment Plan.
Housing Special Fund
The term "Housing Special Fund" means the Housing Special Fund held by the Agency
pursuant to Section 5.02.
Indenture
The term "Indenture" means this Housing Indenture and all Supplemental Indentures.
Independent Certified Public Accountant
The term "Independent Certified Public Accountant" means any certified public
accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under
the laws of the State of California, appointed and paid by the Agency, and who, or each of whom:
80004932.3 10
(1) is in fact independent and not under the domination of the Agency;
(2) does not have any substantial interest, direct or indirect, with the
Agency; and
(3) is not connected with the Agency as a member, officer or employee of
the Agency, but who may be regularly retained to make annual or other audits of the books of or
reports to the Agency.
Independent Financial Consultant
The term "Independent Financial Consultant" means a financial consultant or firm of
such consultants generally recognized to be well qualified in the financial consulting field, appointed and
paid by the Agency and who, or each of whom:
(1) is in fact independent and not under the domination of the Agency;
(2) does not have any substantial interest, direct or indirect, with the
Agency; and
(3) is not connected with the Agency as a member, officer or employee of
the Agency, but who may be regularly retained to make annual or other reports to the Agency.
Independent Redevelopment Consultant
The term "Independent Redevelopment Consultant" means a consultant or firm of such
consultants generally recognized to be well qualified in the field of consulting relating to tax allocation
bond financing by California redevelopment agencies, appointed and paid by the Agency, and who, or
each of whom:
(1) is in fact independent and not under the domination of the Agency;
(2) does not have any substantial interest, direct or indirect, with the Agency;
and
(3) is not connected with the Agency as a member, officer or employee of
the Agency, but who may be regularly retained to make annual or other reports to the Agency.
Information Services
The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond
Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Moody's
"Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217,
Attention: Called Bond Department; and Kenny S&P, 55 Water Street, 45 Floor, New York, New York
10041, Attention: Notification Department; or, in accordance with then -current guidelines of the
Securities and Exchange Agency, such other addresses and/or such other services providing information
with respect to called bonds as the Agency may designate to the Trustee in writing.
Interest Account
The term "Interest Account" means the account by that name within the Housing Debt
Service Fund held by the Trustee pursuant to Section 5.06(a).
80004932.3 11
Interest Payment Date
The term "Interest Payment Date" means each March 1 or September 1 on which interest
on any Series of Bonds is scheduled to be paid, and with respect to the Series 2008 Bonds commencing
September 1, 2008.
Law _
The term "Law" means the Community Redevelopment Law of the State of California
(being Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended), and all
laws amendatory thereof or supplemental thereto.
Letter of Representations
The term "Letter of Representations" means the letter of the Agency and the Trustee
delivered to and accepted by the Depository on or prior to the issuance of a Series of Book Entry Bonds
setting forth the basis on which the Depository serves as depository for such Book Entry Bonds, as
originally executed or as it may be supplemented or revised or replaced by a letter to a substitute
depository.
Moody's
The term "Moody's" means Moody's Investors Service, its successors and assigns.
Nominee
The term "Nominee" means the nominee of the Depository, which may be Cede & Co.,
as determined from time to time pursuant to Section 2.12 hereof.
Outstandini
The term "Outstanding" when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 8.02) all Bonds except
(1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee
for cancellation;
(2) Bonds paid or deemed to have been paid within the meaning of Section
10.01; and
(3) Bonds in lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the Agency pursuant to the Indenture.
Owner
The term "Owner" means the registered owner of any Outstanding Bond according to the
registration books held by the Trustee pursuant to Section 2.08.
Participants
The term "Participants" means those broker dealers, banks and other financial institutions
from time to time for which the Depositoryholds Book Entry Bonds as securities depository.
80004932.3 12
Plan Limitations
The term "Plan Limitations" means the limitations contained or incorporated in the
Redevelopment Plan on the aggregate amount of taxes which may be divided and allocated to the Agency
pursuant to the Redevelopment Plan.
Principal Account
The term "Principal Account" means the account by that name within the Housing Debt
Service Fund held by the Trustee pursuant to Section 5.06(b).
Principal Payment Date
The term "Principal Payment Date" means any date on which principal of any Series of
Bonds is scheduled to be paid, which dates shall be as set forth in Section 2.02 hereof for the Series 2008
Bonds.
Project
The term "Project" means the undertaking of the Agency pursuant to the Redevelopment
Plan and the Law for the housing component of the redevelopment of the Project Area.
Project Area
The term "Project Area" means the project area described in the Redevelopment Plan,
known as the Newhall Redevelopment Project.
Qualified Reserve Account Credit Instrument
The term "Qualified Reserve Account Credit Instrument" means an irrevocable standby
or direct -pay letter of credit or surety bond issued by a commercial bank or insurance company and
deposited with the Trustee pursuant to Section 5.06(d), provided that all of the following requirements are
met: (i) at the time of issuance of the instrument, the long-term credit rating of such bank is within the
highest rating category of Moody's and S&P, or the claims paying ability of such insurance company is
rated within the highest rating category of A.M. Best & Company and S&P; (ii) such letter of credit or
surety bond has a term of at least 12 months (or if the final maturity date of the related Bonds is less than
12 months from the date of issuance of such letter of credit or surety bond, then such letter of credit or
surety bond shall not expire before the final maturity date of the related Bonds); (iii) such letter of credit
or surety bond has a stated amount at least equal to the portion of the Reserve Account Requirement with
respect to which funds are proposed to be released pursuant to Section 5.06(d); and (iv) the Trustee is
authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder amounts
necessary to carry out the purposes specified in Section 5.06(d), including the replenishment of the
Interest Account, the Principal Account or the Sinking Account.
Record bate
The term "Record Date" means with respect to any Interest Payment Date, the fifteenth
(15`h) calendar day of the month immediately preceding such Interest Payment Date, whether or not such
day is a Business Day.
80004932.3 13
Redevelopment Plan
The term "Redevelopment Plan" means the redevelopment plan for the Newhall
Redevelopment Project approved and adopted on July 8, 1997, by Ordinance No. 97-12 of the City of
Santa Clarita, California and includes any amendment of said plan heretofore or hereafter made pursuant
to law.
Reserve Account
The term "Reserve Account" means the account by that name within the Housing Debt
Service Fund held by the Trustee pursuant to Section 5.06(d).
Reserve Account Requirement
The term "Reserve Account Requirement" (to be confirmed by the Agency to the Trustee
upon the Trustee's request) means, as of any calculation date, with respect to the Bonds, an amount equal
to the least of (i) ten percent (10%) of the proceeds (within the meaning of Section 148 of the Code) of
that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of
Average Annual Debt Service or (iii) Maximum Annual Debt Service; excluding from such calculation
either (a) Annual Debt Service with respect to the proceeds of the Bonds held in the Special Escrow Fund
or (b) 10% of the issue price (within the meaning of section 148 of the Code) of the Bonds held in a
Special Escrow Fund.
The term "S&P" means Standard & Poor's Ratings Services, its successors and assigns.
Securities Depositories
The term "Securities Depositories" means The Depository Trust Company, 55 Water
Street, 50th Floor, New York, New York, 10041-41-0099, Attention Call Notification Department, Fax
(212) 855-7232; or such other securities depositories as the Agency may designate to the Trustee in
writing.
Series
The term "Series", when used with reference to the Bonds, means all of the Bonds
authenticated and delivered on original issuance and identified pursuant to the Indenture or a
Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter
authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the Indenture.
Series 2008 Account of the Housing Expense Fund
"Series 2008 Account of the Housing Expense Fund" means the account by that name
held within the Housing Expense Fund by the Trustee pursuant to Section 5.03 of the Indenture.
Series 2008 Account of the Housing Project Fund .
"Series 2008 Account of the Housing Expense Fund" means the account by that name
held within the Housing Project Fund by the Agency pursuant to Section 5.03 of the Indenture.
80004932.3 14
Series 2008 Interest Subaccount
"Series 2008 Interest Subaccount" means the subaccount by that name within the Interest
Account of the Housing Debt Service Fund held by the Trustee pursuant to Section 5.06(a) of the
Indenture.
Series 2008 Principal Subaccount
"Series 2008 Principal Subaccount" means the subaccount by that name within the
Principal Account of the Housing Debt Service Fund held by the Trustee pursuant to Section 5.06(b) of
the Indenture.
Series 2008 Sinking Subaccount
"Series 2008 Sinking Subaccount" means the subaccount by that name within the Sinking
Account of the Housing Debt Service Fund held by the Trustee pursuant to Section 5.06(c) of the
Indenture.
Sinking Account
The term "Sinking Account" means the account by that name within the Housing Debt
Service Fund held by the Trustee pursuant to Section 5.06(c).
Sinking Account Installment
The term "Sinking Account Installment" means the amount of money required by or
pursuant to this Indenture to be paid by the Agency on any single date toward the retirement of any
particular Term Bonds of any particular Series on or prior to their respective stated maturities.
Sinking Account Payment Date
The term "Sinking Account Payment Date" means any date on which Sinking Account
Installments on any Series of Bonds are scheduled to be paid.
Supplemental Indenture
The term "Supplemental Indenture" means any indenture then in full force and effect
which has been entered into by the Agency and the Trustee, amendatory of or supplemental to this
Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized
hereunder.
Tax Certificate
The term "Tax Certificate" means the Tax and Nonarbitrage Certificate (or similar
instrument), dated the date of the original delivery of each Series of Bonds (except any Series of Bonds
which the Agency shall certify to the Trustee is not intended to meet the requirements for tax exemption
under the Code) relating to the requirements of certain provisions of the Code, as each such certificate
may from time to time be modified or supplemented in accordance with the terms thereof.
80004932.3 15
Total Maturity Amount
The term "Total Maturity Amount" means with respect to any Outstanding Bond other
than a Capital Appreciation Bond, the aggregate principal amount thereof and, with respect to any
Outstanding Capital Appreciation Bond, the Final Compounded Amount thereof.
Trust Office
The term "Trust Office" means the corporate trust office of the Trustee at the address set
forth in Section 11. 14, or such other office designated by the Trustee from time to time.
Tnictee
The term "Trustee" means such trustee as may be appointed by the Agency, and its
successors and assigns, or any other corporation or association which may at any time be substituted in its
place, as provided in Section 7.01. The initial Trustee shall be The Bank of New York Trust Company,
N.A., a national banking association organized under the laws of the United States of America.
Written Request
The term "Written Request" means an instrument in writing signed by the Chairman, the
Executive Director or Treasurer of the Agency or by any other officer of the Agency duly authorized for
that purpose.
SECTION 1.02 Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, the Indenture shall be deemed to be and shall constitute a contract between the Agency and
the Trustee for the benefit of Owners from time to time of all Bonds issued hereunder and then Outstanding
to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on
all Bonds authorized, executed, issued and delivered hereunder, subject to the agreements, conditions,
covenants and provisions herein contained; and the agreements and covenants herein set forth to be
performed on behalf of the Agency shall be for the equal and proportionate benefit, security and protection
of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any
Bonds over any other Bonds.
ARTICLE II
THE BONDS; SERIES 2008 BOND PROVISIONS
SECTION 2.01 Authorization. Bonds may be issued at any time under and subject to the
terms of this Indenture. The Agency has reviewed all proceedings heretofore taken relative to the
authorization of the Series 2008 Bonds and has found, as a result of such review, and hereby finds and
determines that all acts, conditions and things required by law to exist, happen or be performed precedent to
and in connection with the issuance of the Series 2008 Bonds do exist, have happened and have been
performed in due time, form and manner as required by law, and the Agency is now duly authorized
pursuant to each and every requirement of law, to issue the Series 2008 Bonds in the manner and form
provided in this Indenture. Accordingly, the Agency hereby authorizes the issuance of the Series 2008
Bonds for the purpose of providing funds to aid in financing the Project.
80004932.3 16
SECTION 2.02 Terms of Series 2008 Bonds.
(a) Series 2008 Bonds. The Series 2008 Bonds shall be dated as of the Closing Date,
shall mature on September 1 in each of the years and in the amounts, and shall bear interest (calculated on
the basis of a 360 -day year of twelve 30 -day months) in the amounts, as follows:
Maturity Date Principal Interest
(September 1) Amount Rate CUSIP No.
(b) Denominations. The Series 2008 Bonds shall be delivered in fully registered
form, in the denominations of $5,000 or any integral multiple thereof, numbered from one upwards in
consecutive numerical order for each Series.
(c) Payment of Interest and Principal. Each Series 2008 Bond shall bear interest
from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is
authenticated during the period from the day after the Record Date for an Interest Payment Date to and
including such Interest Payment Date, in which event it shall 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 Series 2008 Bond interest with respect to such Series 2008 Bond is in default, such Series 2008
Bond shall bear interest from the Interest Payment Date to which interest has been paid or made available
for payment with respect to such Series 2008 Bond.
Interest with respect to any Series 2008 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 on the
Interest Payment Date to the Owner at his address as it appears, on such Record Date, on the bond
registration books maintained by the Trustee; provided, however, that at the written request of the Owner
of Series 2008 Bonds in the aggregate principal amount of $1,000,000 or more filed with the Trustee prior
to any Record Date, principal of and interest on such Series 2008 Bonds shall be paid to such Owner on
each succeeding Interest Payment Date (unless such request.has been revoked in writing) by transfer of
immediately available funds to an account in the continental United States designated in .such written
request. Payments of defaulted interest with respect to the Series 2008 Bonds shall be paid by check 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 Series 2008 Bonds not less than ten days
prior thereto. Except as set forth above, the principal of and premium, if any, on the Series 2008 Bonds
are payable when due at the Trust Office in lawful money of the United States of America.
SECTION 2.03 Form of Series 2008 Bonds. The Series 2008 Bonds, the authentication
and registration endorsement and the assignment to appear thereon shall be substantially in the forms
attached hereto as Appendix A, with necessary or appropriate variations, omissions and insertions as
permitted or required by this Indenture.
SECTION 2.04 Redemption of Series 2008 Bonds; Selection of Bonds; Purchase in Lieu of
Redemption, Notice.
(a) Optional Redemption of the Series 2008 Bonds. The Series 2008 Bonds
maturing on or after September 1, 20_ shall be subject to optional redemption prior to maturity at the
80004932.3 17
option of the Agency on any date on or after September 1, 20 , as a whole or in part by lot from any
source and deposited with the Trustee (notice of such redemption having been given by the Agency to the
Trustee no later than 45 days prior to the date of redemption) at a redemption price equal to the principal
amount to be redeemed together with accrued interest to the date fixed for redemption.
(b) Mandatory Sinking Account Redemption of the Series 2008 Bonds. The Series
2008 Bonds maturing on September 1, 20 shall be subject to mandatory redemption, in part by lot,
from Sinking Account Installments deposited in the Series 2008 Sinking Subaccount, on September I in
each year commencing September 1, 20_, at a redemption price equal to the principal amount to be
redeemed (without premium), together with interest accrued to the date fixed for redemption, according to
the following schedules:
Mandatory Sinking Account Payments
Series 2008 Term Bonds Maturing September 1, 20
Redemption Date Redemption Date
(September 1) Principal Amount (September 1) Principal Amount
*Maturity
(c) . General Redemption Provisions
(1) Selection of Bonds.
Whenever less than all the Outstanding Bonds maturing on any one date are
called for redemption at any one time, the Trustee shall select the Bonds to be redeemed, from the
Outstanding Bonds maturing on such date not previously selected for redemption, by lot; provided,
however, that if less than all the Outstanding Term Bonds of any maturity are called for redemption at any
one time, the Agency shall specify in writing to the Trustee the reduction in any Sinking Account
Installment payments required to be made with respect to such Bonds (in an amount equal to the amount
of Outstanding Term Bonds to be redeemed) which, to the extent practicable, results in approximately
equal Annual Debt Service on the Bonds Outstanding following such redemption.
(2) Purchase in Lieu of Redemption.
In lieu of redemption of any Term Bond, amounts on deposit in the Housing
Special Fund or in the Sinking Account therein may also be used and withdrawn by the Trustee at any
time, upon the Written Request of the Agency, for the purchase of such Term Bonds at public or private
sale as and when and at such prices (including brokerage and other charges, but excluding accrued
interest, which is payable from the Interest Account) as the Agency may in its discretion determine, but
not in excess of the principal amount thereof plus accrued interest to the purchase date; provided,
however, that no Bonds shall be purchased by the Trustee under this subsection (e)(2) with a settlement
date more than 60 days prior to the redemption date. The principal amount of any Term Bonds so
purchased by the Trustee in any twelve month period ending 30 days prior to any Principal Payment Date
in any year shall be credited towards and shall reduce the principal amount of such Term Bonds required
to be redeemed on such Principal Payment Date in such year.
80004932.3 18
(3) Notice.
Notice of redemption shall be mailed by first class mail by the Trustee, on behalf
and at the expense of the Agency, not less than 30 days prior to the redemption date to (i) the respective
Owners of Bonds designated for redemption at their addresses appearing on the bond registration books
of the Trustee, (ii) one or more Information Services designated in writing to the Trustee by the Agency
and (iii) the Securities Depositories. Each notice of redemption shall state the date of such notice, the
Bonds to be redeemed, the date of issue of such Bonds, the redemption date, the redemption price, the
place or places of redemption (including the name' and appropriate address or addresses), the CUSIP
number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be redeemed,
the distinctive certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds
to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each
such notice shall also state that on said date there will become due and payable on each of such Bonds the
redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond
to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from
and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be
then surrendered at the address or addresses of the Trustee specified in the redemption notice.
Failure by the Trustee to give notice pursuant to this Section to any one or more
of the Information Services or Securities Depositories, or the insufficiency of any such notice shall not
affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any
redemption notice mailed to such Owner and any defect in the notice so mailed shall not affect the
sufficiency of the proceedings for redemption.
(4) Partial Redemption.
Upon surrender of any Bond redeemed in part only, the Agency shall execute
(manually or by facsimile) and the Trustee shall authenticate and deliver to the Owner thereof, at the
expense of the Agency, a new Bond or Bonds of authorized denominations equal in aggregate principal
amount to the unredeemed portion of the Bondi surrendered and of the same series, interest rate and the
same maturity.
(5) Effect of Redemption.
From and after the date fixed for redemption, if notice of such redemption shall
have been duly given and funds available for the payment of such redemption price of the Bonds so called
for redemption shall have been duly provided, no interest shall accrue on such Bonds from and after the
redemption date specified in such notice.
All Bonds redeemed pursuant to the provisions of this section shall be canceled
by the Trustee and the Trustee shall upon Written Request of the Agency deliver a certificate of
destruction to the Agency.
SECTION 2.05 Execution of Bonds. The Chair or the Executive Director of the Agency is
hereby authorized and directed to execute each of the Bonds on behalf of the Agency and the Secretary of
the Agency is hereby authorized and directed to attest each of the Bonds on behalf of the Agency. Any of
the signatures of the Chair or the Executive Director or the Secretary may be by printed, lithographed or
engraved facsimile reproduction. In case any officer whose signature appears on the Bonds shall cease to be
such officer before the delivery of the Bonds to the purchaser thereof, such signature shall nevertheless be
valid and sufficient for all purposes the same as though such officer had remained in office until such
delivery of the Bonds.
80004932.3 19
Only such of the Bonds as shall bear thereon a certificate of authentication in the form set
forth in Appendix A hereto, executed manually by the Trustee, shall be entitled to any benefits under the
Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive
evidence that the Bonds so registered have been duly issued and delivered hereunder and are entitled to
the benefits of the Indenture.
SECTION 2.06 Transfer and Registration of Bonds. Any Bond may, in accordance with its
terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08, by the
person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such
Bond for cancellation, accompanied by delivery of a .written instrument of transfer in substantially the form
set forth in Appendix A hereto, duly executed.
Whenever any Bond or Bonds shall be surrendered for transfer, the Agency shall execute
and the Trustee shall authenticate and deliver a new Bond or Bonds of like series, tenor, maturity and
Total Maturity Amount. 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 Agency, 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 Agency shall not be required to register the transfer of or exchange any Bond during
the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption
or any Bonds which have matured or been selected for redemption.
SECTION 2.07 Exchanize of Bonds. Bonds may be exchanged at the Trust Office for the
same aggregate Total Maturity Amount of Bonds of the same series and maturity 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 Agency, 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. No such exchange shall be required to be made during
the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or
any Bonds which have matured or been selected for redemption.
SECTION 2.08 Bond Registration Books. The Trustee will keep at the Trust Office
sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection
by the Agency during regular business hours with reasonable prior notice; and, upon presentation for such
purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the
Bonds on said books as hereinbefore provided.
SECTION 2.09 Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond shall
become mutilated in respect of the body of such Bond, or shall be believed by the Agency to have been
destroyed, stolen or lost, upon proof of ownership satisfactory to the Trustee, and upon the surrender of such
mutilated Bond at the Trust Office, or upon the receipt of evidence satisfactory to the Trustee of such
destruction, theft or loss, and upon receipt also of indemnity satisfactory to the Agency and the Trustee, and
upon payment of all expenses incurred by the Agency and the Trustee in the premises, the Agency shall
execute (manually or by facsimile) and the Trustee shall authenticate and deliver at the Trust Office a new
Bond or Bonds of the same series and maturity and for the same Total Maturity Amount, of like tenor and
date, with such notations as the Agency shall determine, in exchange and substitution for and upon
cancellation of the mutilated Bond, or in lieu of and in substitution for the Bond so destroyed, stolen or lost.
80004932.3 20
If any such destroyed, stolen or lost Bond shall have matured or shall have been called
for redemption, payment of the amount due thereon may be made by the Trustee upon receipt by the
Trustee and the Agency of like proof, indemnity and payment of expenses.
Any such replacement Bonds issued pursuant to this section shall be entitled to equal and
proportionate benefits with all other Bonds issued hereunder. The Agency and the Trustee shall not be
required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose
of determining the principal amount of Bonds which may be issued hereunder or for the purpose of
determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond
shall be treated as one and the same.
SECTION 2.10 Temporary Bonds. Until definitive Bonds shall be prepared, the Agency
may cause to be executed and delivered in lieu of such definitive Bonds and subject to the same provisions,
limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any
denominations authorized by the Agency, one or more temporary typed, printed, lithographed or engraved
Bonds in fully registered form, as may be authorized by the Agency, substantially of the same tenor and,
until exchanged for definitive Bonds, entitled and subject to the same benefits and provisions of the
Indenture as definitive Bonds. If the Agency issues temporary Bonds it will execute and furnish definitive
Bonds without unnecessary delay and thereupon the temporary Bonds shall be surrendered to the Trustee at
the Trust Office, without expense to the Owner in exchange for such definitive Bonds. All temporary Bonds
so surrendered shall be canceled by the Trustee and shall not be reissued.
SECTION 2.11 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any proceedings taken by the Agency for the financing or
refinancing of the Project, or by any contracts made by the Agency in connection therewith, and shall not be
dependent upon the completion of the financing or refinancing of the Project or upon the performance by
any person of his obligation with respect to the Project, and the recital contained in the Bonds that the same
are issued pursuant to the Law shall be conclusive evidence of their validity and of the regularity of their
issuance.
SECTION 2.12 Book -Entry System. Prior to the issuance of any Series of Bonds issued
hereunder, the Agency may provide that such Series of Bonds shall be initially issued as Book Entry Bonds,
and in such event, each maturity of such Series shall be in the form of a separate single fully registered Bond
(which may be typewritten). Upon initial issuance, the ownership of each such Bond shall be registered in
the bond register in the name of the Nominee, as nominee of the Depository.
With respect to Book Entry Bonds, the Agency and the Trustee shall have no
responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds
an interest in such Book Entry Bonds. Without limiting the immediately preceding sentence, the Agency
and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of
the Depository, the Nominee, or any Participant with respect to any ownership interest in Book Entry
Bonds, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the bond
register, of any notice with respect to Book Entry Bonds, including' any notice of redemption, (iii) the
selection by the Depository and its Participants of the beneficial interests in Book Entry Bonds to be
redeemed in the event the Agency redeems such in part, or (iv) the payment of any Participant or any
other person, other than an Owner as shown in the bond register, of any amount with respect to principal
of, premium, if any, or interest on Book Entry Bonds. The Agency and the Trustee may treat and
consider the person in whose name each Book Entry Bond is registered in the bond register as the
absolute Owner of such Book Entry Bond for the purpose of payment of principal, premium and interest
with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect
to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes
80004932.3 21
whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or
upon the order of the respective Owner, as shown in the bond register, and all such payments shall be
valid and effective to fully satisfy and discharge the Agency's obligations with respect to payment of
principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No
person other than an Owner, as shown in the bond register, shall receive a Bond evidencing the obligation
of the Agency to make payments of principal, premium, if any, and interest pursuant to this Indenture.
Upon delivery by the Depository to the Trustee and Agency of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee, and subject to the
provisions herein with respect to record dates, the word Nominee in this Indenture shall refer to such
nominee of the Depository.
In order to qualify the Book Entry Bonds for the Depository's book entry system, the
Agency and the Trustee shall execute, if necessary, and deliver to the Depository a Letter of
Representations. The execution and delivery of a Letter of Representations shall not in any way impose
upon the Agency or the Trustee any obligation whatsoever with respect to persons having interests in such
Book Entry Bonds other than the Owners, as shown on the bond register. In addition to the execution and
delivery of a Letter of Representations, the Agency and the Trustee, at the Written Request of the Agency,
shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify
Book Entry Bonds for the Depository's book entry program.
In the event (i) the Depository determines not to continue to act as securities depository
for any Series of Book Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the
Trustee and the Agency of such determination, then the Agency will discontinue the book entry system
with the Depository. If the Agency determines to replace the Depository with another qualified securities
depository, the Agency shall prepare or direct the preparation of a new single, separate, fully registered
Bond for each of the maturities of such Book Entry Bonds, registered in the name of such successor or
substitute qualified securities depository or its nominee. If the Agency fails to identify another qualified
securities depository to replace the Depository, then the Bonds shall no longer be restricted to being
registered in such bond register in the name of the Nominee, but shall be registered in whatever name or
names Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions
of Sections 2.06 and 2.07.
Notwithstanding any .other provision of this Indenture to the contrary, so long as any
Book Entry Bond is registered in the name of the Nominee, all payments with respect to principal of,
premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and
given, respectively, as provided in the Letter of Representations or as otherwise instructed by the
Depository.
ARTICLE III
ISSUANCE OF SERIES 2008 BONDS;
APPLICATION OF PROCEEDS OF SALE
SECTION 3.01 Issuance of Series 2008 Bonds. The Agency may at any time execute and
deliver the Series 2008 Bonds authorized to be issued hereunder and, upon the Written Request of the
Agency, the Trustee shall authenticate and deliver the Series 2008 Bonds.
80004932.3 22
SECTION 3.02 Sale of Series 2008 Bonds -- Allocation of Proceeds Among Funds and
Accounts.
(a) Series 2008 Bonds. Upon receipt of payment for the Series 2008 Bonds, the
Trustee shall set aside and deposit the proceeds received from such sale in the amount of $
(being the principal amount of $ less an underwriter's discount of $ and less a
net original issue discount of $ and less $ transferred to the Bond Insurer as
Insurance Policy premium) as follows:
(1) The Trustee shall deposit in the Reserve Account the amount of
$ , which constitutes the initial Reserve Account Requirement.
(2) The Trustee shall deposit in the Series 2008 Account of the Housing
Expense Fund the amount of $ to pay the costs incurred or to be incurred by the Agency in
connection with the issuance of the Series 2008 Bonds.
(3) The Trustee shall transfer the balance of the Series 2008 Bonds sale
proceeds in the amount of $ to the Series 2008 Account of the Housing Project Fund to be
applied in accordance with the provisions hereof.
(b) For record keeping purposes the Trustee may establish such accounts as may be
necessary to reflect such transfer of proceeds.
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
SECTION 4.01 Conditions for the Issuance of Additional Bonds. The Agency may at any
time after the issuance and delivery of the Series 2008 Bonds hereunder issue Additional Bonds payable
from the Housing Set -Aside Revenues and secured by a lien and charge upon the Housing Set -Aside
Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore
issued under the Indenture, but only subject to the following specific conditions, which are hereby made
conditions precedent to the issuance of any such Additional Bonds:
(a) No amounts are remaining in -a Special Escrow Fund.
(b) The Agency shall be in compliance with all covenants set -forth in this Indenture
and any Supplemental Indentures, and a Certificate of the Agency to that effect shall have been filed with
the Trustee.
(c) The issuance of such Additional Bonds shall have been duly authorized pursuant
to the Law and all applicable laws, and the issuance of such Additional Bonds shall have been provided
for by a Supplemental Indenture or other parity debt instrument duly adopted by the Agency which shall
specify the following:
(1) The purpose for which such Additional Bonds are to be issued and the
fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the
proceeds of such Additional Bonds to be applied solely for (i) the purpose of aiding in financing low and
moderate income housing for the project areas of the Agency, including payment of all costs incidental to
or connected with such financing, and/or (ii) the purpose of refunding any Bonds or other indebtedness
related to low and moderate income housing, including payment of all costs incidental to or connected
with such refunding;
80004932.3 23
(2) The authorized principal amount of such Additional Bonds;
(3) The date and the maturity date or dates of such Additional Bonds;
provided that (i) Principal and Sinking Account Payment Dates may occur only on Interest Payment
Dates, (ii) all such Additional Bonds of like maturity shall be identical in all respects, except as to
number, and (iii) fixed serial maturities or mandatory Sinking Account Installments, or any combination
thereof, shall be established to provide for the retirement of all such Additional Bonds on or before their
respective maturity dates;
(4) The Interest Payment Dates, which shall be on the same semiannual
dates as the Interest Payment Dates for the Series 2008 Bonds; provided, that such Additional Bonds may
provide for compounding of interest in lieu of payment of interest on such dates;
(5) The denomination and method of numbering of such Additional Bonds;
(6) The redemption premiums, if any, and the redemption terms, if any, for
such Additional Bonds;
(7) , The amount and due date of each mandatory Sinking Account
Installment, if any, for such Additional Bonds;
(8) The amount, if any, to be deposited from the proceeds of such Additional
Bonds in the Interest Account;
(9) The amount, if any, to be deposited from the proceeds of such Additional
Bonds into the Reserve Account; provided that the amount on deposit in the Reserve Account shall be
increased at or prior to the time such Additional Bonds become Outstanding to an amount at least equal to
the Reserve Account Requirement on all then Outstanding Bonds and such Additional Bonds, which
amount shall be maintained in the Reserve Account;
(10) The form of such Additional Bonds; and
(11) Such other provisions as are necessary or appropriate and not
inconsistent with the Indenture.
(d) Housing Set -Aside Revenues based upon the assessed valuation of taxable
property in the Project Area as shown on the most recently equalized assessment roll preceding the date
of the Agency's adoption of the Supplemental Indenture or other parity debt instrument providing for the
issuance of such Additional Bonds plus, at the option of the Agency, the Additional Allowance, shall be
in an amount equal to at least one hundred forty-five percent (145%) of Maximum Annual Debt Service
on the Bonds and any Additional Bonds following the issuance of such Additional Bonds, as evidenced
by a Consultant's Report.
For purposes of calculating Housing Set -Aside Revenues, a tax rate of $1.00 per $100 of
assessed valuation shall be assumed.
For the purposes of the issuance of Additional Bonds, Outstanding Bonds shall not
include any Bonds, the proceeds of which are deposited in an escrow fund (a "Special Escrow Fund"),
held by the Trustee or an escrow agent ("Escrow Bonds"), provided that the Indenture or Supplemental
Indenture authorizing issuance of such Escrow Bonds shall provide that: (i) such proceeds shall be
invested in Authorized Investments which bear interest at a rate which, together with amounts made
80004932.3 24
available by the Agency from bond proceeds or otherwise, is at least sufficient to pay Annual Debt
Service on the Escrow Bonds to the special mandatory redemption date (as subject to extension); (ii)
moneys may be transferred from said escrow fund only to the extent Housing Set -Aside Revenues (as
calculated using the criteria set forth above) for the then current Fiscal Year plus, at the option of the
Agency, the Additional Allowance, shall be in an amount equal to at least,,[1.25] times Maximum Annual
Debt Service on the Bonds, less a principal amount of Bonds which is equal to moneys on deposit in such
escrow fund after each such transfer; and (iii) such Escrow Bonds shall be redeemed at par from moneys
remaining on deposit in such escrow fund at the expiration of the specified escrow period. In addition,
the Agency shall obtain an opinion of nationally recognized bond counsel on the delivery date of such
Escrow Bonds to the effect that such escrow of proceeds will not affect the exclusion of the interest on
any Outstanding Bonds from gross income for federal income tax purposes.
In the event such Additional Bonds are to be issued solely for the purpose of refunding
and retiring any Outstanding Bonds, interest and principal payments on the Outstanding Bonds to be so
refunded and retired from the proceeds of such Additional Bonds being issued shall be excluded from the
foregoing computation of Maximum Annual Debt Service.
Nothing contained in this Indenture shall prohibit the issuance of any tax allocation bonds
or other indebtedness by the Agency secured by a pledge of Housing Set -Aside Revenues subordinate to
the pledge of Housing Set -Aside Revenues securing the Bonds.
SECTION 4.02 Procedure for the Issuance of Additional Bonds. All of the Additional
Bonds shall be executed by the Agency for issuance under the Indenture and delivered to the Trustee and
thereupon shall be delivered by the Trustee upon the Written Request of the Agency, but only upon receipt
by the Trustee of the following documents or money or securities:
(1) An executed copy of the Supplemental Indenture or other parity debt
instrument authorizing the issuance of such Additional Bonds;
(2) A Written Request of the Agency as to the delivery of such Additional
Bonds;
(3) An opinion of counsel of recognized standing in the field of law relating
to municipal bonds substantially to the effect that (a) the Agency has the right and power under the Law
to execute and deliver the Indenture and all Supplemental Indentures thereto or other parity debt
instruments, and the Indenture and all such Supplemental Indentures or other parity debt instruments have
been duly executed and delivered by the Agency, are in full force and effect and are valid and binding
upon the Agency and enforceable in accordance with their terms (except as enforcement may be limited
by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors'
rights and similar qualifications); and (b) such Additional Bonds are valid and binding special obligations
of the Agency, enforceable in accordance with their terms (except as enforcement may be limited by
bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors'
rights) and are subject to the terms of the Indenture and all Supplemental Indentures thereto or other
parity debt instruments and entitled to the benefits of the Indenture and all such Supplemental Indentures
or other parity debt instruments and the Law, and such Additional Bonds have been duly and validly
issued in accordance with the Law and the Indenture and all such Supplemental Indentures or other parity
debt instruments;
(4) A Certificate of the Agency containing such statements as may be
reasonably necessary to show compliance with the requirements of the Indenture; and
80004932.3 25
(5) Such further documents, money and securities as are required by the
provisions of the Indenture and the Supplemental Indenture or other parity debt instruments providing for
the issuance of such Additional Bonds.
ARTICLE V
HOUSING SET-ASIDE REVENUES; CREATION OF FUNDS
SECTION 5.01 Pledge of Housing Set -Aside Revenues. All the Housing Set -Aside
Revenues and all money in the Housing Special Fund and in the funds or accounts so specified and provided
for in this Indenture, whether held by the Agency or the Trustee (except the Rebate Amount), are hereby
irrevocably pledged to the punctual payment of the interest on and principal of and redemption premiums, if
any, on the Bonds, and the Housing Set -Aside Revenues and such other money shall not be used for any
other purpose while any of the Bonds remain Outstanding, subject to the provisions of this Indenture
permitting application thereof for the purposes and on the terms and conditions set forth herein. This pledge
shall constitute a first lien on the Housing Set -Aside Revenues and such other money for the payment of the
Bonds in accordance with the terms thereof. .
SECTION 5.02 Housing Special Fund; Receipt and Deposit of Housing; Set -Aside
Revenues; Housing; Debt Service Fund. (a) There is hereby established a special fund known as the
"Housing Special Fund" (herein the "Housing Special Fund") held by the Agency. The Agency shall
deposit all of the Housing Set -Aside Revenues received in any Bond Year in the Housing Special Fund
promptly upon receipt thereof by the Agency, until such time (if any) during such Bond Year as the amounts
on deposit in the Housing Special Fund equal the aggregate amounts required to be transferred to the Trustee
pursuant to this Section 5.02 and Section 5.06 for such Bond Year.
(b) There is hereby established a fund known as the "Housing Debt Service Fund,"
to be held by the Trustee. On or before the fifth Business Day immediately preceding any Interest
Payment Date, the Agency shall withdraw from the Housing Special Fund and deposit with the Trustee
the amount of money necessary to make the deposits required in Sections 5.06(a), (b) and (c): After the
deposits required by Sections 5.06(a), (b) and (c) have been made and upon notice from the Trustee, the
Agency shall withdraw from the Housing Special Fund and deposit with the Trustee the amount of money
necessary to make any deposit required by Section 5.06(d).
(c) All Housing Set -Aside Revenues received by the Agency at any time during any
Bond Year in excess of the amount required to be transferred to the Trustee during such Bond Year
pursuant to subsection (b) of this Section shall be released from the pledge and lien hereunder and the
Agency may apply such excess Housing Set -Aside Revenues for any lawful purpose of the Agency. So
long as any Bonds. are outstanding, the Agency shall not have any beneficial right or interest in the
moneys on deposit in the Housing Special Fund or the Housing Debt Service Fund, except as may be
provided in this Indenture.
SECTION 5.03 Establishment of Other Funds. There is hereby established a special trust
fund held by the Agency called the "City of Santa Clarita Redevelopment Agency Housing Project Fund"
(the "Housing Project Fund"). There is also hereby established a special trust fund held by the Trustee
called the "Housing Expense Fund" (the "Housing Expense Fund").
So long as any of the Bonds herein authorized, or any interest thereon, remains unpaid,
the moneys in the foregoing funds shall be used for no purpose other than those required or permitted by
this Indenture and the Law.
80004932.3 26
Pursuant to the Tax Certificate, the funds and accounts established herein may be divided
by the Agency or by the Trustee upon the Written Request of the Agency into sub accounts for each
Series of Bonds issued hereunder, in order to perform the necessary rebate calculations. There is hereby
established the Series 2008 Account within the Housing Project Fund. There is hereby established the
Series 2008 Account within the Housing Expense Fund.
SECTION 5.04 Housing Project Fund. Moneys in the Housing Project Fund shall be used
for the purpose of increasing, improving or preserving the supply of low and moderate income housing
within or of benefit to the project areas of the Agency, including the Project Area. The Agency warrants that
each withdrawal from the Housing Project Fund shall be made in the manner provided by law for the
purpose set forth above or for making reimbursements to the Agency for such costs theretofore paid by the
Agency.
SECTION 5.05 Housing Expense Fund. All moneys in the Housing Expense Fund shall be
applied to the payment of costs and expenses incurred by the Agency in connection with the authorization,
issuance and sale of the Bonds and shall be disbursed by the Trustee upon delivery to the Trustee of a
requisition, substantially in the form attached hereto as Appendix B, executed by an officer of the Agency.
Each such requisition shall be sequentially numbered and state the name and address of the person, firm or
corporation to whom payment is due, the amount to be disbursed, the purposes for such disbursement and
that such obligation has been properly incurred and is a proper charge against the Housing Expense Fund.
Upon the earlier of the payment in full of such costs and expenses (or the making of adequate provision for
the payment thereof, evidenced by a Certificate of the Agency to the Trustee) or 180 days after delivery of
the Bonds to the original purchaser thereof, any balance remaining in any accounts of the Housing Expense
Fund shall be transferred to the respective corresponding accounts of the Housing Project Fund, and pending
such transfer and application, the moneys in such Housing Expense Fund may be invested as permitted by
Section 5.07; provided, however, that investment income resulting from any such investment shall be
retained in the Housing Expense Fund.
SECTION 5.06 Establishment and Maintenance of Accounts for Use of Moneys in the
Housing Debt Service Fund. All moneys in the Housing Debt Service Fund shall be set aside by the Trustee
in each Bond Year when and as received in the following respective special accounts within the Housing
Debt Service Fund (each of which is hereby created and each of which the Trustee hereby agrees to cause to
be maintained), in the following order of priority (except as otherwise provided in subsection (b) below):
(i)
Interest Account;
(ii)
Principal Account;
(iii)
Sinking Account; and
(iv)
Reserve Account.
All moneys in each of such accounts shall be held in trust by the Trustee and shall be applied, used and
withdrawn only for the purposes hereinafter authorized in this Section 5.06.
(a) Interest Account. On or before each Interest Payment Date, the Trustee shall set
aside from the Housing Debt Service Fund and deposit in the Interest Account (or each subaccount on a
pro rata basis) an amount of money which; together with any money contained therein, is equal to the
aggregate amount of the interest becoming due and payable on all Outstanding Bonds on such Interest
Payment Date. No deposit need be made into the Interest Account if the amount contained therein is at
least equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on
80004932.3 27
the Interest Payment Dates in such Bond Year. All moneys in the Interest Account shall be used and
withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due
and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).
(b) Principal Account. On or before each Principal Payment Date, the Trustee shall
set aside from the Housing Debt Service Fund and deposit in the Principal Account (or each subaccount
on a pro rata basis) an amount of money which, together with any money contained therein, is equal to the
aggregate amount of the principal becoming due and payable on all Outstanding Serial Bonds on such
Principal Payment Date. In the event that there shall be insufficient money in the Housing Debt Service
Fund to make in full all such principal payments and Sinking Account Installments required to be made
pursuant to Section 5.06(c) hereof in such Bond Year, then the money available in the Housing Debt
Service Fund shall be applied pro rata to the making of such principal payments and such Sinking
Account Installments in the proportion which all such principal payments and Sinking Account
Installments bear to each other.
No deposit need be made into the Principal Account if the amount contained therein is at
least equal to the aggregate amount of the principal of all Outstanding Serial Bonds becoming due and
payable on the upcoming Principal Payment Date.
All money in the Principal Account shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal and redemption premium, if any, of the Serial Bonds as they shall
become due and payable.
(c) Sinking Account. On or before each Principal Payment Date, the Trustee shall
set aside from the Housing Debt Service Fund and deposit in the Sinking Account an amount of money
equal to the Sinking Account Installment, if any, payable on the Sinking Account Payment Date in such
Bond Year. All moneys in the Sinking Account shall be used by the Trustee to redeem Term Bonds.
(d) Reserve Account. (1) On or before each Interest Payment Date, the Trustee shall
set aside from the Housing Debt Service Fund and deposit in the Reserve Account such amount of money
(or other authorized deposit of security, as contemplated by the following paragraph) as shall be required
to restore the balance in the Reserve Account to an amount equal to the Reserve Account Requirement.
No deposit need be made in the Reserve Account so long as there shall be on deposit therein an amount
equal to the Reserve Account Requirement. All money in (or available to) the Reserve Account shall be
used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account, the
Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any
of such accounts, or for the purpose of paying the interest on or principal of the Bonds in the event that no
other money of the Agency is lawfully available therefor, except that for so long as the Agency is not in
default hereunder, any amount in the Reserve Account in excess of the Reserve Account Requirement
may, upon Written Request of the Agency, be withdrawn from the Reserve Account by the Trustee and
transferred to the Agency. .
80004932.3 28
(2) The Reserve Account Requirement may be satisfied by crediting to the Reserve
Account moneys or a Qualified Reserve Account Credit Instrument or any combination thereof, which in
the aggregate make funds available in the Reserve Account in an amount equal to the Reserve Account
Requirement. Upon the deposit with the Trustee of such Qualified Reserve Account Credit Instrument,
the Trustee shall release moneys then on hand in the Reserve Account to the Agency, to be used for any
lawful purpose relating to the Project Area, in an amount equal to the face amount of the Qualified
Reserve Account Credit Instrument.
(e) Surplus. After making the deposits referred to in paragraphs (a) through (d)
above in any Bond Year, the Trustee shall transfer any amount remaining on deposit in the Housing Debt
Service Fund to the Housing Fund of the Agency to be used for any lawful purpose of the Agency.
SECTION 5.07 Investment of Moneys in Funds and Accounts. Upon the Written Request
of the Agency received by the Trustee at least two Business Days prior to the date of such investment,
moneys in the Housing Debt Service Fund, the Interest Account, the Principal Account, the Sinking
Account, the Reserve Account, and the Housing Expense Fund (and any account therein), shall be invested
by the Trustee in Authorized Investments. In the absence of such instructions the Trustee shall invest in the
investments described in clause H of the definition of "Authorized Investments" set forth in Section 1.01.
The obligations in which moneys in the Housing Debt Service Fund, the Interest Account, the Principal
Account or any Sinking Account are so invested shall mature prior to the date on which such moneys are
estimated to be required to be paid out hereunder. The obligations in which moneys in the Reserve Account
are so invested shall mature no later than the earlier of (a) five years from the date of purchase by the
Trustee or (b) the final maturity date of the Bonds; provided, however, that (i) an obligation which may be
redeemed at par at the option of the Trustee on the Business Day prior to each Interest Payment Date during
which such obligation is outstanding and (ii) an investment agreement which permits the Trustee to
withdraw invested amounts, on any Business Day, on no more than five Business Days' notice, without
penalty, to be used as required by Section 5.06(d), may have any maturity. Any interest, income or profits
from the deposits or investments of all funds and accounts (except the Housing Expense Fund) shall be
deposited in the Housing Debt Service Fund. For purposes of determining the amount on deposit in any
fund or account held hereunder, all Authorized Investments credited to such fund or account shall be valued
monthly at the lower of cost or market value (excluding accrued interest and brokerage commissions, if
any). Except as otherwise provided in this Section, Authorized Investments representing an investment of
moneys attributable to any fund or account and all investment profits or losses thereon shall be deemed at all
times to be a part of said fund or account. Absent negligence or willful misconduct by the Trustee, the
Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds
made by it in accordance with this Section.
The Agency acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Agency the right to receive brokerage
confirmations of security transactions as they occur, the Agency will not receive such confirmations to the
extent permitted by law. The Trustee will furnish the Agency periodic cash transaction statements which
include detail for all investment transactions made by the Trustee hereunder. The Trustee may make any
investments hereunder through its own bond or investment department or trust investment department, or
those of its parent or any affiliate. The Trustee or any of its affiliates may act as a sponsor, advisor or
manager in connection with any investments made by the Trustee hereunder.
Amounts deposited in the Housing Special Fund and the Housing Project Fund may be
invested in any obligations in which the Agency may lawfully invest its funds, including Authorized
Investments.
80004932.3 29
ARTICLE VI
COVENANTS OF THE AGENCY
SECTION 6.01 Punctual Payment. The Agency will punctually pay the interest on and
principal of and redemption premiums, if any, to become due with respect to the Bonds, but only from
Housing Set -Aside Revenues, in strict conformity with the terms of the Bonds and of the Indenture and will
faithfully satisfy, observe and perform all conditions, covenants and requirements of the Bonds and of the
Indenture.
SECTION 6.02 Against Encumbrances. The Agency will not mortgage or otherwise
encumber, pledge or place any charge upon any of the Housing Set -Aside Revenues, except as provided in
the Indenture, and will not issue any obligation or security superior to or on a parity with the Bonds payable
in whole or in part from the Housing Set -Aside Revenues.
SECTION 6.03 Extension or Funding of Claims for Interest. In order to prevent any claims
for interest after maturity, the Agency will not, directly or indirectly, extend or consent to the extension of
the time for the payment of any claim for interest on any Bonds and will not, directly or indirectly, be a party
to or approve any such arrangements by purchasing or funding said claims for interest or in any other
manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of
the Agency, such claim for interest so extended or funded shall not be entitled, in case of default hereunder,
to the benefits of the 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 which shall not have been so extended or funded.
SECTION 6.04 Management and Operation of Properties. The Agency will manage and
operate all properties owned by the Agency and comprising any part of the Project in a sound and business
like manner and in conformity with all valid requirements of any governmental authority relative to the
Project or any part thereof, and will keep such properties insured at all times in conformity with sound
business practice.
SECTION 6.05 Payment of Claims. The Agency will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties
owned by the Agency or upon the Housing Set -Aside Revenues or any part thereof, or upon any funds in the
hands of the Trustee, or which might impair the security of the Bonds; provided that nothing herein
contained shall require the Agency to make any such payments so long as the Agency in good faith shall
contest the validity of any such claims.
SECTION 6.06 Records and Accounts: Financial and Project Statements. The Agency will
keep proper books of record and accounts, separate from all other records and accounts of the Agency, in,
which complete and correct entries shall be made of all transactions relating to the Project. Such books of
record and accounts shall at all times during business hours be subject to the inspection of the Trustee or of
the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then
Outstanding or their representatives authorized in writing.
The Agency will prepare and file with the Trustee annually as soon as practicable, but in
any event not later than two hundred seventy (270) days after the close of each Fiscal Year, so long as any
Bonds are Outstanding, an audited financial statement in reasonable detail relating to the Housing Set -
Aside Revenues and all funds or accounts established pursuant to the Indenture for the preceding Fiscal
Year along with the related opinion of an Independent Certified Public Accountant. The Trustee shall
have no duty to review such financial statement.The Agency will furnish a copy of such audited
financial statement to any Owner upon written request and will distribute a reasonable number of copies
thereof as may be required to investment bankers, security dealers and others interested in the Bonds.
80004932.3 30
The Trustee shall provide such statements with fegard to any funds held by the Trustee hereunder to the
Agency as the Agency may reasonably require to comply with the terms of this Section 6.06.
SECTION 6.07 Protection ofSecurity .aind Rights of Owners. The Agency will preserve
and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights
against all claims and demands of all persons. From and after the sale and delivery of any Bonds by the
Agency, such Bonds shall be incontestable by the Agency.
SECTION 6.08 Payment of Taxes and Other Charges. The Agency will pay and discharge
all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully
imposed upon the Agency or any properties owned by the Agency in the Project Area, or upon the revenues
therefrom, when the same shall become due; provided that nothing herein contained shall require the
Agency to make any such payments so long as the Agency in good faith shall contest the validity of any
such taxes, service charges, assessments or other governmental charges.
SECTION 6.09 Financing the Project. The Agency will continue the financing of the
Project to be aided with the proceeds of the Bonds with all practicable dispatch, and such financing will be
accomplished and completed in a sound, economical and expeditious manner and in conformity with the
Redevelopment Plan and the Law.
SECTION 6.10 Disposition of PropeM in Project Area. The Agency will not participate in
the disposition of any land or real property in the Project Area which will result in such property becoming
exempt from taxation because of public ownership or use or otherwise (except property dedicated for public
right-of-way) if such disposition, when taken together with other such dispositions, would either (a)
aggregate more than 10 percent of the assessed valuation of the property in the Project Area, or (b) cause the
amount of Housing Set -Aside Revenues to be received in the succeeding Bond Year to fall below 125% of
Maximum Annual Debt Service:
SECTION 6.11 Amendment of Redevelopment Plan. If the Agency proposes to amend the
Redevelopment Plan, it shall cause to be filed with the Trustee a Consultant's Report on the effect of such
proposed amendment. If the Consultant's Report concludes that Housing, Set -Aside Revenues will not be
materially reduced by such proposed amendment, the Agency may approve such amendment. If the
Consultant's Report concludes that Housing Set -Aside Revenues will be materially reduced by such
proposed amendment, the Agency shall not approve such proposed amendment. The Trustee shall be
entitled to rely upon any said Report and shall have no duty to verify the information or statements set forth
therein.
SECTION 6.12 Tax Revenues. The Agency shall comply with all requirements of the Law
to insure the allocation and payment to it of the tax increment revenues of the Agency, including, without
limitation; the timely filing of any necessary statements of indebtedness with appropriate officials of the
County.
SECTION 6.13 Further Assurances. The Agency shall adopt, make, execute and deliver
any and all such further indentures, instruments and assurances a's may be reasonably necessary or proper to
carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and
confirming unto the Owners of the Bonds of the rights and benefits provided in the Indenture.
SECTION 6.14 Tax Covenants. For each Series of Bonds, except any Series of Bonds,
which the Agency shall certify to the Trustee is not intended to meet the requirements for tax exemption
under the Code, (the "Tax -Exempt Bonds"), the Agency hereby certifies:
80004932.3 31
(a) Special Definitions: When tised I in this Section, the following terms have the
following meanings:
"Code" means the Internal Revenue Code of 1986.
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
.Regulations.
"Gross Proceeds" means any Proceeds and any replacement proceeds as defined in
section 1.148-1(c) of the Tax Regulations, of any Series of Tax -Exempt Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of any Series of Tax -Exempt Bonds are invested
and that is not acquired to carry out the governmental purposes of such Series of Tax -
Exempt Bonds.
"Proceeds ", with respect to an issue of governmental obligations, has the meaning set
forth in 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.
"Yield" of any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and of any issue of governmental obligations has the meaning set forth in
section 1.148-4 of the Tax Regulations.
(b) Not to Cause Interest to Become Taxable. The Agency covenants that it shall not
use, and shall not permit the use of, and shall not omit to use Gross Proceeds or any other amounts (or any
property the acquisition, construction or improvement of which is to be financed directly or indirectly
with Gross Proceeds) in a manner that if made or omitted, respectively, could cause the interest on any
Tax -Exempt Bond to fail to be excluded pursuant to section 103(a) of the Code from the gross income of
the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the Trustee receives a written opinion of Bond Counsel to the effect that failure to comply
with such covenant will not adversely affect such exclusion of the interest on any Tax -Exempt Bond from
the gross income of the owner thereof for federal income tax purposes, the Agency shall comply with
each of the specific covenants in this Section.
(c) Private Use and 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, the Agency shall take all actions necessary to assure that the Agency at all times prior to the
final retirement of the Tax -Exempt Bonds:
(1) exclusively owns, operates, possesses and provides any services
necessary to allow and maintain each function of every property the acquisition, construction or
improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the
80004932.3 32
Tax -Exempt Bonds and not use or permit the use of such Gross Proceeds (including through any
contractual arrangement with terms different than those applicable to the general public) or any property
acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or
entity (including the United States or any agency, department and instrumentality thereof) other than a
state or local government, unless such use is solely as a member of the general public; and
(2) does not directly or indirectly impose or accept any charge or other
payment by or for the benefit of any person or entity (other than a state or local government) who is
treated as using any Gross Proceeds of the Tax -Exempt Bonds or any property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with such
Gross Proceeds.
(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 Agency shall not use or permit the use of Gross Proceeds of the Tax -Exempt
Bonds to make or finance loans to any person or entity other than a state or local government. For
purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or
entity if: (i) 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; (ii) 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 (iii) 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 Agency shall not (and shall not permit any person to), at any time prior to the
final cancellation of the last Tax -Exempt Bond to be retired, 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 the Series of
Tax -Exempt Bonds within the meaning of said section 148.
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Tax Regulations and rulings thereunder, the Agency shall not take or omit to take (and
shall not permit any person to take or omit to take) any action that would cause any Tax -Exempt Bond to
be "federally guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and
rulings thereunder.
(g) Information Report. The .Agency shall timely file any information required by
section 149(e) of the Code with respect to a Series of Tax -Exempt Bonds with the Secretary of the
Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section
148(f) of the Code and the Tax Regulations:
(1) The Agency shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from all other funds
(and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least
six years after the day on which the last Tax -Exempt Bond is discharged. However, to the extent
permitted by law, the. Agency may commingle Gross Proceeds of Tax -Exempt Bonds with its other
80004932.3 33
monies, provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the Agency shall
calculate the Rebate Amount in accordatce with rules set forth ih section 148(f) of the Code and the Tax
Regulations and rulings thereunder. The Agency shall maintain a copy of the calculation with its official
transcript of proceedings relating to the issuance of the Series of Tax -Exempt Bonds until six years after
the final Computation Date.
(3) In order to assure the excludability pursuant to section 103(a) of the
Code of the interest on the Tax -Exempt Bonds from the gross income of the owners thereof for federal
income tax purposes, within 60 days of each Computation Date the Agency shall pay to the United States
the amount that when added to the future value of previous rebate payments made for the Tax -Exempt
Bonds equals (i) in the case of the Final Computation Date as defined in section 1.148-3(e)(2) of the Tax
Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any
other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, such
rebate payments shall be made by the Agency at the times and in the amounts as are or may be required,
by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and shall be accompanied
by Form 8038-T or such other forms and information as is or may be required by section 148(f) of the
Code and the Tax Regulations and rulings thereunder for execution and filing by the Agency.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Tax Regulations and rulings thereunder, the Agency shall not and shall not permit any
person to, at any time prior to the final retirement of the Tax -Exempt Bonds, enter into any transaction
that reduces the amount required to be paid to.the United States pursuant to paragraph (i) 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 Series of Tax -Exempt Bonds not been
relevant to either party.
0) Tax -Exempt Bonds Not Hedge Bond.
(1) The Agency represents that none of the Tax -Exempt Bonds is or will
become a "hedge bond" within the meaning of section 149(g) of the Code.
(2) Without limitation of paragraph (1) above: (A) the Agency will not
execute and deliver a Series of Tax -Exempt Bonds unless as of the date of issuance of such Series of Tax -
Exempt Bonds the Agency reasonably expects that at' least 85% of the spendable proceeds of such Series
of Tax -Exempt Bonds will be expended within the three-year period commencing on such date of
issuance, and (B) no more than 50% of the proceeds of such Series of Tax -Exempt Bonds will be invested
in Nonpurpose Investments having -a substantially guaranteed yield for a period of four years or more.
(k) Elections. The Agency hereby directs and authorizes,any Agency Representative
to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as
such Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection
with the Tax -Exempt Bonds, in the Tax Certificate or similar or other appropriate certificate, form or
document.
(1) Closing Certificate. The Agency agrees to execute and deliver in connection
with the issuance of the Tax -Exempt Bonds a Tax Certificate as to Arbitrage and the Provisions of
Sections 141-I50 of the Internal Revenue Code of 1986, or similar document containing additional
representations and covenants pertaining to the exclusion of interest on the Tax -Exempt Bonds from the
80004932.3 34
gross income of the owners thereof for federal income tax purposes (the "Tax Certificate"), which
representations and covenants are incorporated as thougli expressly set forth herein.
SECTION 6.15 Agreements with Taxing_ Agencies, Other Agreements. So long as any
Bonds are Outstanding, the Agency shall not (a) enter into any new agreement, or amend any existing
agreement, with any taxing agency entered into (i) pursuant to Section 33401 of the Law or (ii) which
operates as a waiver of the Agency's right to receive Housing Set -Aside Revenues under the Redevelopment
Plan, or (b) enter into any disposition, development, owner participation or other agreement, or amend any
existing agreement, which requires the Agency to make payments from Housing Set -Aside Revenues, unless
the Agency's obligations under such agreement are made expressly subordinate and junior to the Agency's
obligations under this Indenture and the Bonds.
SECTION 6.16 Annual Review of Housing Set -Aside Revenues. The Agency hereby
covenants that it will annually review the total amount of Housing Set -Aside Revenues remaining available
to be received by the Agency under the Redevelopment Plan's cumulative tax increment limitation, as well
as future cumulative Annual Debt Service. The Agency will not accept Housing Set -Aside Revenues greater
than Annual Debt Service, in any year, if such acceptance will cause the amount remaining under the tax
increment limit to fall below remaining cumulative Annual Debt Service, except for the purpose of
depositing such revenues in escrow for the payment of interest on and principal of and redemption
premiums, if any, on the Bonds.
ARTICLE VII
THE TRUSTEE
SECTION 7.01 The Trustee. The Bank of New York Trust Company, N.A. having a
corporate trust office in Los Angeles, California, is hereby appointed Trustee hereunder for the purpose of
receiving all money which the Agency is required to deposit with the Trustee hereunder and to allocate, use
and apply the same as provided in the Indenture.
The Agency may at any time, but only prior to an Event of Default or after the curing or
waiver of an Event of Default and only upon thirty (30) days written notice, at its sole discretion remove
the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors
thereto; provided that any such successor shall be a bank, banking institution (state or federal) or trust
company with a corporate trust office in California, having a combined capital (exclusive of borrowed
capital) and surplus (or whose parent holding company has a combined capital (exclusive of borrowed
capital) and surplus) of at least seventy-five million dollars ($75,000,000), and subject to supervision or
examination by federal or state authority. If such bank, banking institution or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this section the combined capital and
surplus of such bank, banking institution or trust company shall be deemed to be its combined capital and .
surplus as set forth in its most recent report of condition so published.
The Trustee may at any time resign by giving written notice to the Agency. Any
successor trustee appointed hereunder shall give notice of such appointment to the Owners, which notice
shall be mailed to the Owners at their addresses appearing in the registration books in the office of the
Trustee. Upon receiving such notice of resignation, the Agency shall promptly appoint a successor
Trustee by an instrument in writing. Any resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee.
If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee
shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee
may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court
80004932.3 35
may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by
law, appoint a successor Trustee having the qualifications required hereby.
The Trustee is hereby authorized to pay or redeem the Bonds when duly presented for
payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds upon
payment thereof or upon the surrender thereof by the Agency and shall upon Written Request of the
Agency deliver a certificate of destruction to the Agency. The Trustee shall keep accurate records of all
Bonds paid and discharged and destroyed by it.
The Agency shall from time to time, subject to any agreement between the Agency and
the Trustee then in force, pay to the Trustee compensation for its services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, which compensation shall not be limited by any provision of law with respect to
the compensation of a trustee of an express trust, and the Agency will reimburse the Trustee for all its
advances (with interest on such advances at the maximum rate allowed by law) and expenditures,
including but not limited to advances to and fees and expenses of independent accountants, counsel
(including in-house counsel to the extent not duplicative of other counsel's work) and engineers or other
experts employed by it, and reasonably required, in the exercise and performance of its powers and duties
hereunder. The Agency shall indemnify and save the Trustee, its officers, employees, directors and
agents harmless from and against all claims, losses, costs, expenses, liability and damages, including legal
fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work
or thing done on, the Project, (ii) any breach of default on the part of the Agency in the performance of
any of its obligations under this Indenture and any other agreement made and entered into for purposes of
the Project, (iii) any act or omission of the Agency or of any of its agents, assignees or licensees with
respect to the Project, (iv) the acquisition, construction, installation and equipping of the Project or the
authorization of payment of delivery costs or acquisition and construction costs, (v) the exercise and
performance by the Trustee of any of its powers and duties hereunder, or (vi) the offering and sale of the
Bonds or the distribution of any official statement or other offering circular utilized in connection with the
sale of the Bonds; provided, that the Agency shall not be liable for actions caused by the Trustees' own
negligence or willful misconduct. The Trustee's rights to indemnification and protection from liability
hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and
final payment or defeasance of the Bonds. The Trustee shall not be liable for the sufficiency or collection
of any Tax Revenues or other moneys required to be paid to it under the Indenture (except as provided in
this Indenture), or its right to receive moneys pursuant to the Indenture.
SECTION 7.02 Liability of Trustee. The recitals of facts, covenants and agreements
contained herein, in the Bonds and in any instruments of further assurance shall be taken as statements,
covenants and agreements of the Agency, and the Trustee does not assume any responsibility for the
correctness of the same, or make any representation as to the validity or sufficiency of the Indenture or of
the Bonds, the adequacy of any security afforded thereunder, or the correctness or completeness of any
information contained in any offering materials distributed in connection with the sale of the Bonds, or incur
any responsibility in respect of any of the foregoing, other than in connection with the duties or obligations
herein or in the Bonds assigned to or imposed upon it. The Trustee shall not be liable in connection with the
performance of its duties hereunder, except for its own negligence or willful misconduct.
The Trustee shall not be responsible for the validity, genuineness or performance of any
leases, contracts or other instruments at any time conveyed, mortgaged, hypothecated, pledged, assigned
or transferred to it hereunder, or with respect to the obligation of the Agency to preserve and keep
unimpaired the rights of the Agency under or concerning any such leases, contracts or other instruments.
The Trustee makes no representations and shall have no responsibility for any official statement or other
offering material prepared or distributed with respect to the Bonds. In accepting the trust hereby created,
80004932.3 36
the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons,
including without limitation the Owners, the Agency and the City, having any claim against the Trustee
arising from this Indenture not attributable to the Trustee's negligence or willful misconduct shall look
only to the funds and accounts held by the Trustee hereunder for payment except as otherwise specifically
provided herein.
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 Owner pursuant to this Indenture unless the Trustee
shall have received reasonable security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction.
Except during the continuance of an Event of Default, the Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
In case an Event of Default has occurred and is continuing, the Trustee shall exercise
such rights and powers vested in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own
affairs.
In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
The Trustee is not accountable for the use by the Agency of funds which the Trustee
releases to the Agency or which the Agency otherwise receives, or to verify compliance by the Agency
with the provisions of Section 5.02, or for the adequacy or validity of any collateral or security interest
securing this Indenture or the Bonds. The Trustee has no obligation to advance its own funds, incur
individual financial or other liability or risk in performing any duty or in exercising any right hereunder.
The Trustee shall not be deemed to have knowledge of any Event of Default other than a
payment default hereunder unless the Trustee shall be specifically notified in writing of such default by
the Agency or by the Owners of at least twenty five percent (25%) in aggregate principal amount of
Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to
the Trustee must, in order to be effective, be delivered at the corporate trust office of the Trustee in Los
Angeles, California, or at such other address as shall be designated by the Trustee, and, in the absence of
such notice so delivered, the Trustee may conclusively assume there is no Event of Default except as
aforesaid. The Trustee shall not be bound to ascertain or inquire as to the performance or observance by
any other party of any of the terms conditions, covenants or agreements herein or in any of the documents
executed in connection with the Bonds. Any action taken or omitted to be taken by the Trustee in good
faith pursuant to this Indenture upon the request of 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 executed and delivered in exchange therefor or in
place thereof.
The Trustee shall not be required to give any bond or surety in respect of the execution of
the said trusts and powers or otherwise in respect of the premises.
The Trustee shall not. be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Owners of a majority in aggregate principal amount
of the Outstanding Bonds relating to the time, method and place of conducting any proceeding for any
80004932.3 37
remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture.
The duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture. The Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no implied covenants or obligations
(fiduciary or otherwise) shall be read into this Indenture against the Trustee. The permissive right of the
Trustee to do things enumerated in this Indenture 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 and such immunities
and exceptions and its right to payment of its fees and expenses shall survive its resignation or removal
and the final payment and defeasance of the Bonds. Under no circumstances shall the Trustee be liable in
its individual capacity for the obligations evidenced by the Bonds. The Trustee, in its individual or any
other capacity, may become the Owner of any Bonds or other obligations of any party hereto with the
same rights which it would have if not the Trustee and may act as a depository 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. At any and all reasonable times,
the Trustee, and its agents shall have the right (but not any duty) to inspect the Project, including all
books, papers and records of the Agency and the City pertaining to the Project and the Bonds, and to take
such memoranda therefrom and with regard thereto and make photocopies thereof as may be desired.
Before taking or refraining from any action hereunder at the request or direction of the Owners, the
Trustee may require that an indemnity bond satisfactory to the Trustee be furnished to it and be in full
force and effect.
SECTION 7.03 Notice to Trustee. The Trustee shall be protected in acting upon any
notice, indenture, request, consent, order, certificate, report, bond, opinion or other paper or document
believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee
may consult with counsel, who may be counsel to the Agency, with regard to legal questions, and the
opinion of such counsel shall be full and complete authorization and protection in respect of any action taken
or suffered hereunder in good faith and in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond unless
and until such Bond is submitted for inspection, if required, and such person is the registered owner of
such Bond as shown on the registration books.
Whenever in the administration of its duties under the Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in
the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established
by a Certificate of the Agency and such certificate shall be full warrant to the Trustee for any action taken
or suffered under the provisions of the Indenture upon the faith thereof, but in its discretion the Trustee
may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it
may seem reasonable.
ARTICLE VIII
AMENDMENT OF THE INDENTURE
SECTION 8.01 Amendment by Consent of Owners. The Indenture and the rights and
obligations of the Agency and of the Owners may be amended at any time by a Supplemental Indenture
which shall become binding when the written consents of the Owners of at least a majority in aggregate
80004932.3 38
principal amount of the affected Bonds then Outstanding, exclusive of Bonds disqualified as provided in
Section 8.02, are filed with the Trustee. No such amendment shall (1) extend the maturity of or reduce the
interest rate on, or otherwise alter or impair the obligation of the Agency to pay the interest or principal or
redemption premium, if any, at the time and place and at the rate and in the currency provided herein of any
Bond, without the express written consent of the Owner of such Bond, or (2) permit the creation by the
Agency of any mortgage, pledge or lien upon the Housing Set -Aside Revenues superior to or on a parity
with the pledge and lien created in the Indenture for the benefit of the Bonds, or (3) reduce the percentage of
Bonds required for the written consent to any such amendment, or (4) modify the rights or obligations of the
Trustee without its prior written assent thereto.
The Indenture and the rights and obligations of the Agency and of the Owners may also
be amended at any time by a Supplemental Indenture which shall become binding upon execution,
without the consent of any Owners, and to the extent permitted by law and only for any one or more of
the following purposes:
(a) To add to the covenants and agreements of the Agency in the Indenture
contained, other covenants and agreements thereafter to be observed, or to surrender any right or power
herein reserved to or conferred upon the Agency;
(b) To make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained in the Indenture, or in regard to questions
arising under the Indenture, as the Agency may deem necessary or desirable and not inconsistent with the
Indenture, and which shall not materially adversely affect the interest of the Owners;
(c) To provide for the issuance of any Additional Bonds, and to provide the terms
and conditions under which such Additional Bonds may be issued, subject to and in accordance with the
provisions of Article IV;
(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 Owners of the
Bonds;
(e) To maintain the exclusion of interest on the Bonds from gross income for federal
income tax purposes (except with respect to any Bonds which the Agency certifies to the Trustee are not
intended to qualify for such exclusion);
(f) To the extent necessary to obtain a bond insurance policy, to obtain a rating on
the Bonds or in connection with satisfying all or a portion of the Reserve Account Requirement by
crediting a letter of credit or bond insurance policy to the Reserve Account; or
(g) For any other purpose that does not materially adversely affect the interests of the
Owners.
SECTION 8.02 Disqualified Bonds. Bonds owned or held by or for the account of the
Agency or the City shall not be deemed Outstanding for the purpose of any consent or other action in this
Indenture provided for, and shall not be entitled to consent to, or take any other action in this Indenture
provided for; provided, however, that for purposes 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 will be disregarded.
80004932.3 39
it
SECTION 8.03 Endorsement or Replacement of Bonds After Amendment. After the.
effective date of any action taken as hereinabove provided, the Agency may determine that the Bonds may
bear a notation, by endorsement in form approved by the Agency, as to such action, and in that case upon
demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for such
purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for
that purpose, a suitable notation as to such action shall be made on such Bond. If the Agency shall so
determine, new Bonds so modified as, in the opinion of the Agency, shall be necessary to conform to such
action shall be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding
at such effective date such new Bonds shall be exchanged at the office of the Trustee or at such additional
offices as the Trustee may select and designate for that purpose, without cost to each Owner, for Bonds then
Outstanding, upon surrender of such Outstanding Bonds.
SECTION 8.04 Opinion of Counsel. The Trustee may conclusively accept an opinion of
nationally recognized bond counsel to the Agency that an amendment of the Indenture is in conformity with
the provisions of this Article.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES OF OWNERS .
SECTION 9.01 Events of Default and Acceleration of Maturities. If one or more of the
following events (herein called "Events of Default") shall happen, that is to say:
(a) If default shall be made in the due and punctual payment of the principal of or
redemption premium, if any, on any Bond when and as the same shall become due and payable, whether
at maturity as therein expressed, by declaration or otherwise;
(b) If default shall be made in the due and punctual payment of the interest on any
Bond when and as the same shall become due and payable;
(c) If default shall be made by the Agency in the observance of any of the
agreements, conditions or covenants on its part in the Indenture or in the Bonds contained, and such
default shall have continued for a period of 30 days after the Agency shall have been given notice in
writing of such default by the Trustee; provided, however, with the prior written consent of the Insurer
that such default shall not constitute an Event of Default hereunder if the Agency shall commence to cure
such default within said 30 day period and thereafter diligently and in good faith proceed to cure such
default within a reasonable period of time; or
(d) If the Agency shall file 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 Agency, 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 Agency or of the whole or any
substantial part of its property;
then, and in each and every such case during the continuance of such Event of Default, the Trustee may,
and upon the written request of the Owners of not less than a majority in aggregate principal amount of
the Bonds at the time Outstanding, shall, by notice in writing to the Agency, declare the principal of all of
the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due and payable, anything in
the Indenture or in the Bonds contained to the contrary notwithstanding.
80004932.3 40
This provision, however, is subject to the condition that if, at any time after the principal
of the Bonds shall have been so declared due and payable, and before any judgment or decree for the
payment of the money due shall have been obtained or entered, the Agency shall deposit with the Trustee
a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured
installments of interest (if any) upon all the Bonds, with interest at the rate of interest which would have
been paid on such overdue principal on such overdue installments of principal and interest, and any fees
and expenses owed to the Trustee, including attorneys fees, and any and all other defaults known to the
Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by
reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or
provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such
case, the Bond Insurer or the Owners of at least a majority in aggregate principal amount of the Bonds
then Outstanding with the prior written consent of the Bond Insurer, by written notice to the Agency and
to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and
its consequences. No such rescission and annulment shall extend to or shall affect any subsequent
default, or shall impair or exhaust any right or power consequent thereon.
SECTION 9.02 Application of Funds Upon Acceleration. All money in the funds and
accounts provided for in the Indenture upon the date of the declaration of acceleration by the Trustee as
provided in Section 9.01, and all Housing Set -Aside Revenues thereafter received by the Agency hereunder,
shall be transmitted to the Trustee and shall be applied by the Trustee in the following order:
First, to the payment of the costs and expenses of the Trustee, if any, in carrying out the
provisions of this article, including reasonable compensation to its agents and counsel, to the payment of
any other amounts then due and payable to the Trustee, including any predecessor trustee, with respect to
or in connection with this Indenture, whether as compensation, reimbursement, indemnification or
otherwise, and, thereafter, to the payment of the costs and expenses of the Owners in providing for the
declaration of such Event of Default, including reasonable compensation to their agents and counsel;
Second, upon presentation of the several Bonds, and the stamping thereon of the amount
of the payment if only partially paid, or upon the surrender thereof if fully paid, to the payment of the
whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on the
overdue interest and principal at the rate of interest which would have been paid on such overdue
principal, and in case such money shall be insufficient to pay in full the whole amount so owing and
unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue interest
and principallwithout preference or priority among such interest, principal and interest on overdue interest
and principal, ratably to the aggregate of such interest, principal and interest on overdue interest and
principal.
SECTION 9.03 Other Remedies of Owners. Any Owner shall have the right, subject to the
provisions of Section 9.08, for the equal benefit and protection of all Owners similarly situated:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his rights
against the Agency and any of the members, officers and employees of the Agency, and to compel the
Agency or any such members, officers or employees to perform and carry out their duties under the Law
and their agreements with the Owners as provided in the Indenture;
(b) By suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Owners; or
80004932.3 41
(c) Upon the happening of an Event of Default (as defined in Section 9.01), by a suit
in equity to require the Agency and its members, officers and employees to account as the trustee of an
express trust.
SECTION 9.04 Non -Waiver. A waiver of any default or breach of duty or contract by any
Owner shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies
on any such subsequent default or breach. No delay or omission by any Owner or the Trustee 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
Owners by the Law or by this article may be enforced and exercised from time to time and as often as shall
be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned
or determined adversely to the Owners, the Trustee, the Agency and the Owners shall be restored to their
former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
SECTION 9.05 Actions by Trustee as Attorney -in -Fact. Any suit, action or proceeding
which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by
the Trustee for the equal benefit and protection of all Owners, and the Trustee is hereby appointed (and the
successive respective Owners of the Bonds issued hereunder, by taking and holding the same, shall be
conclusively deemed so to have appointed it) the true and lawful attorney in fact of the Owners for the
purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for
and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of the
Trustee as such attorney in fact; provided, however, the Trustee shall have no duty or obligation to enforce
any right or remedy unless it has been indemnified by the Owners from any liability or expense including
without limitation fees and expenses of its attorneys.
SECTION 9.06 Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or
by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy
conferred by the Law or any other law, subject to the provisions of Section 9.08.
SECTION 9.07 Owners' Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and
delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the
method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction
shall not be otherwise than in accordance with law and the provisions of this Indenture, that the Trustee may
take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that
the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee
would be unjustly prejudicial to Owners not parties to such direction.
SECTION 9.08 Limitation on Owners' Right to Sue. No Owner of any Bond shall have the
right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any
right or remedy under this Indenture, the Law or any other applicable law with respect to such Bond, unless
(1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2)
the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or
to institute such suit, action or proceeding in its own name; (3) such Owner or said Owners shall have
tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in
80004932.3 42
compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for
a period of sixty (60) days after such written request shall have been received by, and said tender of
indemnity shall have been made to, the Trustee; and (5) the Trustee shall not have received contrary
directions from the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.
Such notification, request, tender or 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
or under law; it being understood and intended that no one or more Owners shall have any right in any
manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the
rights of any other Owners, or to enforce any right under this Indenture, the Law or other applicable law
with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and
for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this
Indenture.
Nothing in this Section or in any other provision of the Indenture, or in the Bonds, shall
affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the interest on
and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as
herein provided, out of the Housing Set -Aside Revenues pledged for such payment, or affect or impair the
right of action, which is also absolute and unconditional, of such Owners to institute suit to enforce such
payment by virtue of the contract embodied in the Bonds and in the Indenture.
SECTION 9.09 Control. Notwithstanding anything in the Indenture to the contrary, upon
the occurrence and continuance of an Event of Default under the Indenture, the Bond Insurer shall be
entitled to control and direct the enforcement of all rights and remedies granted to the registered owners of
the Bonds or any trustee appointed for the benefit of the registered owners under the Indenture, including
without limitation the Trustee, as if the Bond Insurer were the registered owner of the Bonds insured by it.
ARTICLE X
DEFEASANCE
SECTION 10.01 Discharge of Indebtedness. If the Agency shall pay or cause to be paid, or
there shall otherwise be paid, to the Owners of all Outstanding Bonds the interest due thereon and the
principal thereof, at the times and in the manner stipulated therein and in the Indenture, then the Owners of
such Bonds shall cease to be entitled to the pledge of Housing Set -Aside Revenues, and all covenants,
agreements and other obligations of the Agency to the Owners of such Bonds under the Indenture shall
thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee
shall execute at the Written Request of the Agency, and at the expense of the Agency, and deliver to the
Agency all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee
shall, after payment of amounts due the Trustee hereunder, pay over or deliver to the Agency all money or
securities held by it pursuant to the Indenture which are not required for the payment of the interest due on
and the principal of and premium, if any, due on such Bonds other than the Rebate Amount.
Bonds for the payment of which money shall have been set aside (through deposit by the
Agency or otherwise) to be held in trust by the Trustee for such payment at the maturity or redemption
date thereof shall be deemed, as of the date of such setting aside, to have been paid within the meaning
and with the effect expressed in the first paragraph of this section.
Any Outstanding Bonds shall prior to the maturity date thereof be deemed to have been
paid within the meaning and with the effect expressed in the first paragraph of this section if (1) there
shall have been deposited with the Trustee, or another fiduciary or escrow agent, either money in an
80004932.3 43
amount which shall be sufficient, or Defeasance Obligations the principal of and the interest on which
when paid will provide money which, together with the money, if any, deposited with the Trustee at the
same time, shall be sufficient to pay when due the interest due and to become due on such Bonds on and
prior to the maturity date thereof or such earlier redemption date as shall be irrevocably established, and
the principal of and redemption premium, if any, on such Bonds (the sufficiency of such amounts to be
appropriately verified by an Independent Certified Public Accountant) and (2) the Agency shall have
given the Trustee in form satisfactory to it irrevocable instructions to mail, as soon as practicable, a notice
to the Owners of such Bonds that the deposit required by (1) above has been made with the Trustee and
that such Bonds are deemed to have been paid in accordance with this section and stating the maturity
date or earlier redemption date upon which money is to be available for the payment of the principal of
such Bonds.
Neither Defeasance Obligations nor money deposited with the Trustee pursuant to this
section nor interest or principal payments on any such Defeasance Obligations shall be withdrawn or used
for any purpose other than, and shall be held in trust for, the payment of the interest on and principal of
such Bonds; provided that any cash received from such interest or principal payments on such Defeasance
Obligations deposited with the Trustee, if not then needed for such purpose, shall, to the extent
practicable, be reinvested at the written direction of the Agency in Defeasance Obligations maturing at
times and in amounts sufficient to pay when due the interest on and principal of such Bonds on and prior
to such maturity date thereof, and interest earned from such reinvestments shall be deposited in the
Housing Special Fund. For the purposes of this section, Defeasance Obligations shall mean and include
only such securities as are not subject to redemption prior to their maturity.
SECTION 10.02 Unclaimed Moneys. Anything in the Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds
or interest thereon which remain unclaimed for two (2) years after the date when such Bonds or interest
thereon have become due and payable, if such money was held by the Trustee at such date, or for two (2)
years after the date of deposit of such money if deposited with the Trustee after the said date when such
Bonds or interest thereon become due and payable, shall be repaid by the Trustee to the Agency, 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 Agency for the payment of such Bonds; provided,
however, that before being required to make any such payment to the Agency, the Trustee shall, at the
Written Request of the Agency and at the expense of the Agency, cause to be mailed to the registered
Owners of such Bonds at their addresses as they appear on the registration books of the Trustee a notice that
said money remains unclaimed and that, after a date named in said notice, which date shall not be less than
thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will
be returned to the Agency. Any money held by the Trustee in trust for the payment and discharge of any
Bonds shall not bear interest or be otherwise invested from and after such maturity or redemption date.
ARTICLE XI
FINANCIAL GUARANTY INSURANCE POLICY
SECTION 11.01 [Amendments Requiring Consent of Bond Insurer. Any provision of this
Indenture expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any
manner which adversely affects the rights of the Bond Insurer hereunder without the prior written consent of
the Bond Insurer. Any amendment to this Indenture which requires the consent of Owners of the Bonds
shall also require the consent of the Bond Insurer. The Bond Insurer reserves the right to charge the Agency
a fee for any consent or amendment to this Indenture while the Insurance Policy is outstanding.
Unless otherwise provided in this Article XI, the Bond Insurer's consent shall be required
in addition to consent of the Owners of the Bonds, when required, for the following purposes:
80004932.3 44
(i) execution and delivery of any Supplemental Indenture that would adversely affect the rights of the
Bond Insurer; (ii) removal of the Trustee and selection and appointment of any successor trustee; and (iii)
initiation or approval of any action not described in (i) or (ii) above which requires consent of the Owners
of the Bonds. Notwithstanding any other provision of this Indenture, the Bond Insurer shall have the
right, in lieu of Owners of the Bonds, to consent on behalf of such owners to any Supplemental Indenture
that requires the consent of Owners of Bonds.
SECTION 11.02 Approval of AU Reorganization. Any reorganization or liquidation plan
with respect to the Agency must be acceptable to the Bond Insurer. In the event of any reorganization or
liquidation, the Bond Insurer shall have the right to vote on behalf of all Owners who hold the Bonds absent
a default by the Bond Insurer under the Insurance Policy.
c
SECTION 11.03 Consent of Bond Insurer Upon Default. Anything in this Indenture to the
contrary notwithstanding, upon the occurrence and continuance of an Event of Default as defined in this
Indenture, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies
granted to the Owners or the Trustee for the benefit of the Owners under this Indenture.
SECTION 11.04 Notice to Bond Insurer.
(a) While the Insurance Policy is in effect, the Agency or the Trustee (as to (i) and
(ii)), as appropriate, shall furnish to the Bond Insurer (at the Agency's expense to the attention of the
Surveillance Department, unless otherwise indicated):
(1) as soon as they are available, a copy of any financial statement, audit
and/or annual report of the Agency;
(2) such additional information as the Bond Insurer may reasonably request;
(3) a copy of any notice to be given to the Owners of the Bonds, including,
without limitation, notice of any redemption or defeasance of the Bonds, and any certificate
rendered pursuant to this Indenture relating to the security for the Bonds; and
(4) to the extent that the Agency has entered into a continuing disclosure
agreement with respect to the Bonds, the Bond Insurer shall be included as a party to be
notified of a material significant event required to be given thereunder.
(b) The Agency or the Trustee, as appropriate, shall notify the Bond Insurer (to the
attention of the General Counsel Office) of any failure of the Agency to provide relevant notices,
certificates, etc.
(c) Notwithstanding any other provision of this Indenture, the Trustee or the Agency,
as appropriate, shall immediately notify the Bond Insurer (to the attention of the General Counsel Office)
if at any time there are insufficient moneys to make any payments of principal and/or interest on the
Bonds as required and immediately upon the occurrence of any Event of Default hereunder.
(d) The Agency will permit the Bond Insurer to discuss the affairs, finances and
accounts of the Agency or any information the Bond Insurer may reasonably request regarding the
security for the Bonds with appropriate officers of the Agency. The Trustee or the Agency, as
appropriate, will permit the Bond Insurer to have access to and to make copies of all books and records
relating to the Bonds at any reasonable time.
80004932.3 45
(e) The Bond Insurer shall have the right to direct an accounting with respect to the
Bonds at the Agency's expense, and the Agency's failure to comply with such direction within thirty (30)
days after receipt of written notice of the direction from the Bond Insurer shall be deemed a default
hereunder; provided, however, that if compliance cannot occur within such period, then such period will
be extended so long as compliance is begun within such period and diligently pursued, but only if such
extension would not materially adversely affect the interests of any Owner of the Bonds.
SECTION 11.05 Defeasance Provisions. Notwithstanding any other provision of this
Indenture, in the event that the principal and/or interest due on the Bonds is paid by the Bond Insurer
pursuant to the Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or
otherwise satisfied and not be considered paid by the Agency, and all covenants, agreements and other
obligations of the Agency under this Indenture to the Owners of the Bonds shall continue to exist and shall
run to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such Owners
of the Bonds. To evidence such subrogation (i) in the case of subrogation as to claims for past due interest,
the Trustee shall note the Bond Insurer's rights as subrogee on the registration books of the Agency
maintained by the Trustee upon receipt from the Bond Insurer of proof of the payment of interest thereon to
the Owners of the Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Trustee
shall note the Bond Insurer's rights as subrogee on the registration books of the Agency maintained by the
Trustee upon surrender of the Bonds by the Owners thereof together with proof of the payment of principal
thereof.
SECTION 11.06 Payment Procedure Pursuant to the Insurance Policy. As long as the
Insurance Policy shall be in full force and effect, the Agency and the Trustee agree to comply with the
following provisions:
(a) At least one (1) day prior to all Interest Payment Dates the Trustee will determine
whether there will be sufficient funds in the applicable funds and accounts to pay the principal of or
interest on the Bonds on such Interest Payment Date. If the Trustee determines that there will be
insufficient funds in such funds or accounts, the Trustee shall so notify the Bond Insurer. Such notice
shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable
and whether such Bonds will be deficient as to principal or interest, or both. If the Trustee has not so
notified the Bond Insurer at least one (1) day prior to an Interest Payment Date, the Bond Insurer will
make payments of principal or interest due with respect to the Bonds on or before the first day next
following the date on which the Bond Insurer shall have received notice of nonpayment from the Trustee.
(b) The Trustee shall, after giving notice to the Bond Insurer provided in (a) above,
make available to the Bond Insurer and, at the Bond Insurer's direction, to The Bank of New York, in
New York, New York, as insurance trustee for the Bond Insurer or any successor insurance trustee (the
"Insurance Trustee"), the registration books of the Agency maintained by the Trustee and all records
relating to the funds and accounts maintained under this Indenture.
(c) The Trustee shall provide the Bond Insurer and the Insurance Trustee with a list
of Owners of Bonds entitled to receive principal or interest payments from the Bond Insurer under the
terms of the Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks
or drafts to the Owners of the Bonds entitled to receive full or partial interest payments from the Bond
Insurer and (ii) to pay principal upon the Bonds surrendered to the Insurance Trustee by the Owners of the
Bonds entitled to receive full or partial principal payments from the Bond Insurer.
(d) The Trustee shall, at the time it provides notice to the Bond Insurer pursuant to
(a) above, notify Owners of the Bonds entitled to receive the payment of principal or interest thereon from
the Bond Insurer (i) as to the fact of such entitlement, (ii) that the Bond Insurer will remit to them all or a
80004932.3 46
part of the interest payments next coming due upon proof of the entitlement of the Owners of the Bonds
to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee,
of an appropriate assignment of the right to payment of the Owners of the Bonds, (iii) that should they be
entitled to receive full payment of principal from the Bond Insurer, they must surrender their Bonds
(along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to
permit ownership of such Bonds to be registered in the name of the Bond Insurer) for payment to the
Insurance Trustee, and not the Trustee, and (iv) that should they be entitled to receive partial payment of
principal from the Bond Insurer, they must surrender their Bonds for payment thereon first to the Trustee
who shall note on such Bonds the portion of the principal paid by the Trustee, and then, along with an
appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance
Trustee, which will then pay the unpaid portion of principal.
In the event that the Trustee has notice that any payment of principal of or interest on a
Bond which has become due for payment and which is made to an Owner of Bonds by or on behalf of the
Agency has been deemed a preferential transfer and theretofore recovered from its Owner pursuant to the
United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable
order of a court having competent jurisdiction, the Trustee shall, at the time the Bond Insurer is notified
pursuant to (a) above, notify all Owners of the Bonds that in the event that any Owner's payment is so
recovered, such Owner will be entitled to payment from the Bond Insurer to the extent of such recovery if
sufficient funds are not otherwise available, and the Trustee shall furnish to the Bond Insurer its records
evidencing the payments of principal of and interest on Bonds which have been made by the Trustee and
subsequently recovered from Owners of Bonds and the dates on which such payments were made.
SECTION 11.07 Trustee -Related Provisions. The Trustee may be removed at any time, at
the request of the Bond Insurer, for any breach of the trust set forth in this Indenture. The Trustee shall
provide to the Bond Insurer prior written notice of any Trustee resignation.
Notwithstanding any other provision of this Indenture, in determining whether the rights
of the Owners of the Bonds will be adversely affected by any action taken pursuant to the terms and
provisions of this Indenture, the Trustee shall consider the effect on the Owners of the Bonds as if there
were no Insurance Policy.
Notwithstanding any other provision of this Indenture, no removal, resignation or
termination of the Trustee shall take effect until a successor, acceptable to the Bond Insurer, shall be
appointed.
SECTION 11.08 Bond Insurer as Third Party Beneficiar. To the extent that this Indenture
confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this
Indenture, the Bond Insurer is hereby explicitly recognized as being a third -party beneficiary hereunder and
may enforce any such right, remedy or claim conferred, given or granted under this Indenture.
Notwithstanding any other provision of this Indenture, the Bond Insurer shall be entitled to the rights,
remedies and claims set forth in this Indenture so long as it is not in default under the Insurance Policy.]
80004932.3 47
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Liability of Agency Limited to Housing Set -Aside Revenues.
Notwithstanding anything in this Indenture contained, the Agency shall not be 'required to advance any
money derived from any source of income other than the Housing Set -Aside Revenues for the payment of
the interest on or the principal of the Bonds. The Agency may, however, advance funds for any such
purpose, provided that such funds are derived from a source legally available for such purpose. The
Agency's obligation to pay the Rebate Amount to the United States of America pursuant to Section 6.15
hereof shall be considered the general obligation of the Agency and shall be payable from any available
funds of the Agency.
The Bonds are limited obligations of the Agency and are payable, as to interest thereon
and principal thereof, exclusively from the Housing Set -Aside Revenues, and the Agency is not obligated
_ to pay them except from the Housing Set -Aside Revenues. All of the Bonds are equally secured by a
pledge of, and charge and lien upon, all of the Housing Set -Aside Revenues, and the Housing Set -Aside
Revenues constitute a trust fund for the security and payment of the interest on and the principal of the
Bonds. The Bonds are not a debt of the City of Santa Clarita, the State of California or any of its political
subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in
any event shall the Bonds be payable out of any funds or properties other than those of the Agency. The
Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation
or restriction, and neither the members of the Agency nor any persons executing the Bonds are liable
personally on the Bonds by reason of their issuance.
SECTION 12.02 Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Agency, the Trustee 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 Agency or any member, officer or employee
thereof shall be for the sole and exclusive benefit of the Trustee and the Owners.
SECTION 12.03 Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Agency or any member, officer or employee thereof is named or
referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Agency, that are presently vested
in the Agency or such member, officer or employee, and all the agreements, covenants and provisions
contained in this Indenture by or on behalf of the Agency or any member, officer or employee thereof shall
bind and inure to the benefit of the respective successors thereof whether so expressed or not.
SECTION 12.04 Execution of Documents by Owners. Any request, consent, declaration or
other instrument which this Indenture may require or permit to be executed by Owners may be in one or
more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed
in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, consent, declaration or other instrument, or of such writing
appointing such attorney, may be proved by the certificate of any notary public or other officer authorized
to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act, that
the person signing such request, consent, declaration or other instrument or writing acknowledged to him
the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary
public or other officer.
80004932.3 48
Except as otherwise herein expressly provided, the amount of Bonds transferable by
delivery held by any person executing such request, consent, declaration or other instrument or writing as
a Owner, and the numbers thereof, and the date of his holding such Bonds, may be proved by a certificate,
which need not be acknowledged or verified, satisfactory to the Trustee, executed by a trust company,
bank or other depositary wherever situated, showing that at the date therein mentioned such person had on
deposit with such depositary the Bonds described in such certificate. The Trustee may nevertheless in its
discretion require further or other proof in cases where it deems the same desirable. The ownership of
Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry
books provided for in Section 2.08.
Any request, consent, declaration or other instrument or writing of the Owner of any
Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the
Agency or the Trustee in good faith and in accordance therewith.
SECTION 12.05 Waiver of Personal Liability. No member, officer or employee of the
Agency 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 member, officer or employee of the Agency from the
performance of any official duty provided by law.
SECTION 12.06 Acquisition of Bonds by Agency. All Bonds acquired by the Agency,
whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation.
SECTION 12.07 Content of Certificates and Reports. Every certificate or report of the
Agency with respect to compliance with a condition or covenant provided for in this Indenture shall include
(a) a statement that the person or persons making or giving such certificate or report have read such
covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions contained in such
certificate or report are based; (c) a statement that, in the opinion of the signers, they have made or caused to
be made such examination or investigation as is necessary to enable them to express an informed opinion as
to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in
the opinion of the signers, such condition or covenant has been complied with.
Any such certificate made or given by an officer of the Agency 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 or information with respect to which is in the
possession of the Agency, upon the certificate or opinion of or representations by an officer or officers of
the Agency, 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 exercise of reasonable care should have known that the same were erroneous.
SECTION 12.08 Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Agency or the Trustee may be established and maintained in the
accounting records of the Agency or the Trustee either as a fund or an account, and may, for the purposes of
such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund
or as an account; but all such records with respect to all such funds and accounts shall at all times be
maintained in accordance with sound accounting practices and with due regard for the protection of the
security of the Bonds and the rights of the Owners.
80004932.3 49
SECTION 12.09 Article and Section Headings and References. The headings or titles of
the several articles and sections hereof, and the table of contents appended hereto, shall be solely for
convenience of reference and shall not affect the meaning, construction or effect of this Indenture.
All references herein 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 12.10 Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof provided in this Indenture to be performed on the part of the Agency (or of the Trustee)
should be contrary to law, then such agreement or agreements, such covenant or covenants, or such portions
thereof, shall be null and void and shall be deemed separable from the remaining agreements and covenants
or portions thereof and shall in no way affect the validity of this Indenture or of the Bonds; but the Owners
shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of
law. The Agency hereby declares that it would have adopted this Indenture and each and every other section,
paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the
Bonds pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions,
sentences, clauses or phrases of this Indenture or the application thereof to any person or circumstance may
be held to be unconstitutional, unenforceable or invalid.
SECTION 12.11 Execution in Several Counterparts. This Indenture may be executed in
any number of counterparts. Each of such counterparts shall for all purposes be deemed to be an original
and all such counterparts, or as many of them as the Agency and the Trustee shall preserve undestroyed,
shall together constitute but one and the same instrument.
SECTION 12.12 Business Days. When any action is provided for herein to be done on a
day named or within a specified time period, and the day or the last day of the period falls on a day other
than a Business Day, such action may be performed on the next ensuing Business Day with the same effect
as though performed on the appointed day or within the specified period.
SECTION 12.13 Governing Law. This Indenture shall be governed and construed in
accordance with the laws of the State of California.
SECTION 12.14 Notices. Whenever any notice is required to be given hereunder, such
notice shall be mailed, first class mail, postage prepaid, or delivered by expedited courier, or by facsimile
transmission (with original to follow by mail promptly thereafter), to the following parties at the following
addresses:
If to the Agency: City of Santa Clarita Redevelopment Agency
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Treasurer
If to the Trustee: The Bank of New York Trust Company, N.A.
700 South Flower, 5th Floor
Los Angeles, California 90017-4104
Attention: Corporate Trust Department
Reference: City of Santa Clarita Redevelopment Agency Series 2008
Housing TABs
80004932.3 50
If to the Bond Insurer:
Attention:
Fax:
Phone:
80004932.3 51
IN WITNESS WHEREOF, the City of Santa Clarita Redevelopment Agency has caused
this Indenture to be signed in its name by its duly authorized officer and attested by its Secretary and The
Bank of New York Trust Company, N.A. in token of its acceptance of the trusts created hereunder, has
caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of
the date and year first above written.
Attest:
Secretary
CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY
I�
Executive Director
THE BANK OF NEW YORK TRUST COMPANY,
N.A., as Trustee
LIZ
Authorized Signatory
80004932.3 52
APPENDIX A
[Form of Series 2008 Bond]
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Agency or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
No.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF SANTA CLARITA
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
HOUSING SET-ASIDE TAX ALLOCATION BOND, SERIES 2008
RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP:
September 1, 20_ June _, 2008
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
The City of Santa Clarita Redevelopment Agency, a public body, corporate and politic,
duly organized and existing under and pursuant to the laws of the State of California (the "Agency"), for
value received hereby promises to pay to the registered owner specified above, or registered assigns, on
the Maturity Date specified above the Principal Amount specified above, together with interest thereon
from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is
authenticated during the period from the 16th day of the month next preceding an interest payment date to
and including such interest payment date, in which event it shall bear interest from such interest payment
date, or unless this Bond is authenticated on or before the fifteenth day of the month next preceding the
first interest payment date, in which event it shall bear interest from the dated date shown above) until the
principal hereof shall have been paid, at the Rate of Interest specified above, payable on September 1,
2008, and semiannually thereafter on March 1 and September 1 in each year. Both the interest hereon and
principal hereof are payable in lawful money of the United States of America. The principal (or
redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at
the corporate trust office of The Bank of New York Trust Company, N.A. (the "Trustee") in Los Angeles,
California, or.at such other office as the Trustee may designate (the "Trust Office"). Interest hereon is
payable by check mailed on each interest payment date by first class mail to the person in whose name
this Bond is registered at the close of business on the 15th day of the month next preceding the applicable
interest payment date at such person's address as it appears on the registration books of the Trustee, or
upon written request received by the Trustee prior to the fifteenth day of the month preceding an interest
payment date of an Owner of all of the outstanding Bonds, by transfer in immediately available funds to
80004932.3 A -I
an account within the continental United States designated by such Owner. Terms not defined herein
shall be given the meaning assigned to such terms in the hereinafter defined Indenture.
This Bond is one of a duly authorized issue of bond of the Agency designated "City of
Santa Clarita Redevelopment Agency Housing Set -Aside Tax Allocation Bonds, Series 2008" (the
"Bonds"), limited in aggregate principal amount to $ , issued under the provisions of the
Community Redevelopment Law of the State of California, as supplemented and amended (the "Law"),
and pursuant to the provisions of a Housing Indenture, dated as of June 1, 2008 (the "Indenture"), by and
between the Agency and the Trustee. Terms not defined herein shall be defined as provided in the
Indenture. The Bonds are secured by a lien on Housing Set -Aside Revenues. The Bonds are secured in
accordance with the terms and conditions of the Indenture, and reference is hereby made to the Indenture,
to any indentures supplemental thereto and to the Law for a description of the terms on which the Bonds
are issued, for the provisions with regard to the nature and extent of the security provided for the Bonds
and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of
the registered owners of the Bonds; and all the terms of the Indenture and the Law are hereby
incorporated herein and constitute a contract between the Agency and the registered owner from time to
time of this Bond, and to all the provisions thereof the registered owner of this Bond, by his acceptance
hereof, consents and agrees. Each registered owner hereof shall have recourse to all the provisions of the
Law and the Indenture and shall be bound by all the terms and conditions thereof.
The Bonds are issued to provide moneys to fund low and moderate income housing, as
more particularly described in the Indenture. The Bonds are special obligations of the Agency and are
payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof,
exclusively from the Housing Set -Aside Revenues (as that term is defined in the Indenture and herein
called the "Housing Set -Aside Revenues") and certain other funds, and the Agency is not obligated to pay
them except from the Housing Set -Aside Revenues and such other funds. Each of the Bonds are equally
secured by a pledge of, and charge and lien upon, the Housing Set -Aside Revenues, and the Housing Set -
Aside Revenues constitute a trust fund for the security and payment of the interest on and principal of and
redemption premiums, if any, on the Bonds. Additional tax allocation bonds payable from the Housing
Set -Aside Revenues may be issued which will rank equally as to security with the Bonds, but only subject
to the terms and conditions set forth in the Indenture.
Pursuant to and under the terms of the Indenture, the Agency has covenanted and
warranted that, for the payment of the interest on and principal of and redemption premium, if any, on this
Bond and all other additional tax allocation bonds issued under the Indenture when due, there has been
created a special fund into which all Housing Set -Aside Revenues shall be deposited, and as an
irrevocable charge the Agency has allocated the Housing Set -Aside Revenues to the payment of the
interest on and principal of and redemption premiums, if any, on the Bonds, and the Agency will pay
promptly when due the interest on and principal of and redemption premium, if any, on this Bond and all
other Bonds of this issue and all additional tax allocation bonds authorized by the Indenture out of said
special fund, all in accordance with the terms and provisions set forth in the Indenture.
The Bonds maturing on or after September 1, 20_ shall be subject to optional
redemption prior to maturity at the option of the Agency on any date on or after September 1, 20 , as a
whole or in part by lot from any source and deposited with the Trustee (notice of such redemption having
been given by the Agency to the Trustee no later than 45 days prior to the date of redemption) at a
redemption price equal to the principal amount to be redeemed together with accrued interest to the date
fixed for redemption.
The Bonds maturing on September 1, 20_, are also subject to redemption prior to their
stated maturity, in part by lot, from Sinking Account Installments deposited in the Sinking Account, at the
80004932.3 A-2
principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium,
according to the following schedules:
Term Bonds Maturing September 1, 20_,
Redemption Date Redemption Date
(September 1) Principal Amount (September 1) Principal Amount
*Matuntyl
As provided in the Indenture, notice of redemption of this Bond shall be mailed by first
class mail not less than thirty (30) days before the redemption date to the registered owner hereof, but
failure to receive such notice shall not affect the sufficiency of such proceedings for redemption. If notice
of redemption has been duly given as aforesaid and money for payment of the above described
redemption price is held by the Trustee, then such Bonds shall, on the redemption date designated in such
notice, become due and payable at the above described redemption price; and from and after the date so
designated interest on the Bonds so called for redemption shall cease to accrue and registered owners of
such Bonds shall have no rights in respect thereof except to receive payment of such redemption price
thereof.
If an event of default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and -with the effect provided in the
Indenture; except that the Indenture provides that in certain events such declaration and its consequences
may be rescinded by the registered owners of at least a majority in aggregate principal amount of the
Bonds then outstanding.
The owner of any Bond or Bonds may surrender the same at the Trust Office in exchange
for an equal aggregate principal amount of fully registered Bonds of any other authorized denominations,
in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture.
This Bond is transferable, as provided in the Indenture, only upon a register to be kept for
that purpose at the Trust Office by the registered owner hereof in person, or by his duly authorized
attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the
Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds, in the same aggregate principal amount, shall be issued to the transferee in
exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The
Agency and the Trustee may deem and treat the person in whose name this Bond is registered as the
absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and
principal hereof and redemption premium, if any, hereon and for all other purposes. The Trustee shall not
be required to register the transfer or exchange of any Bond during the period in which the Trustee is
selecting Bonds for redemption or any Bond selected for redemption.
The rights and obligations of the Agency and of the registered owners of the Bonds may
be amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no
such amendment shall (1) extend the maturity of this Bond, or reduce the interest rate hereon, or
80004932.3 A-3
otherwise alter or impair the obligation of the Agency to pay the interest hereon or principal hereof or any
premium payable on the redemption hereof at the time and place and at the rate and in the currency
provided herein, without the express written consent of the registered owner of this Bond, or (2) permit
the creation by the Agency of any mortgage, pledge or lien upon the Housing Set -Aside Revenues
superior to or on a parity with the pledge and lien created in the Indenture for the benefit of the Bonds and
all additional tax allocation bonds authorized by the Indenture or (3) reduce the percentage of Bonds
required for the written consent to an amendment of the Indenture, or (4) modify any rights or obligations
of the Trustee without its prior written assent thereto; all as more fully set forth in the Indenture.
This Bond is not a debt of the City of Santa Clarita, the State of California or any of its
political subdivisions, and neither said City, said State nor any of its political subdivisions is liable
hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be
payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an
indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and
neither the members of the Agency nor any persons executing the Bonds shall be personally liable on the
Bonds by reason of their issuance.
This Bond shall not be entitled to any benefits under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have been
manually signed by the Trustee.
It is hereby certified that all of the acts, conditions and things required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist, have
happened and have been performed in due time, form and manner as required by law and that the amount
of this Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed by
the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted
to be issued under the Indenture.
IN WITNESS WHEREOF, the City of Santa Clarita Redevelopment Agency has caused
this Bond to be executed in its name and on its behalf by its Executive Director and attested by its
Secretary, and has caused its seal to be reproduced hereon, and has caused this Bond to be dated on the
date first written above.
CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY
LIM
Executive Director
(Seal)
Attest:
Secretary
80004932.3 A-4
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within -mentioned Indenture and registered on
the Bond Registration Books.
Date:
THE BANK OF NEW YORK TRUST COMPANY,
N.A., as Trustee
:A
Authorized Signatory
80004932.3 A -S
[FORM OF 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.
80004932.3 A-6
STATEMENT OF INSURANCE
[to follow].
80004932.3 A-%
APPENDIX B
[Form of Housing Expense Fund Requisition]
REQUISITION NO.
with reference to
City of Santa Clarita Redevelopment Agency
Housing Set -Aside Tax Allocation Bonds, Series 2008
I. The City of Santa Clarita Redevelopment Agency (the "Agency") hereby
requests The Bank of New York Trust Company, N.A., as trustee (the "Trustee") pursuant to that certain
Indenture dated as of June 1, 2008 (the "Indenture") between the Agency and the Trustee, under the terms
of which the Agency has issued the above -captioned Bonds to pay from the moneys in the specified
Accounts of the Housing Expense Fund established pursuant to Section 5.03 of the Indenture (the
"Housing Expense Fund"), the amounts shown on Schedule I attached hereto to the parties indicated in
Schedule 1.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Housing Expense Fund. None of the items for which payment is requested
has been reimbursed previously from the Housing Expense Fund.
DATED: 320
CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY
Treasurer
80004932.3 B-1
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
and
THE BANK OF NEW YORK TRUST COMPANY, N.A.
as Trustee
INDENTURE
Dated as of June 1, 2008
Relating to
City of Santa Clarita Redevelopment Agency
(Newhall Redevelopment Project Area)
Tax Allocation Bonds, Series 2008
IJ
80005086.3
5/2/08
SECTION 1.01
SECTION 1.02
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Definitions...................................................................................................................2
EqualSecurity ...........................................................................................................16
ARTICLE II
THE BONDS; SERIES 2008 BOND PROVISIONS
SECTION2.01 Authorization.............................................................................................................16
SECTION 2.02 Terms of Series 2008 Bonds.....................................................................................17
SECTION 2.03 Form of Series 2008 Bonds.......................................................................................17
SECTION 2.04 Redemption of Series 2008 Bonds; Selection of Bonds; Purchase in Lieu of
Redemption; Notice...................................................................................................17
SECTION 2.05 Execution of Bonds...................................................................................................19
SECTION 2.06 Transfer and Registration of Bonds.........................................:...............:.................20
SECTION 2.07 Exchange of Bonds....................................................................................................20
SECTION 2.08 Bond Registration Books...........................................................................................20
SECTION 2.09 Mutilated, Destroyed, Stolen or Lost Bonds.............................................................20
SECTION 2.10 Temporary Bonds......................................................................................................21
SECTION 2.11 Validity of Bonds......................................................................................................21
SECTION 2.12 Book -Entry System...................................................................................................21
ARTICLE III
ISSUANCE OF SERIES 2008 BONDS; APPLICATION OF PROCEEDS OF SALE
SECTION 3.01 Issuance of Series 2008 Bonds..................................................................................22
SECTION 3.02 Sale of Series 2008 Bonds -- Allocation of Proceeds Among Funds and
Accounts.................................................................................................................... 23
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
SECTION 4.01 Conditions for the Issuance of Additional Bonds......................................................23
SECTION 4.02 Procedure for the Issuance of Additional Bonds.......................................................25
ARTICLE V
TAX REVENUES; CREATION OF FUNDS
SECTION 5.01
Pledge of Tax Revenues............................................................................................26
SECTION 5.02
Special Fund; Receipt and Deposit of Tax Revenues; Debt Service Fund ...............26
SECTION 5.03
Establishment of Other Funds .......................................................
............................26
SECTION 5.04
Redevelopment Fund. Moneys in the Redevelopment Fund shall be used for
the purpose of aiding in financing the Project (or for making reimbursements
to the Agency for such costs theretofore paid by it), including payment of all
costs incidental to or connected with such financing................................................27
SECTION5.05
Expense Fund............................................................................................................27
SECTION 5.06
Establishment and Maintenance of Accounts for Use of Moneys in the Debt
.Service Fund..............................................................................................................27
SECTION 5.07
Investment of Moneys in Funds and Accounts.........................................................29
80005086.3
SECTION 6.01
SECTION 6.02
SECTION 6.03
SECTION 6.04
SECTION 6.05
SECTION 6.06
SECTION 6.07
SECTION 6.08
SECTION 6.09
SECTION 6.10
SECTION 6.11
SECTION 6.12
SECTION 6.13
SECTION 6.14
SECTION 6.15
SECTION 6.16
SECTION 7.01
SECTION 7.02
SECTION 7.03
TABLE OF CONTENTS
(Continued)
Page
ARTICLE VI
COVENANTS OF THE AGENCY
PunctualPayment......................................................................................................29
AgainstEncumbrances..............................................................................................29
Extension or Funding of Claims for Interest.............................................................30
Management and Operation of Properties.................................................................30
Paymentof Claims....................................................................................................30
Records and Accounts; Financial and Project Statements........................................30
Protection of Security and Rights of Owners............................................................30
Payment of Taxes and Other Charges.......................................................................30
Financingthe Project.................................................................................................31
Disposition of Property in Project Area....................................................................31
Amendment of Redevelopment Plan.........................................................................31
TaxRevenues............................................................................................................
31
Further Assurances....................................................................................................31
TaxCovenants...........................................................................................................31
Agreements with Taxing Agencies; Other Agreements............................................34
Annual Review of Tax Revenues..............................................................................35
ARTICLE VII
THE TRUSTEE
TheTrustee................................................................................................................35
Liabilityof Trustee....................................................................................................36
Noticeto Trustee.......................................................................................................38
ARTICLE VIII
AMENDMENT OF THE INDENTURE
SECTION 8.01 Amendment by Consent of Owners..........................................................................38
SECTION 8.02 Disqualified Bonds....................................................................................................39
SECTION 8.03 Endorsement or Replacement of Bonds After Amendment......................................40
SECTION 8.04 Opinion of Counsel...................................................................................................40
ARTICLE DX
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTION 9.01 Events of Default and Acceleration of Maturities.....................................................40
SECTION 9.02 Application of Funds Upon Acceleration..................................................................41
SECTION 9.03 Other Remedies of Owners.......................................................................................41
SECTION 9.04 Non-Waiver...............................................................................................................42
SECTION 9.05 Actions by Trustee as Attorney-in-Fact....................................................................42
SECTION 9.06 Remedies Not Exclusive...........................................................................................42
SECTION 9.07 Owners' Direction of Proceedings............................................................................42
SECTION 9.08 Limitation on Owners' Right to Sue.........................................................................42
SECTION9.09 Control.......................................................................................................................43
80005086.3 11
TABLE OF CONTENTS
(Continued)
Page
ARTICLE X
DEFEASANCE
SECTION 10.01 Discharge of Indebtedness.........................................................................................43
SECTION 10.02 Unclaimed Moneys....................................................................................................44
ARTICLE XI
FINANCIAL GUARANTY INSURANCE POLICY
SECTION 11.01 [Amendments Requiring Consent of Bond Insurer...................................................44
SECTION 11.02 Approval of Any Reorganization..............................................................................45
SECTION 11.03 Consent of Bond Insurer Upon Default.....................................................................45
SECTION 11.04 • Notice to Bond Insurer............................................................................................:.45
SECTION 11.05 Defeasance Provisions...............................................................................................46
SECTION 11.06 Payment Procedure Pursuant to the Insurance Policy................................................46
SECTION 11.07 Trustee -Related Provisions........................................................................................47
SECTION 11.08 Bond Insurer as Third Party Beneficiary ...................................................................47
ARTICLE XII
MISCELLANEOUS
SECTION 12.01
Liability of Agency Limited to Tax Revenues..........................................................48
SECTION 12.02
Benefits of Indenture Limited to Parties...................................................................48
SECTION 12.03
Successor Is Deemed Included in All References to Predecessor .............................48
SECTION 12.04
/ Execution of Documents by Owners ........................................... ¢............................48
SECTION 12.05
Waiver of Personal Liability ......................................................................................49
SECTION 12.06
Acquisition of Bonds by Agency..............................................................................49
SECTION 12.07
Content of Certificates and Reports..........................................................................49
SECTION 12.08
Funds and Accounts..............................................................................::..................49
SECTION 12.09
Article and Section Headings and References...........................................................50
SECTION 12.10
Partial Invalidity ........................................................................................................50
SECTION 12.11
Execution in Several Counterparts............................................................................50
SECTION12.12
Business Days...........................................................................................................50
SECTION12.13
Governing Law...........................................................................................................50
SECTION12.14
Notices.......................................................................................................................50
APPENDIX A Form
of Series 2008 Bond...............................................................................................
A-1
APPENDIX B Form
of Expense Fund Requisition..................................................................................
B-1
80005086.3 111
INDENTURE
This Indenture (the "Indenture") is entered into and dated as of June 1, 2008, by and
between the City of Santa Clarita Redevelopment Agency, a public body, corporate and politic, organized
and existing under and by virtue of the laws of the State of California (the "Agency"), and The Bank of
New York Trust Company, N.A., a national association organized under the laws of the United States of
America, duly authorized to accept and execute trusts of the character herein set forth as trustee (the
"Trustee").
RECITALS
A. The Agency is a Redevelopment Agency and a redevelopment agency, a public body,
corporate and politic duly created, established and authorized to transact business and exercise its powers,
all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the Health and
Safety Code of the State of California and the acts amendatory and supplemental thereto and referred to
herein as the "Law") and Part 1.7 of Division 24 of the Health and Safety Code of the State of California
and the powers of such agency include the power to issue bonds for any of its corporate purposes.
B. A redevelopment plan (the "Redevelopment Plan") for a redevelopment project known
and designated as the "Newhall Redevelopment Project Area" (the "Project Area") has been adopted and
approved and all requirements of law for, and precedent to, the adoption and approval of said plan have
been duly complied with.
C. The Redevelopment Plan contemplates that the Agency will issue its bonds to finance a
portion of the cost of such redevelopment.
D. Concurrent with the execution and delivery of this Indenture, the Agency has issued its
Housing Set -Aside Tax Allocation Bonds, Series 2008 (the "Housing Bonds"), in the aggregate principal
amount of $ , for the purpose of providing moneys to finance low and moderate income
housing within and of benefit to the Agency.
E. For the'purpose of financing additional projects within the Project Area, the Agency has
determined to issue its Tax Allocation Bonds, Series 2008, in the aggregate principal amount of
$ (the "Series 2008 Bonds") pursuant to and secured by this Indenture.
F. The Agency has determined to issue the Series 2008 Bonds pursuant to this Indenture and
to secure the Series 2008 Bonds in the manner provided herein, which manner shall be a lien on Tax
Revenues.
G. All things necessary to cause_ the Series 2008 Bonds, when authenticated by the Trustee
and issued as in this Indenture provided, to be legal, special obligations of the Agency, enforceable in
accordance with their terms, and to constitute this Indenture a valid agreement for the uses and purposes
herein set forth in accordance with its terms, have been done and taken, and the creation, execution and
delivery of this Indenture and the creation, execution and issuance of the Series 2008 Bonds, subject to
the terms hereof, have in all respects been duly authorized.
NOW THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the 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
80005086.3
and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by Owners
thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Agency
does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to
time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; 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 the Bonds and of any certificate, opinion,
report, request or other document herein or therein mentioned have the meanings herein specified.
Accreted Value
The term "Accreted Value" means, with respect to any Capital Appreciation Bonds, as of
any date of calculation, the sum of the initial amount thereof and the interest accrued and compounded
thereon, as determined in accordance with the provisions of the Supplemental Indenture authorizing
issuance of such Bonds, to such date of calculation.
Additional Allowance
The term "Additional Allowance" means, as of the date of calculation, the amount of Tax
Revenues which, as shown in a Consultant's Report, are estimated to be receivable by the Agency in the
next Fiscal Year as a result of increases in the assessed valuation of taxable property in the project areas
of the Agency due to either (i) construction which has been completed for which a certificate of
occupancy (or similar instrument) has been issued by the City or other appropriate governmental agency
but has not yet been reflected on the tax roll, or (ii) transfer of ownership or any other interest in real
property, which is not then reflected on the tax roll, as evidenced by written documentation of the County
or other appropriate governmental agency.
Additional Bonds
The term "Additional Bonds has the meaning given to it, in Article IV hereof.
AgencX
The term "Agency" means the City of Santa Clarita Redevelopment Agency, a public
body, corporate and politic, duly organized and existing under and pursuant to the Law and Part 1.7 of
Division 24 of the Health and Safety Code of the State of California.
Annual Debt Service; Average Annual Debt Service; Maximum Annual Debt Service
The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest
falling due on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are
retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the Sinking
Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of
sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their
terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be
paid or called and redeemed in such Bond Year.
80005086.3 2
With respect to Capital Appreciation Bonds, the Accreted Value payment shall be
deemed due on the scheduled redemption or payment date of such Capital Appreciation Bonds.
If any Bonds bear interest payable pursuant to a variable interest rate formula, the interest
rate on such Bonds for periods when the actual interest rate cannot yet be determined shall be assumed to
be equal to the greater .of (a) the most recently published Bond Buyer 25 Bond Revenue Index (or
comparable index if such 25 Bond Revenue Index is no longer published) or (b) the average variable rate
of interest borne by such Bonds during the preceding 36 months or, if such Bonds were not outstanding
during all of the preceding 36 months, the highest interest rate borne by variable interest rate debt for
which the interest rate is computed by reference to a variable interest rate formula comparable to that
utilized for such Bonds.
"Annual Debt Service" shall not include (a) interest on Bonds which is to be paid from
amounts constituting capitalized interest or (b) principal and interest allocable to that portion of the
proceeds of any Bonds required to remain unexpended and to be held in escrow pursuant to the terms of a
Supplemental Indenture, provided that (i) projected interest earnings on such amounts, if any, deposited
by the Agency in the Interest Account, are sufficient to pay the interest due on such portion of the Bonds
so long as it is required to be held in escrow and (ii) the conditions for the release of such proceeds from
escrow, insofar as they relate to Tax Revenue coverage and satisfaction of the Reserve Account
Requirement, are substantially the same as those for the issuance of Additional Bonds.
The term "Average Annual Debt Service" means the average Annual Debt Service over
all Bond Years.
The term "Maximum Annual Debt Service" means the largest Annual Debt Service
during the period from the date of calculation through the final maturity date of any Outstanding Bonds.
Assessed Value
The term "Assessed Value" shall mean the value of property as determined by the County
and confirmed in a Consultant's Report
Authorized Investments
The term "Authorized Investments" means any of the following:
A. (1) Direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America ("United States Treasury Obligations"), (2) obligations fully
and unconditionally guaranteed as to timely payment of principal and interest by the United States of
America, (3) obligations fully and unconditionally guaranteed 'as to timely payment of principal and
interest by any agency or instrumentality of the United States of America when, such obligations are
backed by the full faith and credit of the United States of America, or (4) evidences of ownership of
proportionate interests in future.interest and principal payments on obligations described above 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 government
obligations are not available to any person claiming through the custodian or to whom the custodian may
be obligated.
B. The listed obligations of government-sponsored agencies which are not backed
by the full faith and credit of the United States of America:
80005086.3
r
(1) Federal Home Loan Mortgage Corporation (FHLMC)
- Participation certificates (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
- Senior Debt obligations
(2) Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit
Banks and Banks for Cooperatives)
- Consolidated system -wide bonds and notes
(3) . Federal Home Loan Banks (FHL Banks)
- Consolidated debt obligations
(4) Federal National Mortgage Association (FNMA)
- Senior debt obligations
- Mortgage-backed securities (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
(5) Financing Corporation (FICO)
- Debt obligations
(6) Resolution Funding Corporation (REFCORP)
- Debt obligations
C. Nonnegotiable certificates of deposit issued by a nationally chartered bank, a
bank chartered by the State of California or to a foreign banking corporation authorized pursuant to
Section 1756 of the California Financial Code to transact business in the State of California by accepting
deposits, or a State of California or federal savings and loan association, including the Trustee, its parent
holding company and their affiliates, provided that such certificates of deposit are fully collateralized in
the manner required for collateralization of trust funds, and provided that such certificates of deposit shall
be limited to those issued by financial institutions whose long-term unsecured general obligations are
rated Aa or better by Moody's and AA or better by S&P.
D. Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation (FDIC), in banks, including affiliates of the Trustee, its parent company and their
affiliates, which have capital and surplus of at least $50 million.
E. Investment agreements acceptable to the Bond Insurer with domestic banks, U.S.
branches of foreign banks or insurance companies (or corporations whose obligations are guaranteed by
an insurance company (in the form of an insurance policy) or by an insurance holding company), the
long-term debt or claims paying ability of which, or, in the case of a. guaranteed corporation the long-term
debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the
guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's; provided that by the terms of the
investment agreement:
(1) interest on the investment should be paid to the Trustee at least one (1) Business
Day prior to each payment date for the bonds for application in accordance with
the bond documents;
(2) if invested funds are needed for indenture permitted purposes (excluding
reinvestment or surety substitution), there will be no penalty or recourse to the
Agency, including the cash payment paid by the provider at settlement of the
80005086.3 4
investment agreement. If monies are withdrawn for indenture permitted
purposes, they will be reinvested (replenished) at a rate at least equal to the
original contract rate. The investment agreement provider shall permit
replenishment for up to one (1) year;
(3) the investment agreement shall state that it is the unconditional and general
obligation of, and is not subordinated to any other general unsecured obligation
of, the provider thereof, and must expressly disclaim any right of set-off or
counter -claim, including with respect to any cost relating to termination of the
investment agreement;
(4) the Agency and the Trustee receive the opinion of domestic counsel (which
opinion shall be addressed to the Agency and the Trustee) that such investment
agreement is legal, valid, binding and enforceable upon the provider in
accordance with its terms. For transactions involving U.S. branches of foreign
banks, the bank shall deliver an opinion of foreign counsel to the effect that in
form and substance is acceptable, and addressed to, the Trustee and the Agency;
(5) the investment agreement shall provide that if during its term:
(a) the provider's (or its guarantor's) rating by either S&P or Moody's (i) is
suspended, (ii) is withdrawn, or (iii) drops below "AA-" or "AaY,
respectively, the Agency must be notified, in writing, within five (5)
business days of said ratings suspension, withdrawal or downgrade
below "AA-" or "AaY, respectively. The Agency has the right, but not
the obligation, to require the provider within five (5) days of its receipt of
notice to either (x) collateralize the investment agreement by delivering
or transferring in accordance with applicable state and federal laws (other
than by means of entries on the provider's books) to the Agency, the
Trustee or a third party acting solely as agent therefor (the "Holder of the
Collateral") collateral free and clear of any third -party liens or claims, the
Parket value of which collateral is maintained at one hundred four
percent (104%) of the total principal deposited under the investment
agreement for U.S. direct Treasury obligations, GNMA obligations and
full faith and credit U.S. Government obligations and 105% of the total
principal deposited under the investment agreement for FNMA and
FHLMC; (y) assign the investment agreement and all of its obligations
thereunder to a financial institution mutually acceptable to the Agency
and the Trustee which is rated either in the first or second highest
category by S&P and Moody's; or (z) repay the principal of and accrued
but unpaid interest on the investment, and
(b) the provider's (or its guarantor's) rating by either S&P or Moody's is
(i)withdrawn, (ii) suspended, or (iii) falls below "A-" or "A3",
respectively, the Agency has the right, but not the obligation, to require
the provider, within five (5) days of receipt of such direction to, (y)
deliver to the bond trustee additional permitted collateral, or (z) repay the
principal of and accrued but unpaid interest on the investment, in either
case with no penalty or premium to the Agency or Trustee; and
80005086.3
(c) the investment agreement shall state and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider
under the terms of the investment agreement, at the time such collateral
is delivered, that the Holder of the Collateral has a perfected first priority
security interest in the collateral, any substituted collateral and all
proceeds thereof (in the case of bearer securities, this means the Holder
of the Collateral is in possession), also the collateral must be marked to
market at least weekly;
(6) the investment agreement must provide that upon an occurrence of default, the
Agency must be notified within five (5) business days and any remedies are at
the direction of the Agency or the Trustee, including, but not limited to,
terminating the investment agreement without penalty.
F. Repurchase agreements with financial institutions, domestic banks, U.S. branches
of foreign banks, any broker dealer with "retail customers" which falls under the jurisdiction of the
Securities Investors Protection Corporation (SIPC), or Insurance companies (or corporations whose
obligations are guaranteed by an insurance company (in the form of an insurance policy) or by an
insurance holding company), the long-term debt or claims paying ability. of which, or, in the case of a
guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance
company, claims paying ability, of the guarantor is rated at least "AA" by S&P and "AaY by Moody's;
provided that: (i) the over -collateralization is at one hundred two percent (102%), computed weekly,
consisting of such securities as described in this section, items A. and B; (ii) a third party custodian, the
Trustee or the Federal Reserve Bank shall have possession of such obligations; (iii) the Trustee shall have
perfected a first priority security interest in such obligations; and (iv) failure to maintain the requisite
collateral percentage will require the Trustee to liquidate the collateral.
G. Forward Delivery or Forward Purchase Agreements with underlying securities of
the types outlined in A. and B. above.
H. Money market funds rated in the two highest rating categories by Standard &
Poor's Corporation and Moody's Investor Service, Inc., which invest in U. S. treasuries and U.S. agencies
including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries
of the Trustee provide investment advisory or other management services.
I. The Local Agency Investment Fund (LAIF) created pursuant to Section 16429.1
et seq. of the California Government Code.
Book Entry Bonds
The term "Book Entry Bonds" means Bonds of any Series registered in the name of the
Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of Section 2.12
hereof.
Bond Insurer
The term `Bond Insurer" means the Bond Insurer for any Series of Bonds and with
respect to the Series 2008 Bonds, shall mean
80005086.3
Bonds, Series 2008 Bonds, Additional Bonds, Capital Appreciation Bonds • Serial Bonds Term Bonds
The term "Bonds" means the Series 2008 Bonds and all Additional Bonds.
The term "2008 Bonds" or "Series 2008 Bonds" means the City of Santa Clarita
Redevelopment Agency (Newhall Redevelopment Project Area), Tax Allocation Bonds, Series 2008.
The term "Additional Bonds" means all tax allocation bonds of the Agency authorized
and executed pursuant to the Indenture and issued and delivered in accordance with Article IV.
The term "Capital Appreciation Bonds" means any Additional Bonds described as such
when issued.
The term "Serial Bonds" means Bonds for which no mandatory sinking account
payments are provided.
The term "Term Bonds" means Bonds which are payable on or before their specified
maturity dates from mandatory sinking account payments established for that purpose and calculated to
retire such Bonds on or before their specified maturity dates, including Escrow Bonds which are term
bonds.
Bond Year
The term "Bond Year" means each twelve month period extending from September 2 in
one calendar year to September 1 of the succeeding calendar year, both dates inclusive; except that the
first Bond Year shall extend from the Closing Date to September 1, 2008.
Business Day
The term "Business Day" means a day other than a Saturday, a Sunday or a day on which
banks located in the city where the corporate trust office of the Trustee is located are required or
authorized to remain closed. .
Certificate of the AjZency
The term "Certificate of the Agency" means an instrument in writing signed by the
Chairman, the Executive Director or the Treasurer of the Agency, or by any other officer of the Agency
duly authorized by the Agency for that purpose.
Lfty
The term "City" means the City of Santa Clarita, California.
Closing Date
The term "Closing Date" means the date of delivery of a Series of Bonds to the original
purchaser thereof. The Closing Date for the Series 2008 Bonds is June , 2008.
Code
The term "Code" means the Internal Revenue Code of 1986, and any regulations
promulgated thereunder.
80005086.3 7
Consultant's Repo
The term "Consultant's Report" means a report signed by an Independent Financial
Consultant or an Independent Redevelopment Consultant, as may be appropriate to the subject of the
report, and including:
Coun
(1) a statement that the person or firm making or giving such report has read the
pertinent provisions of this Indenture to which such report relates;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the report is based;
(3) a statement that, in the opinion of such person or firm, sufficient examination or
investigation was made as is necessary to enable said Independent Financial Consultant or
Independent Redevelopment Consultant to express an informed opinion with respect to the
subject matter referred to in the report.
The term "County" means the County of Los Angeles, California.
Debt Service Fund
The term "Debt Service Fund" means the fund by that name held by the Trustee pursuant
to Section 5.02.
Defeasance Obligations
The term "Defeasance Obligations" means any of the following:
A. U.S. Treasury Certificates, Notes and Bonds (including State and Local
Government Series -- " SLGs");
B. Direct obligations of the Treasury which have been stripped by the
Treasury itself, CATS, TIGRS and similar securities;
C. Resolution Funding Corp. (REFCORP) Only the interest component of
REFCORP strips which have been stripped by request to the Federal
Reserve Bank of New York in book entry form are acceptable;
D. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by
S&P. If however, the issue is only rated by S&P (i.e., there is no
Moody's rating), then the pre -refunded bonds must have been pre -
refunded with cash, direct U.S. or U.S. guaranteed obligations, or
"AAA" rated pre -refunded municipals to satisfy this condition;
E. Obligations issued by the following agencies which are backed by the
full faith and credit of the U.S.:
U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial
ownership
80005086.3
2. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures (FHA)
5. General Services Administration
Participation certificates
6. Government National Mortgage Association (GNMA or "Ginnie
Mae")
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
7. U.S. Maritime Administration
Guaranteed Title XI financing
8. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed
debentures
U.S. Public Housing Notes and Bonds - U.S. government
guaranteed public housing notes and bonds
Depository
The term "Depository" means any securities depository acting as Depository pursuant to
Section 2.12 hereof. The Depository for the Series 2008 Bonds is DTC.
DTC
The term "DTC" means The Depository Trust Company, New York, New York, and its
successors and assigns or such other securities depositories as the Agency designates to the Trustee in
writing.
Expense Fund
The term "Expense Fund" means the fund by that name held by the Trustee pursuant to
Section 5.03.
Final Compounded Amount
The term "Final Compounded Amount" means the Accreted Value of a Capital
Appreciation Bond at maturity.
Financial Guaranty Insurance Policy or Insurance Policy
The term "Financial Guaranty Insurance Policy" or "Insurance Policy" means the
financial guaranty insurance policy issued by the Bond Insurer insuring the payment when due of the
principal of and interest on the Series 2008 Bonds, as provided therein.
80005086.3 9
Fiscal Year.
The term "Fiscal Year" means the period commencing on July 1 of each year and
terminating on the next succeeding June 30, or any other annual accounting period hereafter selected and
designated by the Agency as its Fiscal Year in accordance with the Law and identified in writing to the
Trustee.
Fitch
The term "Fitch" means Fitch IBCA, Inc., its successors and assigns.
Housing Fund
The term "Housing Fund" means the Low and Moderate Income Housing Fund
established pursuant to Section 33334.3 of the Law and held by the Agency.
Housing Set -Aside Revenues
The term "Housing Set -Aside Revenues" means, for each Bond Year, the portion of the
taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the
Agency pursuant to the Law in connection with all current and future project areas of the Agency,
including the Project Area as provided in the Redevelopment Plan, which are deposited by the Agency in
the Housing Fund pursuant to Section 33334.2 or Section 33334.6 of the Law, as provided in the
Redevelopment Plan.
Indenture
The term "Indenture" means this Indenture and all Supplemental Indentures.
Independent Certified Public Accountant
The term "Independent Certified Public Accountant' means any certified public
accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under
the laws of the State of California, appointed and paid by the Agency, and who, or each of whom:
(1) is in fact independent and not under the domination of the Agency;
(2) does not have any substantial interest, direct or indirect, with the
Agency; and
(3) is not connected with the Agency as a member, officer or employee of
the'Agency, but who may be regularly retained to make annual or other audits of the books of or
reports to the Agency.
Independent Financial Consultant
The term "Independent Financial Consultant' means a financial consultant or firm of
such consultants generally recognized to be well qualified in the financial consulting field, appointed and
paid by the Agency and who, or each of whom:
(1) is in fact independent and not under the domination of the Agency;
80005086.3 10
(2) does not have any substantial interest, direct or indirect, with the
Agency; and
(3) is not connected with the Agency as a member, officer or employee of
the Agency, but who may be regularly retained to make annual or other reports to the Agency.
Independent Redevelopment Consultant
The term "Independent Redevelopment Consultant" means a consultant or firm of such
consultants generally recognized to be well qualified in the field of consulting relating to tax allocation
bond financing by California redevelopment agencies, appointed and paid by the Agency, and who, or
each of whom:
(1) is in fact independent and not under the domination of the Agency;
(2) does not have any substantial interest, direct or indirect, with the Agency;
and
(3) is not connected with the Agency as a member, officer or employee of
the Agency, but who may be regularly retained to make annual or other reports to the Agency.
Information Services
The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond
Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Moody's
"Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217,
Attention: Called Bond Department; and Kenny S&P, 55 Water Street, 45 Floor, New York, New York
10041, Attention: Notification Department; or, in accordance with then -current guidelines of the
Securities and Exchange Agency, such other addresses and/or such other services providing information
with respect to called bonds as the Agency may designate to the Trustee in writing.
Interest Account
The term "Interest Account" means the account by that name within the Debt Service
Fund held by the Trustee pursuant to Section 5.06(a).
Interest Payment Date
The term "Interest Payment Date" means each March 1 or September 1 on which interest
on any Series of Bonds is scheduled to be paid, and with respect to the Series 2008 Bonds commencing
September 1, 2008.
Law
The term "Law" means the Community Redevelopment Law of the State of California
(being Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended), and all
laws amendatory thereof or supplemental thereto.
Letter of Representations
The term "Letter of Representations" means the letter of the Agency and the Trustee
delivered to and accepted by the Depository on or prior to the issuance of a Series of Book Entry Bonds
80005086.3 11
setting forth the basis on which the Depository serves as depository for such Book Entry Bonds, as
originally executed or as it may be supplemented or revised or replaced by a letter to a substitute
depository.
Mood
The term "Moody's" means Moody's Investors Service, its successors and assigns.
Nominee
The term "Nominee" means the nominee of the Depository, which may be Cede & Co.,
as determined from time to time pursuant to Section 2.12 hereof.
Outstanding
The term "Outstanding" when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 8.02) all Bonds except
for cancellation;
(1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee
(2) Bonds paid or deemed to have been paid within the meaning of Section
10.01; and
(3) Bonds in lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the Agency pursuant to the Indenture.
Owner
The term "Owner" means the registered owner of any Outstanding Bond according to the
registration books held by the Trustee pursuant to Section 2.08.
Participants
The term "Participants" means those broker dealers, banks and other financial institutions
from time to time for which the Depository holds Book Entry Bonds as securities depository.
Plan Limitations
The term "Plan Limitations" means the limitations contained or incorporated in the
Redevelopment Plan on the aggregate amount of taxes which may be divided and allocated to the Agency
pursuant to the Redevelopment Plan.
Principal Account
The term "Principal Account" means the account by that name within the Debt Service
Fund held by the Trustee pursuant to Section 5.06(b).
80005086.3 12
Principal Payment Date
The term "Principal Payment Date" means any date on which principal of any Series of
Bonds is scheduled to be paid, which dates shall be as set forth in Section 2.02 hereof for the Series 2008
Bonds.
Project
The term "Project" means the undertaking of the Agency pursuant to the Redevelopment
Plan and the Law for the redevelopment of the Project Area.
Project Area
The term "Project Area" means the project area described in the Redevelopment Plan,
known as the Newhall Redevelopment Project.
Qualified Reserve Account Credit Instrument
The term "Qualified Reserve Account Credit Instrument" means an irrevocable standby
or direct -pay letter of credit or surety bond issued by a commercial bank or insurance company and
deposited with the Trustee pursuant to Section 5.06(d), provided that all of the following requirements are
met: (i) at the time of issuance of the instrument, the long-term credit rating of such bank is within the
highest rating category of Moody's and S&P, or the claims paying ability of such insurance company is
rated within the highest rating category of A.M. Best & Company and S&P; (ii) such letter of credit or
surety bond has a term of at least 12 months (or if the final maturity date of the related Bonds is less than
12 months from the date of issuance of such letter of credit or surety bond, then such letter of credit or
surety bond shall not expire before the final maturity date of the related Bonds); (iii) such letter of credit
or surety bond has a stated amount at least equal to the portion of the Reserve Account Requirement with
respect to which funds are proposed to be released pursuant to Section 5.06(d); and (iv) the Trustee is
authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder amounts
necessary to carry out the purposes specified in Section 5.06(d), including the replenishment of the
Interest Account, the Principal Account or the Sinking Account.
Record Date
The term "Record Date" means with respect to any Interest Payment Date, the fifteenth
(15th) calendar day of the month immediately preceding such Interest Payment Date, whether or not such
day is a Business Day.
Redevelopment Fund
The term "Redevelopment Fund" means the Newhall Redevelopment Project
Redevelopment Fund held by the Agency pursuant to Section 5.03.
Redevelopment Plan
The term "Redevelopment Plan" means the redevelopment plan for the Newhall
Redevelopment Project approved and adopted on July 8, 1997, by Ordinance No. 97-12 of the City of
Santa Clarita, California and includes any amendment of said plan heretofore or hereafter made pursuant
to law.
80005086.3 13
Reserve Account
The term "Reserve Account" means the account by that name within the Debt Service
Fund held by the Trustee pursuant to Section 5.06(d).
Reserve Account Reauirement
The term "Reserve Account Requirement" (to be confirmed by the Agency to the Trustee
upon the Trustee's request) means, as of any calculation date, with respect to the Bonds, an amount equal
to the least of (i) ten percent (10%) of the proceeds (within the meaning of Section 148 of the Code) of
that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of
Average Annual Debt Service or (iii) Maximum Annual Debt Service; excluding from such calculation
either (a) Annual Debt Service with respect to the proceeds of the Bonds held in the Special Escrow Fund
or (b) 10% of the issue price (within the meaning of section 148 of the Code) of the Bonds held in a
Special Escrow Fund.
S&P
The term "S&P" means Standard & Poor's Ratings Services, its successors and assigns.
Securities Depositories
The term "Securities Depositories" means The Depository Trust Company, 55 Water
Street, 50th Floor, New York, New York, 1004141-0099, Attention Call Notification Department, Fax
(212) 855-7232; or such other securities depositories as the Agency may designate to the Trustee in
writing.
Series
The term "Series", when used with reference to the Bonds, means all of the Bonds
authenticated and delivered on original issuance and identified pursuant to the Indenture or a
Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter
authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the Indenture.
Series 2008 Account of the Expense Fund
"Series 2008 Account of the Expense Fund" means the account by that name held within
the Expense Fund by the Trustee pursuant to Section 5.03 of the Indenture.
Series 2008 Account of the Redevelopment Fund
"Series 2008 Account of the Redevelopment Fund" means the account by that name held
within the Redevelopment Fund by the Agency pursuant to Section 5.03 of the Indenture.
Series 2008 Interest Subaccount
"Series.2008 Interest Subaccount" means the subaccount by that name within the Interest'
Account of the Debt Service Fund held by the Trustee pursuant to Section 5.06(a) of the Indenture.
80005086.3 14
Series 2008 Principal Subaccount
"Series 2008 Principal Subaccount" means the subaccount by that name within the
Principal Account of the Debt Service Fund held by the Trustee pursuant to Section 5.06(b) of the
Indenture.
Series 2008 Sinking Subaccount
"Series 2008 Sinking Subaccount" means the subaccount by that name within the Sinking
Account of the Debt Service Fund held by the Trustee pursuant to Section 5.06(c) of the Indenture.
Sinking Account
The term "Sinking Account' means the account by that name within the Debt Service
Fund held by the Trustee pursuant to Section 5.06(c).
Sinking Account Installment
The term "Sinking Account Installment' means the amount of money required by or
pursuant to this Indenture to be paid by the Agency on any single date toward the retirement of any
particular Term Bonds of any particular Series on or prior to their respective stated maturities.
Sinking Account Payment Date
The term "Sinking Account Payment Date" means any date on which Sinking Account
Installments on any Series of Bonds are scheduled to be paid.
Special Fund
The term "Special Fund" means the Special Fund held by the Agency pursuant to Section
5.02.
Sunnlemental Indenture
The term "Supplemental Indenture" means any indenture then in full force and effect
which has been entered into by the Agency and the Trustee, amendatory of or supplemental to this
Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized
hereunder.
Tax Certificate
The term "Tax Certificate" means the Tax and Nonarbitrage Certificate (or similar
instrument), dated the date of the original delivery of each Series of Bonds (except any Series of Bonds
which the Agency shall certify to the Trustee is not intended to meet the requirements for tax exemption
under the Code) relating to the requirements of certain provisions of the Code, as each such certificate
may from time to time be modified or supplemented in accordance with the terms thereof.
Tax Revenues
The term "Tax Revenues" means, for each Bond Year, the taxes (including all payments,
reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax
exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Law ,in
80005086.3 15
connection with the Project Area as provided in the Redevelopment Plan (excluding to the extent there are
any (i) amounts deposited by the Agency in the Housing Fund pursuant to Section 33334.2 or Section
33334.6 of the Law, as provided in the Redevelopment Plan, and (ii) amounts payable to taxing agencies
pursuant to Section 33607.5 of the Law, except to the extent that such payments are subordinated
pursuant to Subsection (e) of such Section 33607.5).
Total Maturity Amount
The term "Total Maturity Amount" means with respect to any Outstanding Bond other
than a Capital Appreciation Bond, the aggregate principal amount thereof and, with respect to any
Outstanding Capital Appreciation Bond, the Final Compounded Amount thereof.
Trust Office
The term "Trust Office" means the corporate trust office of the Trustee at the address set
forth in Section 11. 14, or such other office designated by the Trustee from time to time.
Trustee
The term "Trustee" means such trustee as may be appointed by the Agency, and its
successors and assigns, or any other corporation or association which may at any time be substituted in its
place, as provided in Section 7.01. The initial Trustee shall be The Bank of New York Trust Company,
N.A., a national banking association organized under the laws of the United States of America.
Written Request
The term "Written Request" means an instrument in writing signed by the Chairman, the
Executive Director or Treasurer of the Agency or by any other officer of the Agency duly authorized for
that purpose.
SECTION 1.02 Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, the Indenture shall be deemed to be and shall constitute a contract between the Agency
and the Trustee for the benefit of Owners from time to time of all Bonds issued hereunder and then
Outstanding to secure the full and final payment of the interest on and principal of and redemption
premiums, if any, on all Bonds authorized, executed, issued and delivered hereunder, subject to the
agreements, conditions, covenants and provisions herein contained; and the agreements and covenants
herein set forth to be performed on behalf of the Agency shall be for the equal and proportionate benefit,
security and protection of all Owners of the Bonds without preference, priority or distinction as to
security or otherwise of any Bonds over any other Bonds. '
ARTICLE II
THE BONDS; SERIES 2008 BOND PROVISIONS
SECTION 2.01 Authorization. Bonds may be issued at any time under and subject to the
terms of this Indenture. The Agency has reviewed all proceedings heretofore taken relative to the
authorization of the Series 2008 Bonds and has found, as a result of such review, and hereby finds and
determines that all acts, conditions and things required by law to exist, happen or be performed precedent
to and in connection with the issuance of the Series 2008 Bonds do exist, have happened and have been
performed in due time, form and manner as required by law, and the Agency is now duly authorized
pursuant to each and every requirement of law, to issue the Series 2008 Bonds in the manner and form
80005086.3 16
provided in this Indenture. Accordingly, the Agency hereby authorizes the issuance of the Series 2008
Bonds for the purpose of providing funds to aid in financing the Project.
SECTION 2.02 Terms of Series 2008 Bonds.
(a) Series 2008 Bonds. The Series 2008 Bonds shall be dated as of the Closing Date,
shall mature on September 1 in each of the years and in the amounts, and shall bear interest (calculated on
the basis of a 360 -day year of twelve 30 -day months) in the amounts, as follows:
Maturity Date Principal Interest
(September 1) Amount Rate CUSIP No.
(b) Denominations. The Series 2008 Bonds shall be delivered in fully registered
form, in the denominations of $5,000 or any integral multiple thereof, numbered from one upwards in
consecutive numerical order for each Series.
(c) Payment of Interest and Principal. Each Series 2008 Bond shall bear interest
from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is
authenticated during the period from the day after the Record Date for an Interest Payment Date to and
including such Interest Payment Date, in which event it shall 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 Series 2008 Bond interest with respect to such Series 2008 Bond is in default, such Series 2008
Bond shall bear interest from the Interest Payment Date to which interest has been paid or made available
for payment with respect to such Series 2008 Bond.
Interest with respect to any Series 2008 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 on the
Interest Payment Date to the Owner at his address as it appears, on such Record Date, on the bond
registration books maintained by the Trustee; provided, however, that at the written request of the Owner
of Series 2008 Bonds in the aggregate principal amount of $1,000,000 or more filed with the Trustee prior
to any Record Date, principal of and interest on such Series 2008 Bonds shall be paid to such Owner on
each succeeding Interest Payment Date (unless such request has been revoked in writing) by transfer of
immediately available funds to an account in the continental United States designated in such written
request. Payments of defaulted interest with respect to the Series 2008 Bonds shall be paid by check 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 Series 2008 Bonds not less than ten days
prior thereto. Except as set forth above, the principal of and premium, if any, on the Series 2008 Bonds
are payable when due at the Trust Office in lawful money of the United States of America.
SECTION 2.03 Form of Series 2008 Bonds. The Series 2008 Bonds, the authentication
and registration endorsement and the assignment to appear thereon shall be substantially in the forms
attached hereto as Appendix A, with necessary or appropriate variations; omissions and insertions as
permitted or required by this Indenture.
SECTION 2.04 Redemption of Series 2008 Bonds; Selection of Bonds; Purchase in Lieu
of Redemption; Notice.
80005086.3 17
(a) Optional Redemption of the Series 2008 Bonds. The Series 2008 Bonds
maturing on or after September 1, 20_ shall be subject to optional redemption prior to maturity at the
option of the Agency on any date on or after September 1, 20_, as a whole or in part by lot from any
source and deposited with the Trustee (notice of such redemption having been given by the Agency to the
Trustee no later than 45 days prior to the date of redemption) at a redemption price equal to the principal
amount to be redeemed together with accrued interest to the date fixed for redemption.
(b) Mandatory Sinking Account Redemption of the Series 2008 Bonds: The Series
2008 Bonds maturing on September 1, 20_ shall be subject to mandatory redemption, in part by lot,
from Sinking Account Installments deposited in the Series 2008 Sinking Subaccount, on September 1 in
each year commencing September 1, 20_, at a redemption price equal to the principal amount to be
redeemed (without premium), together with interest accrued to the date fixed for redemption, according to
the following schedules:
Mandatory Sinking Account Payments
Series 2008 Term Bonds Maturing September 1, 20_
Redemption Date Redemption Date
(September 1) Principal Amount (September 1) Principal Amount
*Maturity
(c) General Redemption Provisions
(1) Selection of Bonds.
Whenever less than all the Outstanding Bonds maturing on any one date are
called for redemption at any one time, the Trustee shall select the Bonds to be redeemed, from the
Outstanding Bonds maturing on such date not previously selected for redemption, by lot; provided,
however, that if less than all the Outstanding Term Bonds of any maturity are called for redemption at any
one time, the Agency shall specify in writing to the Trustee the reduction in any Sinking Account
Installment payments required to be made with respect to such Bonds (in an amount equal to the amount
of Outstanding Term Bonds to be redeemed) 'which, to the extent practicable, results in approximately
equal Annual Debt Service on the Bonds Outstanding following such redemption.
(2) Purchase in Lieu of Redemption.
In lieu of redemption of any Term Bond, amounts on deposit in the Special Fund
or in the Sinking Account therein may also be used and withdrawn by the Trustee at any time, upon the
Written Request of the Agency, for the purchase of such Term Bonds at public or private sale as and
when and at such prices (including brokerage and other charges, but excluding accrued interest, which is
payable from the Interest Account) as the Agency may in its discretion determine, but not in excess of the
principal amount thereof plus accrued interest to the purchase date; provided, however, that no Bonds
shall be purchased by the Trustee under this subsection (e)(2) with a settlement date more than 60 days
prior to the redemption date. The principal amount of any Term Bonds so purchased by the Trustee in
any twelve month period ending 30 days prior to any Principal Payment Date in any year shall be credited
towards and shall reduce the principal amount of such Term Bonds required to be redeemed on such
Principal Payment Date in such year.
80005086.3 r- 18
(3) Notice.
Notice of redemption shall be mailed by first class mail by the Trustee, on behalf
and at the expense of the Agency, not less than 30 days prior to the redemption date to (i) the respective
Owners of Bonds designated for redemption at their addresses appearing on the bond registration books
of the Trustee, (ii) one or more Information Services designated in writing to the Trustee by the Agency
and (iii) the Securities Depositories. Each notice of redemption shall state the date of such notice, the
Bonds to be redeemed, the date of issue of such Bonds, the redemption date, the redemption price, the
place or places of redemption (including the name and appropriate address or addresses), the CUSIP
number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be redeemed,
the distinctive certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds
to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each
such notice shall also state that on said date there will become due and payable on each of such Bonds the
redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond
to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from
and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be
then surrendered at the address or addresses of the Trustee specified in the redemption notice.
Failure by the Trustee to give notice pursuant to this Section to any one or more
of the Information Services or Securities Depositories, or the insufficiency of any such notice shall not
affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any
redemption notice mailed to such Owner and any defect in the notice so mailed shall not affect the
sufficiency of the proceedings for redemption.
(4) Partial Redemption.
Upon surrender of any Bond redeemed in part only, the Agency shall execute
(manually or by facsimile) and the Trustee shall authenticate and deliver to the Owner thereof, at the
expense of the Agency, a new Bond or Bonds of authorized denominations equal in aggregate principal
amount to the unredeemed portion of the Bond surrendered and of the same series, interest rate and the
same maturity.
(5) Effect of Redemption.
From and after the date fixed for redemption, if notice of such redemption shall
have been duly given and funds available for the payment of such redemption price of the Bonds so called
for redemption shall have been duly provided, no interest shall accrue on such Bonds from and after the
redemption date specified in such notice.
All Bonds redeemed pursuant to the provisions of this section shall be canceled
by the Trustee and the Trustee shall upon Written Request of the Agency deliver a certificate of
destruction to the Agency.
SECTION 2.05 Execution of Bonds. The Chair or the Executive Director of the Agency
is hereby authorized and directed to execute each of the Bonds on behalf of the Agency and the Secretary
of the Agency is hereby authorized and directed to attest each of the Bonds on behalf of the Agency. Any
of the signatures of the Chair or the Executive Director or the Secretary may be by printed, lithographed
or engraved facsimile reproduction. In case any officer whose signature appears on the Bonds shall cease
to be such officer before the delivery of the Bonds to the purchaser thereof, such signature shall
nevertheless be valid and sufficient for all "purposes the same as though such officer had remained in
office until such delivery of the Bonds.
80005086.3 19
Only such of the Bonds as shall bear thereon a certificate of authentication in the form set
forth in Appendix A hereto, executed manually by the Trustee, shall be entitled to any benefits under the
Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive
evidence that the Bonds so registered have been duly issued and delivered hereunder and are entitled to
the benefits of the Indenture.
SECTION 2.06 Transfer and Registration of Bonds. Any Bond may, in accordance with
its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08, by
the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of
such Bond for cancellation, accompanied by delivery of a written instrument of transfer in substantially
the form set forth in Appendix A hereto, duly executed.
Whenever any Bond or Bonds shall be surrendered for transfer, the Agency shall execute
and the Trustee shall authenticate and deliver a new Bond or Bonds of like series, tenor, maturity and
Total Maturity Amount. 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 Agency, 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 Agency shall not be required to register the transfer of or exchange any Bond during
the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption
or any Bonds which have matured or been selected for redemption.
SECTION 2.07 Exchange of Bonds. Bonds may be exchanged at the Trust Office for
the same aggregate Total Maturity Amount of Bonds of the same series and maturity 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 Agency, 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. No such exchange shall be required to be made during
the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption
or any Bonds which have matured or been selected for redemption.
SECTION 2.08 Bond Registration Books. The Trustee will keep at the Trust Office
sufficient books for the registration and transfer of the Bonds, which shall at all times be open to
inspection by the Agency during regular business hours with reasonable prior notice; and, upon
presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe,
register or transfer the Bonds on said books as hereinbefore provided.
SECTION 2.09 Mutilated, Destroyed, Stolen or Lost Bonds. -In case any Bond shall
become mutilated in respect of the body of such Bond, or shall be believed by the Agency to have been
destroyed, stolen or lost, upon proof of ownership satisfactory to the Trustee, and upon the surrender of
such mutilated Bond at -the Trust Office, or upon the receipt of evidence satisfactory to the Trustee of
such destruction, theft or loss, and upon receipt also of indemnity satisfactory to the Agency and the
Trustee, and upon payment of all expenses incurred by the Agency and the Trustee in the premises, the
Agency shall execute (manually or by facsimile) and the Trustee shall authenticate and deliver at the
Trust Office a new Bond or .Bonds of the same series and maturity and for the same Total Maturity
Amount, of like tenor and date, with such notations as the Agency shall determine, in exchange and
substitution for and upon cancellation of the mutilated Bond, or in lieu of and in substitution for the Bond
so destroyed, stolen or lost.
80005086.3 20
If any such destroyed, stolen or lost Bond shall have matured or shall have been called
for redemption, payment of the amount due thereon may be made by the Trustee upon receipt by the
Trustee and the Agency of like proof, indemnity and payment of expenses.
Any such replacement Bonds issued pursuant to this section shall be entitled to equal and
proportionate benefits with all other Bonds issued hereunder. The Agency and the Trustee shall not be
required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose
of determining the principal amount of Bonds which may be issued hereunder or for the purpose of
determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond
shall be treated as one and the same.
SECTION 2.10 Temporary Bonds. _Until definitive Bonds shall be prepared, the Agency
may cause to be executed and delivered in lieu of such definitive Bonds and subject to the same
provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they
may be in any denominations authorized by the , Agency, one or more temporary typed, printed,
lithographed or engraved Bonds in fully registered form, as may be authorized by the Agency,-
substantially
gency;substantially of the same tenor and, until exchanged for definitive Bonds, entitled and subject to the same
benefits and provisions of the Indenture as definitive Bonds. If the Agency issues temporary Bonds it
will execute and furnish definitive Bonds without unnecessary delay and thereupon the temporary Bonds
shall be surrendered to the Trustee at the Trust Office, without expense to the Owner in exchange for such
definitive Bonds. All temporary Bonds so surrendered shall be canceled by the Trustee and shall not be
reissued.
SECTION 2.11 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any proceedings taken by the Agency for the financing or
refinancing of the Project; or by any contracts made by the Agency in connection therewith, and shall not
be dependent upon the completion of the financing or refinancing of the Project or upon the performance
by any person of his obligation with respect to the Project, and the recital contained in the Bonds that the
same are issued pursuant to the Law shall be conclusive evidence of their validity and of the regularity of
their issuance.
SECTION 2.12 Book -Entry System. Prior to the issuance of any Series of Bonds issued
hereunder, the Agency may provide that such Series of Bonds shall be initially issued as Book Entry
Bonds, and in such event, each maturity of such Series shall be in the form of a separate single fully
registered Bond (which may be typewritten). Upon initial issuance, the ownership of each such Bond
shall be registered in the bond register in the name of the Nominee, as nominee of the Depository.
With respect to Book Entry Bonds,' the Agency and the Trustee shall have no
responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds
an interest in such Book Entry Bonds. Without limiting the immediately preceding sentence, the Agency
and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of
the Depository, the Nominee, or any Participant with respect to any ownership interest in Book Entry
Bonds, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the bond
register, of any notice with respect to Book Entry Bonds, including any notice of redemption, (iii) the
selection by the Depository and its Participants of the beneficial interests in Book Entry Bonds to be
redeemed in the event the Agency redeems such in part, or (iv) the payment of any Participant or any
other person, other than an Owner as shown in the bond register, of any amount with respect to principal
of, premium, if any, or interest on Book Entry Bonds. The Agency and the Trustee may treat and
consider the person in whose name each Book Entry Bond is registered in the bond register as the
absolute Owner of such Book Entry Bond for the purpose of payment of principal, premium and interest
with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect
80005086.3 21
to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or
upon the order of the respective Owner, as shown in the bond register, and all such payments shall be
valid and effective to fully satisfy and discharge the Agency's obligations with respect to payment of
principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No
person other than an Owner, as shown in the bond register, shall receive a Bond evidencing the obligation
of the Agency to make payments of principal, premium, if any, and interest pursuant to this Indenture.
Upon delivery by the Depository to the Trustee and Agency of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee, and subject to the
provisions herein with respect to record dates, the word Nominee in this Indenture shall refer to such
nominee of the Depository.
In order to qualify the Book Entry Bonds for the Depository's book entry system, the
Agency and the Trustee shall execute, if necessary, and deliver to the Depository a Letter of
Representations. The execution and delivery of a Letter of Representations shall not in any way impose
upon the Agency or the Trustee any obligation whatsoever with respect to persons having interests in such
Book Entry Bonds other than the Owners, as shown on the bond register. In addition to the execution and
delivery of a Letter of Representations, the Agency and the Trustee, at the Written Request of the Agency,
shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify
Book Entry Bonds for the Depository's book entry program.
In the event (i) the Depository determines not to continue to act as securities depository
for any Series of Book Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the
Trustee and the Agency of such determination, then the Agency will discontinue the book entry system
with the Depository. If the Agency determines to replace the Depository with another qualified securities
depository, the Agency shall prepare or direct the preparation of a new single, separate, fully registered
Bond for each of the maturities of such Book Entry Bonds, registered in the name of such successor or
substitute qualified securities depository or its nominee. If the Agency fails to identify another qualified
securities depository to replace the Depository, then the Bonds shall no longer be restricted to being
registered in such bond register in the name of the Nominee, but shall be registered in whatever name or
names Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions
of Sections 2.06 and 2.07.
Notwithstanding any other provision of this Indenture to the contrary, so long as any
Book Entry Bond is registered in the name of the Nominee, all payments with respect to principal of,
premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and
given, respectively, as provided in the Letter of Representations or as otherwise instructed by the
Depository.
ARTICLE III
ISSUANCE OF SERIES 2008 BONDS;
APPLICATION OF PROCEEDS OF SALE
SECTION 3.01 Issuance of Series 2008 Bonds. The Agency may at any time execute
and deliver the Series 2008 Bonds authorized to be issued hereunder and, upon the Written Request of the
Agency, the Trustee shall authenticate and deliver the Series 2008 Bonds.
80005086.3 22
SECTION 3.02 Sale of Series 2008 Bonds -- Allocation of Proceeds Among Funds and
Accounts.
(a) Series 2008 Bonds. Upon receipt of payment for the Series 2008 Bonds, the
Trustee shall set aside and deposit the proceeds received from such sale in the amount of $
(being the principal amount of $ less an underwriter's discount of $ and less a
net original issue discount of $ and less $ transferred to the Bond Insurer as
Insurance Policy premium) as follows:
(1) The Trustee shall deposit in the Reserve Account the amount of
$ , which constitutes the initial Reserve Account Requirement.
(2) The Trustee shall deposit in the Series 2008 Account of the Expense
Fund the amount of $ to pay the costs incurred or to be incurred by the Agency in connection
with the issuance of the Series 2008 Bonds.
(3) The Trustee shall transfer the balance of the Series 2008 Bonds sale
proceeds in the amount of $ to the Series 2008 Account of the Redevelopment Fund to be
applied in accordance with the provisions hereof.
(b) For record keeping purposes the Trustee may establish such accounts as may be
necessary to reflect such transfer of proceeds.
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
SECTION 4.01 Conditions for the Issuance of Additional Bonds. The Agency may at
any time after the issuance and delivery of the Series 2008 Bonds hereunder issue Additional Bonds
payable from the Tax Revenues and secured by a lien and charge upon the Tax Revenues equal to and on
a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indenture,
but only subject.to the following specific conditions, which are hereby made conditions precedent to the
issuance of any such Additional Bonds:
(a) No amounts are remaining in a Special Escrow Fund.
(b) The Agency shall be in compliance with all covenants set forth in this Indenture
and any Supplemental Indentures, and a Certificate of the Agency to that effect shall have been filed with
the Trustee.
(c) The issuance of such Additional Bonds shall have been duly authorized pursuant
to the Law and all applicable laws, and the issuance of such Additional Bonds shall have been provided
for by a Supplemental Indenture or other parity debt instrument duly adopted by the Agency which shall
specify the following:
(1) The purpose for which such Additional Bonds are to be issued and the
fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the
proceeds of such Additional Bonds to be applied solely for (i) the purpose of aiding in financing the
Project, including payment of all costs incidental to or connected with such financing, and/or (ii) the
purpose of refunding any Bonds or other indebtedness related to financing the Project, including payment
of all costs incidental to or connected with such refunding;
80005086.3 23
(2) The authorized principal amount of such Additional Bonds;
(3) The date and the maturity date or dates of such Additional Bonds;
provided that (i) Principal and Sinking Account Payment Dates may occur only on Interest Payment
Dates, (ii) all such Additional Bonds of like maturity shall be identical in all respects, except as to
number, and (iii) fixed serial maturities or mandatory Sinking Account Installments, or any combination
thereof, shall be established to provide for the retirement of all such Additional Bonds on or before their
respective maturity dates;
(4) The Interest Payment Dates, which shall be on the same semiannual
dates as the Interest Payment Dates for the Series 2008 Bonds; provided, that such Additional Bonds may
provide for compounding of interest in lieu of payment of interest on such dates;
(5) The denomination and method of numbering of such Additional Bonds;
(6) The.redemption premiums, if any, and the redemption terms, if any, for
such Additional Bonds;
(7) The amount and due date of each mandatory Sinking Account
Installment, if any, for such Additional Bonds;
(8) The amount, if any, to be deposited from the proceeds of such Additional
Bonds in the Interest Account;
(9) The amount, if any, to be deposited from the proceeds of such Additional
Bonds into the Reserve Account; provided that the amount on deposit in the Reserve Account shall be
increased at or prior to the time such Additional Bonds become Outstanding to an amount at least equal to
the Reserve Account Requirement on all then Outstanding Bonds and such Additional Bonds, which
amount shall be maintained in the Reserve Account;
(10) The form of such Additional Bonds; and
(11) Such other provisions as are necessary or appropriate and not
inconsistent with the Indenture.
(d) Tax Revenues based upon the assessed valuation of taxable property in the
Project Area as shown on the most recently equalized assessment roll preceding the date of the Agency's
adoption of the Supplemental Indenture or other parity debt instrument providing for the issuance of such
Additional Bonds plus, at the option of the Agency, the Additional Allowance, shall be in an amount
equal to at least one hundred forty-five percent (145%) of Maximum Annual Debt Service on the Bonds
and any Additional Bonds following the issuance of such Additional Bonds, as evidenced by a
Consultant's Report.
For purposes of calculating Tax Revenues, a tax rate of $1.00 per $100 of assessed
valuation shall be assumed.
For the purposes of the issuance of Additional Bonds, Outstanding Bonds shall not
include any Bonds, the proceeds of which are deposited in an escrow fund (a "Special Escrow Fund"),
held by the Trustee or an escrow agent ("Escrow Bonds"), provided that the Indenture or Supplemental
Indenture authorizing issuance of such Escrow Bonds shall provide that: (i) such proceeds shall be
invested in Authorized Investments which bear interest at a rate which, together with amounts made
I
80005086.3 24
available by the Agency from bond proceeds or otherwise, is at least sufficient to pay Annual Debt
Service on the Escrow Bonds to the special mandatory redemption date (as subject to extension); (ii)
moneys may be transferred from said escrow fund only to the extent Tax Revenues (as calculated using
the criteria set forth above) , for the then current Fiscal Year plus, at the option of the Agency, the
Additional Allowance, shall be in an amount equal to at least [1.25] times Maximum Annual Debt Service
on the Bonds, less a principal amount of Bonds which is equal to moneys on deposit in such escrow fund
after each such transfer; and (iii) such Escrow Bonds shall be redeemed at par from moneys remaining on
deposit in such escrow fund at the expiration of the specified escrow period. In addition, the Agency shall
obtain an opinion of nationally recognized bond counsel on the delivery date of such Escrow Bonds to the
effect that such escrow of proceeds will not affect the exclusion of the interest on any Outstanding Bonds
from gross income for federal income tax purposes.
11 In the event such Additional Bonds are to be issued solely for the purpose of refunding
and retiring any Outstanding Bonds, interest and principal payments on the Outstanding Bonds to be so
refunded and retired from the proceeds of such Additional Bonds being issued shall be excluded from the
foregoing computation of Maximum Annual Debt Service.
Nothing contained in this Indenture shall prohibit the issuance of any tax allocation bonds
or other indebtedness by the Agency secured by a pledge of Tax Revenues subordinate to the pledge of
Tax Revenues securing the Bonds.
SECTION 4.02 Procedure for the Issuance of Additional Bonds. All of the Additional
Bonds shall be executed by the Agency for issuance under the Indenture and delivered to the Trustee and
thereupon shall be delivered by the Trustee upon the Written Request of the Agency, but only upon
receipt by the Trustee of the following documents or money or securities:
(1) An executed copy of the Supplemental Indenture or other parity debt
instrument authorizing the issuance of such Additional Bonds;
(2) A Written Request of the Agency as to the delivery of such Additional
Bonds;
(3) An opinion of counsel of recognized standing in the field of law relating
to municipal bonds substantially to the effect that (a) the Agency has the right and power under the Law
to execute and deliver the Indenture and all Supplemental Indentures thereto or other parity debt
instruments, and the Indenture and all such Supplemental Indentures or other parity debt instruments have
been duly executed and delivered by the Agency, are in full force and effect and are valid and binding
upon the Agency and enforceable in accordance with their terms (except as enforcement may be limited
by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors'
rights and similar qualifications); and (b) such Additional Bonds are valid and binding special obligations
of the Agency, enforceable in accordance with their terms (except as enforcement may be limited by
bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors'
rights) and are subject to the terms of the Indenture and all Supplemental Indentures thereto or other
parity debt instruments and entitled to the benefits of the Indenture and all such Supplemental Indentures
or other parity debt instruments and the Law, and such Additional Bonds have been duly and validly
issued in accordance with the Law and the Indenture and all such Supplemental Indentures or other parity
debt instruments;
(4) A Certificate of the Agency containing such statements as may be
reasonably necessary to show compliance with the requirements of the Indenture; and
80005086.3 25
(5) Such further documents, money and securities as are required by the
provisions of the Indenture and the Supplemental Indenture or other parity debt instruments providing for
the issuance of such Additional Bonds.
ARTICLE V
TAX REVENUES; CREATION OF FUNDS
SECTION 5.01 Pledge of Tax Revenues. All the Tax Revenues and all money in the
Special Fund and in the funds or accounts so specified and provided for in this Indenture, whether held by
the Agency or the Trustee (except the Rebate Amount), are hereby irrevocably pledged to the punctual
payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Tax
Revenues and such other money shall not be used for any other purpose while any of the Bonds remain
Outstanding, subject to the provisions of this Indenture permitting application thereof for the purposes
and on the terms and conditions set forth herein. This pledge shall constitute a first lien on the Tax
Revenues and such other money for the payment of the Bonds in accordance with the terms thereof.
SECTION 5.02 Special Fund; Receipt and Deposit of Tax Revenues; Debt Service Fund.
(a) There is hereby established a special fund known as the "Special Fund" (herein the "Special Fund")
held by the Agency. The Agency shall deposit all of the Tax Revenues received in any Bond Year in the
Special Fund promptly upon receipt thereof by the Agency, until such time (if any) during such Bond
Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be
transferred to the Trustee pursuant to this Section 5.02 and Section 5.06 for such Bond Year.
(b) There is hereby established a fund knownas the "Debt Service Fund," to be held
by the Trustee. On or before the fifth Business Day immediately preceding any Interest Payment Date,
the Agency shall withdraw from the Special Fund and deposit with the Trustee the amount of money
necessary to make the deposits required in Sections 5.06(a), (b) and (c). After the deposits required by
Sections 5.06(a), (b) and (c) have been made and upon notice from the Trustee, the Agency shall
withdraw from the Special'Fund and deposit with the Trustee the amount of money necessary to make
any deposit required by Section 5.06(d).
(c) All Tax Revenues received by the Agency at any time during any Bond Year in
excess of the amount required to be transferred to the Trustee during such Bond Year pursuant to
subsection (b) of this Section shall be released from the pledge and lien hereunder and the Agency may
apply such excess Tax Revenues for any lawful purpose of the Agency. So long as any Bonds are
outstanding, the Agency shall not have any beneficial right or interest in the moneys on deposit in the
Special Fund or the Debt Service Fund, except as may be provided in this Indenture.
SECTION 5.03 Establishment of Other Funds. There is hereby established a special
trust fund held by the Agency called the "City of Santa Clarita Redevelopment Agency Redevelopment
Fund" (the "Redevelopment Fund"). There is also hereby established a special trust fund held by the
Trustee called the "Expense Fund" (the "Expense Fund").
So long as any of the Bonds herein authorized, or any interest thereon, remains unpaid,
the moneys in the foregoing funds shall be used for no purpose other than those required or permitted by
this Indenture and the Law.
Pursuant to the Tax Certificate, the funds and accounts established herein may be divided
by the Agency or by the Trustee upon the Written Request of the Agency into sub accounts for each
Series of Bonds issued hereunder, in order to perform the necessary rebate calculations. There is hereby
80005086.3 26
established the Series 2008 Account within the Redevelopment Fund. There is hereby established the
Series 2008 Account within the Expense Fund.
SECTION 5.04 Redevelopment Fund. Moneys in the Redevelopment Fund shall be used
for the purpose of aiding in financing the Project (or for making reimbursements to the Agency for such
costs theretofore paid by it), including payment of all costs incidental to or connected with such financing.
The Agency warrants that each withdrawal from the Redevelopment Fund shall be made in the manner
provided by law for the purpose of aiding in financing the Project or for making reimbursements to the
Agency for such costs theretofore paid by the Agency.
SECTION 5.05 Expense Fund. All moneys in the Expense Fund shall be applied to the
payment of costs and expenses incurred by the Agency in connection with the authorization, issuance and
sale of the Bonds and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition,
substantially in the form attached hereto as Appendix B, executed by an officer of the Agency. Each such
requisition shall be sequentially numbered and state the name and address of the person, firm or
corporation to whom payment is due, the amount to be disbursed, the purposes for such disbursement and
that such obligation has been properly incurred and is a proper charge against the Expense Fund. Upon
the earlier of the payment in full of such costs and expenses (or the making of adequate provision for the
payment thereof, evidenced by a Certificate of the Agency to the Trustee) or 180 days after delivery of
the Bonds to the original purchaser thereof, any balance_ remaining in any accounts of the Expense Fund
shall be transferred to the respective corresponding accounts of the Redevelopment Fund, and pending
such transfer and application, the moneys in such Expense Fund may be invested as permitted by Section
5.07; provided, however, that investment income resulting from any such investment shall be retained in
the Expense Fund.
SECTION 5.06 Establishment and Maintenance of Accounts for Use of Moneys in the
Debt Service Fund.. All moneys in the Debt Service Fund shall be set aside by the Trustee in each Bond
Year when and as received in the following respective special accounts within the Debt Service Fund
(each of which is hereby created and each of which the Trustee hereby agrees to cause to be maintained),
in the following order of priority (except as otherwise provided in subsection (b) below):
(i)
Interest Account;
(ii)
Principal Account;
(iii)
Sinking Account; and
(iv)
Reserve Account.
All moneys in each of such accounts shall be held in trust by the Trustee and shall be applied, used and
withdrawn only for the purposes hereinafter authorized in this Section 5.06.
(a) Interest Account. On or before each Interest Payment Date, the Trustee shall set
aside from the Debt Service Fund and deposit in the Interest Account (or each subaccount on a pro rata
basis) an amount of money which, together with any money contained therein, is equal to the aggregate
amount of the interest becoming due and payable on all Outstanding Bonds on such Interest Payment
Date. No deposit need be made into the Interest Account if the amount contained therein is at least equal
to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the
Interest Payment Dates in such Bond Year. All moneys in the Interest Account shall be used and
withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due
and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).
80005086.3 27
(b) Principal Account. On or before each Principal Payment Date, the Trustee shall
set aside from the Debt Service Fund and deposit in the Principal Account (or each subaccount on a pro
rata basis) an amount of money which, together with any money contained therein, is equal to the
aggregate amount of the principal becoming due and payable on all Outstanding Serial Bonds on such
Principal Payment Date. In the event that there shall be insufficient money in the Debt Service Fund to
make in full all such principal payments and Sinking Account Installments required to be made pursuant
to Section 5.06(c) hereof in such Bond Year, then the money available in the Debt Service Fund shall be
applied pro rata to the making of such principal payments and such Sinking Account Installments in the
proportion which all such principal payments and Sinking Account Installments bear to each other.
No deposit need be made into the Principal Account if the amount contained therein is at
least equal to the aggregate amount of the principal of all Outstanding Serial Bonds becoming due and
payable on the upcoming Principal Payment Date.
All money in the Principal Account shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal and redemption premium, if any, of the Serial Bonds as they shall
become due and payable.
(c) Sinking Account. On or before each Principal Payment Date, the Trustee shall
set aside from the Debt Service Fund and deposit in the Sinking Account an amount of money equal to
the Sinking Account Installment, if any, payable on the Sinking Account Payment Date in such Bond
Year. All moneys in the Sinking Account shall be used by the Trustee to redeem Term Bonds.
(d) Reserve Account. (1) On or before each Interest Payment Date, the Trustee shall
set aside from the Debt Service Fund and deposit in the Reserve Account such amount of money (or other
authorized deposit of security, as contemplated by the following paragraph) as shall be required to restore
the balance in the Reserve Account to an amount equal to the Reserve Account Requirement. No deposit
need be made in the Reserve Account so long as there shall be on deposit therein an amount equal to the
Reserve Account Requirement. All money in (or available to) the Reserve Account shall be used and
withdrawn by the Trustee solely for the purpose of replenishing the Interest Account, the Principal
Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such
accounts, or for the purpose of paying the interest on or principal of the Bonds in the event that no other
money of the Agency is lawfully available therefor, except that for so long as the Agency is not in default
hereunder, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon
Written Request of the Agency,be withdrawn from the Reserve Account by the Trustee and transferred to
the Agency.
(2) The Reserve Account Requirement may be satisfied by crediting to the Reserve
Account moneys or a Qualified Reserve Account Credit Instrument or any combination thereof, which in
the aggregate make funds available in the Reserve Account in an amount equal to the Reserve Account
Requirement. Upon the deposit with the Trustee of such Qualified Reserve Account Credit Instrument,
the Trustee shall release moneys then on hand in the Reserve Account to the Agency, to be used for any
lawful purpose relating to the Project Area, in an amount equal to the face amount of the Qualified
Reserve Account Credit Instrument.
(e) Su!plus. After making the deposits referred to in paragraphs (a) through (d)
above in any Bond Year, the Trustee shall transfer any amount remaining on deposit in the Debt Service
Fund to the Agency to be used for any lawful purpose of the Agency
80005086.3 28
SECTION 5.07 Investment of Moneys in Funds and Accounts. Upon the Written
Request of the Agency received by the Trustee at least two Business Days prior to the date of such
investment, moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking
Account, the Reserve Account, and the Expense Fund (and any account therein), shall be invested by the
Trustee in Authorized Investments. In the absence of such instructions the Trustee shall invest in the
investments described in clause H of the definition of "Authorized Investments" set forth in Section 1.01.
The obligations in which moneys in the Debt Service Fund, the Interest Account, the Principal Account or
any Sinking Account are so invested shall mature prior to the date on which such moneys are estimated to
be required to be paid out hereunder. The obligations in which moneys in the Reserve Account are so
invested shall mature no later than the earlier of (a) five years from the date of purchase by the Trustee or
(b) the final maturity date of the Bonds; provided, however, that (i) an obligation which may be redeemed
at par at the option of the Trustee on the Business Day prior to each Interest Payment Date during which
such obligation is outstanding and (ii) an investment agreement which permits the Trustee to withdraw
invested amounts, on any Business Day, on no more than five Business Days' notice, without penalty, to
be used as required by Section 5.06(d), may have any maturity. Any interest, income or profits from the
deposits or investments of all funds and accounts (except the Expense Fund) shall be deposited in the
Debt Service Fund. For purposes of determining the amount on deposit in any fund or account held
hereunder, all Authorized Investments credited to such fund or account shall be valued monthly at the
lower of cost or market value (excluding accrued interest and brokerage commissions, if any). Except as
otherwise provided in this Section, Authorized Investments representing an investment of moneys
attributable to any fund or account and all investment profits or losses thereon shall be deemed at all times
to be a part of said fund or account. Absent negligence or willful misconduct by the Trustee, the Trustee
shall not be responsible or liable for any loss suffered in connection with any investment of funds made
by it in accordance with this Section.
The Agency acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Agency the right to receive brokerage
confirmations of security transactions as they occur, the Agency will not receive such confirmations to the
extent permitted by law. The Trustee will furnish the Agency periodic cash transaction statements which
include detail for all investment transactions made by the Trustee hereunder. The Trustee may make any
investments hereunder through its own bond or investment department or trust investment department, or
those of its parent or any affiliate. The Trustee or any of its affiliates may act as a sponsor, advisor or
manager in connection with any investments made by the Trustee hereunder.
Amounts deposited in the Special Fund and the Redevelopment Fund may be invested in
any obligations in which the Agency may lawfully invest its funds, including Authorized Investments.
ARTICLE VI
COVENANTS OF THE AGENCY
SECTION 6.01 Punctual Payment. The Agency will punctually pay the interest on and
principal of and redemption premiums, if any, to become due with respect to the Bonds, but only from
Tax Revenues, in strict conformity with the terms of the Bonds and of the Indenture and will faithfully
satisfy, observe and perform all conditions, covenants and requirements of the Bonds and of the
Indenture.
SECTION 6.02 Against Encumbrances. The Agency will not mortgage or otherwise
encumber, pledge or place any charge upon any of the Tax Revenues, except as provided in the Indenture,
and will not issue any obligation or security superior to or on a parity with the Bonds payable in whole or
in part from the Tax Revenues.
80005086.3 29
SECTION 6.03 Extension or Funding of Claims for Interest. In order to prevent any
claims for interest after maturity, the Agency will not, directly or indirectly, extend or consent to the
extension of the time for the payment of any claim for interest on any Bonds and will not, directly or
indirectly, be a party to or approve any such arrangements by purchasing or funding said claims for
interest or in any other manner. In case any such claim for interest shall be extended or funded, whether
or not with the consent of the Agency, such claim for interest so extended or funded shall not be entitled,
in case of default hereunder, to the benefits of the 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 which shall not have been
so extended or funded.
SECTION 6.04 Management and Operation of Properties. The Agency will manage and
operate all properties owned by the Agency and comprising any part of the Project in a sound and
business like manner and in conformity with all valid requirements of any governmental authority relative
to the Project or any part thereof, and will keep such properties insured at all times in conformity with
sound business practice.
SECTION 6.05 Payment of Claims. The Agency will pay and discharge any and all
lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the
properties owned by the Agency or upon the Tax Revenues or any part thereof, or upon any funds in the
hands of the Trustee, or which might impair the security of the Bonds; provided that nothing herein
contained shall require the Agency to make any such payments so long as the Agency in good faith shall
contest the validity of any such claims.
SECTION 6.06 Records and Accounts; Financial and Project Statements. The Agency
will keep proper books of record and accounts, separate from all other records and accounts of the
Agency, in which complete and correct entries shall be made of all transactions relating to the Project.
Such books of record and accounts shall at all times during business hours be subject to the inspection of
the Trustee or of the Owners of not less than ten percent (10%) of the aggregate principal amount of the
Bonds then Outstanding or their representatives authorized in writing.
The Agency will prepare and file with the Trustee annually as soon as practicable, but in
any event not later than two hundred seventy (270) days after the close of each Fiscal Year, so long as any
Bonds are Outstanding, an audited financial statement in reasonable detail relating to the Tax Revenues
and all funds or accounts established pursuant to the Indenture for the preceding Fiscal Year along with
the related opinion of an Independent Certified Public Accountant. The Trustee shall have no duty to
review such financial statement. The Agency will furnish a copy of such audited financial statement to
any Owner upon written request and will distribute a reasonable number of copies thereof as may be
required to investment bankers, security dealers and others interested in the Bonds. The Trustee shall
provide such statements with regard to any funds held by the Trustee hereunder to the Agency as the
Agency may reasonably require to comply with the terms of this Section 6.06.
SECTION 6.07 Protection of Securi1y and Rights of Owners. The Agency will preserve
and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their
rights against all claims and demands of all persons. From and after the sale and delivery of any Bonds
by the Agency, such Bonds shall be incontestable by the Agency.
SECTION 6.08 Payment of Taxes and Other Charges. The Agency will pay and
discharge all taxes, service charges, assessments and other governmental charges which may hereafter be
lawfully imposed upon the Agency or any properties owned by the Agency in the Project Area, or upon
the revenues therefrom, when the same shall become due; provided that nothing herein contained shall
80005086.3 30
require the Agency to make any such payments so long as the Agency in good faith shall contest the
validity of any such taxes, service charges, assessments or other governmental charges. '
SECTION 6.09 Financing the Project. The Agency will continue the financing of the
Project to be aided with the proceeds of the Bonds with all practicable dispatch, and such financing will
be accomplished and completed in a sound, economical and expeditious manner and in conformity with
the Redevelopment Plan and the Law.
SECTION 6.10 Disposition of Property in Project Area. The Agency will not participate
in the disposition of any land or real property in the Project Area which will result in such property
becoming exempt from taxation because of public ownership or use or otherwise (except property
dedicated for public right-of-way) if such disposition, when taken together with other such dispositions,
would either (a) aggregate more than 10 percent of the assessed valuation of the property in the Project
Area, or (b) cause the amount of Tax Revenues to be received in the succeeding Bond Year to fall below
125% of Maximum Annual Debt Service.
SECTION 6.11 Amendment of Redevelopment Plan. If the Agency proposes to amend
the Redevelopment Plan, it shall cause to be filed with the Trustee a Consultant's Report on the effect of
such proposed „amendment. If the Consultant's Report concludes that Tax Revenues will not be
materially reduced by such proposed amendment, the Agency may approve such amendment. If the
Consultant's Report concludes that Tax Revenues will be materially reduced by such proposed
amendment, the Agency shall not approve such proposed amendment. The Trustee shall be entitled to
rely upon any said Report and shall have no duty to verify the information or statements set forth therein.
SECTION 6.12 Tax Revenues. The Agency shall comply with all requirements of the
Law to insure the allocation and payment to it of the tax increment revenues of the Agency, including,
without limitation, the timely filing of any necessary statements of indebtedness with appropriate officials
of the County.
SECTION 6.13 Further Assurances. The Agency shall adopt, make, execute and deliver
any and all such further indentures, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and
confirming unto the Owners of the Bonds of the rights and benefits provided in the Indenture.
SECTION 6.14 Tax Covenants. For each Series of Bonds, except any Series of Bonds
which the Agency shall certify to the Trustee is not intended to meet the requirements for tax exemption
under the Code, (the "Tax -Exempt Bonds"), the Agency hereby certifies:
(a) Special Definitions. When used in this Section, the following terms have the
following meanings:
"Code" means the Internal Revenue Code of 1986.
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Gross Proceeds" means any Proceeds and any replacement proceeds as defined in
section 1.148-1(c) of the Tax Regulations, of any Series of Tax -Exempt Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
80005086.3 31
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of any Series of Tax -Exempt Bonds are invested
and that is not acquired to carry out the governmental purposes of such Series of Tax -
Exempt Bonds.
"Proceeds ", with respect to an issue of governmental obligations, has the meaning set
forth in 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.
"Yield" of any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and of any issue of governmental obligations has the meaning set forth in
section 1.1484 of the Tax Regulations.
(b) Not to Cause Interest to Become Taxable. The Agency covenants that it shall not
use, and shall not permit the use of, and shall not omit to use Gross Proceeds or any other amounts (or any
property the acquisition, construction or improvement of which is to be financed directly or indirectly
with Gross Proceeds) in a manner that if made or omitted, respectively, could cause the interest on any
Tax -Exempt Bond to fail to be excluded pursuant to section 103(a) of the Code from the gross income of
the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the Trustee receives a written opinion of Bond Counsel to the effect that failure to comply
with such covenant will not adversely affect such exclusion of the interest on any Tax -Exempt Bond from
the gross income of the owner thereof for federal income tax purposes, the Agency shall comply with
each of the specific covenants in this Section.
(c) Private Use and 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, the Agency shall take all actions necessary to assure that the Agency at all times prior to the
final retirement of the Tax -Exempt Bonds:
(1) exclusively owns, operates, possesses and provides any services
necessary to allow and maintain each function of every property the acquisition, construction or
improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the
Tax -Exempt Bonds and not use or permit the use of such Gross Proceeds (including through any
contractual arrangement with terms different than those applicable to the general public) or any property
acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or
entity (including the United States or any agency, department and instrumentality thereof) other than a
state or local government, unless such use is solely as a member of the general public; and
(2) does not directly or indirectly impose or accept any charge or other
payment by or for the benefit of any person or entity,(other than a state or local government) who is
treated as using any Gross Proceeds of the Tax -Exempt Bonds or any property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with such
Gross Proceeds.
80005086.3 32
(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 Agency shall not use or permit the use of Gross Proceeds of the Tax -Exempt
Bonds to make or finance loans to any person or entity other than a state or local government. For
purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or
entity if (i) 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; (ii) 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 (iii) 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 Agency shall not (and shall not permit any person to), at any time prior to the
final cancellation of the last Tax -Exempt Bond to be retired, 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 the Series of
Tax -Exempt Bonds within the meaning of said section 148.
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Tax Regulations and rulings thereunder, the Agency shall not take or omit to take (and
shall not permit any person to take or omit to take) any action that would cause any Tax -Exempt Bond to
be "federally guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and
rulings thereunder.
(g) Information Report. The Agency shall timely file any information required by
section 149(e) of the Code with respect to a Series of Tax -Exempt Bonds with the Secretary of the
Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section
148(f) of the Code and the Tax Regulations:
(1) The Agency shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from all other funds
(and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least
six years after the day on which the last Tax -Exempt Bond is discharged. However, to the extent
permitted by law, the Agency may commingle Gross Proceeds of Tax -Exempt Bonds with its other
monies, provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the Agency shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax
Regulations and rulings thereunder. The Agency shall maintain a copy of the calculation with its official
transcript of proceedings relating to the issuance of the Series of Tax -Exempt Bonds until six years after
the final Computation Date.
(3) In order to assure the excludability pursuant to section 103(a) of the
Code of the interest on the Tax -Exempt Bonds from the gross income of the owners thereof for federal
income tax purposes, within 60 days of each Computation Date the Agency shall pay to the United States
the amount that when added to the future value of previous rebate payments made for the Tax -Exempt
80005086.3 33
Bonds equals (i) in the case of the Final Computation Date as defined in section 1.148-3(e)(2) of the Tax
Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any
other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, such
rebate payments shall be made by the Agency at the times and in the amounts as are or may be required
by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and shall be accompanied
by Form 8038-T or such other forms and information as is or may be required by section 148(f) of the
Code and the Tax Regulations and rulings thereunder for execution and filing by the Agency.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Tax Regulations and rulings thereunder, the Agency shall not and shall. not permit any
person to, at any time prior to the final retirement of the Tax -Exempt Bonds, enter into any transaction
that reduces the amount required to be paid to the United States pursuant to paragraph (i) 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 Series of Tax -Exempt Bonds not been
relevant to either party.
0) Tax -Exempt Bonds Not Hedge Bond.
(1) The Agency represents that none of the Tax -Exempt Bonds is or will
become a "hedge bond" within the meaning of section 149(g) of the Code.
(2) Without limitation of paragraph (1) above: (A) the Agency will not
execute and deliver a Series of Tax -Exempt Bonds unless as of the date of issuance of such Series of Tax -
Exempt Bonds the Agency reasonably expects that at least 85% of the spendable proceeds of such Series
of Tax -Exempt Bonds will be expended within the three-year period commencing on such date of
issuance, and (B) no more than 50% of the proceeds of such Series of Tax -Exempt Bonds will be invested
in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more.
(k) Elections. The Agency hereby directs and authorizes any Agency Representative
to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as
such Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection
with the Tax -Exempt Bonds, in the Tax Certificate or similar or other appropriate certificate, form or
document.
(1) Closing Certificate. The Agency agrees to execute and deliver in connection
with the issuance of the Tax -Exempt Bonds a Tax Certificate as to Arbitrage and the Provisions of
Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing additional
representations and covenants pertaining to the exclusion of interest on the Tax -Exempt Bonds from the
gross income of the owners thereof for federal income tax purposes (the "Tax Certificate"), which
representations and covenants are incorporated as though expressly set forth herein.
SECTION 6.15 Agreements with Taxing Agencies; Other Agreements. So long as any
Bonds are Outstanding, the Agency shall not (a) enter into any new agreement, or amend any existing
agreement, with any taxing agency entered into (i) pursuant to Section 33401 of the Law or (ii) which
operates as a waiver of the Agency's right to receive Tax Revenues under the Redevelopment Plan, or (b)
enter into any disposition, development, owner participation or other agreement, or amend any existing
agreement, which requires the Agency to make payments from Tax Revenues, unless the Agency's
obligations under such agreement are made expressly subordinate and junior to the Agency's obligations
under this Indenture and the Bonds.
80005086.3 34
SECTION 6.16 Annual Review of Tax Revenues. The Agency hereby covenants that it
will annually review the total amount of Tax Revenues remaining available to be received by the Agency
under the Redevelopment Plan's cumulative tax increment limitation, as well as future cumulative Annual
Debt Service. The Agency will not accept Tax Revenues greater than Annual Debt Service, in any year,
if such acceptance will cause the amount remaining under the tax increment limit to fall below remaining
cumulative Annual Debt Service, except for the purpose of depositing such revenues in escrow for the
payment of interest on and principal of and redemption premiums, if any, on the Bonds.
ARTICLE VII
THE TRUSTEE
SECTION 7.01 The Trustee. The Bank of New York Trust Company, N.A. having a
corporate trust office in Los Angeles, California, is hereby appointed Trustee hereunder for the purpose of
receiving all money which the Agency is required to deposit with the Trustee hereunder and to allocate,
use and apply the same as provided in the Indenture.
The Agency may at any time, but only prior to an Event of Default or after the curing or
waiver of an Event of Default and only upon thirty (30) days written notice, at its sole discretion remove
the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors
thereto; provided that any such successor shall be a bank, banking institution (state or federal) or trust
company with a corporate trust office in California, having a combined capital (exclusive of borrowed
capital) and surplus (or whose parent holding company has a combined capital (exclusive of borrowed
capital) and surplus) of at least seventy-five million dollars ($75,000,000), and subject to supervision or
examination by federal or state authority. If such bank, banking institution or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this section the combined capital and
surplus of such bank, banking institution or trust company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Trustee may at any time resign by giving written notice to the Agency. Any
successor trustee appointed hereunder shall give notice of such appointment to the Owners, which notice
shall be mailed to the Owners at their addresses appearing in the registration books in the office of the
Trustee. Upon receiving such notice of resignation, the Agency shall promptly appoint a successor
Trustee by an instrument in writing. Any resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee.
If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee
shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee
may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court
may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by
law, appoint a successor Trustee having the qualifications required hereby.
The Trustee is hereby authorized to pay or redeem the Bonds when duly presented for
payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds upon
payment thereof or upon the surrender thereof by the Agency and shall upon Written Request of the
Agency deliver a certificate of destruction to the Agency. The Trustee shall keep accurate records of all
Bonds paid and discharged and destroyed by it.
The Agency shall from time to time, subject to any agreement between the Agency and
the Trustee then in force, pay to the Trustee compensation for its services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, which compensation shall not be limited by any provision of law with respect to
80005086.3 35
the compensation of a trustee of an express trust, and the Agency will reimburse the Trustee for all its
advances (with interest on such advances at the maximum rate allowed by law) and expenditures,
including but not limited to advances to and fees and expenses of independent accountants, counsel
(including in-house counsel to the extent not duplicative of other counsel's work) and engineers or other
experts employed by it, and reasonably required, in the exercise and performance of its powers and duties
hereunder. The Agency shall indemnify and save the Trustee, its officers, employees, directors and
agents harmless from and against all claims, losses, costs, expenses, liability and damages, including legal
fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work
or thing done on, the Project, (ii) any breach of default on the part of the Agency in the performance of
any of its obligations under this Indenture and any other agreement made and entered into for purposes of
the Project, (iii) any act or omission of the Agency or of any of its agents, assignees or licensees with
respect to the Project, (iv) the acquisition, construction, installation and equipping of the Project or the
authorization of payment of delivery costs or acquisition and construction costs, (v) the exercise and
performance by the Trustee of any of its powers and duties hereunder, or (vi) the offering and sale of the
Bonds or the distribution of any official statement or other offering circular utilized in connection with the
sale of the Bonds; provided, that the Agency shall not be liable for actions caused by the Trustees' own
negligence or willful misconduct. The Trustee's rights to indemnification and protection from liability
hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and
final payment or defeasance of the Bonds. The Trustee shall not be liable for the sufficiency or collection
of any Tax Revenues or other moneys required to be paid to it under the Indenture (except as provided in
this Indenture), or its right to receive moneys pursuant to the Indenture.
SECTION 7.02. Liability of Trustee. The recitals of facts, covenants and agreements
contained herein, in the Bonds and in any instruments of further assurance shall be taken as statements,
covenants and agreements of the Agency, and the Trustee does not assume any responsibility for the
correctness of the same, or make any representation as to the validity or sufficiency of the Indenture or of
the Bonds, the adequacy of any security afforded thereunder, or the correctness or completeness of any
information contained in any offering materials distributed in connection with the sale of the Bonds, or
incur any responsibility in respect of any of the foregoing, other than in connection with the duties or
obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall not be liable in
connection with the performance of its duties hereunder, except for its own negligence or willful
misconduct.
The Trustee shall not be responsible for the validity, genuineness or performance of any
leases, contracts or other instruments at any time conveyed, mortgaged, hypothecated, pledged, assigned
or transferred to it hereunder, or with respect to the obligation of the Agency to preserve and keep
unimpaired the rights of the Agency under or concerning any such leases, contracts or other instruments.
The Trustee makes no representations and shall have no responsibility for any official statement or other
offering material prepared or distributed with respect to the Bonds. In accepting the trust hereby created,
the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons,
including without limitation the Owners, the Agency' and the City, having any claim against the Trustee
arising from this Indenture not attributable to the Trustee's negligence or willful misconduct shall look
only to the funds and accounts held by the Trustee hereunder for payment except as otherwise specifically
provided herein.
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 Owner pursuant to this Indenture unless the Trustee
shall have received reasonable security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction.
80005086.3 - 36
Except during the continuance of an Event of Default, the Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
In case an Event of Default has occurred and is continuing, the Trustee shall exercise
such rights and powers vested in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own
affairs.
In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
The Trustee is not accountable for the use by the Agency of funds which the Trustee
releases to the Agency or which the Agency otherwise receives, or to verify compliance by the Agency
with the provisions of Section 5.02, or for the adequacy or validity of any collateral or security interest
securing this Indenture or the Bonds. The Trustee has no obligation to advance its own funds, incur
individual financial or other liability or risk in performing any duty or in exercising any right hereunder.
The Trustee shall not be deemed to have knowledge of any Event of Default other than a
payment default hereunder unless the Trustee shall be specifically notified in writing of such default by
the Agency or by the Owners of at least twenty five percent (25%) in aggregate principal amount of
Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to
the Trustee must, in order to be effective, be delivered at the corporate trust office of the Trustee in Los
Angeles, California, or at such other address as shall be designated by the Trustee, and in the absence of
such notice so delivered, the Trustee may conclusively assume there is no Event of Default except as
aforesaid. The Trustee shall not be bound to ascertain or inquire as to the performance or observance by
any other party of any of the terms conditions, covenants or agreements herein or in any of the documents
executed in connection with the Bonds. Any action taken or omitted to be taken by the Trustee in good
faith pursuant to this Indenture upon the request of 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 executed and delivered in exchange therefor or in
place thereof.
The Trustee shall not be required to give any bond or surety in respect of the execution of
the said trusts and powers or otherwise in respect of the premises.
The Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Owners of a majority in aggregate principal amount
of the Outstanding Bonds relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture.
The duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture. The Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no implied covenants or obligations
(fiduciary or otherwise) shall be read into this Indenture against the Trustee. The permissive right of the
Trustee to do things enumerated in this Indenture 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 and such immunities
and exceptions and its right to payment of its fees and expenses shall survive its resignation or removal
80005086.3 37
and the final payment and defeasance of the Bonds. Under no circumstances shall the Trustee be liable in
its individual capacity for the obligations evidenced by the Bonds. The Trustee, in ,its individual or any
other capacity, may become the Owner of any Bonds or other obligations of any party hereto with the
same rights which it would have if not the Trustee and may act as a depository 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. At any and all reasonable times,
the Trustee, and its agents shall have the right (but not any duty) to inspect the Project, including all
books, papers and records of the Agency and the City pertaining. to the Project and the Bonds, and to take
such memoranda therefrom and with regard thereto and make photocopies thereof as may be desired.
Before taking or refraining from any action hereunder at the request or direction of the Owners, the
Trustee may require that an indemnity bond satisfactory to the Trustee be furnished to it and be in full
force and effect.
SECTION 7.03 Notice to Trustee. The Trustee shall be protected in acting upon any
notice, indenture, request, consent, order, certificate, report, bond, opinion or other paper or document
believed by it to be genuine and to have been signed or presented by the proper party or parties. The
Trustee may consult with counsel, who may be counsel to the Agency, with regard to legal questions, and
the opinion of such counsel shall be full and complete authorization and protection in respect of any
action taken or suffered hereunder in good faith and in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond unless
and until such Bond is submitted for inspection, if required, and such person is the registered owner of
such Bond as shown on the registration books.
Whenever in the administration of its duties under the Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or, established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in
the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established
by a Certificate of the Agency and such certificate shall be full warrant to the Trustee for any action taken
or suffered under the provisions of the Indenture upon the faith thereof, but in its discretion the Trustee
may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it
may seem reasonable.
ARTICLE VIII
AMENDMENT OF THE INDENTURE
SECTION 8.01 Amendment by Consent of Owners. The Indenture and the rights and
obligations of the Agency and of the Owners may be amended at any time by a Supplemental Indenture
which shall become binding when the written consents of the Owners of at least a majority in aggregate
principal amount of the affected Bonds then Outstanding, exclusive of Bonds disqualified as provided in
Section 8.02, are filed with the Trustee. No such amendment shall (1) extend the maturity of or reduce
the interest rate on, or otherwise alter or impair the obligation of the Agency to pay the interest or
principal or redemption premium, if any, at the time and place and at the rate and in the currency provided
herein of any Bond, without the express written consent of the Owner of such Bond, or (2) permit the
creation by the Agency of any mortgage, pledge or lien upon the Tax Revenues superior to or on a parity
with the pledge and lien created in the Indenture for the benefit of the Bonds, or (3) reduce the percentage
of Bonds required for the written consent to any such amendment, or (4) modify the rights or obligations
of the Trustee without its prior written assent thereto.
80005086.3 38
The Indenture and the rights and obligations of the Agency and of the Owners may also
be amended at any time by a Supplemental Indenture which shall become binding upon execution,
without the consent of any Owners, and to the extent permitted by law and only for any one or more of
the following purposes;
(a) To add to the covenants and agreements of the Agency in the Indenture
contained, other covenants and agreements thereafter to be observed, or to surrender any right or power
herein reserved to or conferred upon the Agency;
(b) To make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained in the Indenture, or in regard to questions
arising under the Indenture, as the Agency may deem necessary or desirable and not inconsistent with the
Indenture, and which shall not materially adversely affect the interest of the Owners;
(c) To provide for the issuance of any Additional Bonds, and to provide the terms
and conditions under which such Additional Bonds may be issued, subject to and in accordance with the
provisions of Article N;
(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 Owners of the
Bonds;
(e) To maintain the exclusion of interest on the Bonds from gross income for federal
income tax purposes (except with respect to any Bonds which the Agency certifies to the Trustee are not
intended to qualify for such exclusion);
(f) To the extent necessary to obtain a bond insurance policy, to obtain a rating on
the Bonds or in connection with satisfying all or a portion of the Reserve Account Requirement by
crediting a letter of credit or bond insurance policy to the Reserve Account; or
(g) For any other purpose that does not materially adversely affect the interests of the
Owners.
SECTION 8.02 Disqualified Bonds. Bonds owned or held by or for the account of the
Agency or the City shall not be deemed Outstanding for, the purpose of any consent or other action in this
Indenture provided for, and shall not be entitled to consent to, or take any other action in this Indenture
provided for; provided, however, that for purposes 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 will be disregarded.
80005086.3 39
SECTION 8.03 Endorsement or Replacement of Bonds After Amendment. After the
effective date of any action taken as hereinabove provided, the Agency may determine that the Bonds
may bear a notation, by endorsement in form approved by the Agency, as to such action, and in that case
upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond
for such purpose at the office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation as to such action shall be made on such Bond. If the
Agency shall so determine, new Bonds so modified as, in the opinion of the Agency, shall be necessary to
conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any
Bond Outstanding at such effective date such new Bonds shall be exchanged at the office of the Trustee
or at such additional offices as the Trustee may select and designate for that purpose, without cost to each
Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds.
SECTION 8.04 Opinion of Counsel. The Trustee may conclusively accept an opinion of
nationally recognized bond counsel to the Agency that an amendment of the Indenture is in conformity
with the provisions of this Article.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTION 9.01 Events of Default and Acceleration of Maturities. If one or more of the
following events (herein called "Events of Default") shall happen, that is to say:
(a) If default shall be made in the due and punctual payment of the principal of or
redemption premium, if any, on any Bond when and as the same shall become due and payable, whether
at maturity as therein expressed, by declaration or otherwise;
(b) If default shall be made in the due and punctual payment of .the interest on any
Bond when and as the same shall become due and payable;
(c) If default shall be made by the Agency in the observance of any of the
agreements, conditions or covenants on its part in the Indenture or in the Bonds contained, and such
default shall have continued for a period of 30 days after the Agency shall have been given notice in
writing of such default by the Trustee; provided, however, with the prior written consent of the Bond
Insurer that such default shall not constitute an Event of Default hereunder if the Agency shall commence
to cure such default within said 30 day period and thereafter diligently and in good faith proceed to cure
such default within a reasonable period of time; or
(d) If the Agency shall file 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 Agency, 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 Agency or of the whole or any
substantial part of its property;
then, and in each and every such case during the continuance of such Event of Default, the Trustee may,
and upon the written request of the Owners of not less than a majority in aggregate principal amount of
the Bonds at the time Outstanding, shall, by notice in writing to the Agency, declare the principal of all of
the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due and payable, anything in
the Indenture or in the Bonds contained to the contrary notwithstanding.
80005086.3 40
This provision, however, is subject to the condition that if, at any time after the principal
of the Bonds shall have been so declared due and payable, and before any judgment or decree for the
payment of the money due shall have been obtained or entered, the Agency shall deposit with the Trustee
a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured
installments of interest (if any) upon all the Bonds, with interest at the rate of interest which would have
been paid on such overdue principal on such overdue installments of principal and interest, and any fees
and expenses owed to the Trustee, including attorneys fees, and any and all other defaults known to the
Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by
reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or
provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such
case, the Bond Insurer or the Owners of at least a majority in aggregate principal amount of the Bonds
then Outstanding with the prior written consent of the Bond Insurer, by written notice to the Agency and
to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and
its consequences. No such rescission and annulment shall extend to or shall affect any subsequent
default, or shall impair or exhaust any right or power consequent thereon.
SECTION 9.02 Application of Funds Upon Acceleration. All money in the funds and
accounts provided for in the Indenture upon the date of the declaration of acceleration by the Trustee as
provided in Section 9.01, and all Tax Revenues thereafter received by the Agency hereunder, shall be
transmitted to the Trustee and shall be applied by the Trustee in the following order:
First, to the payment of the costs and expenses of the Trustee, if any, in carrying out the
provisions of this article, including reasonable compensation to its agents and counsel, to'the payment of
any other amounts then due and payable to the Trustee, including any predecessor trustee, with respect to
or in connection with this Indenture, whether as compensation, reimbursement, indemnification or
otherwise, and, thereafter, to the payment of the costs and expenses of the Owners in providing for the
declaration of such Event of Default, including reasonable compensation to their agents and counsel;
Second, upon presentation of the several Bonds, and the stamping thereon of the amount
of the payment if only partially paid, or upon the surrender thereof if fully paid, to the payment of the
whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on the
overdue interest and principal at the rate of interest which would have been paid on such overdue
principal, and in case such money shall be insufficient to pay in full the whole amount so owing and
unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue interest
and principal without preference or priority among such interest, principal and interest on overdue interest
and principal, ratably to the aggregate of such interest, principal and interest on overdue interest and
principal.
SECTION 9.03 Other Remedies of Owners. Any Owner shall have the right, subject to
the provisions of Section 9.08, for the equal benefit and protection of all Owners similarly situated:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his rights
against the Agency and any of the members, officers and. employees of the Agency, and to compel the
Agency or any such members, officers or employees to perform and carry out their duties under the Law
and their agreements with the Owners as provided in the Indenture;
(b) By suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Owners; or
80005086.3 41
(c) Upon the happening of an Event of Default (as defined in Section 9.01), by a suit
in equity to require the Agency and its members, officers and employees to account as the trustee of an
express trust.
SECTION 9.04 Non -Waiver. A waiver of any default or breach of duty or contract by
any Owner shall not affect any subsequent default or breach of duty or contract, or impair any rights or
remedies on any such subsequent default or breach. No delay or omission by any Owner or the Trustee 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 Owners by the Law or by this article may be enforced and exercised'from time to time
and as often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned
or determined adversely to the Owners, the Trustee, the Agency and the Owners shall be restored to their
former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
SECTION 9.05 Actions by Trustee as Attorney -in -Fact. Any suit, action or proceeding
which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought
by the Trustee for the equal benefit and protection of all Owners, and the Trustee is hereby appointed (and
the successive respective Owners of the Bonds issued hereunder, by taking and holding the same, shall be
conclusively deemed so to have appointed it) the true and lawful attorney in fact of the Owners for the
purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things
for and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of
the Trustee as such attorney in fact; provided, however, the Trustee shall have no duty or obligation to
enforce any right or remedy unless it has been indemnified by the Owners from any liability or expense
including without limitation fees and expenses of its attorneys.
SECTION 9.06 Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in
equity or by statute or otherwise, and may be exercised without exhausting and without regard to any
other remedy conferred by the Law or any other law, subject to the provisions of Section 9.08.
SECTION 9.07 Owners' Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and
delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct
the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such
direction shall not be otherwise than in accordance with law and the provisions of this Indenture, that the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such
direction, and that the Trustee shall have the right to decline to follow any such direction which in the
opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction.
SECTION 9.08 Limitation on Owners' Right to Sue. No Owner of any Bond shall have
the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of
any right or remedy under this Indenture, the Law or any other applicable law with respect to such Bond,
unless (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of
Default; (2) the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the
Bonds then Outstanding shall have made written request - upon the Trustee to exercise the powers `
hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Owner or
said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and
80005086.3 42
liabilities to be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to
comply with such request for a period of sixty (60) days after such written request shall have been
received by, and said tender of indemnity shall have been made to, the Trustee; and (5) the Trustee shall
not have received contrary directions from the Owners of a majority in aggregate principal amount of the
Bonds then Outstanding.
Such notification, request, tender or 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
or under law; it being understood and intended that no one or more Owners shall have any right in any
manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the
rights of any other Owners, or to enforce any right under this Indenture, the Law or other applicable law
with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and
for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this
Indenture.
Nothing in this Section or in any other'provision of the Indenture, or in the Bonds, shall
affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the interest on
and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as
herein provided, out of the Tax Revenues pledged for such payment, or affect or impair the right of
action, which is also absolute and unconditional, of such Owners to institute suit to enforce such payment
by virtue of the contract embodied in the Bonds and in the Indenture.
SECTION 9.09 Control. Notwithstanding anything in the Indenture to the contrary,
upon the occurrence and continuance of an Event of Default under the Indenture, the Bond Insurer shall
be entitled to control and direct the enforcement of all rights and remedies granted to the registered
owners of the Bonds or any trustee appointed for the benefit of the registered owners under the Indenture,
including without limitation the Trustee, as if the Bond Insurer were the registered owner of the Bonds
insured by it.
ARTICLE X
DEFEASANCE
SECTION 10.01 Discharge of Indebtedness. If the Agency shall pay or cause to be paid,
or there shall otherwise be paid, to the Owners of all Outstanding Bonds the interest due thereon and the
principal thereof, at the times and in the manner stipulated therein and in the Indenture, then the Owners
of such Bonds shall cease to be entitled to the pledge of Tax Revenues, and all covenants, agreements and
other obligations of the Agency to the Owners of such Bonds under the Indenture shall thereupon cease,
terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute at the
Written Request of the Agency, and at the expense of the Agency, and deliver to the Agency all such
instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall, after
payment of amounts due the Trustee hereunder, pay over or deliver to the Agency all money or securities
held by it pursuant to the Indenture which are not required for the payment of the interest due on and the
principal of and premium, if any, due on such Bonds other than the Rebate Amount.
Bonds for the payment of which money shall have been set aside (through deposit by the
Agency* or otherwise) to be held in trust by the Trustee for such payment at the maturity or redemption
date thereof shall be deemed, as of the date of such setting aside, to have been paid within the meaning
and with the effect expressed in the first paragraph of this section.
80005086.3 43
Any Outstanding Bonds shall prior to the maturity date thereof be deemed to have been
paid within the meaning and with the effect expressed in the first paragraph of this section if (1) there
shall have been deposited with the Trustee, or another fiduciary or escrow agent, either money in an
amount which shall be sufficient, or Defeasance Obligations the principal of and the interest on which
when paid will provide money which, together with the money, if any, deposited with the Trustee at the
same time, shall be sufficient to pay when due the interest due and to become due on such Bonds on and
prior to the maturity date thereof or such earlier redemption date as shall be irrevocably established, and
the principal of and redemption premium, if any, on such Bonds (the sufficiency of such amounts to be
appropriately verified by- an Independent Certified Public Accountant) and (2) the Agency shall have
given the Trustee in form satisfactory to it irrevocable instructions to mail, as soon as practicable, a notice
to the Owners of such Bonds that the deposit required by (1) above has been made with the Trustee and
that such Bonds are deemed to have been paid in accordance with this section and stating the maturity
date or earlier redemption date upon which money is to be available for the payment of the principal of
such Bonds.
Neither Defeasance Obligations nor money deposited with the Trustee pursuant to this
section nor interest or principal payments on any such Defeasance Obligations shall be withdrawn or used
for any purpose other than, and shall be held in trust for, the payment of the interest on and principal of
such Bonds; provided that any cash received from such interest or principal payments on such Defeasance
Obligations deposited with the Trustee, if not then needed for such purpose, shall, to the extent
practicable, be reinvested at the written direction of the Agency in Defeasance Obligations maturing at
times and in amounts sufficient to pay when due the interest on and principal of such Bonds on and prior
to such maturity date thereof, and interest earned from such reinvestments shall be deposited in the
Special Fund. For the purposes of this section, Defeasance Obligations shall mean and include only such
securities as are not subject to redemption prior to their maturity.
SECTION 10.02 Unclaimed Moneys. Anything in the Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the
Bonds or interest thereon which remain unclaimed for two (2) years after the date when such Bonds or
interest thereon have become due and payable, if such money was held by the Trustee at such date, or for
two (2) years after the date of deposit of such money if deposited with the Trustee after the said date when
such Bonds or interest thereon become due and payable, shall be repaid by the Trustee to the Agency, 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 Agency for the payment of such Bonds; provided,
however, that before being required to make any such payment to the Agency, the Trustee shall, at the
Written Request of the Agency and at the expense of the Agency, cause to be mailed to the registered
Owners of such Bonds at their addresses as they appear on the registration books of the Trustee a notice
that said money remains unclaimed and that, after a date named in said notice, which date shall not be less
than thirty (30) days after the date of the mailing of such notice, the balance of such money then
unclaimed will be returned to the Agency. Any money held by the Trustee in trust for the payment and
discharge of any Bonds shall not bear interest or be otherwise invested from and after such maturity or
redemption date.
ARTICLE XI
FINANCIAL GUARANTY INSURANCE POLICY
SECTION 11.01 [Amendments Requiring Consent of Bond Insurer. Any provision of
this Indenture expressly recognizing or granting rights in or to the Bond Insurer may not be amended in
any manner which adversely affects the rights of the Bond Insurer hereunder without the prior written
consent of the Bond Insurer. Any amendment to this Indenture which requires the consent of Owners of
the Bonds shall also require the consent of the Bond Insurer. The Bond Insurer reserves the right to
80005086.3 44
charge the Agency a fee for any consent or amendment to this Indenture while the Insurance Policy is
outstanding.
Unless otherwise provided in this Article XI, the Bond Insurer's consent shall be required
in addition to consent of the Owners of the Bonds, when required, for the following purposes:
(i) execution and delivery of any Supplemental Indenture that would adversely affect the rights of the
Bond Insurer; (ii) removal of the Trustee and selection and appointment of any successor trustee; and (iii)
initiation or approval of any action not described in (i) or (ii) above which requires consent of the Owners
of the Bonds. Notwithstanding any other provision of this Indenture, the Bond Insurer shall have the
right, in lieu of Owners of the Bonds, to consent on behalf of such owners to any Supplemental Indenture
that requires the consent of Owners of Bonds.
SECTION 11.02 Approval of AU Reorganization. Any reorganization or liquidation
plan with respect to the Agency must be acceptable to the Bond Insurer. In the event of any
reorganization or liquidation, the Bond Insurer shall have the right to vote on behalf of all Owners who
hold the Bonds absent a default by the Bond Insurer under the Insurance Policy.
SECTION 11.03 Consent of Bond Insurer Upon Default. Anything in this Indenture to
the contrary notwithstanding, upon the occurrence and continuance of an Event of Default as defined in
this Indenture, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and
remedies granted to the Owners or the Trustee for the benefit of the Owners under this Indenture.
SECTION 11.04 Notice to Bond Insurer.
(a) While the Insurance Policy is in effect, the Agency or the Trustee (as to (i) and
(ii)), as appropriate, shall furnish to the Bond Insurer (at the Agency's expense to the attention of the
Surveillance Department, unless otherwise indicated):
(1) as soon as they are available, a copy of any financial statement, audit
and/or annual report of the Agency;
(2) such additional information as the Bond Insurer may reasonably request;
(3) a copy of any notice to be given to the Owners of the Bonds, including,
without limitation, notice of any redemption or defeasance of the Bonds, and any certificate
rendered pursuant to this Indenture relating to the security for the Bonds; and
(4) to the extent that the Agency has entered into a continuing disclosure
agreement with respect to the Bonds, the Bond Insurer shall be included as a party to be
notified of a material significant event required to be given thereunder.
(b) The Agency or the Trustee, as appropriate, shall notify the Bond Insurer (to the
attention of the General Counsel Office) of any failure of the Agency to provide relevant notices,
certificates, etc.
(c) Notwithstanding any other provision of this Indenture, the Trustee or the Agency,
as appropriate, shall immediately notify the Bond Insurer (to the attention of the General Counsel Office)
if at any time there are insufficient moneys to make any payments of principal and/or interest on the
Bonds as required and immediately upon the occurrence of any Event of Default hereunder.
80005086.3 45
(d) The Agency will permit the Bond Insurer to discuss the affairs, finances and
accounts of the Agency or any information the Bond Insurer may reasonably request regarding the
security for the Bonds with appropriate officers of the Agency. The Trustee or the Agency, as
appropriate, will permit the Bond Insurer to have access to and to make copies of all books and records
relating to the Bonds at any reasonable time.
(e) The Bond Insurer shall have the right to direct an accounting with respect to the
Bonds at the Agency's expense, and the Agency's failure to comply with such direction within thirty (30)
days after receipt of written notice of the direction from the Bond Insurer shall be deemed a default
hereunder; provided, however, that if compliance cannot occur within such period, then such period will
be extended so long as compliance is begun within such period and diligently pursued, but only if such
extension would not materially adversely affect the interests of any Owner of the Bonds.
SECTION 11.05 Defeasance Provisions. Notwithstanding any other provision of this
Indenture, in the event that the principal and/or interest due on the Bonds is paid'by the Bond Insurer
pursuant to the Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or
otherwise satisfied and not be considered paid by the Agency, and all covenants, agreements and other
obligations of the Agency under this Indenture to the Owners of the Bonds shall continue to exist and
shall run to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such
Owners of the Bonds. To evidence such subrogation (i) in the case of subrogation as to claims for past
due interest, the Trustee shall note the Bond Insurer's rights as subrogee on the registration books of the
Agency maintained by the Trustee upon receipt from the Bond Insurer of proof of the payment of interest
thereon to the Owners of the Bonds, and (ii) in the case of subrogation as to claims for past due principal,
the Trustee shall note . the Bond Insurer's rights as subrogee on the registration books of the Agency
maintained by the Trustee upon surrender of the Bonds by the Owners thereof together with proof of the
payment of principal thereof.
SECTION 11.06 Payment Procedure Pursuant to the Insurance Polic . As long as the
Insurance Policy shall be in' full force and effect, the Agency and the Trustee agree to comply with the,
following provisions: `
(a) At least one (1) day prior to all Interest Payment Dates the Trustee will determine
whether there will be sufficient funds in the applicable funds and accounts to pay the principal of or
interest on the Bonds on such Interest Payment Date. If the Trustee determines that there will be
insufficient funds in such funds or accounts, the Trustee shall so notify the Bond Insurer. Such notice
shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable
and whether such Bonds will be deficient as to principal or interest, or both. If the Trustee has not so
notified the Bond Insurer at least one (1) day prior to an Interest Payment Date, the Bond Insurer will
make payments of principal or interest due with respect to the Bonds on or before the first day next
following the date on which the Bond Insurer shall have received notice of nonpayment from the Trustee.
(b) The Trustee shall, after giving notice to the Bond Insurer provided in (a) above,
make available to the Bond Insurer and, at the Bond Insurer's direction, to The Bank of New York, in
New York, New York, as insurance trustee for the Bond Insurer or any successor insurance trustee (the
"Insurance Trustee"), the registration books of the Agency maintained by the Trustee and all records
relating to the funds and accounts maintained under this Indenture.
(c) The Trustee shall provide the Bond Insurer and the Insurance Trustee with a list
of Owners of Bonds entitled to receive principal or interest payments from the Bond Insurer under the
terms of the Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks
or drafts to the Owners of the Bonds entitled to receive full or partial interest payments from the Bond
80005086.3 46
Insurer and (ii) to pay principal upon the Bonds surrendered to the Insurance Trustee by the Owners of the
Bonds entitled to receive full or partial principal payments from the Bond Insurer.
(d) The Trustee shall, at the time it provides notice to the Bond Insurer pursuant to
(a) above, notify Owners of the Bonds entitled to receive the payment of principal or interest thereon from
the Bond Insurer (i) as to the fact of such entitlement, (ii) that the Bond Insurer will remit to them all or a
part of the interest payments next coming due upon proof of the entitlement of the Owners of the Bonds
to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee,
of an appropriate assignment of the right to payment of the Owners of the Bonds, (iii) that should they be
entitled to receive full payment of principal from the Bond Insurer, they must surrender their Bonds
(along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to
permit ownership of such Bonds to be registered in the name of the Bond Insurer) for payment to the
Insurance Trustee, and not the Trustee, and (iv) that should they be entitled to receive partial payment of
principal from the Bond Insurer, they must surrender their Bonds for payment thereon first to the Trustee
who shall note on such Bonds the portion of the principal paid by the Trustee, and then, along with an
appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance
Trustee, which will then pay the unpaid portion of principal.
In the event that the Trustee has notice that any payment of principal of or interest on a
Bond which has become due for payment and which is made to an Owner of Bonds by or on behalf of the
Agency has been deemed a preferential transfer and theretofore recovered from its Owner pursuant to the
United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable
order of a court having competent jurisdiction, the Trustee shall, at the time the Bond Insurer is notified
pursuant to (a) above, notify all Owners of the Bonds that in the event that any Owner's payment is so
recovered, such Owner will be entitled to payment from the Bond Insurer to the extent of such recovery if
sufficient funds are not otherwise available, and the Trustee shall furnish to the Bond Insurer its records
evidencing the payments of principal of and interest on Bonds which have been made by the Trustee and
subsequently recovered from Owners of Bonds and the dates on which such payments were made.
SECTION 11.07 Trustee -Related Provisions. The Trustee may be removed at any time,
at the request of the Bond Insurer, for any breach of the trust set forth in this Indenture. The Trustee shall
provide to the Bond Insurer prior written notice of any Trustee resignation.
Notwithstanding any other provision of this Indenture, in determining whether the rights
of the Owners of the Bonds will be adversely affected by any action taken pursuant to the terms and
provisions of this Indenture, the Trustee shall consider the effect on the Owners of the Bonds as if there
were no Insurance Policy.
Notwithstanding any other provision of this Indenture, no removal, resignation or
termination of the Trustee shall take effect until a successor, acceptable to the Bond Insurer, shall be
appointed.
SECTION 11.08 Bond Insurer as Third Party Beneficiary. To the extent that this
Indenture confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by
reason of this Indenture, the Bond Insurer is hereby explicitly recognized as being a third -party
beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted under
this Indenture. Notwithstanding any other provision of this Indenture, the Bond Insurer shall be entitled
to the rights, remedies and claims set forth in this Indenture so long as it is not in default under the
Insurance Policy.
80005086.3 47
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Liability of Agency Limited to Tax Revenues. Notwithstanding
anything in this Indenture contained, the Agency shall not be required to advance any money derived
from any source of income other than the Tax Revenues for the payment of the interest on or the principal
of the Bonds. The Agency. may, however, advance funds for any such purpose, provided that such funds
are derived from a source legally available for such purpose. The Agency's obligation to pay the Rebate
Amount to the United States of America pursuant to Section 6.15 hereof shall be considered the general
obligation of the Agency and shall be payable from any available funds of the Agency.
The Bonds are limited obligations of the Agency and are payable, as to interest thereon
and principal thereof, exclusively from the Tax Revenues; and the Agency is not obligated to pay them
except from the Tax Revenues. All of the Bonds are equally secured by a pledge of, and charge and lien
upon, all of the Tax Revenues, and the Tax Revenues constitute a trust fund for the security and payment
of the interest on and the principal of the Bonds. The Bonds are not a debt of the City of Santa Clarita,
the State of California or any of its political subdivisions, and neither said City, said State nor any of its
political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or
properties other than those of the Agency. The Bonds do not constitute an indebtedness within the
meaning of any constitutional or statutory limitation or restriction, and neither the members of the Agency
nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance.
SECTION 12.02 Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Agency, the Trustee 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 Agency or any member, officer or
employee thereof shall be for the sole and exclusive benefit of the Trustee and the Owners.
SECTION 12.03 Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Agency or any member, officer or employee thereof is named or
referred to, such reference shall be deemed to include the successor to the powers, duties and functions,
with respect to the management, administration and control of the affairs of the Agency, that are presently
vested in the Agency or such member, officer or employee, and all the agreements, covenants and
provisions contained in this Indenture by or on behalf of the Agency or any member, officer or employee
thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or
not.
SECTION 12.04 Execution of Documents by Owners. Any request, consent, declaration
or other instrument which this Indenture may require or permit to be executed by Owners may be in one
or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys
appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, consent, declaration or other instrument, or of such writing
appointing such attorney, may be proved by the certificate of any notary public or other officer authorized
to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act, that
the person signing such request, consent, declaration or other instrument or writing acknowledged to him
the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary
public or other officer.
80005086.3 48
Except as otherwise herein expressly provided, the amount of Bonds transferable by
delivery held by any person executing such request, consent, declaration or other instrument or writing as
a Owner, and the numbers thereof, and the date of his holding such Bonds, may be proved by a certificate,
which need not be acknowledged or verified, satisfactory to the Trustee, executed by a trust company,
bank or other depositary wherever situated, showing that at the date therein mentioned such person had on
deposit with such depositary the Bonds described in such certificate. The Trustee may nevertheless in its
discretion require further or other proof in cases where it deems the same desirable. The ownership of
Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry
books provided for in Section 2.08.
Any request, consent, declaration or other instrument or writing of the Owner of any
Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the
Agency or the Trustee in good faith and in accordance therewith.
SECTION 12.05 Waiver of Personal Liability. No member, officer or employee of the
Agency 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 member, officer or employee of the Agency from
the performance of any official duty provided by law.
SECTION 12.06 Acquisition of Bonds by Agency. All Bonds acquired by the Agency,
whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation.
SECTION 12.07 Content of Certificates and Reports. Every certificate or report of the
Agency with respect to compliance with a condition or covenant provided for in this Indenture shall
include (a) a statement that the person or persons making or giving such certificate or report have read
such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature
and scope of the examination or investigation upon which the statements or opinions contained in such.
certificate or report are based; (c) a statement that, in the opinion of the signers, they have made or caused
to be made such examination or investigation as is necessary to enable them to express an informed:
opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to
whether, in the opinion of the signers, such condition or covenant has been complied with.
Any such certificate made or given by an officer of the Agency 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 or information with respect to which is in the
possession of the Agency, upon the certificate or opinion of or representations by an officer or officers of
the Agency, 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 exercise of reasonable care should have known that the same were erroneous.
SECTION 12.08 Funds and Accounts. Any fund or account required by this Indenture
to be established and maintained by the Agency or the Trustee may be established and maintained in the
accounting records of the Agency or the Trustee either as a fund or an account, and may, for the purposes
of such records, any audits thereof and any reports or statements with respect thereto, be treated either as
a fund or as an account; but all such records with respect to all such funds and accounts shall at all times
be maintained in accordance with sound accounting practices and with due regard for the protection of the
security of the Bonds and the rights of the Owners.
80005086.3 49
SECTION 12.09 Article and Section Headings and References. The headings or titles of
the several articles and sections hereof, and the table of contents appended hereto, shall be solely for
convenience of reference and shall not affect the meaning, construction or effect of this Indenture.
All references herein 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 12.10 Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof provided in this Indenture to be performed on the part of the Agency (or of the Trustee)
should be contrary to law, then such agreement or agreements, such covenant or covenants, or such
portions thereof, shall be null and void and shall be deemed separable from the remaining agreements and
covenants or portions thereof and shall in no way affect the validity of this Indenture or of the Bonds; but
the Owners shall retain all the rights and benefits accorded to them under the Law or any other applicable
provisions of law. The Agency hereby declares that it would have adopted this Indenture and each and
every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have
authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more
sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application
thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
SECTION 12.11 Execution in Several Counterparts. This Indenture may be executed in
any number of counterparts. Each of such counterparts shall for all purposes be deemed to be an original
and all such counterparts, or as many of them as the Agency and the Trustee shall preserve undestroyed,
shall together constitute but one and the same instrument.
SECTION 12.12 Business Days. When any action is provided for herein to be done on a
day named or within a specified time period, and the day or the last day of the period falls on a day other
than a Business Day, such action may be performed on the next ensuing Business Day with the same
effect as though performed on the appointed day or within the specified period.
SECTION 12.13 Governing Law. This Indenture shall be governed and construed in
accordance with the laws of the State of California.
SECTION 12.14 Notices. Whenever any notice is required to be given hereunder, such
notice shall be mailed, first class mail, postage prepaid, or delivered by expedited courier, or by facsimile
transmission (with original to follow by mail promptly thereafter), to the following parties at the
following addresses:
If to the Agency: City of Santa Clarita Redevelopment Agency
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Treasurer
If to the Trustee: The Bank of New York Trust Company, N.A.
700 South Flower, 5th Floor
Los Angeles, California 90017-4104
Attention: Corporate Trust Department
Reference: City of Santa Clarita Redevelopment Agency (Newhall
Redevelopment Project Area) Series 2008 TABS
80005086.3 50
If to the Bond Insurer:
Attention:
Fax:
Phone:
80005086.3 51
IN WITNESS WHEREOF, the City of Santa Clarita Redevelopment Agency has caused
this Indenture to be signed in its name by its duly authorized officer and attested by its Secretary and The
Bank of New York Trust Company, N.A. in token of its acceptance of the trusts created hereunder, has
caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of
the date and year first above written.
Attest:
Secretary
CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY
Executive Director
THE BANK OF NEW YORK TRUST COMPANY,
N.A., as Trustee
IL0
Authorized Signatory
80005086.3 52
APPENDIX A
[Form of Series 2008 Bond]
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Agency or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF SANTA CLARITA
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
TAX ALLOCATION BOND, SERIES 2008
RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP:
September 1, 20_ June _, 2008
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
The City of Santa Clarita Redevelopment Agency, a public body, corporate and politic,
duly organized and existing under and pursuant to the laws of the State of California (the "Agency"), for
value received hereby promises to pay to the registered owner specified above, or registered assigns, on
the Maturity Date specified above the Principal Amount specified above, together with interest thereon
from the interest payment date* next preceding the date of authentication of this Bond (unless this Bond is
authenticated during the period from the 16th day of the month next preceding an interest payment date to
and including such interest payment date, in which event it shall bear interest from such interest payment
date, or unless this Bond is authenticated on or before the fifteenth day of the month next preceding the
first interest payment date, in which event it shall bear interest from the dated date shown above) until the
principal hereof shall have been paid, at the Rate of Interest specified above, payable on September 1,
2008, and semiannually thereafter on March 1 and September 1 in each year. Both the interest hereon and
principal hereof are payable in lawful money of the United States of America. The principal (or
redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at
the corporate trust office of The Bank of New York Trust Company, N.A. (the "Trustee") in Los Angeles,
California, or at such other office as the Trustee may designate (the "Trust Office"). Interest hereon is
payable by check mailed on each interest payment date by first class mail to the person in whose name
this Bond is registered at the close of business on the 15th day of the month next preceding the applicable
interest payment date at such person's address as it appears on the registration books of the Trustee, or
upon written request received by the Trustee prior to the fifteenth day of the month preceding an interest
payment date of an Owner of all of the outstanding Bonds, by transfer in immediately available funds to
80005086.3 A-1
an account within the continental United States designated by such Owner. Terms not defined herein
shall be given the meaning assigned to such terms in the hereinafter defined Indenture.
This Bond is one of a duly authorized issue of bond of the Agency designated "City of
Santa Clarita Redevelopment Agency Tax Allocation Bonds, Series 2008" (the "Bonds"), limited in
aggregate principal amount to $ issued under the provisions of the Community
Redevelopment Law of the State of California, as supplemented and amended (the "Law"), and pursuant
to the provisions of an Indenture, dated as of June 1, 2008 (the "Indenture"), by and between the Agency
and the Trustee. Terms not defined herein shall be defined as provided in the Indenture. The Bonds are
secured by a lien on Tax Revenues. The Bonds are secured in accordance with the terms and conditions
of the Indenture, and reference is hereby made to the Indenture, to any indentures supplemental thereto
and to the Law for a description of the terms on which the Bonds are issued, for the provisions with
regard to the nature and extent of the security provided for the Bonds and of the nature, extent and manner
of enforcement of such security, and for a statement of the rights of the registered owners of the Bonds;
and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract
between the Agency and the registered owner from time to time of this Bond, and to all the provisions
thereof the registered owner of this Bond, by his acceptance hereof, consents and agrees. Each registered
owner hereof shall have recourse to all the provisions of the Law and the Indenture and shall be bound by
all the terms and conditions thereof.
The Bonds are issued to provide moneys to fund a portion of the Project, as more
particularly described in the Indenture. The Bonds are special obligations of the Agency and are payable,
as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from
the Tax Revenues (as that term is defined in the Indenture and herein called the "Tax Revenues") and
certain other funds, and the Agency is not obligated to pay them except from the Tax Revenues and such
other funds. Each of the Bonds are equally secured by a pledge of, and charge and lien upon, the Tax
Revenues, and the Tax Revenues constitute a trust fund for the security and payment of the interest on
and principal of and redemption premiums, if any, on the Bonds. Additional tax allocation bonds payable
from the Tax Revenues may be issued which will rank equally as to security with the Bonds, but only
subject to the terms and conditions set forth in the Indenture.
Pursuant to and under the terms of the Indenture, the Agency has covenanted and
warranted that, for the payment of the interest on and principal of and redemption premium, if any, on this
Bond and all other additional tax allocation bonds issued under the Indenture when due, there has been
created a special fund into which all Tax Revenues shall be deposited, and as an irrevocable charge the
Agency has allocated the Tax Revenues to the payment of the interest on and principal of and redemption
premiums, if any, on the Bonds, and the Agency will pay promptly when due the interest on and principal
of and redemption premium, if any, on this Bond and all other Bonds of this issue and all additional tax
allocation bonds authorized by the Indenture out of said special fund, all in accordance with the terms and
provisions set forth in the Indenture.
The Bonds maturing on or after September 1, 20_ shall be subject to optional
redemption prior to maturity at the option of the Agency on any date on or after September 1, 20 , as a
whole or in part by lot from any source and deposited with the Trustee (notice of such redemption having
been given by the Agency to the Trustee no later than 45 days prior to the date of redemption) at a
redemption price equal to the principal amount to be redeemed together with accrued interest to the date
fixed for redemption.
[The Bonds maturing on September 1, 20_, are also subject to redemption prior to their
stated maturity, in part by lot, from Sinking Account Installments deposited in the Sinking Account, at the
80005086.3 A-2
principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium,
according to the following schedules:
Redemption Date
(September 1)
*Maturity]
Term Bonds Maturing September 1, 20_,
Redemption Date
Principal Amount (September D Principal Amount
As provided in the Indenture, notice of redemption of this Bond shall be mailed by first
class mail not less than thirty (30) days before the redemption date to the registered owner hereof, but
failure to receive such notice shall not affect the sufficiency of such proceedings for redemption. If notice
of redemption has been duly given as aforesaid and money for payment of the above described
redemption price is held by the Trustee, then such Bonds shall, on the redemption date designated in such
notice, become due and payable at the above described redemption price; and from and after the date so
designated interest on the Bonds so called for redemption shall cease to accrue and registered owners of
such Bonds shall have no rights in respect thereof except to receive payment of such redemption price
thereof.
If an event of default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect provided in the
Indenture; except that the Indenture provides that in certain events such declaration and its consequences
may be rescinded by the registered owners of at least a majority in aggregate principal amount of'the
Bonds then outstanding.
The owner of any Bond or Bonds may surrender the same at the Trust Office in exchange
for an equal aggregate principal amount of fully registered Bonds of any other authorized denominations,
in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture.
This Bond is transferable, as provided in the Indenture, only upon a register to be kept for
that purpose at the Trust Office by the registered owner hereof in person, or by his duly authorized
attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the
Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds, in the same aggregate principal amount, shall be issued to the transferee in
exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The
Agency and the Trustee may deem and treat the person in whose name this Bond is registered as the
absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and
principal hereof and redemption premium, if any, hereon and for all other purposes. The Trustee shall not
be required to register the transfer or exchange of any Bond during the period in which the Trustee is
selecting Bonds for redemption or any Bond selected for redemption.
The rights and obligations of the Agency and of the registered owners of the Bonds may
be amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no
such amendment shall (1) extend the maturity of this Bond, or reduce the interest rate hereon, or
80005086.3 A-3
otherwise alter or impair the obligation of the Agency to pay the interest hereon or principal hereof or any
premium payable on the redemption hereof at the time and place and at the rate and in the currency
provided herein, without the express written consent of the registered owner of this Bond, or (2) permit
the creation by the Agency of any mortgage, pledge or lien upon the Tax Revenues superior to or on a
parity with the pledge and lien created in the Indenture for the benefit of the Bonds and all additional tax
allocation bonds authorized by the Indenture or (3) reduce the percentage of Bonds required for the
written consent to an amendment of the Indenture, or (4) modify any rights or obligations of the Trustee
without its prior written assent thereto; all as more fully set forth in the Indenture.
This Bond is not a debt of the City of Santa Clarita, the State of California or any of its
political subdivisions, and neither said City, said State nor any of its political subdivisions is liable
hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be
payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an
indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and
neither the members of the Agency nor any persons executing the Bonds shall be personally liable on the
Bonds by reason of their issuance.
This Bond shall not be entitled to any benefits under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have been
manually signed by the Trustee.
It is hereby certified that all of the acts, conditions and things required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist, have
happened and have been performed in due time, form and manner as required by law and that the amount
of this Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed by
the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted
to be issued under the Indenture.
IN WITNESS WHEREOF, the City of Santa Clarita Redevelopment Agency has caused
this Bond to be executed in its name and on its behalf by its Executive Director and attested by its
Secretary, and has caused its seal to be reproduced hereon, and has caused this Bond to be dated on the
date first written above.
CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY
Executive Director
(Seal)
Attest:
Secretary
80005086.3 A4
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within -mentioned Indenture and registered on
the Bond Registration Books.
Date:
THE BANK OF NEW YORK TRUST COMPANY,
N.A., as Trustee
LM
Authorized Signatory
80005086.3 A-5
[FORM OF 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. I .
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.
80005086.3 A-6
STATEMENT OF INSURANCE
[to follow].
80005086.3 A-%
APPENDIX B
[Form of Expense Fund Requisition]
REQUISITION NO.
with reference to
City of Santa Clarita Redevelopment Agency
(Newhall Redevelopment Project Area)
Tax Allocation Bonds, Series 2008
I. The City of Santa Clarita Redevelopment Agency (the "Agency") hereby
requests The Bank of New York Trust Company, N.A., as trustee (the "Trustee") pursuant to that certain
Indenture dated as of June 1, 2008 (the "Indenture") between the Agency and the Trustee, under the terms
of which the Agency has issued the above -captioned Bonds to pay from the moneys in the specified
Accounts of the Expense Fund established pursuant to Section 5.03 of the Indenture (the "Expense
Fund"), the amounts shown on Schedule I attached hereto to the parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Expense Fund. None of the items for which payment is requested has been
reimbursed previously from the Expense Fund.
DATED: , 20
CITY OF SANTA CLARITA REDEVELOPMENT
AGENCY
LIZ
Treasurer
80005086.3 B -I
5/2/08
OFFICIAL NOTICE OF SALE
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
HOUSING SET-ASIDE TAX ALLOCATION BONDS
SERIES 2008
NOTICE IS HEREBY GIVEN by the City of Santa Clarita Redevelopment Agency
(the "Agency ") that faxed and electronic bids will be received by a representative of the Agency
for the purchase of $ # principal amount of Housing Bonds designated the "City
of Santa Clarita Redevelopment Agency, Housing Set -Aside Tax Allocation Bonds, Series 2008
(the "Housing Bonds"). No hand delivered bids will be accepted. The bids will be received in
the manner and up to the time and date specified below, provided, however, that the Agency
reserves the right to postpone or change the sale date upon notice delivered via Thompson
Municipal News as provided in this Official Notice of Sale:
DATE AND TIME: 10:00 A.M. California Time on , June _,
2008, and so long as a proposal has not theretofore been
accepted by the Agency, on any date thereafter without
further advertising, as provided in this Official Notice of
Sale.
ELECTRONIC BIDS: Bid proposals may be submitted via I -Deal LLC
BIDCOMP/PARITY° System ("PARITY"), as provided.
below.
FAXED BIDS: By fax_ to the Agency's Financial Advisor, C.M. de Crinis
& Co., Inc., 15300 Ventura Boulevard, Suite 404, Sherman
Oaks, California 91403, phone (818) 385-4900, fax (818)
385-4904, email cm@cmdecrinis.com (the "Financial
Advisor").
See "TERMS OF SALE - Warnings Regarding Electronic Bids" and "- Warnings Regarding
Faxed Bids" herein.
Please note that the Agency reserves the right to cancel or reschedule the sale of the
Housing Bonds upon notice given through ,Thompson Municipal News by 1:30 P.M., California
time the day prior to the day bids are scheduled to be received, and if the sale is rescheduled,
notice of the new sale date and time, if any, will be given through Thompson Municipal News at
least 20 hours prior to the new day bids are to be received, and bids will be received in, the
manner set forth above at the rescheduled date and time as the Agency shall determine. Bids
must be received by 10:00 A.M., California time, on such date of sale.
* Preliminary, subject to change.
DESCRIPTION OF THE HOUSING BONDS
DATE; FORM; DENOMINATION: The Housing Bonds will be dated the date of
original delivery, and will be issued in non-negotiable, fully registered form, without coupons, in
denominations of $5,000 each or any integral multiple thereof. The Housing Bonds will be
delivered in a book -entry only system with no physical distribution of the Housing Bonds to the
public. The Depository Trust Company, New York, New York ("DTC") will act as depository
for the Housing Bonds. The Housing Bonds will be registered in the name of Cede & Co., as
nominee for DTC, on behalf of the participants in the DTC system and the subsequent beneficial
owners of the Housing Bonds. The Housing Bonds are being issued pursuant to an Indenture,
dated as of June 1, 2008 (the "Indenture'), by and between the Agency and The Bank of New
York Trust Company, N.A., Los Angeles, California, as trustee (the "Trustee"). Reference is
made to the Indenture for further details regarding the terms and provisions of the Housing
Bonds.
MATURITIES: The Housing Bonds will mature on September 1 in each of the years,
and in the approximate amounts, in accordance with the following schedule.
Year Principal
Year Principal
(September 1) Amount*
(September 1) Amount*
2008
2026
2009
2027
2010
2028
2011
2029
2012
2030
2013
2031.
2014
2032
2015
2033
2016
2034
2017
2035
2018
2036
2019
2037
2020
2038
2021
2039
2022
2040
2023
2041
2024
2042
2025
* Preliminary, subject to change.
2
W
MANDATORY SINKING ACCOUNT REDEMPTION; BIDDER'S RIGHT TO
DESIGNATE TERM BONDS: Bidders may designate two or more consecutive maturities of
the Housing Bonds as term Bonds, subject to the following limitations: (1) the final maturity date
for the Housing Bonds, including any term Bond, shall be September 1, 2042; (2) each term
Bond shall bear a single rate of interest; and (3) the term Bond(s) shall be subject to mandatory
sinking account redemption by lot on September 1 of each year, commencing with the year
following the final serial Bond maturity (or, if there is more than one term Bond, the maturity
date of any term Bond having an earlier maturity, as the case may be), with the aggregate
principal amount to be redeemed in each such year to be the same as the aggregate principal
amount set forth in the above maturity table and with each such redemption to be at a price equal
to 100% of the principal amount to be redeemed plus accrued and unpaid interest thereon to the
date fixed for redemption but without premium. If no term Bonds are designated in the winning
bid, the Housing Bonds will mature serially as shown in the preceding schedule.
INTEREST: Interest on the Housing Bonds will be payable from their dated date at such
rate or rates to be fixed upon the sale thereof, payable semiannually on March 1 and September 1
of each year (each, an "Interest Payment Date"), commencing September 1, 2008.
PAYMENT. • The Housing Bonds and interest with respect thereto are payable in lawful
money of the United States of America, "interest being payable by check mailed on each Interest
Payment Date to the registered owners thereof at the address shown on the Bond registration
books maintained by the Trustee on the 15th day of the month preceding an interest payment
date. Principal will be payable upon surrender at the corporate trust office of the Trustee.
REDEMPTION: Optional Redemption. Housing Bonds maturing on or before
September 1, 2017 will not be subject to optional redemption before their respective stated
maturities. Housing Bonds maturing on and after September 1, 2018 will be subject to
redemption, at the option of the Agency on any date on or after September 1, 2017, as a whole or
in part, by such maturities as shall be determined by the Agency, and by lot within a maturity,
from any available source of funds deposited with the Trustee, at a redemption price equal to the
principal amount of the Housing Bonds to be redeemed, together with accrued interest thereon to
the date fixed for redemption, without premium, by giving notice as.provided in the Indenture.
Mandatory Sinking Account Redemption of Housing Bonds. The Term Bonds shall
be subject to mandatory sinking account redemption in part, by lot, from mandatory sinking
account payments, at a redemption price equal to the principal amount thereof to be redeemed,
together with accrued interest thereon to the redemption date, without premium, in the aggregate
respective principal amounts set forth in the accepted bid for the Term Bonds; provided,
however, that if some but not all of such Term Bonds have been redeemed pursuant to optional
redemption, the total amount of all future applicable sinking account payments shall be reduced
by the aggregate principal amount of such Term Bonds so redeemed, to be allocated among such
sinking account payments as are thereafter payable in integral multiples of $5,000 as determined
by the Agency.
d
PURPOSE: The proceeds of the Housing Bonds together with other available moneys,
will be used (i) to finance certain public capital improvements and other redevelopment activities
within the Agency's Newhall Redevelopment Project Area, (ii) to fund a reserve fund, and (iii)
to pay certain costs of issuing the Housing Bonds.
SECURITY: The Housing Bonds. are special obligations of the Agency secured by an
irrevocable pledge of, and payable as to the principal of, premium, if any, and interest on from,
Tax Revenues and other funds as provided in the Indenture, and as such are not a debt of the City
of Carson (the "City"), the State of California or any of its political subdivisions. Neither the
City, the State of California nor any of its political subdivisions is liable for the payment thereof.
In no event shall the Housing Bonds or any interest or redemption premium thereon be payable
out of any funds or properties other than those of the Agency as set forth in the Indenture. The
Housing Bonds do not constitute an indebtedness within the meaning of any constitutional or
statutory debt limitation or restriction. Neither the members of the Agency nor, any persons
executing the Housing Bonds are liable personally on the Housing Bonds.
RESERVE ACCOUNT. A reserve account (the "Reserve Fund") is established by the
Indenture and is required to be funded in an amount equal to the least of (i) the amount of
Maximum Annual Debt Service on the Housing Bonds and additional bonds (excluding from the
calculation thereof parity debt other than Housing Bonds and additional bonds), (ii) ten percent
(10%) of the total of the proceeds of the Housing Bonds and additional bonds (excluding from
the calculation thereof parity debt other than Housing Bonds and additional bonds), and (iii) one
hundred and twenty five percent (125%) of average Annual Debt Service on the Housing Bonds
and additional bonds (excluding from the calculation thereof parity debt other than Housing
Bonds and additional bonds).
UNDERLYING RATINGS: The Housing Bonds have been assigned underlying ratings
of "A-" by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
("S&P").
MUNICIPAL BOND INSURANCE AT BIDDER'S OPTION. The Agency has
obtained a municipal bond insurance commitment from Ambac Assurance Corporation (the
"Bond Insurer") to guarantee under a financial guaranty insurance policy the scheduled payment
of principal of and interest on the Housing Bonds. Bids will be accepted which are based upon
the issuance of a financial guaranty insurance policy from such insurer for some or all of the
Housing Bonds, provided that payment of the insurance premium (which shall be rounded to the
nearest $100) of % (^ basis points) of the total debt service on the insured
Housing Bonds, and any additional fees charged by any rating agency for rating insured Housing
Bonds shall be the sole responsibility of the bidder.
TAX MATTERS: Fulbright & Jaworski L.L.P., Los Angeles, California, will render its
legal opinion with respect to tax -exemption of the interest paid on the Housing Bonds. See the
discussion of "TAX MATTERS" in the Official Statement herein referred to. In the event that
prior to the delivery of the Housing Bonds (a) the income received by private holders from
obligations of the same type and character shall be declared to be includable in gross income
(either at the time of such declaration or at any future date) for purposes of federal income tax
laws, either by the terms of such laws or by ruling of a federal income tax authority or official
rd
which is followed by the Internal Revenue Service, or by decision of any federal court, or (b) any
federal income tax law is adopted which will have a substantial adverse tax effect on holders of
the Housing Bonds as such, the successful bidder may, at its option, prior to the tender of the
Housing Bonds by the Agency, be relieved of its obligation, to purchase the Housing Bonds, and
in such case the deposit accompanying its bid will be returned. For purposes of the preceding
sentence, interest will be treated as excludable from gross income for federal income tax
purposes whether or not it is includable as an item of tax preference for calculating alternative
minimum taxes or otherwise includable for purposes of calculating certain other tax liabilities.
The legal opinion of Fulbright & Jaworski L.L.P. approving the validity of the Housing Bonds
will be furnished to the successful bidder without cost.
FURTHER INFORMATION: A copy of the Preliminary, Official Statement, dated May
2008, describing the Housing Bonds (the "Preliminary Official Statement"), and any other
information concerning the proposed financing, will be furnished upon request to the Agency's
Financial Advisor, cm@cmdecrinis.com (the "Financial Advisor"). A copy of the Preliminary
Official Statement can also be downloaded without charge from the Parity website at
http://www.i-dealprospectus.com.
TERMS OF SALE
FORM OF BID; MAXIMUM DISCOUNT. • All bids must be for not less than all of the
Housing Bonds hereby offered for sale and for not less than ninety-nine percent (99.00%) of the
aggregate par value thereof. The amount of any discount specified in any bid shall not exceed
one percent (1.00%) of the aggregate principal amount of the Housing Bonds.
Bidders may submit only one bid, and such bid shall be submitted electronically through
PARITY or by fax submitted to the Financial Advisor at (818) 385-4904. All bids must comply
with the requirement for a good faith deposit. See "GOOD FAITH DEPOSIT" herein.
Electronic Bids. Electronic bids must conform with the procedures established by
PARITY. Solely as an accommodation to bidders, electronic bids will be received exclusively
through PARITY in accordance with this Official Notice of Sale until 10:00 A.M. California
time on the date set for receipt of bids, but no bid will be received after the time specified for
receiving bids. To the extent any instructions or directions set forth in PARITY conflict with
this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further
information about PARITY, potential bidders may contact the Agency's Financial Advisor.
Faxed Bids. Faxed bids may be submitted to the Agency's Financial Advisor at (818)
385-4904. Neither the Agency, the Financial Advisor nor Fulbright & Jaworski L.L.P., as Bond
Counsel, takes any responsibility for any difficulties receiving fax submittals prior to the
deadline for receipt of bids. A copy of the prescribed bid form is attached hereto. Neither the
Agency, the Financial Advisor nor Bond Counsel will accept responsibility for inaccurate or
illegible bids, or for delay due to engaged telephone lines at the place of bid opening, or for delay
arising out of any bidder's election to deliver its bid by any means.
THE AGENCY RETAINS ABSOLUTE DISCRETION TO DETERMINE WHETHER
ANY BID; WHETHER FAXED OR ELECTRONIC, IS TIMELY, LEGIBLE AND
5
r -
COMPLETE. -,THE AGENCY TAKES NO RESPONSIBILITY FOR INFORMING ANY
BIDDER PRIOR TO THE TIME FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE,
ILLEGIBLE OR NOT RECEIVED.
WARNING REGARDING ELECTRONIC BIDS: THE AGENCY WILL ACCEPT
BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY ON THE OFFICIAL BID
FORM CREATED FOR SUCH PURPOSE. EACH BIDDER SUBMITTING AN
ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY
RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY, THAT THE AGENCY
NEITHER ENDORSES NOR EXPLICITLY ENCOURAGES THE USE OF PARITY, AND
THAT PARITY IS NOT ACTING AS AN AGENT OF THE AGENCY. INSTRUCTIONS
AND FORMS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM
PARITY, AND THE AGENCY ASSUMES NO RESPONSIBILITY FOR ENSURING OR
VERIFYING BIDDER. COMPLIANCE WITH THE PROCEDURES OF PARITY. THE
AGENCY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY HAS BEEN
MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER.
THE AGENCY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE
ELECTRONIC BIDS; HOWEVER THE AGENCY, THE FINANCIAL ADVISOR AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN
ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE
TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF
BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE
AGENCY AT THE PLACE OF BID OPENING, AND THE AGENCY SHALL NOT BE
REQUIRED TO ACCEPT THE TIME KEPT BY PARITY AS THE OFFICIAL TIME.
IN THE EVENT OF A MALFUNCTION IN THE ELECTRONIC BIDDING
PROCESS, BIDDERS SHOULD SUBMIT THEIR BIDS ON THE OFFICIAL BID FORM
ATTACHED HERETO BY FACSIMILE TO: (818) 385-4904.
WARNINGS REGARDING FAXED BIDS: NEITHER THE AGENCY, THE
FINANCIAL ADVISOR, NOR BOND COUNSEL SHALL BE RESPONSIBLE FOR, AND
THE BIDDER EXPRESSLY ASSUMES THE RISK OF, ANY INCOMPLETE, ILLEGIBLE
OR UNTIMELY BID SUBMITTED BY SUCH BIDDER BY FACSIMILE TRANSMISSION,
INCLUDING, WITHOUT LIMITATION, BY REASON OF GARBLED TRANSMISSION,
MECHANICAL FAILURE, ENGAGED TELEPHONE OR TELECOMMUNICATIONS
LINES AT THE PLACE OF BID OPENING, OR ANY OTHER CAUSE FOR REJECTION
ARISING OUT OF ANY BIDDER'S ELECTION TO DELIVER ITS BID BY MEANS OF
FACSIMILE DELIVERY.
INTEREST RATE: Bidders must specify the rate or rates of interest which shall be
payable on the Housing Bonds. The maximum true interest cost bid may not exceed
percent ( %) per annum interest and no interest rate shall exceed %. Interest on the
Housing Bonds is payable from the date of delivery (expected to be. June , 2008),
semiannually on each March 1 and September 1, commencing September 1, 2008. Bidders will
be permitted to bid different rates of interest but (a) each interest rate specified in any bid must
be in a multiple of one -twentieth (1/20) or one-eighth (1/8) of one percent; (b) interest on each
D
Housing Bond shall be computed from the date of delivery thereof, to its stated maturity date at
the interest rate specified in the bid, payable semiannually as set forth above; (c) interest on all
Housing Bonds maturing at any one time shall be payable at the same rate of interest; (d) the
difference between the lowest interest rate and the highest interest rate to be borne by a maturity
of Housing Bonds shall not exceed two percent (2%); (e) any premium must be paid as part of
the purchase price; and (f) no bid will be accepted which contemplates the waiver of any interest
or other concession by the bidder as a substitute for payment in full of the purchase price.
BEST BID: The Housing Bonds will be awarded to the best responsible bidder therefor,
considering the interest rate or rates specified and the premium offered, if any, or discount taken,
if any, and the best bid will be determined on the basis of the lowest true interest cost. The true
interest cost will be that nominal annual discount rate which, when discounted semiannually and
when used to discount all payments of principal and interest on the Housing Bonds at the rate or
rates specified in the bid to the date of delivery (expected to be June _, 2008) of the Housing
Bonds results in the amount equal to the purchase price, which is the principal amount of the
Housing Bonds plus the amount of any premium, less the amount of any discount. In the event
two or more bids setting forth identical interest rates are received, the Agency reserves the right
to allow its authorized representative to exercise his or her own discretion and judgment in
making the award and may award the Housing Bonds on a pro rata basis in such denominations
as he or she shall determine.
ADJUSTMENT OF PRINCIPAL AMOUNTS: The Agency reserves the right to
increase or to decrease the principal amount of any maturity of the Housing Bonds as the Agency
deems advisable, based on the actual rates of interest on the Housing Bonds. Any such increase
or decrease shall be allocated among the various maturities of the Housing Bonds on such basis
as the Agency deems advisable, and shall result in a proportionate increase or decrease (as the
case may be) in the amount of any premium or discount bid. Notice of such increase or decrease
shall be given to the successful bidder as soon as practicable following the notification of award,
as described below. No such adjustment will have the effect of altering the basis upon which the
best bid is determined. In no event will the principal amount of the Housing Bonds exceed $35
million.
RIGHT OF CANCELLATION OF SALE BY THE AGENCY: The. Agency reserves
the right, in its sole discretion, at any time to cancel the public sale of the Housing Bonds. In
such event, the Agency shall cause notice of cancellation of this invitation for bids and the public
sale of the Housing Bonds to be communicated through Thompson Municipal News as promptly
as practicable. However, no failure to publish such notice or any defect or omission therein shall
affect the cancellation of the public sale.of the Housing Bonds.
7
RIGHT TO MODIFY OR AMEND: The Agency reserves the right, in its sole
discretion, to modify or amend this Official Notice of Sale including, but not limited to, the right
to adjust and change the principal amount and principal amortization schedule of the Housing
Bonds being offered; however, such modifications or amendments shall be made not later than
1:30 P.M., California time, on the business day prior to the bid opening and communicated
through Thompson Municipal News.
RIGHT OF POSTPONEMENT BY AGENCY. • The Agency reserves the right, in its
sole discretion, to postpone, from time to time, the date established for the receipt of bids. Any
such postponement will be communicated through Thompson Municipal News not later than
1:30 P.M., California time, on the business day prior to any announced date for receipt of bids.
If any date is postponed, any alternative sale date will be announced via Thompson Municipal
News at least 20 hours prior to such alternative sale date. On any such alternative sale date, any
bidder may submit a bid for the purchase of the Housing Bonds in conformity in all respects with
the provisions of this Official Notice of Sale, except for the date of sale and except for the
changes announced by Thompson Municipal News at the time the sale date and time are
announced.
RIGHT OF REJECTION. The Agency reserves the right, in its sole discretion, to reject
any and all bids, for any reason deemed appropriate by the Agency, and to waive any irregularity
or informality in any bid, except that no bids will be accepted later than 10:00 A.M. California
time on the date set for receipt of bids.
PROMPT AWARD: An authorized ,representative of the Agency will take action
awarding the sale of the Housing Bonds ori reject all bids not later than twenty-six (26) hours
after the expiration of time herein prescribed for the receipt of bids and until such expiration of
time all bids received shall be irrevocable. Unless such time of award is waived by the
successful bidder, the award may be made after the expiration of the specified time if the bidder
shall not have given to the Agency notice in writing of the withdrawal of such proposal. Notice
of the award will be given promptly to the successful bidder.
DELIVERY AND PAYMENT. Delivery of the Housing Bonds will be made to the
successful bidder in New York, New York, as soon as the Housing Bonds can be prepared,
which is estimated to be June , 2008' The Housing Bonds will be delivered in full book-
entry form through the facilities of The Depository Trust Company. Payment for the Housing
Bonds must be made in immediately available funds to the Trustee. Any expense in providing
immediately available funds shall be borne by the purchaser.
RIGHT OF CANCELLATION. The successful bidder shall have the right, at its option,
to cancel its purchase of the Housing Bonds if the Agency shall fail to cause the execution and
delivery of the Housing Bonds and tender the same for delivery within 30 days from the date of
sale thereof, and in such event the successful bidder shall be entitled to the return of the deposit
accompanying its bid.
GOOD FAITH DEPOSIT: A good faith deposit ("Deposit") in the form of a Financial
Surety Bond in the amount of [$300,000] payable to the order of the Trustee is required for each
bid to be considered. The Financial Surety Bond must be from an insurance company licensed to
'3
issue such bond in the State of California, and such bond must be submitted to the Financial
Advisor prior to the opening of the bids. The Financial Surety Bond must identify each bidder
whose Deposit is guaranteed by such Financial Surety Bond. When the Housing Bonds are
awarded to a bidder, then such bidder must submit its Deposit to the Trustee in the form of a
cashier's check (or wire transfer such amount as instructed by the Agency or such Financial
Advisor) not later than 12:00 P.M. California time on the next business day following the award.
If such Deposit is not received by that time, the Financial Surety Bond may be drawn on by the
Agency to satisfy the Deposit requirement. The amount of the Deposit will be applied as a credit
towards the payment of the purchase price by the successful bidder. If after award of the
Housing Bonds, the successful bidder fails to complete its purchase on the terms stated in its
proposal, the full amount of the good faith deposit will be retained by the Agency.
ESTIMATE OF TRUE INTEREST COST: Each bidder is requested, but not required,
to state in its bid the true interest cost, as described under the caption "BEST BID" herein, which
shall be considered as informative only and not binding on either the bidder or the Agency.
CERTIFICATION OF REOFFERING PRICE: The successful bidder shall be
required, as a condition to the delivery of the Housing Bonds, to certify to the Agency in writing
that, as of the date of award, the Housing Bonds were expected to be reoffered in a bona fide
public offering,- and the prices at which the Housing Bonds were expected to be sold. to the
public, in form and substance satisfactory to the Agency and to Bond Counsel. A form of the
certificate is available upon request from the Financial Advisor.
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION: The Agency
has duly notified the California Debt and Investment Advisory Commission of the proposed sale
of the Housing Bonds. Payment of all fees to the California Debt and Investment Advisory
Commission in connection with the execution, sale and delivery of the Housing Bonds shall ;be
the responsibility of the successful bidder.
1
NO LITIGATION: There is no litigation pending concerning the validity of the Housing
Bonds, the existence of the Agency or the entitlement of the officers thereof to their respective
offices, and the successful bidder will be furnished a no -litigation certificate certifying to the
foregoing as of and at the time of delivery of the Housing Bonds.
CUSIP NUMBERS: It is anticipated that, CUSIP numbers will be printed on the
Housing Bonds, but neither the failure to print such numbers on any Housing Bonds nor any
error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to
accept delivery of and pay for the Housing Bonds in accordance with the terms hereof. All
expenses in relation to the printing of CUSIP numbers on the Housing Bonds shall be paid for by
the Agency; provided, however, that the CUSIP Service Bureau charge for the assignment of
said numbers shall be the responsibility of and shall be paid for by the successful bidder.
OFFICIAL STATEMENT. The Agency -will approve an Official Statement relating to
the Housing Bonds. Copies of the Preliminary Official Statement will be distributed to the
Bidder prior to the sale in a form "deemed final" by, the Agency for purposes of Rule 15c2-12
under the Securities Exchange Act of 1934 (the "Rule") and approved for distribution by
resolution of the Agency. Within seven (7) business days from the sale date, the Agency will
a
deliver to the purchaser 100 copies of the final Official Statement, executed by an authorized
representative of the Agency and dated the date of delivery thereof to the purchaser, in sufficient
number to allow the purchaser to comply with paragraph (b)(4) of the Rule and to satisfy the
Municipal Securities Rulemaking Board (the "MSRB") Rule G-32 or any other rules adopted by
the MSRB, which shall include information permitted to be omitted by paragraph (b)(1) of the
Rule and such other amendments or supplements as shall have been approved by the Agency (the
"Final Official Statement"). The successful bidder agrees to supply the Agency all pricing
information necessary to complete the Final Official Statement within 24 hours after the award
of the Housing Bonds. The purchaser agrees that it will not confirm the sale of any Housing
Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of
the final Official Statement.
By making a bid for the Housing Bonds, the successful bidders agree (1) to disseminate to
ail members of the underwriting syndicate copies of the final Official Statement, including any
supplements prepared by the Agency, (2) to promptly file a copy of the final Official Statement,
including any supplements prepared by the Agency, with a Nationally Recognized Municipal
Securities Information Repository, and (3) to take any and all other actions necessary to comply
with applicable Securities and Exchange Commission rules and Municipal Securities
Rulemaking Board rules governing the offering, sale and delivery of the Housing Bonds and the
Official Statement to ultimate purchasers.
DISCLOSURE COUNSEL OPINION. The Purchaser shall receive an opinion, dated
the date of the closing addressed to the Purchaser, of Fulbright & Jaworski L.L.P., Disclosure
Counsel, to the effect that based on such counsel's participation in the preparation of the Official
Statement as Disclosure Counsel and in conferences with representatives of the Agency, the
Trustee, the Bond Insurer, if any, their respective counsel, the Financial Advisor, and others,
during which conferences the contents of the Official Statement and related matters were
discussed and without having undertaken to determine independently the accuracy or
completeness of the contents in the Official Statement, such counsel has no reason to believe that
the Official Statement, as of its date and as of the Closing Date (except for the financial
statements and the other financial and statistical data included therein and the information
included therein relating to The Depository Trust Company and the book -entry system (as such
terms are defined in the Official Statement), and in the Appendices thereto as to all of which no
opinion or belief need be expressed) contained or contains any untrue statement of a material fact
or omitted or omits to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
CONTINUING DISCLOSURE: In order to assist bidders in complying with S.E.C.
Rule 15c2 -12(b)(5), the Agency has committed to undertake, pursuant to the Indenture and a
Continuing Disclosure Agreement, to provide certain annual financial information and notices of
the occurrence of certain events, if material. A description of this undertaking is set forth in the
Preliminary Official Statement and will also be set forth in the final Official Statement. Such
Continuing Disclosure Agreement will be a document required to be delivered at closing by the
Agency, and the failure by the Agency to deliver such document in form and substance
acceptable to Bond Counsel and the successful bidder will relieve the successful bidder of its
obligation to purchase the Housing Bonds.
10
Dated: , 2008
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
11.
Treasurer
OFFICIAL BID FORM
BID FOR THE PURCHASE OF
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
HOUSING SET-ASIDE TAX ALLOCATION BONDS
SERIES 2008
Preliminary, subject to change.
Bid Form - i
22008
City of Santa Clarita Redevelopment Agency
c/o C.M. de Crinis & Co., Inc.
15300 Ventura Boulevard
Sherman Oaks, CA 91403
Phone (818) 385-4900
FAX (818) 385-4904
email cm@cmdecrinis.com
Ladies and Gentlemen:
We offer to purchase the $
` City of Santa Clarita Redevelopment Agency,
Housing Set -Aside Tax Allocation Bonds, Series 2008, dated as of the date of delivery, expected to be
June _, 2008, and in the principal amounts, in such denominations, maturing on September 1 in the
years and bearing interest as follows:
Sinking
Sinking
Maturity Account
Maturity Account
Date Principal Serial Redemption
Interest Date Principal Serial Redemption Interest
(September 1) Amount Maturity (check)
Rate (September 1) Amount Maturi (check) Rate
2008
2026
2009
2027
2010
2028
2011
2029
2012
2030
2013
2031 _
2014
2032
2015
2033 _
2016
2034
2017
2035 _
2018
2036
2019
2037
2020
2038
2021
2039
2022
2040
2023
2041
2024
2042
2005
Preliminary, subject to change.
Bid Form - i
and to pay therefor the principal amount thereof, plus a premium of $ or minus a discount of
$ (not to exceed 1% of the principal amount of the Housing Bonds) on the aggregate
principal amount (making an aggregate sum of $ ).
This bid is made subject to all the terms and conditions of the Official Notice of Sale for said
Housing Bonds dated as of _, 2008, all of which terms and conditions are made a part
hereof as fully as though set forth in full in this bid.
This proposal is subject to acceptance, in whole or in part, within twenty-six (26) hours after the
expiration of the time for the receipt of proposals, as specified in said Official Notice of Sale.
This bid is secured by a Financial Surety Bond (as defined in the Official Notice of Sale), and we
certify that evidence thereof has heretofore been provided to C.M. de Crinis & Co., Inc., as financial
advisor to the Agency.
We hereby request that (not to exceed 100) printed copies of the Official Statement
pertaining to the Housing Bonds be furnished us in accordance with the terms of said Official Notice of
Sale.
The following is our computation made as provided in the Official Notice of Sale, but not
constituting any part of the foregoing, of the true interest cost under the foregoing proposal:
Total Interest
True Interest Cost %
Following is a list of the members of our account on whose behalf this bid is made.
Respectfully submitted,
Name of Firm:
By:
Address:
City: State:
Bid Form - 11
M
5/2/08
OFFICIAL NOTICE OF SALE
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
TAX ALLOCATION BONDS, SERIES 2008
(NEWHALL REDEVELOPMENT PROJECT AREA)
NOTICE IS HEREBY GIVEN by the City of Santa Clarita Redevelopment Agency
(the "Agency ") that faxed and electronic bids will be received by a representative of the Agency
for the purchase of $ * principal amount of Bonds designated the "City of Santa
Clarita Redevelopment Agency, Tax Allocation Bonds, Series 2008 (Newhall Redevelopment
Project Area)" (the "Bonds"). No hand delivered bids will be accepted. , The bids will be
received in the manner and up to the time and date specified below, provided, however, that the
Agency reserves the right to postpone or change the sale date upon notice delivered via
Thompson Municipal News as provided in this Official Notice of Sale:
DATE AND TIME: 10:00 A.M. California Time on , June _,
2008, and so long as a proposal has not theretofore been
accepted by the Agency, on any date thereafter without
further advertising, as provided in this Official Notice of
Sale.
ELECTRONIC BIDS: Bid proposals may be submitted via I -Deal LLC
BIDCOMP/PARITY° System ("PARITY"), as provided
below.
FAXED BIDS: By fax to the Agency's Financial Advisor, C.M. de Crinis
& Co., Inc., 15300 Ventura Boulevard, Suite 404, Sherman
Oaks, California 91403, phone (818) 385-4900, fax (818)
385-4904, email cm@cmdecrinis.com (the "Financial
Advisor").
See "TERMS OF SALE - Warnings Regarding Electronic Bids" and "- Warnings Regarding
Faxed Bids" herein.
Please note that the Agency reserves the right to cancel or reschedule the sale of the
Bonds upon notice given through Thompson Municipal News by 1:30 P.M., California time the
day prior to the day bids are scheduled to be received, and if the sale is rescheduled, notice of the
new sale date and time, if any, will be given through Thompson Municipal News at least 20
hours prior to the new day bids are to be received, and bids will be received in the manner set
forth above at the rescheduled date and time as the Agency shall determine. Bids must be
received by 10:00 A.M., California time, on such date of sale.
Preliminary, subject to change.
DESCRIPTION OF THE BONDS
DATE; FORM; DENOMINATION: The Bonds will be dated the date of original
delivery, and will be issued in non-negotiable, fully registered form, without coupons, in
denominations of $5,000 each or any integral multiple thereof. The Bonds will be delivered in a
book -entry only system with no physical distribution of the Bonds to the public. The Depository
Trust Company, New York, New York ("DTC") will act as depository for the Bonds. The
Bonds will be registered in the name of Cede & Co., as nominee for DTC, on behalf of the
participants in the DTC system and the subsequent beneficial owners of the Bonds. The Bonds
are being issued pursuant to an Indenture, dated as of June 1, 2008 (the "Indenture"), by and
between the Agency and The,Bank of New York Trust Company, N.A., Los Angeles, California,
as trustee (the "Trustee"). Reference is made to the Indenture for further details regarding the
terms and provisions of the Bonds.
MATURITIES: The Bonds will mature on September 1 in each of the years, and in the
approximate amounts, in accordance with the following schedule.
Year Principal
(September 1) Amount*
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
*Preliminary, subject to change.
2
Year Principal
(September 1) Amount*
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
MANDATORY SINKING ACCOUNT REDEMPTION; BIDDER'S RIGHT TO
DESIGNATE TERM BONDS: Bidders may designate two or more consecutive maturities of
the Bonds as term Bonds, subject to the following limitations: (1) the final maturity date for the
Bonds, including any term Bond, shall be September 1, 2042; (2) each term Bond shall bear a
single rate of interest; and (3) the term Bond(s) shall be subject to mandatory sinking account
redemption by lot on September 1 of each year, commencing with the year following the final
serial Bond maturity (or, if there is more than one term Bond, the maturity date of any term Bond
having an earlier maturity, as the case may be), with the aggregate principal amount to be
redeemed in each such year to be the same as the aggregate principal amount set forth in the
above maturity table and with each such redemption to be at a price equal to 100% of the
principal amount to be redeemed plus accrued and unpaid interest thereon to the date fixed for
redemption but without premium. If no term Bonds are designated in the winning bid, the Bonds
will mature serially as shown in the preceding schedule.
INTEREST: Interest on the Bonds will be payable from their dated date at such rate or
rates to be fixed upon the sale thereof, payable semiannually on March 1 and September 1 of
each year (each, an "Interest Payment Date"), commencing September 1, 2008.
PAYMENT. The Bonds and interest with respect thereto are payable in lawful money of
the United States of America, interest being payable by check mailed on each Interest Payment
Date to the registered owners thereof at the address shown on the Bond registration books
maintained by the Trustee on the 15th day of the month preceding an interest payment date.
Principal will be payable upon surrender at the corporate trust office of the Trustee.
REDEMPTION. Optional Redemption. Bonds maturing on or before September 1,
2017 will not be subject to optional redemption before their respective stated maturities. Bonds
maturing on and after September 1, 2018 will be subject to redemption, at the option of the
Agency on any date on or after September 1, 2017, as a whole or in part, by such maturities as
shall be determined by the Agency, and by lot within a maturity, from any available source of
funds deposited with the Trustee, at a. redemption price equal to the principal amount of the
Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption,
without premium, by giving notice as provided in the Indenture.
Mandatory Sinking Account Redemption of Bonds. The Term Bonds shall be subject
to mandatory sinking account redemption in part, by lot, from mandatory sinking account
payments, at a redemption price equal to the principal amount thereof to be redeemed, together
with accrued interest thereon to the redemption date, without premium, in the aggregate
respective principal amounts set forth in the accepted bid for the Term Bonds; provided,
however, that if some but not all of such Term Bonds have been redeemed pursuant to optional
redemption, the total amount of all future applicable sinking account payments shall be reduced
by the aggregate principal amount of such Term Bonds so redeemed, to be allocated among such
sinking account payments as are thereafter payable in integral multiples of $5,000 as determined
by the Agency.
3
PURPOSE: The proceeds of the Bonds together with other available moneys, will be
used (i) to finance certain public capital improvements and other redevelopment activities within
the Agency's Newhall Redevelopment Project Area, (ii) to fund a reserve fund, and (iii) to pay
certain costs of issuing the Bonds.
SECURITY: The Bonds are special obligations of the Agency secured by an irrevocable
pledge of, and payable as to the principal of, premium, if any, and interest on from, Tax
Revenues and other funds as provided in the Indenture, and as such are not a debt of the City of
Carson (the "City"), the State of California or any of its political subdivisions. Neither the City,
the State of California nor any of its political subdivisions is liable for the payment thereof. In
no event shall the Bonds or any interest or redemption premium thereon be payable out of any
funds or properties other than those of the Agency as set forth in the Indenture. The Bonds do
not constitute an indebtedness within the meaning of any constitutional or statutory debt
limitation or restriction. Neither the members of the Agency nor any persons executing the
Bonds are liable personally on the Bonds.
RESERVE ACCOUNT: A reserve account (the "Reserve Fund") is established by the
Indenture and is required to be funded in an amount equal to the least of (i) the amount of
Maximum Annual Debt Service on the Bonds and additional bonds (excluding from the
calculation thereof parity debt other than Bonds and additional bonds), (ii) ten percent (10%) of
the total of the .proceeds of the Bonds and additional bonds (excluding from the calculation
thereof parity debt other than Bonds and additional bonds), and (iii) one hundred and twenty five
percent (125%) of average Annual Debt Service on the Bonds and additional bonds (excluding
from the calculation thereof parity debt other than Bonds and additional bonds).
UNDERLYING RATINGS: The Bonds have'been assigned underlying ratings of "A-"
by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
("S&P").
MUNICIPAL BOND INSURANCE AT BIDDER'S OPTION. The Agency has
obtained a municipal bond insurance commitment from Ambac Assurance Corporation (the
"Bond Insurer") to guarantee under a financial guaranty insurance policy the scheduled payment
of principal of and interest on the Bonds. Bids .will be accepted which are based upon the
issuance of a financial guaranty insurance policy from such insurer for some or all of the Bonds,
provided that payment of the insurance premium (which shall be rounded to the nearest $100) of
% ( basis points) of the total debt service on the insured Bonds, and any
additional fees charged by any rating agency for rating insured Bonds shall be the sole
responsibility of the bidder.
TAX MATTERS: Fulbright & Jaworski L.L.P., Los Angeles, California, will render its
legal opinion with respect to tax -exemption of the interest paid on the Bonds. See the discussion
of "TAX MATTERS" in the Official Statement herein referred to. In the event that prior to the
delivery of the Bonds (a) the income received by private holders from obligations of the same
type and character shall be declared to,be includable in gross income (either at the time of such
declaration or at any future date) for purposes of federal income tax laws, either by the terms of
such laws or by ruling of a federal income tax authority or official which is followed by the
Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law
0
is adopted which will have a substantial adverse tax effect on holders of the Bonds as such, the
successful bidder may, at its option, prior to the tender of the Bonds by the Agency, be relieved
of its obligation to purchase the Bonds, and in such case the deposit accompanying its bid will be
returned. For purposes of the preceding sentence, interest will be treated as excludable from
gross income for federal income tax purposes whether or not it is includable as an item of tax
preference for calculating alternative minimum taxes or otherwise includable for purposes of
calculating certain other tax liabilities. The legal opinion of Fulbright & Jaworski L.L.P.
approving the validity of the Bonds will be furnished to the successful bidder without cost.
FURTHER INFORMATION: A copy of the Preliminary Official Statement, dated May
2008, describing the Bonds (the "Preliminary Official Statement"), and any other
information concerning the proposed financing, will be furnished upon request to the Agency's
Financial Advisor, cm@cmdecrinis.com (the "Financial Advisor"). A copy of the Preliminary
Official Statement can also be downloaded without charge from the Parity website at
http://www.i-dealprospectus.com.
TERMS OF SALE
FORM OF BID; MAXIMUM DISCOUNT: All bids must be for not less than all of the
Bonds hereby offered for sale and for not less than ninety-nine percent (99.00%) of the aggregate
par value thereof. The amount of any discount specified in any bid shall not exceed one percent
(1.00%) of the aggregate principal amount of the Bonds.
Bidders may submit only one bid, and such bid shall be submitted electronically through
PARITY or by fax submitted to the Financial Advisor at (818) 385-4904. All bids must comply
with the requirement for a good faith deposit. See "GOOD FAITH DEPOSIT" herein.
Electronic Bids. Electronic bids must conform with the procedures established by
PARITY. Solely as an accommodation to bidders, electronic bids will be received exclusively
through PARITY in accordance with this Official Notice of Sale until 10:00 A.M. California
time on the date set for receipt of bids, but no bid will be received after the time specified for
receiving bids. To the extent any instructions or directions set forth in PARITY conflict with
this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further
information about PARITY, potential bidders may contact the Agency's Financial Advisor.
Faxed Bids. Faxed bids may be submitted to the Agency's Financial Advisor at (818)
385-4904. Neither the Agency, the Financial Advisor nor Fulbright & Jaworski L.L.P., as Bond
Counsel, takes any responsibility for any difficulties receiving .fax submittals prior to the
deadline for receipt of bids. A copy of the prescribed bid form is attached hereto. Neither the
Agency, the Financial Advisor nor Bond Counsel will accept responsibility for inaccurate or
illegible bids, or for delay due to engaged telephone lines at the place of bid opening, or for delay
arising out of any bidder's election to deliver its bid by any means.
THE AGENCY RETAINS ABSOLUTE DISCRETION TO DETERMINE WHETHER
ANY BID, WHETHER FAXED OR ELECTRONIC, IS TIMELY, LEGIBLE AND
COMPLETE. THE AGENCY TAKES NO RESPONSIBILITY FOR INFORMING ANY
5
BIDDER PRIOR TO THE TIME FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE,
ILLEGIBLE OR NOT RECEIVED.
WARNING REGARDING ELECTRONIC BIDS: THE AGENCY WILL ACCEPT
BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY ON THE OFFICIAL BID
FORM CREATED FOR SUCH PURPOSE. EACH BIDDER SUBMITTING AN
ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY
RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY, THAT THE AGENCY
NEITHER ENDORSES NOR EXPLICITLY ENCOURAGES THE USE OF PARITY, AND
THAT PARITY IS NOT ACTING AS AN AGENT OF THE AGENCY. INSTRUCTIONS
AND FORMS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM
PARITY, AND THE AGENCY ASSUMES NO RESPONSIBILITY FOR ENSURING OR
VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF PARITY. THE
AGENCY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY HAS BEEN
MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER.
THE AGENCY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE
ELECTRONIC BIDS; HOWEVER THE AGENCY, THE FINANCIAL ADVISOR AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN
ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE
TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF
BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE
AGENCY AT THE PLACE OF BID OPENING, AND THE AGENCY SHALL NOT BE
REQUIRED TO ACCEPT THE TIME KEPT BY PARITY AS THE OFFICIAL TIME.
IN THE EVENT OF A MALFUNCTION IN THE ELECTRONIC BIDDING
PROCESS, BIDDERS SHOULD SUBMIT THEIR BIDS ON THE OFFICIAL BID FORM
ATTACHED HERETO BY FACSIMILE TO: (818) 385-4904.
WARNINGS REGARDING FAXED BIDS:. NEITHER THE AGENCY, THE
FINANCIAL ADVISOR, NOR BOND COUNSEL SHALL BE RESPONSIBLE FOR, AND
THE BIDDER EXPRESSLY ASSUMES THE RISK OF, ANY INCOMPLETE, ILLEGIBLE
OR UNTIMELY BID SUBMITTED BY SUCH BIDDER BY FACSIMILE TRANSMISSION,
INCLUDING, WITHOUT LIMITATION, BY REASON OF GARBLED TRANSMISSION,
MECHANICAL FAILURE, ENGAGED TELEPHONE OR TELECOMMUNICATIONS
LINES AT THE PLACE OF BID OPENING, OR ANY OTHER CAUSE FOR REJECTION
ARISING OUT OF ANY BIDDER'S ELECTION TO DELIVER ITS 'BID BY MEANS OF
FACSIMILE DELIVERY.
INTEREST RATE: Bidders must specify the rate or rates of interest which shall be
payable on the Bonds. The maximum true interest cost bid may not exceed percent
( %) per annum interest and no interest rate shall exceed %. Interest on the Bonds is
payable from the date of delivery (expected to be June _, 2008), semiannually on each March 1
and September 1, commencing September 1, 2008. Bidders will be permitted to bid different
rates of interest but (a) each interest rate specified in any bid must be in a multiple of one -
twentieth (1/20) or one-eighth (1/8) of one percent; (b) interest on each Bond shall be computed
from the date of delivery thereof, to its stated maturity date at the interest rate specified in the
E.
bid, payable semiannually as set forth above; (c) interest on all Bonds maturing at any one time
shall be payable at the same rate of interest; (d) the difference between the lowest interest rate
and the highest interest rate to be borne by a maturity of Bonds shall not exceed two percent
(2%); (e) any premium must be paid as part of the purchase price; and (f) no bid will be accepted
which contemplates the waiver of any interest or other concession by the bidder as a substitute
for payment in full of the purchase price.
BEST BID: The Bonds will be awarded to the best responsible bidder therefor,
considering the interest rate or rates specified and the premium offered, if any, or discount taken,
if any, and the best bid will be determined on the basis of the lowest true interest cost. The true
interest cost will be that nominal annual discount rate which, when discounted semiannually and
when used to discount all payments of principal and interest on the Bonds at the rate or rates
specified in the bid to the date of delivery (expected to be June , 2008) of the Bonds results in
the amount equal to the purchase price, which is the principal amount of the Bonds plus the
amount of any premium, less the amount of any discount. In the event two or more bids setting
forth identical interest rates are received, the Agency reserves the right to allow its authorized
representative to exercise his or her own discretion and judgment in making the award and may
award the Bonds on a pro rata basis in such denominations as he or she shall determine.
ADJUSTMENT OF PRINCIPAL AMOUNTS: The Agency reserves the right to
increase or to decrease the principal amount of any maturity of the Bonds as the Agency deems
advisable, based on the actual rates of interest on the Bonds. Any such increase or decrease shall
be allocated among the various maturities of the Bonds on such basis as the Agency deems
advisable, and shall result in a proportionate increase or decrease (as the case may be) in the
amount of any premium or discount bid. Notice of such increase or decrease shall be given to
the successful bidder as soon as practicable following the notification of award, as described
below. No such adjustment will have the effect of altering the basis upon which the best bid is
determined. In no event will the principal amount of the Bonds exceed $35 million.
RIGHT OF CANCELLATION OF SALE BY THE AGENCY. • The Agency reserves
the right, in its sole discretion, at any time to cancel the public sale of the Bonds. In such event,
the Agency shall cause notice of cancellation of this invitation for bids and the public sale of the
Bonds to be communicated through Thompson Municipal News as promptly as practicable.
However, no failure to publish such notice or any defect or omission therein shall affect the
cancellation of the public sale of the Bonds.
RIGHT TO MODIFY OR AMEND: The Agency reserves the right, in its sole
discretion, to modify or amend this Official Notice of Sale including, but not limited to, the right
to adjust and change the principal amount and principal amortization schedule of the Bonds
being offered; however, such modifications or amendments shall be made not later than 1:30
P.M., California time, on the business day prior to the bid opening and communicated through
Thompson Municipal News.
RIGHT OF POSTPONEMENT BY AGENCY. The Agency reserves the right, in its
sole discretion, to postpone, from time to time, the date established for the receipt of bids. Any
such postponement will be communicated through Thompson Municipal News not later than
1:30 P.M., California time, on the business day prior to any announced date for receipt of bids.
7
If any date is postponed, any alternative sale date will be announced via Thompson Municipal
News at least 20 hours prior.to such alternative sale date. On any such alternative sale date, any
bidder may submit a bid for the purchase of the Bonds in conformity in all respects with the
provisions of this Official Notice of Sale, except for the date of sale and except for the changes
announced by_Thompson Municipal News at the time the sale date and time are announced.
RIGHT OF REJECTION: The Agency reserves the right, in its sole discretion, to reject
any and all bids, for any reason deemed appropriate by the Agency, and to waive any irregularity
or informality in any bid, except that no bids will be accepted later than 10:00 A.M. California
time on the date set for receipt of bids.
PROMPT AWARD: An authorized representative of the Agency will take action
awarding the sale of the Bonds or reject all bids not later than twenty-six (26) hours after the
expiration of time herein prescribed for the receipt of bids and until such expiration of time all
bids received shall be irrevocable. Unless such time of award is waived by the successful bidder,
the award may be made after the expiration of the specified time if the bidder shall not have
given to the Agency notice in writing of the withdrawal of such proposal. Notice of the award
will be given promptly to the successful bidder.
DELIVERY AND PAYMENT: Delivery of the Bonds will be made to the successful' "
bidder in New York, New York, as soon as the Bonds can be prepared, which is estimated to be
June , 2008: The Bonds will be delivered in full book -entry form through the facilities of
The Depository Trust Company. Payment for the Bonds must be made in immediately available
funds to the Trustee. Any expense in providing immediately available funds shall be borne by
the purchaser.
RIGHT OF CANCELLATION: The successful bidder shall have the right, at its option,
to cancel its purchase of the Bonds if the Agency shall fail to cause the execution and delivery of
the Bonds and tender the same for delivery within 30 days from the date of sale thereof, and in
such event the successful bidder shall be entitled to the return of the deposit accompanying its
bid.
GOOD FAITH DEPOSIT: A good faith deposit ("Deposit") in the form of a Financial
Surety Bond in the amount of [$300,000] payable to the order of the Trustee is required for each
bid to be considered. The Financial Surety Bond must be from an insurance company licensed to
issue such bond in the State of California, and such bond must be submitted to the Financial
Advisor prior to the opening of the bids. The Financial Surety Bond must identify each bidder
whose Deposit is guaranteed by such Financial Surety Bond. When the Bonds are awarded to a
bidder, then such bidder must submit its Deposit to the Trustee in the form of a cashier's check
(or wire transfer such amount as instructed by the Agency or such Financial Advisor) not later
than 12:00 P.M. California time on the next business day following the award. If such Deposit is
not received by that time, the Financial Surety Bond may be drawn on by the Agency to satisfy
the Deposit requirement. The amount of the Deposit will be applied as a credit towards the
payment of the purchase price by the successful bidder. If after award of the Bonds, the
successful bidder fails to complete its purchase on the terms stated in its proposal, the full
amount of the good faith deposit will be retained by the Agency.
ESTIMATE OF TRUE INTEREST COST: Each bidder is requested, but not required,
to state in its bid the true interest cost, as described under the caption "BEST BID" herein, which
shall be considered as informative only and not binding on either the bidder or the Agency.
CERTIFICATION OF REOFFERING PRICE: The successful bidder shall be
required, as a condition to the delivery of the Bonds, to certify to the Agency in writing that, as
of the date of award, the Bonds were expected to be reoffered in a bona fide public offering, and
the prices at which the Bonds were expected to be sold to the public, in form and substance
satisfactory to the Agency and to Bond Counsel." A form of the certificate is available upon
request from the Financial Advisor. '
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION: The Agency
has duly notified the California Debt and Investment Advisory Commission of the proposed sale
of the Bonds. Payment of all fees to the California Debt and Investment Advisory Commission
in connection with the execution, sale and delivery of the Bonds shall be the responsibility of the
successful bidder.
NO LITIGATION: There is no litigation pending concerning the validity of the Bonds,
the existence of the Agency, or the entitlement of the officers thereof to their respective offices,
and the successful bidder will be furnished a no -litigation certificate certifying to the foregoing
as of and at the time of delivery of the Bonds.
CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the Bonds,
but neither the failure to print such numbers on any Bonds nor any error with respect thereto
shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and
pay for the Bonds in accordance with the terms hereof. All expenses in relation to the printing of
CUSIP numbers on the Bonds shall be paid for by the Agency; provided, however, that the
CUSIP Service Bureau charge for the assignment of said numbers shall be the responsibility of
and shall be paid for by the successful bidder.
OFFICIAL STATEMENT: The Agency will approve an Official Statement relating to
the Bonds. Copies of the Preliminary Official Statement will be distributed to the Bidder prior to
the sale in a form "deemed final" by the Agency for purposes of Rule 15c2-12 under the
Securities Exchange Act of 1934 (the "Rule") and approved for distribution by resolution of the
Agency. Within seven (7) business days from the sale date, the Agency will deliver to the
purchaser 100 copies of the final Official Statement, executed by an authorized representative of
the Agency and dated the date of delivery thereof to the purchaser, in sufficient number to allow
the purchaser to comply with paragraph (b)(4) of the Rule and to satisfy the Municipal Securities
Rulemaking Board (the "MSRB") Rule G-32 or any other rules adopted by the MSRB, which
shall include information permitted to be omitted by paragraph (b)(1) of the Rule and such other
amendments or supplements as shall have been approved by the Agency (the "Final Official
Statement"). The successful bidder agrees to supply the Agency all pricing information
necessary to complete the Final Official Statement within 24 hours after the award of the Bonds.
The purchaser agrees that it will not confirm the sale of any Bonds unless the confirmation of
sale is accompanied or preceded by the delivery of a copy of the final Official Statement.
X
By making a bid for the Bonds, the successful bidders agree (1) to disseminate to all
members of the underwriting syndicate copies of the final Official Statement, including any
supplements prepared by the Agency, (2) to promptly file a copy of the final Official Statement,
including any supplements prepared by the Agency, with a Nationally Recognized Municipal
Securities Information Repository, and (3) to take any and all other actions necessary to comply
with applicable Securities and Exchange Commission rules and Municipal Securities
Rulemaking Board rules governing the offering, sale and delivery -of the Bonds and the Official
Statement to ultimate purchasers.
DISCLOSURE COUNSEL OPINION. The Purchaser shall receive an opinion, dated
the date of the closing addressed to the Purchaser, of Fulbright & Jaworski L.L.P., Disclosure
Counsel, to the effect that based on such counsel's participation in the preparation of the Official
Statement as Disclosure Counsel and in conferences with representatives of the Agency, the
Trustee, the Bond Insurer, if any, their respective counsel, the Financial Advisor, and others,
during which conferences the contents of the Official Statement and related matters were
discussed and without having undertaken to determine independently the accuracy or
completeness of the contents in the Official Statement, such counsel has no reason to believe that
the Official Statement, as of its date and as of the Closing Date (except for the financial
statements and the other financial and statistical data included therein and the information
included therein relating to The Depository Trust Company and the book -entry system (as such
terms are defined in the Official Statement), and in the Appendices thereto as to all of which no
opinion or belief need be expressed) contained or contains any untrue statement of a material fact
or omitted or omits to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
CONTINUING DISCLOSURE: In order to assist bidders in complying with S.E.C.
Rule 15c2 -12(b)(5), the Agency has committed to undertake, pursuant to the Indenture and a
Continuing Disclosure Agreement, to provide certain annual financial information and notices of
the occurrence of certain events, if material. A description of this undertaking is set forth in the
Preliminary Official Statement and will also be set forth in the final Official Statement. Such
Continuing Disclosure Agreement will be a document required to be delivered at closing by the
Agency, and the failure by the Agency to deliver such document in form and substance
acceptable to Bond Counsel and the successful bidder will relieve the successful bidder of its
obligation to purchase the Bonds.
Dated: , 2008
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
LION
10
Treasurer
OFFICIAL BID FORM
BID FOR THE PURCHASE OF
x
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
TAX ALLOCATION BONDS, SERIES 2008
(NEWHALL REDEVELOPMENT PROJECT AREA)
'2008
City of Santa Clarita Redevelopment Agency
c/o C.M. de Crinis & Co., Inc.
15300 Ventura Boulevard
Sherman Oaks, CA 91403
Phone (818) 3854900
FAX (818) 3854904
email cm@cmdecrinis.com
Ladies and Gentlemen:
We offer to purchase the $
x City of Santa Clarita Redevelopment Agency,
Tax Allocation Bonds, Series 2008 (Newhall Redevelopment
Project Area), dated as of the date of
delivery, expected to be June _, 2008, and in the
principal amounts, in such denominations, maturing
on September 1 in the years and bearing interest as follows:
Sinking
Sinking
Maturity Account
Maturity Account
Date Principal Serial Redemption Interest
Date Principal Serial Redemption Interest
(September 1) Amount Maturity (check) Rate
(September 1) Amount Maturi (check) Rate
2008
2026
2009
2027
2010
2028 _
2011
2029 _
2012
2030 _
2013
2031 _
2014
2032
2015
2033 _
2016
2034 _
2017
2035 _
2018
2036
2019
2037
2020
2038 _
2021
2039 _
2022
2040 _
2023
2041 _
2024
2042 _
2005
x Preliminary, subject to change.
Bid Form - i
and to pay therefor the principal amount thereof, plus a premium of $ or minus a discount of
$ (not to exceed 1% of the principal amount of the Bonds) on the aggregate principal
amount (making an aggregate sum of $ ).
This bid is made subject to all the terms and conditions of the Official Notice of Sale for said
Bonds dated as of _, 2008, all of which terms and conditions are made a part hereof as
fully as though set forth in full in this bid.
This proposal is subject to acceptance, in whole or in part, within twenty-six (26) hours after the
expiration of the time for the receipt of proposals, as specified in said Official Notice of Sale.
This bid is secured by a Financial Surety Bond (as defined in the Official Notice of Sale), and we
certify that evidence thereof has heretofore been provided to C.M. de Crinis & Co., Inc., as financial
advisor to the Agency.
We hereby request that (not to exceed 100) printed copies of the Official Statement
pertaining to the Bonds be furnished us in accordance with the terms of said Official Notice of Sale.
The following is our computation made as provided in the Official Notice of Sale, but not
constituting any part of the foregoing, of the true interest cost under the foregoing proposal:
Total Interest
True Interest Cost
Following is a list of the members of our account on whose behalf this bid is made.
Respectfully submitted,
Name of Firm:
By:
Address:
City: State: Zip:
Bid Form - 11
PRELIMINARY OFFICIAL STATEMENT DATED MAY _, 2008
NEW ISSUE — BOOK ENTRY ONLY
5/2/08
RATINGS: S&P: "
Moody's:
Insured)
Underlying Rating: S&P " "
See "Ratings" herein
In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under existing law, the interest on the Bonds is exempt from
personal income taxes of the State of California and, assuming compliance with the tax covenants described herein, interest on the Bonds is excluded pursuant to
section 103(x) of the Internal Revenue Code of 1986, as amended, from the gross income of the owners thereof for federal income tax purposes and is not an item
of preference for purposes of the federal alternative minimum tax. See "TAX MATTERS" herein.
Dated: Date of Delivery
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
HOUSING SET-ASIDE TAX ALLOCATION BONDS, SERIES 2008
Due: As shown on the inside front cover
The City of Santa Clarita Redevelopment Agency (the "Agency") will issue its Housing Set -Aside Tax Allocation Bonds, Series
2008 (the "Bonds") pursuant to an Indenture, dated as of June 1, 2008 (the "Indenture"), by and between the Agency and The Bank of New
York Trust Company, M.A., as trustee for the Bonds (the "Trustee"). The Bonds are payable from and secured by Housing Set -Aside Revenues
(as hereinafter defined) and funds and accounts held under the Indenture.
Proceeds of the Bonds will be used to (i) finance low and moderate income housing projects and programs, (ii) fund a reserve fund,
and (iii) pay costs incurred in connection with the issuance, sale, and delivery of the Bonds, including the premium of a financial guaranty
insurance policy.
l
The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The
Depository Trust Company, New York, New York ("DTC") which will act as secunties depository of the Bonds. Individual purchases of the
Bonds may be made in book -entry form only, in multiples of $5,000. Principal of and interest on the Bonds will be paid directly to DTC by the
Trustee. Principal of the Bonds is payable on the dates set forth on the inside cover page hereof. Interest on the Bonds is payable on March 1
and September -I of each year, commencing September 1, 2008 (the "Interest Payment Dates").
The Bonds are subject to optional and mandatory redemption as described herein.
Subject to certain conditions, additional obligations on a parity basis with the Bonds may be incurred in the
future by the Agency.
Payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy to be issued
by to be issued simultaneously with the delivery of the Bonds.
[INSERT INSURER LOGO]
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY AND AS SUCH ARE NOT A DEBT OF THE CITY OF
SANTA CLARITA (THE "CITY'), THE STATE OF CALIFORNIA (THE "STATE'), OR ANY OF THEIR POLITICAL SUBDIVISIONS
(OTHER THAN THE AGENCY), AND NEITHER THE CITY, THE STATE, NOR ANY OF THEIR POLITICAL SUBDIVISIONS
(OTHER THAN THE AGENCY) IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AGENCY AS SET FORTH IN THE INDENTURE. NEITHER THE
MEMBERS OF THE AGENCY NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY FOR THE BONDS. THE
AGENCY HAS NO TAXING POWER. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS IN CONTRAVENTION OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
This cover page contains information for quick reference only. It is not a summary of this issue. Potential purchasers must read
the entire Official Statement to obtain information essential to making an informed investment decision.
The Bonds were awarded to (the "Purchaser") on June , 2008 pursuant to the terms of a competitive bid. The Bonds are
offered when, as and if issued, subject to the approval as to their legality by Fulbright & Jaworski L L.P., Los Angeles, California, Bond Counsel. Certain legal
matters will be passed on for the Agency by Fulbright & Jaworski L.L.P., Los Angeles, California, as Disclosure Counsel, and for the Agency by Burke,
Williams & Sorensen, L L.P., Los Angeles, California, as Agency Counsel. It is anticipated that the Bonds will be available for delivery in book -entry form
through the facilities of DTC on or about June , 2008.
Dated: June 2008
Preliminary, subject to change.
f
MATURITY SCHEDULE FOR THE BONDS
$ Serial Bonds
(Base CUSIP:' )
Maturity Date Principal Interest
(September 1) Amount Rate Yield
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
$ Term Bonds
$ % Term Bonds due September 1, 20_ — Price: to
Price
CUSIP No:
% CUSIP`:
CUSIP data, copyright 2008, American Bankers Association. CUSIP data herein are provided for convenience of
reference only. Neither the Agency nor the Underwriter assume any responsibility for the accuracy of such data.
J
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
SANTA CLARITA, CALIFORNIA
AGENCY MEMBERS AND CITY COUNCIL
Marsha A. McLean, Agency Chairperson/Mayor
Robert C. Kellar, Agency Vice Chairperson/Mayor Pro Tempore
Frank C. Ferry, Agency Member/Councilmember
Laurene F. Weste, Agency Member/Councilmember
Timothy B. Boydston, Agency Member/Councilmember
AGENCY STAFF AND CITY STAFF
Kenneth R. Pulskamp, Executive Director/City Manager
Kenneth W. Striplin, Ed.D., Assistant City Manager
Darren P. Hernandez, Treasurer/Deputy City Manager & Director of Administrative Services
Paul D. Brotzman, Director of Community Development
, Redevelopment Manager
Carl K. Newton, Agency Counsel/City Attorney
Sharon L. Dawson, Secretary/City Clerk/
SPECIAL SERVICES
Bond and Disclosure Counsel
Fulbright & Jaworski L.L.P.
Los Angeles, California
Trustee
The Bank of New York Trust Company, N.A.
Los Angeles, California
Financial Advisor to the Agency
C.M. de Crinis & Co., Inc.
Sherman Oaks, California
Fiscal Consultant
HdL Coren & Cone
Diamond Bar, California
No dealer, broker, salesperson or other person has been authorized by the City of Santa Clarita Redevelopment Agency
(the "Agency") or the City of Santa Clarita (the "City") to give any information or to make any representations other than those
contained herein and, if given or made, such other information or representations 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 any Bonds by any person in any jurisdiction in which such offer of solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to whom 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. Statements contained in
this Official Statement which involve estimates, forecasts or matter of opinion, whether or not expressly so described herein, are
intended solely as such and are not to be construed as a representation of fact.
Cautionary Information Regarding Forward -Looking Statements in this Official Statement
Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking
statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21 E of the United
States Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such
statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget," or other similar
words and include, but are not limited to, statements under the caption "THE REDEVELOPMENT PROJECT AREA - Projected
Taxable Valuation and Housing Set -Aside Revenues; Debt Service Coverage."
The achievement of certain results or other expectations contained in such forward-looking statements involves known
and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. While the Agency has agreed to provide certain on going financial and operating data for a limited period of time
(see "INTRODUCTION - Continuing Disclosure"), the Agency does not plan to issue any updates or revisions to those forward-
looking statements if or when its expectations or events, conditions or circumstances on which such statements are based change.
The information set forth herein has been obtained from the City, the Agency and other sources that are believed to be
reliable, but it is not guaranteed as to its accuracy or completeness. 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 Agency or the City since the date hereof.
All summaries of the resolutions, the Indenture, laws and statutes or other documents 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 Underwriter has
reviewed the information in this Official Statement in accordance with its responsibilities to investors under the federal securities
laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or
completeness of such information.
This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be
reproduced or used, in whole or in part, for any other purpose.
The Bonds have not been registered under the Securities Act of 1933, as amended, nor has the Indenture been qualified
under the Trust Indenture Act of 1939, as amended, in reliance upon an exception from the registration requirements contained in
such acts. The Bonds have not been registered or qualified under the securities laws of any state.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE UNDERWRITER MAY OFFER AND SELL BONDS TO CERTAIN DEALERS AND OTHERS AT A PRICE
LOWER THAN THE OFFERING PRICE. THE OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE
ORIGINAL UNDERWRITER.
TABLE OF CONTENTS
Pages
INTRODUCTION..............................................................1
TheBonds.....................................................................1
Legislation; Further Initiatives ...............................
City and the Agency.....................................................1
Concentration of Ownership .......................................
The Redevelopment Plan..............................................2
County of Orange vs. Orange County Assessment
Financial Statements.....................................................2
31
Tax Allocation Financing.............................................2
32
Security for the Bonds..................................................2
32
Professionals Involved in the Offering .........................3
33
Summaries of Documents.............................................3
34
Continuing Disclosure..................................................3
34
THE FINANCING PLAN..................................................4
34
Use of Bond Proceeds...................................................4
35
Plan of Financing..........................................................4
35
Sources and Uses of Funds...........................................5
35
Annual Debt Service.....................................................6
35
THE BONDS......................................................................7
36
Authority for Issuance..................................................7
36
Description of the Bonds..............................................7
36
Redemption...................................................................7
37
Redemption Provisions.................................................8
37
Registration, Transfer and Exchange ............................9
37
Book -Entry Only System..............................................9
37
SECURITY FOR THE BONDS.........................................9
39
Tax Allocation Financing.............................................9
39
Allocation of Taxes.....................................................10
APPENDIX F
Housing Set-Aside......................................................10
Limited Liability .........................................................1
l
Application of Tax Revenues......................................1
I
Reserve Account.........................................................12
41
Issuance of Additional Bonds.....................................12
41
Issuance of Subordinate Debt.....................................12
42
THE INSURER AND THE FINANCIAL
H-1
GUARANTY INSURANCE POLICY ...................:.13
42
THE CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY..............................14
AgencyMembers........................................................14
45
Agency Administration...............................................14
45
Agency Powers...........................................................15
Factors Affecting Redevelopment Agencies
45
Generally................................................................15
45
Filing of Statement of Indebtedness ............................16
Financial Statements...................................................16
Regulatory Issues........................................................16
MAP.................................................................................17
THE REDEVELOPMENT PROJECT AREA..................18
Redevelopment Plan...................................................18
Bond and Tax Increment Limitations .........................18
Housing Set -Aside Requirements...............................20
Tax Sharing Statutes...................................................20
Historical Assessed Valuations...................................20
TaxRates....................................................................22
Major Taxpayers.........................................................22
Historical Tax Increment Receipts..............................24
Assessment Appeals...................................................24
Financial Information.................................................26
Projected Taxable Valuation and Housing Set -
Aside Revenues; Debt Service Coverage................26
AgencyActivity..........................................................30
BONDOWNERS' RISKS.................................................30
Bonds Are Limited Obligations and Not General
Obligations..............................................................30
Reduction in Taxable Value; Plan Limitations ...........30
Pages
Reduction in Inflationary Rate and Changes in
SUMMARY OF CERTAIN
Legislation; Further Initiatives ...............................
31
Concentration of Ownership .......................................
31
County of Orange vs. Orange County Assessment
AppealsBoard ........................................................
31
Levy and Collection ...................................................
32
State Budget Deficit ...................................................
32
Additional Financing ..................................................
33
Loss of Tax Exemption ..............................................
34
Seismic Risk and Flood Risk ......................................
34
Property Tax Appeals .................................................
34
Hazardous Substances ................................................
35
Enforceability of Remedies ........................................
35
Investment of Funds ...................................................
35
Assumptions and Projections .....................................
35
Secondary Market ......................................................
36
LIMITATIONS ON TAX REVENUES ...........................
36
Property Tax Limitations - Article XIIIA...................
36
Challenges to Article XIIIA.......................................
37
Implementing Legislation ...........................................
37
Proposition 87............................................................
37
Property Tax Collection Procedures ...........................
37
Tax Collection Fees ....................................................
39
Unitary Taxation of Utility Property ..........................
39
Housing Set-Aside......................................................40
APPENDIX F
Appropriations Limitations; Article XIIIB of the
California Constitution...........................................40
DISCLOSURE AGREEMENT .......
Tax Allocation Procedures of the County of Los
APPENDIX G
Angeles...................................................................
41
Certification of Agency Indebtedness ........................
41
Plan Limitations.........................................................
42
CONCLUDING INFORMATION...................................42
H-1
TaxMatters................................................................
42
Financial Advisor....................................................:..44
Fiscal Consultant........................................................44
Ratings.......................................................................
45
Underwriting..............................................................
45
NoLitigation..............................................................45
LegalMatters.............................................................
45
Miscellaneous.............................................................
45
APPENDIX A
SUMMARY OF CERTAIN
PROVISIONS OF THE
INDENTURE .................................
A-]
APPENDIX B
AUDITED FINANCIAL
STATEMENTS OF THE CITY
OF SANTA CLARITA
REDEVELOPMENT AGENCY
FOR THE FISCAL YEAR
ENDED JUNE 30, 2007 .................
B-1
APPENDIX C
GENERAL INFORMATION
RELATING TO THE CITY OF
SANTA CLARITA .........................
CA
APPENDIX D
FISCAL CONSULTANT'S
REPORT .........................................
D-1
APPENDIX E
FORM OF BOND COUNSEL
OPINION ........................................
E-1
APPENDIX F
FORM OF CONTINUING
DISCLOSURE AGREEMENT .......
F-1
APPENDIX G
BOOK -ENTRY ONLY SYSTEM ......
G-1
APPENDIX H
FORM OF financial guaranty
INSURANCE POLICY ..................
H-1
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
HOUSING SET-ASIDE TAX ALLOCATION BONDS, SERIES 2008
INTRODUCTION
This Introduction does not purport to be complete, and reference is made to the body of this
Official Statement, appendices and the documents referred to herein for more complete information with
respect to the matters concerning the -Bonds. Potential investors are encouraged to read the entire
Official Statement. Capitalized terms used and not defined in this Introduction shall have the meanings
assigned to them elsewhere in this Official Statement.
The Bonds
This Official Statement, including the cover page and appendices, is provided to furnish
information in connection with the sale by the City of Santa Clarita Redevelopment Agency (the
"Agency") of $ . aggregate principal amount of its Housing Set -Aside Tax Allocation
Bonds, Series 2008 (the "Bonds").
The Bonds are being issued pursuant to the Constitution and the laws of the State of California
(the "State"), including the California Community Redevelopment Law (codified in Part 1 of Division 24
of the California Health and SafetyCode) (the "Redevelopment Law"), a resolution of the Agency
adopted on May , 2008, and an Indenture, dated as of June 1, 2008 (the "Indenture"), by and between
the Agency and The Bank of New York Trust Company, N.A., as the trustee (the "Trustee").
The Agency is the redevelopment agency of the City of Santa Clarita, California (the "City") and
functions as, and has the power and jurisdiction of, the redevelopment agency of the City. The Agency
will use the proceeds of the sale of the Bonds to (i) finance low and moderate income housing projects
and programs, (ii) fund a reserve fund, and (iii) pay costs of issuance of the Bonds, including the premium
of a financial guaranty insurance policy.
The Bonds are special obligations of the Agency payable exclusively from the Housing Set -Aside
Revenues (as hereinafter defined), amounts held in the Housing Special Fund created pursuant to the
Indenture and certain amounts held in the Housing Debt Service Fund. Subject to certain conditions,
additional obligations on a parity basis with the Bonds may be incurred in the future by the Agency.
Concurrent with the issuance of the Bonds, the Agency will issue its Tax Allocation Bonds, Series 2008
(Newhall Redevelopment Project Area) (the "Non -Housing Bonds"), secured by certain tax increment
revenues other than Housing Set -Aside Revenues. See "THE FINANCING PLAN" herein.
City and the Agency
The City is a general law city, incorporated in 1987. 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 Council appoints the City Manager who is
responsible for the day-to-day administration of City business and coordination of all departments. The
Mayor is selected by the City Council from among its members. The City provides general government
services either with its own employees or through contracts.
On November 28, 1989, pursuant to California Health and Safety Code Section 33000 et seq.,
entitled "Community Redevelopment Law," the City activated its redevelopment agency. The Agency is
` Preliminary, subject to change.
governed by a five -member board which consists of all members of the City Council of the City. See
"THE CITY OF SANTA CLARITA REDEVELOPMENT AGENCY" herein.
There exists one project area within the Agency known as the "Newhall Redevelopment Project
Area." (the "Project Area").
The Redevelopment Plan
The Project Area is approximately 913.6 acres in size and consists of a single, very irregular area
within the City. The Project Area is located between Interstate 5 and State Highway 14 and includes the
commercial corridors along Lyons Avenue and San Fernando Road. The Project Area is generally
bounded on the west by Interstate 5, on the east by State Highway 14 and on the north by the intersection
of San Fernando Road and Magic Mountain Parkway. The Project Area extends approximately four
blocks to the east and west of San Fernando Road between its intersection with Lyons Avenue and its
intersection with 16th Street. It also includes a large area on the north side of San Fernando Road
between its intersections with Lyons Avenue and with Pine Street. Large areas that are beyond the
immediate San Fernando Road corridor exist southeast of the intersection with Pine Street and at the
intersection with State Highway 14. Several areas that extend beyond the immediate Lyons Avenue
corridor exist near the intersection with Valley Street and near the Lyons Avenue intersection with
Interstate 5. The City Council adopted Ordinance No. 97-12 on July 8, 1997, which adopted the
Redevelopment Plan for the Project Area. See "APPENDIX D - FISCAL CONSULTANT'S REPORT."
Financial Statements
The Agency's audited financial statements for the fiscal year ended June 30, 2007, are included in
"APPENDIX B" and should be read in their entirety. The Agency's financial statements were audited by
the independent accounting firm of Dielh, Evans & Company, LLP (the "Auditor"). No post -audit review
was requested or performed. The Agency's audited financial statements for the year ended June 30, 2007,
and prior years are on file for public inspection with the Secretary of the Agency. Copies can also be
obtained from the City Clerk at 23920 Valencia Blvd., Santa Clarita, CA 91355.
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of tax increment revenues collected within a redevelopment project area. The taxable valuation
of a redevelopment project area last equalized prior to adoption of the redevelopment plan (the base roll)
is established and, except for any period during which the taxable valuation drops below the base year
level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate
upon the base roll. With limited exceptions, taxes collected upon any increase in taxable valuation over
the base roll are allocated to a redevelopment agency and may be pledged by a redevelopment agency to
the repayment of any indebtedness incurred in financing or refinancing a redevelopment project.
Redevelopment agencies themselves have no authority to levy property taxes and must look specifically
to the allocation of tax increment revenues described above'. -
Security for the Bonds
The Bonds are special obligations of the Agency payable solely from "Housing Set -Aside
Revenues" (see "SECURITY FOR THE BONDS - Allocation of Taxes") and other, funds and accounts
pledged pursuant to the Indenture. Housing Set -Aside Revenues are defined generally as the portion of
the taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the
Agency pursuant to the Redevelopment Law in connection with all current and future project areas of the
Agency, including the Project Area as provided in the Redevelopment Plan, which are deposited by the
2
Agency in the Housing Fund pursuant to Section 33334.2 or Section 33334.6 of the Redevelopment Law,
as provided in the Redevelopment Plan. See and "LIMITATIONS ON TAX REVENUES" herein.
For additional information regarding security for the Bonds, see "SECURITY FOR THE
BONDS" herein. The Agency's receipt of Tax Revenues is subject to certain risks and limitations. See
"BONDOWNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein.
Professionals Involved in the Offering
The Bank of New York Trust Company, N.A., Los Angeles, California, will act as Trustee with
-respect to the Bonds. HdL Coren & Cone, Diamond Bar, California, has acted as Fiscal Consultant to the
Agency and has prepared a report (set forth in "APPENDIX D" hereto) on projected taxable values and
anticipated tax increment revenues in the Project Area. C.M. de Crinis & Co., Inc., Sherman Oaks,
California, has served as Financial Advisor to the Agency in connection with the Bonds and has assisted
the Agency in "structuring the Bonds.
All proceedings in connection with the issuance of the Bonds are subject to the approval of
Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel. Burke Williams & Sorensen,
L.L.P., currently serves as legal counsel to the Agency, and provides general legal services to the Agency
with respect to redevelopment matters. Certain legal matters will be passed on for the Agency by
Fulbright & Jaworski L.L.P., Disclosure Counsel to the Agency. The fees and expenses of Bond Counsel,
Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of the Bonds.
Summaries of Documents
This Official Statement includes descriptions of the Bonds, the Indenture, the Agency, the City,
the Project Area, the Redevelopment Law, and various agreements. The descriptions and summaries of
documents do not purport to be comprehensive or definitive, and reference is made to each document for
the complete details of all terms and conditions. All statements are qualified in their entirety by reference
to each document and, with respect to certain rights and remedies, to laws and principles of equity
relating to creditors' rights generally. Undefined capitalized terms shall have the meanings set forth in
the Indenture. Copies of the Indenture are available for inspection during business hours at the corporate
trust office of the Trustee in Los Angeles, California.
This Official Statement speaks only as of its date, as set forth on the cover, and the information
and expressions of opinion are subject to change without notice. Neither the delivery of this Official
Statement nor any sale of Bonds shall under any circumstances create any implication that there has been
no change in the affairs of the Agency or the City or the Project Area since the date set forth on the cover.
Continuing Disclosure
The Agency has covenanted for the benefit of the Owners (including beneficial owners of the
Bonds) to provide certain financial information and operating data relating to the Agency (the "Annual
Report") by not later than 240 days following the end of the Agency's fiscal year (which currently ends
June 30), commencing with the report for the 2007-08 Fiscal Year (which is due no later than March 31,
2009), and to provide notices of the occurrence of certain enumerated events, if material. The Agency has
entered into a Continuing Disclosure Agreement ("Continuing Disclosure Agreement") for the benefit of
the Bond Owners with The Bank of New York Trust Company, N.A. ("The Bank of New York") under
which the Agency has designated The Bank of New York as Dissemination Agent. The Annual Report
and any notices of material events will be filed with each Nationally Recognized Municipal Securities
Information Repository (and with the appropriate State information repository, if any) (the
"Repositories"). The specific nature of the information to be contained in the Annual Report or the
notices of material events is summarized under the caption "APPENDIX F — FORM OF CONTINUING
DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Underwriter in
complying with S.E.C. Rule 15c2 -12(b)(5) (the "Rule").
This the Agency's first continuing disclosure obligation. Since the effective date of the
continuing disclosure requirements under the Rule, the City has filed annual reports to comply with its
disclosure requirements. However, during 2005, the report for an existing indebtedness consisting of the
City's 2003-04 audited financials was not filed in a timely manner but has since been filed. The City's
2003-04 audited financials were, however, on file with the Repositories due to the City's timely filing of
reports for its remaining undertakings. The City has taken steps to better monitor its compliance and
ensure timely filing of future annual reports and is currently in compliance with its disclosure
requirements. The City is currently in compliance with all of its undertakings.
THE FINANCING PLAN
Use of Bond Proceeds
Proceeds from the sale of the Bonds will be used to (i) fund certain low and moderate income
housing projects and programs, (ii) fund a debt service reserve account for the Bonds and any parity
bonds, and (iii) pay costs of issuance of the Bonds, including the premium of a financial guaranty
insurance policy.
Plan of Financing
A portion of proceeds of the Bonds will be used to assist the Agency in funding certain low and
moderate income housing projects and programs, as well as to fund a debt service reserve account for the
Bonds and any parity bonds.
Concurrent with the issuance of the Bonds, the Agency will issue its $ Tax Allocation
Bonds, Series 2008 (Newhall Redevelopment Project Area) (the "Non -Housing Bonds"). These bonds
will be issued under a separate indenture and secured by a pledge of Tax Revenues. The revenues
securing the Non -Housing Bonds do not secure the Bonds.
4
Sources and Uses of Funds
The following table shows the estimated sources and uses of the proceeds from the sale of the
Bonds and certain other moneys:
Sources And Uses Of Funds
Sources:
Par Amount
Less/Plus: Net Original Issue Discount/Premium
Less: Underwriter's Discount
Total Sources
Uses:
Redevelopment Fund
Debt Service Reserve Account
Costs of Issuance(')
Total Uses
(1) Costs of Issuance include Bond Counsel, Disclosure Counsel, Financial Advisor, Fiscal Consultant,
Trustee fees and expenses, rating agency fees and bond insurance premium, printing expenses and
other costs related to the issuance of the Bonds.
[Remainder of page intentionally left blank.]
Annual Debt Service
The following tables show the scheduled annual debt service for the Bonds.
TABLE 1
Annual Debt Service Schedule
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
Total
THE BONDS
Authority for Issuance
The Bonds are issued pursuant to the Constitution and laws of the State and under authority
granted to the Agency by the Redevelopment Law constituting Part 1 of Division 24 of the California
Heath and Safety Code, as amended, a resolution of the Agency adopted on May _, 2008, and the
Indenture.
The Bonds are special obligations of the Agency and as such are not a debt of the City, the State,
or any of their political subdivisions (other than the Agency), and neither the City, the State, nor any of
their political subdivisions (other than the Agency) is liable for their payment. In no event shall the
Bonds be payable out of any funds or properties other than those of the Agency as set forth in the
Indenture. The Bonds do not constitute an indebtedness in contravention of any constitutional or
statutory debt limit or restriction. For a discussion of some of the risks associated with the purchase of
the Bonds, see "BONDOWNERS' RISKS" herein. The Agency has no taxing powers.
Description of the Bonds
The Bonds will be issued in authorized denominations and multiples of $5,000 each and will be
dated their date of delivery. The Bonds mature on the respective dates and bear interest at the respective
rates per annum set forth on the inside cover page. Interest on the Bonds is payable on March 1 and
September 1 of each year, commencing September 1, 2008 (collectively, the "Interest Payment Dates").
The Bonds will be issued as one fully registered bond without coupons for each maturity and,
when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York (the "DTC"). DTC will act as securities depository of the Bonds.
Individual purchases may be made in book -entry form only, in the principal multiples of $5,000.
Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal and
interest will be paid to DTC, which will in turn remit such principal and interest to its participants for
subsequent disbursement to the beneficial owners of the Bonds as described herein. See "APPENDIX G -
BOOK -ENTRY ONLY SYSTEM" herein.
Redemption
Optional Redemption. The Bonds maturing on or after September 1, 20_ are subject to optional
redemption prior to maturity at the option of the Agency on any date on or after September 1, 20_, as a
whole or in part and by lot, without premium, from any source and deposited with the Trustee (notice of
such redemption having been given by the Agency to the Trustee no later than 45 days prior to the date of
redemption), at a redemption price equal to the principal amount to be redeemed, together with accrued
interest to the date fixed for redemption.
Mandatory Sinking Account Redemption. The Term Bonds maturing on September 1, 20_ are
subject to mandatory redemption, in part by lot, from mandatory sinking account installments set forth in
the following schedule on September 1 in each year commencing September 1, 20_, at a redemption
price equal to the principal amount to be redeemed (without premium), together with interest accrued to
the date fixed for redemption.
Mandatory Sinking Account Payments
Term Bonds Maturing September 1, 20_
Redemption Date
(September 11 Principal Amount
*Matunty
Redemption Provisions
Purchase in Lieu of Redemption
In lieu of such redemption, the Trustee, upon the request of the Agency, may apply amounts in
the applicable Sinking Account to the purchase of Term Bonds at public or private sale, as and when and
at such prices (including brokerage and other charges, but excluding accrued interest, which is payable
from the applicable Interest Account) as may be directed in writing by the Agency, except that the
purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the
Term Bonds being purchased. The par amount of any Term Bonds so purchased by the Agency in any
twelve-month period ending 30 days prior to any Principal Payment Date in any year immediately
preceding any March 1 or September 1 (as applicable) will be credited toward and will reduce the
principal amount of applicable Term Bonds required to be redeemed on such Principal Payment Date of
such year.
Notice of Redemption
Notice of redemption shall be mailed by first class mail by the Trustee, not less than 30 days prior
to the redemption date to the respective Holders of the Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee. Each notice of redemption will state the date of such
notice, the redemption price, place or places of redemption (including the name and appropriate address
of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such
maturity is to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be
redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal
amount thereof to be redeemed. Failure to receive such notice shall not invalidate any of the proceedings
taken in connection with such redemption.
Selection of Bonds for Redemption
If less than all Outstanding Bonds of a Series maturing on any one date are to be redeemed at any
one time, the Trustee will select the Bonds of such Series to be redeemed by lot. If some but not all of the
Bonds of such Series have been redeemed pursuant to optional redemption described above, the total
amount of mandatory sinking account payments to be made subsequent to such redemption shall be
reduced as specified in writing by the Agency to the Trustee which reduction, to the extent practicable,
shall result in approximately equal Annual Debt Service on the Bonds Outstanding of such Series,
following such redemption. If Outstanding Bonds of a Series maturing on more than one date are to be
redeemed at any one time, the Agency will select the maturities of Bonds of such Series to be so
redeemed.
Effect of Redemption
If notice of redemption has been duly given and money for the payment of the redemption price
of the Bonds called for redemption is held by the Trustee, then on the redemption date designated in such
notice the Bonds so called for redemption will become due and payable, and from and after the date so
designated interest on the redeemed Bonds will cease to accrue, and the Holders of the redeemed Bonds
shall have no rights except to receive payment of the redemption price.
Registration, Transfer and Exchange
Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept
pursuant to the provisions of the Indenture, by the person in whose name it is registered, in person or by
his duly authorized attorney, upon 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 or Bonds is surrendered for transfer, the Agency will execute and the
Trustee will authenticate and deliver a new Bond or Bonds of like series, tenor, maturity and principal
amount. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in
connection with any such transfer will be paid by the Agency, except that the Trustee will 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.
Bonds may be exchanged at the office of the Trustee for the same aggregate principal amount of
Bonds of the same series and maturity 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 will
be paid by the Agency, except that the Trustee will 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.
Book -Entry Only System
The Depository Trust Company ("DTC") will act as securities depository for the Bonds. The
ownership of each such separate single fully registered Bond shall be registered in the bond register in the
name of Cede & Co., as nominee of DTC. For further information regarding DTC, please refer to
"APPENDIX G" hereto.
SECURITY'FOR THE BONDS
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of tax increment revenues collected within a project area. The taxable valuation of a project
area last equalized prior to adoption of the redevelopment plan, or the base roll, is established and except
for any period during which the taxable valuation drops below the base year level, the jurisdictions
receiving property tax revenue or the taxing agencies thereafter receive the taxes produced by the levy of
the current tax rate upon the base roll. With certain limited exceptions, taxes collected upon any increase
in taxable valuation over the base roll are allocated to a redevelopment agency and may be pledged as
security to a bond issue. Redevelopment agencies themselves have no authority to levy property taxes
and must look specifically to the allocation of tax increment revenues as indicated above.
M
Allocation of Taxes
As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the
Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, taxes
levied upon taxable property in the Project Area (or applicable portions) each year by or for the benefit of
the State of California, any city, county, city and county, district or other public corporation (the "taxing
agencies") for fiscal years beginning after the effective date of the Project Area (or applicable portions)
are divided as follows:
(a) The portion equal to the amount of taxes produced by the current tax rate, applied
to the assessed valuation of property in the Project Area (or applicable portion) as shown on the
applicable base year assessment roll as last equalized prior to the establishment of the Project Area (or
applicable portion thereof) shall be, when collected, paid to those respective taxing agencies;
(b) Except for taxes which are attributable to a tax levy by a taxing agency for the
purpose of producing revenues to repay bonded indebtedness approved by the voters of the taxing agency
on or after January 1, 1989, which shall be allocated to and when collected shall be paid to the respective
taxing agency, that portion of levied taxes each year in excess of such amount, including (to the extent
permitted by law) all payments and reimbursements, if any, to the Agency specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations, will be allocated to, and when
collected, will be paid to the Agency to pay the principal of and interest on loans to, money advanced to,
or indebtedness incurred by the Agency to finance redevelopment projects.
Revenues generated as set forth above and allocated to the Agency are generally referred to as tax
increment revenues.
Housing Set -Aside
In accordance with Section 33334.2 of the Redevelopment Law, not less than twenty percent
(20%) of all taxes which are allocated to the Agency shall be deposited in a low and moderate income
housing fund (unless the Agency makes certain findings) to be used by the Agency for purposes of
improving, increasing and preserving the City's supply of housing for persons and families of low or
moderate income (including the payment of indebtedness issued or incurred for such purposes) (the
"Housing Set -Aside Revenues").
Funds available from the twenty percent (20%) requirement may be used outside a redevelopment
project area upon a finding by the Agency and the City Council that such use will be of benefit to such
redevelopment project area. The Redevelopment Law also permits agencies with more than one project
area to set aside less than twenty percent (20%) of the taxes allocated to the agency from one project area
if the difference is made up from another project area in the same year and if the agency and the
legislative body of the community find that such use of funds will benefit such other project area.
The Agency pledges in connection with the issuance of the Bonds that it will take no actions
which will reduce the amount required to be deposited into the Housing Fund of the Agency.
Housing Set -Aside Revenues (as defined below) that secure the Bonds, are a portion of such tax
increment revenues. Housing Set -Aside Revenues are generally the portion of tax increment revenues
received by the Agency (including all payments, reimbursements and subventions, if any, specifically
attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for
allocation to the Agency pursuant to the Redevelopment Law in connection with all current and future
project areas of the Agency, including the Project Area as provided in the Redevelopment Plan, which are
deposited by the Agency in the Housing Fund pursuant to Section 33334.2 or Section 33334.6 of the
Redevelopment Law, as provided in the Redevelopment Plan.
10
Pursuant to the provisions of the Indenture, the Agency has pledged that portion of the tax
increment revenues that constitute the Housing Set -Aside Revenues to the Bonds. Except as provided in
the Indenture, the Bonds, and any other additional bonds are equally secured by a first pledge of and lien
on all of the Housing Set -Aside Revenues and a first and exclusive pledge of and lien upon all of the
moneys in the funds and accounts created pursuant to the Indenture, including all amounts derived from
the investment of such moneys, subject to application in accordance with the Indenture, without
preference or priority for series, issue, number, sale date, date of execution or date of delivery. Except for
the Housing Set -Aside Revenues and such moneys, no funds or properties of the Agency are pledged to,
or otherwise liable for, the payment of principal of or interest on the Bonds.
Any Housing Set -Aside Revenues received following deposit in the Housing Special Fund in
excess of the aggregate amount required to be transferred to the Interest Account, the Principal Account,
the Sinking Account and the Reserve Account during such Bond Year pursuant to the Indenture will be
released from the pledge and lien under the Indenture and thereafter, may be used for any lawful purpose
of the Agency. See "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE" contained herein.
In consideration of the acceptance of the Bonds by those -who hold the same from time to time,
the Indenture is deemed to be and constitutes a contract between the Agency and the Owners from time to
time of the Bonds. The covenants and agreements set forth in the Indenture to be performed on behalf of
the Agency will be for the equal and proportionate benefit, security and protection of all Owners of the
Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any
of the other Bonds, by reason of the number or date thereof or the time of sale, execution and delivery
thereof, or otherwise for any cause whatsoever, except as expressly provided therein.
Limited Liability
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY AND AS SUCH ARE NOT
A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF THEIR POLITICAL
SUBDIVISIONS (OTHER THAN THE AGENCY) AND NEITHER THEXITY, THE STATE, NOR
ANY OF THEIR POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) IS LIABLE FOR
THE PAYMENT THEREOF. IN NO EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AGENCY SET FORTH IN THE
INDENTURE.
Any future decrease in the taxable valuation of property in the Project Area or in the applicable
tax rates relating thereto will reduce the tax increment revenues allocated to the Agency from the Project
Area and correspondingly may have an adverse impact on the ability of the Agency to pay the principal of
and interest on the Bonds. The Agency has no power to levy and collect property taxes, and any property
tax limitation, legislative measures, voter initiative or provisions or additional sources of income to taxing
agencies having the effect of reducing the property tax could reduce the amount of Housing Set -Aside
Revenues that would otherwise be available to pay debt service on the Bonds. Likewise, broadened
property tax exemptions could have a similar effect. See `BONDOWNERS' RISKS" herein.
Application of Tax Revenues
The Indenture provides that the Agency will deposit all of the Housing Set -Aside Revenues
received in any Bond Year in the Housing Special Fund to be held by the Agency, until such time that the
amounts on deposit in the Housing Special Fund equal the aggregate amounts required to be transferred to
the Trustee to pay debt service on the Bonds and other additional bonds, plus the amount, if any,
necessary to restore the balance in the Reserve Account to the Reserve Account Requirement during such
Bond Year. Amounts in excess thereof will be released from the pledge and lien of the Indenture for the
security of the Bonds and the other additional bonds. See "APPENDIX A - SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE."
Reserve Account
The Indenture requires the establishment of a Debt Service Reserve Account in an amount equal
to the Reserve Account Requirement, or $ following the issuance of the Bonds. "Reserve
Account Requirement" means, as of any calculation date, an amount equal to the least of (i) 10% of the
proceeds (within the meaning of Section 148 of the Code) of that portion of the Bonds and Additional
Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of Average
Annual Debt Service or (iii) Maximum Annual Debt Service.
On or before each Interest Payment Date, the Trustee will set aside from the Debt Service Fund
and deposit in the Reserve Account such amount of money (or other authorized deposit of security, as
contemplated by the following paragraph) as is required to restore the balance in the Reserve Account to
an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve
Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest
Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at
,any time in any of such accounts, or for the purpose of paying the interest on or principal of the Bonds or
Additional Bonds in the event that no other money of the Agency is lawfully available therefor, except
that for so long as the Agency is not in default hereunder, any amount in the Reserve Account in excess of
the Reserve Account Requirement may be withdrawn from the Reserve Account and transferred to the
Agency for use of any lawful purpose.
The Reserve Account Requirement may be satisfied by crediting to the Reserve Account moneys
or a Qualified Reserve Account Credit Instrument or any combination thereof, which in the aggregate
make funds available in the Reserve Account in an amount equal to the Reserve Account Requirement.
See "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Issuance of Additional Bonds
The Agency may at any time after the issuance and delivery of the Bonds under the Indenture
issue Additional Bonds payable from the Housing Set -Aside Revenues and secured by a lien and charge
upon the Housing Set -Aside Revenues equal to and on a parity with the lien and charge securing the
Bonds issued under the Indenture, but only subject to specific conditions, including the requirement that
Housing Set -Aside Revenues based upon the assessed valuation of taxable property in the Project Area as
shown on the most recently equalized assessment roll preceding the date of the Agency's adoption of the
Supplemental Indenture providing for the issuance of such Additional Bonds, plus at the option of the
Agency the Additional Allowance, will be in an amount equal to at least 145 % of Maximum Annual
Debt Service following the issuance of such Additional Bonds, as evidenced by a Consultant's Report.
For purposes of calculating Housing Set -Aside Revenues, a tax rate of $1.00 per $100 of assessed
valuation shall be assumed. See "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE."
Issuance of Subordinate Debt
The Agency may incur subordinate debt in the form of tax allocation bonds, or other debt secured
by a subordinate pledge of Housing Set -Aside Revenues (the "Subordinated Bonds"), provided, however,
that (1) no such issuance shall cause the Agency to exceed any tax increment limit applicable to it under
the Redevelopment Plan or the Redevelopment Law, and (2) the tax increment revenues subject to the
pledge securing such Subordinated Bonds, based upon the assessed valuation of taxable property in the
Project Area as shown on the most recently equalized assessment roll preceding the date of the issuance
of such Subordinated Bonds plus, at the option of the Agency, the Additional Allowance, shall be in an
12
amount equal to at least 100% of maximum annual debt service of all the outstanding Subordinated
Bonds secured by such tax increment revenues following the issuance of such Subordinated Bonds. See
"THE REDEVELOPMENT PROJECT AREA - Plan Limitations" and "APPENDIX A - SUMMARY OF
CERTAIN PROVISIONS OF THE INDENTURE" contained herein.
THE INSURER AND THE FINANCIAL GUARANTY INSURANCE POLICY
[Remainder of page intentionally left blank.]
13
THE CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
Agency Members
The Agency was activated November 28, 1989 by the City pursuant to the State of California
Health and Safety Code Section 33000 et seq., entitled "Community Redevelopment Law." The
Redevelopment Agency did not incur any debt nor establish any projects. The Agency functions as, and
has the power and jurisdiction of, a redevelopment agency of the City under the Community
Redevelopment Law. The City Council adopted Ordinance No. 97-12 on July 8, 1997, which adopted the
Redevelopment Plan. The Agency is governed by a five -member board which consists of all members of
the City Council of the City. City Council/Agency members, their occupations and term expiration dates,
are as follows:
City Council
Marsha A. McLean, Mayor
Robert C. Kellar, Mayor Pro tem
Laurene F. Weste, Councilmember
Frank C. Ferry, Councilmember
Timothy B. Boydston, Councilmember*
Term Expires
Occupation
April 2010
Business Owner
April 2008
Retired Police Officer
April 2010
Community Advocate
April 2010
Educator
April 2008
Executive Director/
Artistic Director
* Appointed to fill vacancy upon election of Councilmember Cameron Smythe to State Assembly, 38th District.
Agency Administration
Mr. Ken Pulskamp serves as the Executive Director of the Agency and the City Manager of the
City and was appointed to the position November 5, 2002. A twenty-seven year veteran of local
government management, Ken previously served as Deputy City Manager of Fresno, California, Assistant
City Manager of Bakersfield, California and Assistant City Manager of Santa Clarita. During his tenure
with the City Ken has also served as the Acting Department Head of every City department. Ken has a
Bachelor of Arts from the California State University, Fresno and a Master of Public Administration from
the University of San Francisco.
Mr. Ken Striplin is currently the Assistant City Manager and Personnel Officer for the City of
Santa Clarita since September 2004. Previously Ken has served Santa Clarita as Assistant to the City
Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In addition,
Ken has served as Interim Director of two departments: Field Services and Planning and Economic
Development. Ken holds Bachelor of Arts and Master of Public Administration degrees from California
State University, Northridge, and a Doctor of Education in Organizational Leadership from Pepperdine
University.
Mr. Darren Hernandez has been the Treasurer of the Agency and the Director of Administrative
Services for the City of Santa Clarita since January 2004 and was named Deputy City Manager in July
2007. In this position he provides leadership to the Department of Administrative Services and serves the
City as Chief Financial Officer. Previously Darren 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. Darren
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.
14
Mr. Paul Brotzman is the Director of Community Development for the City. He has been with
the City since April of 2005. The Community Development Department encompasses the divisions of
Planning, Econonuc Development and Community Preservation. Paul attended Wilkes University, in
Wilkes-Barre, PA where he received a Bachelors of Science (Political Science) degree. His post graduate
studies were done at Muhlenberg College and Claremont Graduate School. Before coming to Santa
Clarita, Paul was a public sector manager and private sector CEO. He served as the city manager for the
City of West Hollywood from 1985 through 1996. In this capacity, he helped to establish a new
government structure and develop a system for the delivery of city services. Paul also worked for the
City of Martinez, California from 1979 through 1985, helping revitalize the historic old town, expand and
develop a regional waterfront park and city -operated manna, as well as develop a city park and trail
network. Paul is a member of the Board of Directors for the West Hollywood Community Housing
Corporation which is a non-profit organization that develops and manages affordable housing for low
income families, seniors and people living with disabilities. He is also a member of the Board of
Directors for Union Station which is a non-profit organization that provides emergency and transition
housing for the homeless.
recently was hired as Redevelopment Manager. [More to follow].
Agency Powers
All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the
Agency is a separate public body and exercises governmental functions, including planning and
implementing redevelopment projects.
The Agency may exercise the right to issue bonds for authorized purposes and to expend their
proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency
may demolish buildings, clear land and cause to be constructed certain improvements, including streets,
sidewalks, and utilities, and can further prepare for use as a building site any real property which it owns
or administers.
The Agency may, from any funds made available to it for such purposes, pay for all or part of the
value of land and the cost of buildings, facilities or other improvements to be publicly owned, provided
that such improvements are expressly found to be of benefit to a redevelopment project and cannot be
financed by any other reasonable method. The Agency may not construct or develop buildings, with the
exception of public buildings and housing, and generally must sell or lease cleared property which it
acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment
plan, and may further specify a period within which such redevelopment must begin and be completed.
The Agency Board adopted a budget for fiscal year 2007-08 on June 12, 2007.
Factors Affecting Redevelopment Agencies Generally
Other features of the Redevelopment Law that bear on redevelopment agencies include general
provisions which require public agencies to award contracts for construction only after competitive
bidding. The Redevelopment Law provides that construction in excess of a minimum amount undertaken
by the Agency shall be done only after competitive bidding. California statutes also provide for offenses
punishable as felonies that involve direct or indirect interest of a public official in a contract made by such
official in his official capacity. In addition, the Redevelopment Law generally prohibits any Agency or
City official or employee who, in the course of his duties, is required to participate in the formulation or
approval of plans or policies, from acquiring any interest in property in the Project Area.
15
Filing of Statement of Indebtedness
Section 33675 of the Redevelopment Law requires that the Agency file, not later than the first
day of October of each year with the county auditor, a statement of indebtedness certified by the chief
financial officer of the Agency for each redevelopment project for which the redevelopment plan provides
for the division of taxes pursuant to Section 33670 of the Redevelopment Law. The statement of
indebtedness is required to contain, among other things, the date on which the bonds were delivered, the
principal amount, term, purpose, interest rate and total interest of the bonds, the principal amount and the
interest due in the fiscal year in which the statement of indebtedness is filed and the outstanding balance
and amount due on the bonds. Similar information must be given for each loan, advance or indebtedness
that the Agency has incurred or entered into which is payable from tax increment. The Agency has made
such a filing for fiscal year 2006-07.
Financial Statements
Included in this Official Statement as "APPENDIX B" are the audited financial statements of the
Agency for the year ended June 30, 2007, reproduced from the report thereon rendered by Dielh, Evans &
Company, LLP, independent accountants for the Agency. No post -audit review was requested or
performed.
Regulatory Issues
The Agency is in material compliance with the provisions of the California Environmental
Quality Act, constituting Division 13 (commencing with Section 21000) of the California Public
Resources Code, with respect to the Project Area.
16
THE REDEVELOPMENT PROJECT AREA
Redevelopment Plan
Under the Redevelopment Law, every redevelopment agency is required to adopt, by ordinance, a
redevelopment plan for each redevelopment project specifically authorized in the adopted redevelopment
plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the
Redevelopment Law rather than a "plan" in the, customary sense of the word.
The overall objective of the Redevelopment Plan is to eliminate blighted conditions in the Project
Area by undertaking all appropriate projects pursuant to the Redevelopment Law. The general objective
is to encourage investment in the Project Area by the private sector, to eliminate blighted conditions and
to upgrade the quality of the community. The Redevelopment Plan provides for the acquisition of
property, the demolition of buildings and improvements, the relocation of any displaced occupants, and
the construction of streets, parking facilities, utilities and other public improvements. The
Redevelopment Plan also allows the redevelopment of land by private enterprise, the rehabilitation of
structures, the rehabilitation or construction of low and moderate income housing, and participation by
owners and the tenants of properties in the Redevelopment Project.
The Project Area is approximately 913.6 acres in size and consists of a single, very irregular area
within the City. The Project Area is located between Interstate 5 and State Highway 14 and includes the
commercial corridors along Lyons Avenue and San Fernando Road. The Project Area is generally
bounded on the west by Interstate 5, on the east by State Highway 14 and on the north by the intersection
of San Fernando Road and Magic Mountain Parkway. The Project Area extends approximately four
blocks to the east and west of San Fernando Road between its intersection with Lyons Avenue and its
intersection with 16th Street. It also includes a large area on the north side of San Fernando Road
between its intersections with Lyons Avenue and with Pine Street. Large areas that are beyond the
immediate San Fernando Road corridor exist southeast of the intersection with Pine Street and at the
intersection with State Highway 14. Several areas that extend beyond the immediate Lyons Avenue
corridor exist near the intersection with Valley Street and near the Lyons Avenue intersection with
Interstate 5. The Redevelopment Plan for the Newhall Redevelopment Project Area was adopted on
July 8, 1997 by Ordinance No. 97-12 of the City. The base year of the Project Area was set in 1996-97.
The 1996-97 base year assessed valuation is $266,351,517.
Of the 913.6 acres within the Project Area, 189.42 acres are vacant, which acres are zoned
commercial/industrial. Of the remaining acres, acres are zoned commercial/industrial with
acres zoned residential.
The Agency passed a Specific Plan in December 2005 to transform downtown Newhall into a
thriving, mixed-use, pedestrian -oriented urban village with a series of economic engines. The Specific
Plan consists of a 20 -block downtown served by Metrolink commuter rail, a commercial corridor in
downtown, two flanking neighborhoods, and an industrial district. Upon buildout, the Specific Plan will
include up to 1,092 new residential units and nearly 1 million square feet of new commercial space. A
portion of this growth will be attributed to new development, while some will also include revitalization
of existing buildings.
Bond and Tax Increment Limitations
In 1976, the Legislature enacted AB 3674 (Statutes of 1976, Chapter 1337) that added Section
33333.2, 33334.1 and 33354.6 to the Redevelopment Law. Section 33333.2 requires redevelopment plans
adopted on or after October 1, 1976, to contain a limit on the number of tax dollars which may be divided
and allocated to a redevelopment agency pursuant to its redevelopment plan (except for plans or
amendments adopted after 1994), a time limit on the establishing of loans, advances and indebtedness to
18
finance, in whole or in part, the redevelopment project and a time limit not to exceed twelve years for the
commencement of eminent domain proceedings to acquire property within the project area.
Section 33334.1 requires a redevelopment plan adopted on or after October 1, 1976, to contain a
limit on the amount of bonded indebtedness that can be outstanding at one time. Section 33354.6
provides that with respect to any amendment of a redevelopment plan (which provides for the allocation
of taxes) to add new territory to a project area, the agency must follow the procedures and be subject to
the same restriction as provided in the adoption of a new redevelopment plan.
Pursuant to the Redevelopment Plan, the total amount of bonded indebtedness outstanding at one
time incurred by the Agency and payable from tax increment revenues, including Housing Set -Aside
Revenues, from the Project Area may not exceed $60,000,000. Following the issuance of the Bonds, and
the Housing Bonds issued concurrently, the Agency will have $ of outstanding
bonded indebtedness secured by Housing Set -Aside Revenues, $ of outstanding
bonded debt secured by the Tax Revenues, and approximately and $[11,46.1,382] of subordinated loan
debt.
The Redevelopment Plan also provides that no loan, advance or indebtedness to finance, in whole
or in part, projects within the Project Area, other than loans, advances or indebtedness secured by or
payable from the Housing Fund, shall be established after 20 years from the effective date of the
Ordinance approving and adopting the Redevelopment Plan. The Redevelopment Plan set a limit of
July 8, 2028 for the effectiveness of the Redevelopment Plan, and a limit of July 8, 2043 for the collection
of Tax Increment Revenues for the Project Area.
Legislation passed in 2003 (SB 1045) and 2004 (SB 1096) permits redevelopment agencies to
extend their ability to collect tax increment by one year for each Educational Revenue Augmentation
Fund ("ERAF") payment made in 2003-04, 2004-05 and 2005-06. The extensions for 2004-05 and 2005-
06 pursuant to SB 1096 apply only to plans with existing limits on the effectiveness of the plan that are
less than 20 years from the last day of the fiscal year in which the ERAF payment is made, which is not
the case for the Project Area. [[The City is entitled to but has yet to adopt an ordinance pursuant to SB
1045 extending its effectiveness and termination for an additional year. The City has adopted this
ordinance on .]]
A summary of the limitations imposed by the Redevelopment Plan are as follows:
Plan Expiration Date: July 8, 2028
Last Date to Collect Tax Increment Revenues (other than Housing Fund purposes): July 8, 2043
Last Date to Incur Debt (other than Housing Fund debt): July 8, 2017
Maximum Bonded Indebtedness Supported by Tax Increment Revenues: $60,000,000
The Agency is of the opinion that these limitations will not impede its ability to develop the
Project Area in accordance with the Redevelopment Plan nor impair its ability in the future to repay any
obligation or indebtedness, including the Bonds, incurred by the Agency in connection with the
development of the Project Area in accordance with the Redevelopment Plan.
The Agency has covenanted under the Indenture to,manage its fiscal affairs in a manner which
enables it to comply with the Plan Limitations, and not to issue any bonds, notes or other obligations
which would cause the Plan Limitations to be exceeded or violated.
19
Housing Set -Aside Requirements
In accordance with Section 33334.2 of the Redevelopment Law, not less than twenty percent
(20%) of all taxes which are allocated to the Agency shall be set aside in a Low and Moderate Housing
Fund and shall be used by the Agency for purposes of improving, increasing and preserving the City's
supply of housing for persons and families of low or moderate income (including the payment of
indebtedness issued or incurred for such purposes). The projected Tax Revenues reflect the 20%
deduction of the tax increment revenues for low and moderate housing.
1
Tax Sharing Statutes
Prior to 1994, under the Redevelopment Law, a redevelopment agency could enter into an
agreement to pay increment revenues to any taxing agency that has territory located within a
redevelopment„project in an amount which in the agency's determination is appropriate to alleviate any
financial burden or detriment caused by the redevelopment project. The Redevelopment Law was
amended in 1993 (AB 1290) to provide, among other things, for mandatory pass-throughs of tax
increment revenues to affected taxing agencies in lieu of negotiated pass-through agreements ("Tax
Sharing Statutes"). These provisions apply to the Redevelopment Plan. These Tax Sharing Statutes
amounts equal a fixed percentage of the tax increment revenues received by an agency after the amount
required to be deposited in the Low and Moderate Income Housing Fund has been deducted.
Affected taxing agencies with jurisdictions within the Project Area include the following: County
of Los Angeles, Los Angeles County Public Library, Los Angeles County Fire District, Los Angeles
County Flood Control Improvement District, Greater Los Angeles County Vector Control District, Los
Angeles County Sanitation District, Newhall County Water District, Newhall Elementary School District,
Saugus Union School District, William S. Hart Union High School District, College of the Canyons
Community College District, and the City of Santa Clarita.
Historical Assessed Valuations
The Agency's source of Housing Set -Aside Revenues pledged to pay debt service on the Bonds is
the tax increment revenues from the Project Area as reported by the Los Angeles County Auditor -
Controller's office. The following is a summary of the historical taxable valuation and is not intended to
aid in the prediction of future Housing Set -Aside Revenues. The 1996-97 base year assessed valuation is
$266,351,517.
TABLE 2
NEWHALL REDEVELOPMENT PROJECT AREA
HISTORICAL AND INCREMENTAL ASSESSED VALUATIONS
Base Year
1996-97 2003-04 2004-05 2005-06 2006-07 2007-08
Secured (Z)
Land
120,671,193
161,159,305
180,876,309
273,321,137
295,842,625
.335,974,647
Improvements
126,203,945
159,730,716
166,984,338
176,610,145
185,336,928
205,086,767
Personal Property
3,392,830
3,829,513
2,342,343
2,461,597
2,567,530
2,346,546
Exemptions
(1,848,103)
(4,148,124)
(5,083,826)
(4,859,824)
(9,028,844)
(4,630,171)
Total
$248,419,865
$320,571,410
$345,119,164
$447,533,055
$474,718,239
$538,777,789
Unsecured
Land
0
0
0
0
0
0
Improvements
6,557,624
6,272,382
6,326,173
5,901,959
26,593,269
28,204,577
20
Personal Property 11,376,128 19,035,089 22,151,970 23,034,914 25,569,962 48,299,529
Exemptions (2,100) (33,000) (33,000) (91,000) (16,300) (217,300)
Total $17,931,652 $25,274,471 $28,445,143 $28,845,873 $52,146,931 $76,286,806
Grand Total $266,351,517 5345.845.881 $373.564.307 $476.378,928 5526,865,E $615,064.595
Annual Incremental Value $79,494,364 $107,212,790 $210,027,411 $260,513,653 $348,713,078
Change in Value from Prior Year 19,453,491 27,718,426 102,814,621 50,486,242 88,199,425
% Change in Total Value 5.96% 8.01% 27.52% 10.60% 16.74%
(1) Assessed Values data provided by the County of Los Angeles.
(2) Secured values include state assessed non -unitary utility property.
Source: Fiscal Consultant's Report.
SB392, passed on July 26, 1999, amended Section 96.6 of the California Revenue and Taxation
Code. SB392 clarified the method of calculating property tax increment to be consistent with the
provisions of California Health and Safety Code Section 33670. Tax increment is calculated as the sum
of increases and decreases in property taxes for a project area for each of the secured and unsecured roll
on the date a project area is created. In the event the overall sum of either roll is negative, that roll is
assigned a "0". A few counties were calculating the sum of increases and decreases on a tax rate area
(TRA) basis rather than a project area basis. In the event the sum of a TRA was negative, a "0" was
assigned. This methodology led to calculations which were too high and therefore SB 392 was needed to
clarify existing law. The County has been and will continue to utilize the sum of increases and decreases
over a project area.
The total fiscal year 2007-08 net taxable assessed value for the Project Area is $615,064,595.
Table 3 shows a breakdown of the different land uses within the Project Area and is based on the net
taxable assessed valuation for the Project Area for fiscal year 2007-08. As shown in Table 3, residential
property is the most significant category of land uses within the Project Area.
21
TABLE 3
City of Santa Clarita Redevelopment Agency
Net Taxable Assessed Value for Land Use Category Summary(l)
(Newhall Redevelopment Project Area)
Category
No. of Parcels
2007-08
Net Taxable Value
Percentage
Residential
723
$227,034,818
36.91%
Commercial
222
157,992,828
25.68%
Industrial
44
41,289,831
6.71%
Irrigated
1
164,312
0.03%
Dry Farm
7
18,612,756
3.03%
Recreational
6
3,363,517
0.55%
Institutional
14
8,195,894
1.33%
Miscellaneous (2)
2
46,770
0.01%
Vacant Land
170
78,550,749
12.77%
Exempt
108
0
0.00%
Subtotal
1,297
$535,251,475
87.02%
Possessory
3,526,314
0.58%
Unsecured
76,286,806
12.40%
Subtotal $ 79,813,120 12.98%
TOTAL 1,297 $615,064,595 100.00%
(1) Data provided by the County of Los Angeles.
Source: Fiscal Consultant's Report.
Tax Rates
Tax rates will vary from area to area within a State, as well as within a community and a project
area. The tax rate for any particular parcel is based upon the jurisdictions levying the tax rate for the area
where the parcel is located. The tax rate consists of the general levy rate of $1.00 per $100 of taxable
values and the override tax rate, which is that portion of the tax rate that exceeds the general levy tax rate
in order to pay voter approved indebtedness or contractual obligations that existed prior to the enactment
of Proposition 13. Revenues associated with the override tax rates have not been included in the
projections of the net Tax Revenues. The projections are effectively based on a 1.0% tax rate. See
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
Major Taxpayers
The following table shows the ten largest taxpayers in the Project Area on the secured roll for the
2007-08 assessment year. The information has been gathered by the Agency, but the accuracy or
completeness of such information is not guaranteed by the Agency. See "APPENDIX D — FISCAL
CONSULTANT'S REPORT."
TABLE 4
City of Santa Clarita Redevelopment Agency
Ten Largest Secured Property Taxpayers 2007-08
(Newhall Redevelopment Project Area)
% of % of
Assessee Use No. of 2007-08 Total Incre.
Parcels Value Value
22
Source. Fiscal Consultant's Report
The ten (10) largest taxpayers own properties whose combined assessed value accounts for
approximately 27% of the secured roll and 31% of the 2007-08 total assessed value of the Project Area.
The reduction in assessed valuation of taxable property in the Project Area caused by the complete or
partial destruction of such properties would likely result in a reduction in Housing Set -Aside Revenues
which secure the Bonds. In such event, the Agency's ability to timely pay principal and interest on the
Bonds may be adversely affected.
The following is information about the largest secured taxpayers in the Project Area. The
information has been gathered by the City and the Agency from various taxpayers and other sources
believed to be reliable, but the accuracy or completeness of such information is not guaranteed by the
Agency or the City.
Casden Santa Clarita LLC owns 24 parcels within the Project Area consisting of approximately
96 acres of vacant commercial and industrial land. Casden Santa Clarita LLC is controlled by Casden
Properties LLC, Beverly Hills, California, whose chairman and chief executive officer is Alan I. Casden,
a Southern California real estate developer of multifamily residential units. Mr. Casden, a self-made
billionaire, is listed in Forbes 400 Richest Americans.
The Casden properties constitute a major part of the City's effort to develop the North Newhall
Specific Plan. The City is in the process of hiring consultants and proceeding with planning and
environment assessment of this area. Ultimate development of the Casden properties will be dictated by
the terms of the specific plan once it is adopted. It is anticipated that the specific plan will envision some
combination of commercial, industrial and residential uses.
23
Secured
Unsecured
Total
1) Casden Santa Clarita LLC
Vacant
24
$78,029,956
$78,029,956
12.69%
22.38%
2) C Native Exchange I LLC
Unsecured
32
45,090,320
45,090,320
7.33%
12.93%
3) Saugus Station LLC
Industrial
6
16,134,349
16,134,349
2.62%
4.63%
4) Hollywood Carlton Prop. LLC
Residential
7
10,011,250
10,011,250
1.63%
2.87%
5) Lyons Properties Limited
Commercial
1
9,079,570
9,079,570
1.48%
2.60%
6) 25805 San Fernando LLC
Commercial
1
7,250,000
7,250,000
1.18%
2.08%
7) Xenon Investment Corporation
Residential
3
6,987,400
6,987,400
1.14%
2.00%
8) Mulberry Park Delaware LLC
Residential
2
6,929,996
6,929,996
1.13%
1.99%
9) RCB Properties LLC
Commercial
2
6,416,353
6,416,353
1.04%
1.84%
10) Walnut Townhomes LLC
Residential
3
6,528,000
6,528,000
1.06%
1.87%
TOTAL MAJOR ASSESSEES
52
$147,366,874
$45,090,320
$192,457,194
31.29%
55.19%
TOTAL PROJECT VALUE
$538,777,789
$76,286,806
$615,064,595
INCREMENTAL VALUE
$290,357,924
$58,355,154
$348,713,078
Source. Fiscal Consultant's Report
The ten (10) largest taxpayers own properties whose combined assessed value accounts for
approximately 27% of the secured roll and 31% of the 2007-08 total assessed value of the Project Area.
The reduction in assessed valuation of taxable property in the Project Area caused by the complete or
partial destruction of such properties would likely result in a reduction in Housing Set -Aside Revenues
which secure the Bonds. In such event, the Agency's ability to timely pay principal and interest on the
Bonds may be adversely affected.
The following is information about the largest secured taxpayers in the Project Area. The
information has been gathered by the City and the Agency from various taxpayers and other sources
believed to be reliable, but the accuracy or completeness of such information is not guaranteed by the
Agency or the City.
Casden Santa Clarita LLC owns 24 parcels within the Project Area consisting of approximately
96 acres of vacant commercial and industrial land. Casden Santa Clarita LLC is controlled by Casden
Properties LLC, Beverly Hills, California, whose chairman and chief executive officer is Alan I. Casden,
a Southern California real estate developer of multifamily residential units. Mr. Casden, a self-made
billionaire, is listed in Forbes 400 Richest Americans.
The Casden properties constitute a major part of the City's effort to develop the North Newhall
Specific Plan. The City is in the process of hiring consultants and proceeding with planning and
environment assessment of this area. Ultimate development of the Casden properties will be dictated by
the terms of the specific plan once it is adopted. It is anticipated that the specific plan will envision some
combination of commercial, industrial and residential uses.
23
C Native Exchange I LLC is an entity controlled by Time Warner Cable Inc. ("Time Warner
Cable") and used by it as the assessee for many of its unsecured holdings within Los Angeles County.
The unsecured value of the parcels represent the assessed value of cable facilities within the Project Area.
Time Warner Cable (NYSE:TWC) is the second-largest cable operator in the U.S. delivering services to
approximately 26 million homes. More information about Time Warner Cable can be found at
www.timewamercable.com. The foregoing internet address is included for reference only, and the
information on this internet site is not a part of this Official Statement and is not incorporated by
reference into this Official Statement.
Historical Tax Increment Receipts
The following are the actual tax increment revenues for the Project Area from Fiscal Year 2003-
04 through Fiscal Year 2006-07, including the actual receipts of tax increment for the Project Area. See
"APPENDIX D — FISCAL CONSULTANT'S REPORT."
TABLE 5
City of Santa Clarita Redevelopment Agency
Historical Tax Increment Receipts
(Newhall Redevelopment Project Area)
Fiscal Year
2003-04
2004-05
2005-06
2006-07
Adjusted Tax Levy
$883,031
$1,128,831
$2,237,235
$2,806,040
Current Yr. Apportionment
857,661
1,095,975
2,179,333
2,708,386
Current Yr. Collection %
97.13%
97.09%
97.41%
96.52%
Prior Yr. Collection
183,064
568,997
650,342
438,193
Total Apportionment
$1,040,724
$1,664,972
$2,829,675
$3,146,578
Total Collection %
117.86%
147.50%
126.48%
112.14%
ERAF
(27,045)
(63,861)
(82,114)
---
Admin Fees
(14,844)
(18,034)
(31,508)
(34,489)
Total Receipts
$ 998,835
$1,583,077_
$2,716,053
$3,112,089
Housing Set -Aside
Source: Los Angeles County Auditor -Controller's Office, Disbursement Tax Division "CRA Remittance Advice " and the City
The Agency has collected between 112% and. 147% of its tax increment charges over the past
four years. The administrative fees shown in Table 5 consist of the County administrative charge.
Assessment Appeals
An assessee of locally -assessed or state -assessed property may contest the taxable value enrolled
by the county assessor or by the State Board of Equalization ("SBE"), respectively. The assessee of
SBE -assessed property or locally -assessed personal property, the valuation of which are subject to annual
reappraisal, actually contests the determination of the full cash value of property when filing an
assessment appeal. Because of the limitations to the determination of the full cash value of
locally -assessed real property by Article XIIIA, an assessee of locally assessed real property generally
contests the original determination of the base assessment value of the parcel, i.e. the value assigned after
a change of ownership or completion of new construction. In addition, the assessee of locally -assessed
real property may contest the current assessment value (the base assessment value plus the compounded
annual inflation factor) when specified conditions have caused the full cash value to drop below the
current assessment value.
24
At the time of reassessment, after'a change of ownership or completion of new construction, the
assessee may appeal the base assessment value of the property. Under an appeal of a base assessment
value, the assessee appeals the actual underlying market value of the sale transaction or the recently
completed improvement. A base assessment appeal has significant future revenue impact because a
reduced base year assessment will then reduce the compounded value of the property prospectively.
Except for the 2% inflation factor, the value of the property cannot be increased until a change of
ownership occurs or additional improvements are added.
Pursuant to Section 51(b) of the Revenue and Taxation Code, the assessor may place a value on
the tax roll lower than the compounded base assessment value, if the full cash value of real property has
been reduced by damage, destruction, depreciation, obsolescence, removal of property or other factors
causing a decline in the value. Reductions in value pursuant to Section 51(b), commonly referred to as
Proposition 8 appeals, can be achieved either by formal appeal or administratively by assessor staff
appraising the property. A reduced full cash value placed on the tax roll does not change the base
assessment value. The future impact of a parcel subject to a Proposition 8 appeal is dependent upon a
change in the conditions which caused the drop in value. In fiscal years subsequent to a successful
Proposition 8 appeal, the assessor may determine that the value of the property has increased as a result of
corrective actions or improved market conditions and enroll a value on the tax roll up to the parcel's
compounded base assessment value.
The taxable value of utility property may be contested by utility companies and railroads to the
SBE. Generally, the impact of utility appeals is on the State-wide value of a utility determined by the
SBE. As a result, the successful appeal of a utility may not affect the taxable value of a project area but
could affect a project area's allocation of unitary property taxes.
The actual impact of assessment appeals on Housing Set -Aside Revenues is dependent upon the
actual revised value of assessments resulting from values determined by the Los Angeles County
Assessment Appeals Board or through litigation and the ultimate timing of successful appeals. Because
the County Controller adjusts revenues to the Agency to reflect roll corrections from successful appeals,
the Agency may bear the burden of appeals. The actual valuation impact to the Project Area from
successful assessment appeals will occur on the assessment roll prepared after the actual valuation
reduction.
Table I of the Fiscal Consultant's Report (see Appendix D) summarizes the status of the
assessment appeals in the Project Area.
Through December 2007, 12 Proposition 8 appeals have been filed for assessment reductions
with the County. Of the 12 appeals filed, 3 have resulted in assessed value reductions totaling $440,960,
or about 0.07% of the total Project Area assessed value. The successful appeals averaged a 13.1%
reduction in value ($440,960 actual reduction based on $3,365,960 requested reduction). However, 2
appeals are still pending by RCB Properties LLC, a top ten taxpayer, in which they are seeking a 58.54%
reduction in 2006-07 tax roll values. This could result in a total reduction of over $3 million, or about
less than 0.5% of the current total assessed value. Historically, approximately 33.3% of appeals fled
received assessment valuation reductions. The Fiscal Consultant's analysis of appeals data indicates that
appeals are rarely granted at the applicant's value of opinion and it is unlikely the pending appeals within
the Project Area will result in a reduction of over $3 million. The remaining 7 Proposition 8 appeals have
either been withdrawn or denied. Based upon the historical average rate of requested reductions, the
Fiscal Consultant estimates that the County will approve a reduction of $355,435 of assessed value or
approximately 0.057% of the total assessed value of the Project Area. The projected Housing Set -Aside
Revenues have taken into account the estimated reduction. See "APPENDIX D" for more detailed
discussion of appeals by the Fiscal Consultant.
25
Gross tax increment revenue was not reduced to reflect any impact of future appeals or potential
refunds which may occur for future appeals.
Financial Information
Included in this Official Statement, as APPENDIX B, are the audited financial statements of the
Agency for the Fiscal Year ended June 30, 2005.
Other than the Bonds, the Agency has incurred no bonded indebtedness secured by Housing Set -
Aside Revenues. Concurrent with the issuance of the Bonds, the Agency will issue its Tax Allocation
Bonds, Series 2008. These bonds will be issued under a separate indenture and secured by a pledge of tax
increment revenues net of Housing Set -Aside Revenues.
As of , the Agency has restructured its debt with the City and entered into one (1)
note obligation representing loans from the City for the Redevelopment Project. The note, dated
2008, in the principal amount of $ and bearing interest at the rate of _%
is due , and has an outstanding balance of $
These amounts represent moneys expended for administrative services and public improvements
advanced by the City. The amounts owed to the City are subordinate to other indebtedness of the
Redevelopment Project, including the Bonds, with respect to application of Housing Set -Aside Revenues.
After the issuance of the Bonds, the Project Area will have $ aggregate principal
amount of the Bonds outstanding, $ aggregate principal amount of housing bonds and
approximately $ million of subordinate loan debt.
Projected Taxable Valuation and Housing Set -Aside Revenues; Debt Service Coverage
Table 6 shows the analysis of projected growth of assessed valuation in the Project Area and the
resulting Housing Set -Aside Revenues over the next thirty-five years, as estimated by the Fiscal
Consultant. Table 7 depicts the projected Housing Set -Aside Revenue available to pay debt service on
the Bonds based on such growth of assessed valuation in the Project Area, as estimated by the Fiscal
Consultant. See "APPENDIX D — FISCAL CONSULTANT'S REPORT" for more information
regarding these projections.
Receipt of projected Housing Set -Aside Revenues in the amounts and at the time projected by the
Fiscal Consultant depends on the realization of certain assumptions relating to the Housing Set -Aside
Revenues. See "APPENDIX D — FISCAL CONSULTANT'S REPORT" for a discussion of the
assumptions used in preparing the Housing Set -Aside Revenue projections. Based upon the projected
Housing Set -Aside Revenues, the Agency expects sufficient funds should be available to the Agency to
pay principal of and interest on the Bonds. Although the Agency believes that the assumptions utilized
by the Fiscal Consultant are reasonable, the Agency provides no assurance that the projected Housing Set -
Aside Revenues will be realized. To the extent that the assumptions are not actually realized, the
Agency's ability to timely pay principal and interest on the Bonds may be adversely affected. Key
assumptions include:
❑ Tax rates have been estimated based on a 1.0% tax rate;
❑ For determining projected gross tax increment revenues from the Project Area, secured and
unsecured real property assessed values are increased at 2% per year;
❑ 20% of the gross revenue to be allocated from the Project Area to the Agency has been utilized
for projected Housing Set -Aside Revenues;
26
❑ There have not been any deductions to the gross tax increment revenue to recognize the impact
of future tax delinquencies;
❑ A reduction of $355,435 in total assessed value was estimated for 2008-09 due to pending
appeals. Gross tax increment revenue was not reduced to reflect any impact of future appeals or potential
refunds which may occur for future appeals; and
❑ Anticipated valuation increase of $11.89 million has been added to the 2008-09 assessment roll
due to ownership changes for sales through December 31, 2007. See "APPENDIX D — FISCAL
CONSULTANT'S REPORT" for more information regarding these projections.
B
27
TABLE 6
City of Santa Clarita Redevelopment Agency
Projected Housing Set -Aside Revenues
(Newhall Redevelopment Project Area)
(000's omitted)
County
Low/Mod
Fiscal AV Total Estimated Admin
Housing
1
Year Growth Assessed Incremental Gross Tax Fee
Set-aside @
Rate Value Valuation Increment (1.32%)
20%
IBase Year
$266,352
2007-08
Actual%
$615,065
$348,713
$3,628
($48)
$726
2008-09
2.00%
637,882
371,530
3,865
(51)
773
2009-10
2.00%
649,631
383,279
3,987
(53)
797
2010-11
2.00%
661,615
395,263
4,112
(54)
822
2011-12
200%
673,838
407,487
4,239
(56)
848
2012-13
200%
686,307
419,955
4,368
(58)
874
2013-14
200%
699,024
432,673
4,501
(59)
900
2014-15
200%
711,996
445,644
4,636
(61)
927
2015-16
200%
725,227
458,876
4,773
(63)
955
2016-17
2.00%
738,723
472,372
4,914
(65)
983
2017-18
200%
752,489
486,138
5,057
(67)
1,011
2018-19
2.00%
766,530
500,179
5,203
(69)
1,041
2019-20
200%
780,852
514,501
5,352
(71)
1,070
2020-21
200%
795,461
529,109
5,504
(73)
1,101
2021-22
200%
810,362
544,010
5,659
(75)
1,132
2022-23
2.00%
825,560
559,209
5,817
(77)
1,163
2023-24
200%
841,063
574,711
5,978
(79)
1,196
2024-25
200%
856,876
590,524
6,142
(81)
1,228
2025-26
200%
873,004
606,653
6,310
(83)
1,262
2026-27
2.00%
889,456
623,104
6,481
(85)
1,296
2027-28
200%
906,237
639,885
6,656
(88)
1,331
2028-29
200%
923,353
657,001
6,834
(90)
1,367
2029-30
200%
940,811
674,460
7,015
(93)
1,403
2030-31
200%
958,619
692,267
7,200
(95)
1,440
2031-32
2.00%
976,783
710,431
7,389
(97)
1,478
2032-33
2.00%
995,310
728,958
7,582
(100)
1,516
2033-34
200%
1,014,207
747,856
7,779
(103)
1,556
2034-35
200%
1,033,483
767,131
7,979
(105)
1,596
2035-36
2.00%
1,053,144
786,792
8,184
(108)
1,637
2036-37
2.00%
1,073,198
806,847
8,392
(111)
1,678
2037-38
200%
1,093,654
827,302
8,605
(113)
1,721
2038-39
200%
1,114,518
848,167
8,822
(116)
1,764
2039-40
200%
1,135,800
869,448
9,043
(119)
1,809
2040-41
200%
1,157,507
891,156
9,269
(122)
1,854
2041-42
2.00%
1,179,649
913,297
9,499
(125)
1,900
Source Fiscal Consultant's Report
28
TABLE 7
City of Santa Clarita Redevelopment Agency
Projected Housing Set -Aside Revenues and Debt Service Coverage
Year Ending Estimated Housing Bonds Debt Debt Service
June 30 Set -Aside Revenues Service(l) Coverage
2009
$ 773,000
2010
797,000
2011
822,000
2012
848,000
2013
874,000
2014
900,000
2015
927,000
2016
955,000
2017
983,000
2018
1,011,000
2019
1,041,000
2020
1,070,000
2021
1,101,000
2022
1,132,000
2023
1,163,000
2024
1,196,000
2025
1,228,000
2026
1,262,000
2027
1,296,000
2028
1,331,000
2029
1,3 67,000
2030
1,403,000
2031
1,440,000
2032
1,478,000
2033
1,516,000
2034
1,556,000
2035
1,596,000
2036
1,637,000
2037
1,678,000
2038
1;721,000
2039
1,764,000
2040
1,809,000
2041
1,854,000
2042
1,900,000
(1) For the year ending September 1
Source Fiscal Consultant and Financial Advisor
29
Agency Activity
The Agency has been actively involved in the redevelopment of properties located within the
Project Area, including the following projects:
recent completion of the Newhall Restripe and Signal Project at a cost of approximately
$900,000, including signal modifications, new signal installation, installation of handicap
access ramps, re -striping for added parking, and re-routing of traffic onto a new arterial
street;
installation underway of new street identification and overhead signs to reflect new street
names to replace San Fernando Road;
design work for Main Street Streetscape Phase 1 to include storm drain, landscape and
streetscape for five blocks of Old Town Newhall; and
- plans for a library, 5t' Street and Newhall Avenue traffic circle and a mixed-use project
consisting of public parking, residential and commercial uses.
BONDOWNERS' RISKS
Investment in the Bonds involves elements of risk. The following section describes certain
specific risk factors affecting the payment and security of the Bonds. The following discussion of risks
is not meant to be an exhaustive list of the risks associated with the purchase of the Bonds and the
order of discussion of such risks does not necessarily reflect the relative importance of the various
risks. Potential investors are advised to consider the following factors along with all other information
in this Official Statement in evaluating the Bonds. There can be no assurance that other risk factors
not discussed under this caption will not become material in the future.
Bonds Are Limited Obligations and Not General Obligations
The Bonds and the interest thereon are limited obligations of the Agency and do not constitute a
general obligation of the Agency. See "SECURITY AND SOURCES OF PAYMENT FOR BONDS"
herein. No Owner of the Bonds may compel exercise of the taxing power of the State of California or any
of its political subdivisions or agencies to pay the principal of, premium, if any, or interest due on the
Bonds.
The Bonds do not evidence a debt of the Agency or the City within the meaning of any
constitutional or statutory debt limitation provision.
Reduction in Taxable Value; Plan Limitations
Housing Set -Aside Revenues allocated to the Agency are determined by the amount of
incremental taxable value in the Project Area and the current rate or rates at which property in the Project
Area is taxed. The reduction of taxable values of property in the Project Area caused by economic factors
beyond the Agency's control, such as a relocation out of the Project Area by one or more major property
owners, successful appeals by property owners for a reduction in property's assessed value, blanket
reductions in assessed value due to general reductions in property values or the complete or partial
destruction of such property caused by, among other eventualities, an earthquake or other natural disaster,
could cause a reduction in Housing Set -Aside Revenues securing the Bonds. These risks and risks of
delinquent payments may generally be exacerbated by the relatively high concentration of ownership in
the Project Area. See "THE REDEVELOPMENT PROJECT AREA - Mayor Taxpayers." Such
30
reduction of Housing Set -Aside Revenues could have an adverse effect on the Agency's ability to make
timely payments of principal of and interest on the Bonds.
In addition, limitations on the Agency's receipt and use of tax increment revenues may also affect
the availability of Housing Set -Aside Revenues. See "LIMITATIONS ON TAX REVENUES" and
"THE REDEVELOPMENT PROJECT AREA - Plan Limitations."
Reduction in Inflationary Rate and Changes in Legislation; Further Initiatives
As described in greater detail below (see "LIMITATIONS ON TAX REVENUES"),
Article XIIIA of the California Constitution provides that the full cash value base of real property used in
determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed
a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price
index or comparable local data. Such measure is computed on a calendar year basis.
Article XIIIA of the California Constitution, which significantly affected the rate of property
taxation, was adopted pursuant to California's constitutional initiative process. From time to time, other
initiative measures could be adopted by California voters. The adoption of any such initiative might alter
the calculation of tax increment revenues, reduce the property tax rate, or broaden property tax
exemptions. Future legislative reallocation of the 1% basic levy among the affected taxing entities could
increase the taxes retained by certain taxing entities with a corresponding reduction in Housing Set -Aside
Revenues. See "LIMITATIONS ON TAX REVENUES - Property Tax Limitations - Article IIIA."
Concentration of Ownership
The top ten largest secured property taxpayers in the Project Area account for approximately 31%
of the total secured and unsecured assessed value of the Project Area for 2007-08. Concentration of
ownership presents a risk in that if one or more of the largest property owners were to default on their
taxes, or were to successfully appeal the tax assessments on property within the Project Area, a substantial
decline in Housing Set -Aside Revenues could result. Property taxes for the ten largest assessees in the
Project Area are current. See "THE REDEVELOPMENT PROJECT AREA — Major Taxpayers" herein.
County of Orange vs. Orange County Assessment Appeals Board
In 2003, the Orange County Superior Court entered a final judgment in the Bezaire v. County of
Orange case (also known as the "Prop. 13" or "2% Case") holding that the Orange County Assessor (the
"Assessor") had violated the 2% maximum annual inflation adjustment limit of Article XIIIA of the
California Constitution when the Assessor attempted to compensate for the failure to increase the taxable
value of a single family residential property the previous year when the market value of the property
declined below its taxable value, by increasing the assessed value by 4% the following year. The
Assessor established the 4% value increase by attempting to recapture two years of inflation adjustments.
The State Board of Equalization had approved this methodology for increasing assessed values in similar
circumstances, and in 2002, two other local courts (Los Angeles and San Diego) ruled differently than
Orange County on the same issue, affirming the latter practice.
The Superior Court had ruled in favor of a motion to restate the complaint as a class action,
whose members consisted of those Orange County taxpayers whose property assessments rose more than
2% due to the cumulative effect of current assessments with those of previous years. If upheld on appeal,
the class action suit could have resulted in the return in excess of $500 million to taxpayers in Orange
County. In June, 2003 the Orange County Assessor and the Tax Collector in conjunction with the County
of Orange, filed an appeal to the Court of Appeal of the State' of California, Fourth District, Division
Three. In 2004, the Court of Appeal reversed the lower court, entering judgment in favor of Orange
County, finding that the trial court erred in ruling that assessments are always limited to no more than 2%
31
of the previous year's assessment. The Court of Appeal ruled that the base on which the inflation factor is
figured remains that of the original purchase price (or assessment at time of genuine new construction),
not any reduced base resulting from a reassessment in the wake of declining property values. The State
Supreme Court declined to hear an appeal of this case, and no further appeal has been filed. Despite its
current status, this litigation illustrates how legal proceedings may be brought to challenge property tax
valuations, the outcome of which may have unpredictable effects on the Agency's receipt of Housing Set -
Aside Revenues.
Levy and Collection
The Agency has no independent power to levy and collect property taxes. Any reduction in the
tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the
Housing Set -Aside Revenues, and accordingly, could have an adverse impact on the ability of the Agency
to make debt service payments on the Bonds. Likewise, delinquencies in the payment of property taxes
could have an adverse effect on the Agency's ability to make timely debt service payments on tfie Bonds.
The County currently allocates tax increment revenues to the Agency based upon the tax increment
actually collected.
The tax increment revenue projections provided in Tables 6 and 7 present the amount of net tax
increment expected to be allocated from the Project Area over the term of the projections. Tax increment
revenue figures represented in these Tables have been reduced for County administration fees, but do not
include supplemental tax revenues and have not been reduced for delinquencies or successful assessment
appeals activity.
State Budget Deficit
The State budget for Fiscal Year 1993-94 transferred $2.6 billion to school districts from cities,
counties and other local governments, including redevelopment agencies. As part of the budget's transfer
of moneys to school districts, the State Legislature adopted SB 1135 which required redevelopment
agencies to transfer approximately $65 million to the Educational Revenue Augmentation Fund
("ERAF") in both Fiscal Years 1993-94 and 1994-95. As a result of the enactment of AB 1768 (Statutes
of 2002, Chapter 1127), the Agency made its first ERAF contribution of $16,709 to the State for Fiscal
Year 2002-03 with funds from the Project Area.
The State budget for 2003-04 included a $135 million shift of redevelopment agency tax
increment revenues to ERAF. The Agency paid $27,045 from funds on hand in the Project Area.
The State budget for 2004-05 included a shift of property tax revenues from local governments to
ERAF totaling approximately $1.3 billion over a period of two years, of which a total of $250 million
would come from redevelopment agencies. The Agency made its ERAF payment of $63,861 prior to the
May 10, 2005 deadline. For fiscal year 2005-06, the Agency's ERAF payment was calculated by the
California Department of Finance to be $82,114 and was paid prior to the May 10, 2006 deadline.
Pursuant to the State's 2006-07 Budget, local governments are no longer required to shift
property taxes to the ERAF pursuant to the provisions of Proposition IA.
Proposition IA. Proposition IA (SCA 4), proposed by the Legislature in connection with the
2004-05 Budget Act and approved by the voters in November 2004, provides that the State may not
reduce any local sales tax rate, linut 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,
32
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 State 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 of the State Legislature and certain other conditions are
met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among
local governments within a county. Proposition IA also provides that if the State reduces the Vehicle
License Fee rate currently in effect, which is 0.65 percent of vehicle value, the State must provide local
governments with equal replacement revenues. Further, Proposition IA required the State, beginning
March 1, 2006, to suspend State mandates affecting cities, counties and special districts, schools or
community colleges, excepting mandates relating to employee rights, in any year that the State does not
fully reimburse local governments for their costs of compliance with such mandates.
Current and Future Budgets. On January 10, 2008, the Governor, by proclamation, declared
that the State was in a fiscal emergency and called a special session of the State Legislature to reduce the
current year's spending. The State Department of Finance reported that, a combination of lowered
revenue receipts and projections and increased costs has resulted in a projected $3.3 billion budget
shortfall for fiscal year 2007-08, which is projected to grow to a $14.5 billion cumulative budget shortfall
for fiscal year 2008-09. The Governor's 2008-09 Proposed Budget calls for significant reductions to
most State programs and expenditures. Although the 2008-09 Proposed Budget does not include any
ERAF shifts or other substantive reallocation of tax increment revenues, the State's budget for fiscal year
2008-09, when finally adopted, will likely include many changes from the current 2008-09 Proposed
Budget, reflecting further review and negotiations among the Governor and State legislators.
The Agency cannot predict whether future State budget legislation will further divert moneys
from redevelopment agencies, and the effect such diversion would have on the receipt of Housing Set -
Aside Revenues and, accordingly, the payment of debt service on the Bonds. There can be no assurances
that the State will not continue to experience budget gaps in the future. The Agency cannot predict the
impact current and future State fiscal shortfalls will have on the Housing Set -Aside Revenues. The
projections of Housing Set -Aside Revenues prepared by the Fiscal Consultant currently do not reflect a
shift of Housing Set -Aside Revenues.
Information about the State budget and State spending is regularly available at various State -
maintained websites. Text of the budget may be found at the website of the Department of Finance,
www.dof.ca.gov, under the heading "California Budget." An impartial analysis of the budget is posted by
the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State of California official
statements, many of which contain a summary of current and past State budgets may be found at the
website of the State Treasurer, www.treasurer.ca gov. The foregoing internet addresses are included for
reference only, and the information on these intereet sites are not apart of this Official Statement and are
not incorporated by reference into this Official Statement. Although it is unclear at this time what impact
(if any) future proposals similarly targeted for diversion to the State's General Fund will have on the
Agency's Housing Fund or other monies for its redevelopment activities, potential buyers of the Bonds
should be aware of these developments.
Additional Financing
Following the issuance of the Bonds, the Agency may issue one or more additional series of
bonds and/or notes in an aggregate principal amount which (when added to the Bonds and the Housing
Bonds) do not exceed the limitations set forth in the Redevelopment Plan. See "THE FINANCING
PLAN" and "LIMITATIONS ON TAX REVENUES." Subject to compliance with the limitations of the
091
Indenture, such obligations may be issued on a parity with or subordinate to the Bonds. See "SECURITY
FOR THE BONDS — Issuance of Additional Bonds" and "-Issuance of Subordinated Debt."
Loss of Tax Exemption
In order to maintain the exclusion from gross income for federal income tax purposes of the
interest on the Bonds, the Agency has covenanted in the Indenture to comply with each applicable
requirement of Section 103 and Sections 141 through 150 of the Internal Revenue Code of 1986, as
amended, relative to arbitrage and avoidance of characterization as private activity bonds, among other
things. The interest on the Bonds could become includable in gross income for purposes of federal
income taxation retroactive to the date of issuance of the Bonds as a result of acts or omissions of the
Agency in violation of covenants in the Indenture. Should such an event of taxability occur, the Bonds
are not subject to acceleration, redemption or any increase in interest rates and will remain Outstanding
until maturity or until redeemed under one of the redemption provisions contained in the Indenture. See
"TAX MATTERS" herein.
Seismic Risk and Flood Risk
The City, like all California communities, may be subject to unpredictable seismic activity.
There is no evidence that a ground surface rupture will occur in the event of an earthquake, but there is
significant potential for destructive ground -shaking during the occurrence of a major seismic event. In
addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such
an event. In the event of a severe earthquake, there may be significant damage to both property and
infrastructure in the Project Area. As a result, the value of taxable land in the Project Area could be
diminished in the aftermath of such an earthquake, through appeals, thereby reducing the amount of
Housing Set -Aside Revenues (see "Property Tax Appeals" herein).
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. The City
sustained damages as a result of the 1994 Northridge Earthquake. [More to follow] 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 Project Area is subject to very minimal flood risk. Discussion offlood risk.]]
Property Tax Appeals
There have been 12 assessment appeals filed by landowners within the Project Area for the period
commencing with the 1996-07 fiscal year and continuing to December 2007. Of the 12 appeals filed, 3
have been resolved with a reduction in value. There are 2 appeals currently pending. See "THE
REDEVELOPMENT PROJECT AREA — Assessment Appeals" and "APPENDIX D - FISCAL
CONSULTANT'S REPORT." Within the Project Area and based on assessment appeals data through
December, 2007 and using the historical averages for owners successfully appealing their assessed values
the Fiscal Consultant projects that a total of $355,435 in assessed value will be taken from the 2008-09
tax rolls. This projected reduction has been incorporated into the projection of tax revenues. Reductions
in assessed value due to any future assessment appeals which may be filed have not been taken into
consideration in projecting future gross tax increment revenue.
W
Any reduction of assessed valuations could result in a reduction of the Housing Set -Aside
Revenues, which in turn could impair the ability of the Agency to make payments of principal of and/or
interest on the Bonds when due.
Hazardous Substances
An environmental condition that may result in the reduction in the assessed value of parcels
would be the discovery of a hazardous substance that would limit the beneficial use of a property within
the Project Area. In general, the owners and operators of a property may be required by law to remedy
conditions of the property relating to releases or threatened releases of hazardous substances. The owner
may be required to remedy a hazardous substance condition of property whether or not the owner or
operator has anything to do with creating or handling the hazardous substance. The effect, therefore,
should any of the property within the Project Area be affected by a hazardous substance would be to
reduce the marketability and value of the property by the costs of remedying the condition, causing a
reduction of the Housing Set -Aside Revenues available to pay debt service on the Bonds.
Enforceability of Remedies
The remedies available to the Trustee and the registered owners of the Bonds upon an event of
default under the Indenture or any other document described herein are in many respects dependent upon
regulatory and judicial actions which are often subject to discretion and delay. Under existing law and
judicial decisions, the remedies provided for under such documents may not be readily available or may
be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be
qualified to the extent that the enforceability of the legal documents with respect to the Bonds is subject to
linutations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of
creditors generally and by equitable remedies and proceedings generally.
Investment of Funds
The Reserve Account and all other funds held under the Indenture are required to be invested in
Authorized Investments as provided under the Indenture. See APPENDIX A - SUMMARY OF
CERTAIN PROVISIONS OF THE INDENTURE." All investments, including Authorized Investments,
authorized by law from time to time for investments by redevelopment agencies contain a certain degree
of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market
value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts
held under the Indenture, or the funds and accounts held by the Agency could have a material adverse
effect on the security for the Bonds and/or the financial condition of the Agency.
Assumptions and Projections
Any reduction in Housing Set -Aside Revenues, whether for any of the foregoing reasons or any
other reason, could have an adverse effect on the Agency's ability to make timely payments of principal
of, premium, if any, and interest on the Bonds, which are secured by such Housing Set -Aside Revenues.
To estimate the total Housing Set -Aside Revenues available to pay debt service on the Bonds, the Fiscal
Consultant has made certain assumptions with regard to the assessed valuation in the Project Area, future
tax rates, and the percentage of taxes collected. See "APPENDIX D — FISCAL CONSULTANT'S
REPORT" for a full discussion of the assumptions underlying the projections set forth herein with respect
to Housing Set -Aside Revenues. The Agency believes these assumptions to be reasonable, but to the
extent that the assessed valuations, the tax rates, and the percentage of taxes collected are less than the
Agency's assumptions, the total Housing Set -Aside Revenues available will, in all likelihood, be less than
those projected herein. See "THE REDEVELOPMENT PROJECT AREA — Projected Taxable Valuation
and Housing Set -Aside Revenues; Debt Service Coverage" herein.
35
Secondary Market
There can be no assurance that there will be a secondary market for the Bonds, or if a secondary
market exists, that such Bonds can be sold for any particular price. Occasionally, because of general
market conditions or because of adverse history or economic prospects connected with a particular issue,
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, pricing of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could substantially differ from the original purchase price.
LIMITATIONS ON TAX REVENUES
Property Tax Limitations - Article XIIIA
California voters, on June 6, 1978, approved an amendment (commonly known as both
Proposition 13 and the Jarvis -Gann Initiative) to the California Constitution. This amendment, which
added Article XIIIA to the California Constitution, among other things, affects the valuation of real
property for the purpose of taxation in that it defines the full cash value of property to mean "the county
assessor's valuation of real property as shown on the 1975/76 tax bill under full cash value, or thereafter,
the appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a
rate not to exceed 2% per year, or any reduction in the consumer price index or comparable local data, or
any reduction in the event of declining property value caused by damage, destruction or other factors. See
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
Article XIIIA further limits the amount of any ad valorem tax on real property to 1% of the full
cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the
voters prior to July 1, 1978. In addition, an amendment to Article XIII was adopted in August 1986 by
initiative that exempts any bonded indebtedness approved by two-thirds of the votes cast by voters for the
acquisition or improvement of real property from the 1 percent limitation. On December 22, 1978, the
California Supreme Court upheld the amendment over challenges on several state and federal
constitutional grounds (Amador Valley Joint Union School District v. State Board of Equalization).
In the general election held November 4, 1986, voters of the State of California approved two
measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended
Article XIIIA to provide that the terms "purchased" and "change of ownership," for purposes of
determining full cash value of property under Article XIIIA, do not include the purchase or transfer of
(1) real property between spouses and (2) the principal residence and the first $1,000,000 of other
property between parents and children.
Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over age 55 who
sell their residence to buy or build another of equal or lesser value within two years in the same county, to
transfer the old residence's assessed value to the new residence. Pursuant to Proposition 60, the
Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in
the event of declining property values caused by damage, destruction or other factors, to provide that
there would be no increase in the "full cash value" base in the event of reconstruction of property
damaged or destroyed in a disaster and in certain other minor or technical ways. See `BONDOWNERS'
RISKS - Reduction in Taxable Value; Plan Limitations" herein.
36
Challenges to Article XIIIA
California trial and appellate courts have upheld the constitutionality of Article XIIIA's
assessment rules in three significant cases. The United States Supreme Court in an appeal to one of these
cases upheld the constitutionality of Article XIIIA's tax assessment system. The Agency cannot 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 Housing Set -Aside Revenues should a
future decision hold unconstitutional the method of assessing property.
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, $4.00 per $100 assessed
valuation (based on the traditional practice in California of using 25% of full cash value as the assessed
value for tax purposes).
The apportionment of property taxes in fiscal years after 1978-79 has been revised pursuant to
Statutes of 1979, Chapter 282 which provides relief funds from State moneys beginning in fiscal year
1978-79 and is designed to provide a permanent system for sharing State taxes and budget surplus funds
with local agencies. Under Chapter 282, cities and countries receive about one-third more of the
remaining property tax revenues collected under Proposition 13 instead of direct State aid. School
districts receive a correspondingly reduced amount of property taxes, but receive compensation directly
from the State and are given additional relief. Chapter 282 does not affect the derivation of the base levy
($1.00 per $100 taxable valuation) and the bonded debt tax rate.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of
ownership, 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 except for certain utility property assessed by the
State Board of Equalization which is allocated by a different method discussed herein.
Proposition 87'
Under prior State law, if a taxing entity increased its tax rate to obtain revenues to repay voter
approved general obligation bonds, any redevelopment project area which included property affected by
the tax rate increase would realize a proportionate increase in tax increment.
Proposition 87, approved by the voters of the State on November 8, 1993, requires that all
revenues produced by a tax rate increase (approved by the voters on or after January 1, 1989) go directly
to the taxing entity which increases the tax rate to repay the general obligation bonded indebtedness. As a
result, redevelopment agencies no longer receive an increase in tax increment when taxes on property in
the project area are increased to repay voter approved general obligation debt.
Property Tax Collection Procedures
Classifications. In California, property that is subject to ad valorem taxes is classified as
"secured" or "unsecured." Secured and unsecured property is entered on separate parts of the assessment
roll maintained by the county assessor. The secured classification includes property on which any
property tax levied by the county becomes a lien on that property sufficient, in the opinion of the county
assessor, to secure payment of the taxes. Every tax that becomes a lien on secured property has priority
over all other liens on the secured property, regardless of the time of the creation of other liens. A tax
37
r)
levied on unsecured property does not become a lien against the taxes on unsecured property, but may
become a lien on certain other property owned by the taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the two
classifications of property. The taxing authority has four ways of collecting unsecured property taxes in
the absence of timely payment by the taxpayer: (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 recording in the county
recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of
the personal property, improvements or possessory interests belonging or assessed to the assessee.
The exclusive means of enforcing the payment of delinquent taxes with respect to property on the
secured roll is the sale of property securing the taxes to the State for the amount of taxes that are
delinquent.
Current tax payment practices by the County provide for payment to the Agency of tax increment
revenues monthly throughout the fiscal year, with the majority of tax increment revenues paid to the
Agency in mid-December and rid -April. A final reconciliation is made after the close of the fiscal year to
incorporate all adjustments to previously reported current year taxable values. The difference between
the final reconciliation and tax increment revenues previously allocated to the Agency is allocated in late
July.
Penalties. A 10% penalty is added to delinquent taxes that have been levied with respect to
property on the secured roll. In addition, property on the secured roll on 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 a delinquency penalty, plus a redemption penalty of 1% 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. A 10% penalty also applies to the
delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1% per month
accrues with respect to such taxes beginning the first day of the third month following the delinquency
date. I
Delinquencies. The valuation of property is determined as of January 1 each year and equal
installments of taxes levied upon secured property become delinquent on the following December 10 and
April 10. Taxes on unsecured property are due January 1 and become delinquent on the succeeding
August 31.
Supplemental Revenue. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498),
provides for the supplemental assessment and taxation of property as of the occurrence of a change in
ownership or completion of new construction. Previously, statutes enabled the assessment of such
changes only as of the next tax lien date (March 1 was used as the lien date as of the enactment of Chapter
498; however, as discussed below, the lien date was changed by legislation enacted in 1995) following the
change and thus delayed the realization of increased property taxes from the new assessments for up to 14
months. As enacted, Chapter 498 provides increased revenue to redevelopment agencies to the extent that
supplemental assessments as a result of new construction or changes - of ownership occur within the
boundaries of redevelopment projects subsequent to the lien date. To the extent such supplemental
assessments occur within the Project Area, Housing Set -Aside Revenues may increase. The receipt of
supplemental tax increment revenues by taxing entities typically follow the change of ownership by a
year or more. The Fiscal Consultant has not included revenues resulting from Supplemental Assessments
in their projections nor have they deducted any potential supplemental revenue collection fees.
38
Actual tax increment receipts presented in Table 3 include supplemental roll revenue.
Supplemental roll revenue is generated by the tax increment revenue created when a sale takes place or
construction project is completed after January 1 of a given year (the Assessor's 'cut-off date for value to
be attributed to next year's assessment roll) but re -assessment occurs and the owner is issued a
supplemental tax bill for the period between the sale or completion of the construction and the next
regular tax bill. Because these revenues are unpredictable, they have not been projected.
Tax Collection Fees
Pursuant to legislation enacted by the State Legislature (SB 2557 and AB 1924), the County of
Los Angeles collects certain administrative fees for the collection and allocation of tax increment revenue
to the Agency. Tax increment projections presented in Table 1 and Table 2 are net of anticipated
administrative fee charges by the County. See "APPENDIX D - FISCAL CONSULTANT'S REPORT".
Unitary Taxation of Utility Property
AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with fiscal year 1988-89,
assessed value derived from State -assessed unitary property (consisting mostly of operational property
owned by certain railroad and utility companies) is to be allocated county -wide as follows: (i) each tax
rate area will receive the same amount from each assessed utility received in the previous fiscal year
unless the applicable county -wide values are insufficient to do so, in which case values will be allocated
to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous
fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility
according to a specified formula. Additionally, the lien date on State -assessed property is changed from
March 1 to January 1. AB 454 (Statutes of 1987, Chapter 921) further modifies Chapter 1457 regarding
the distribution of tax revenues derived from property assessed by the State Board of Equalization.
Chapter 921 provides for the consolidation of all State -assessed property, except for regulated railroad
property, into a single tax rate area in each county. Chapter 921 further provides for a new method of
establishing tax rates on State -assessed property and distribution of property tax revenues derived from
State -assessed property to taxing jurisdictions within each county as follows: for revenues generated from
the one percent tax rate, each jurisdiction, including redevelopment project areas, will receive a
percentage up to 102% of its prior year State -assessed unitary revenue; and if county -wide revenues
generated for unitary, property are greater than 102% of the previous year's unitary revenues, each
jurisdiction will receive a percentage share of the excess unitary revenue generated from the application
of the debt service tax rate to county wide unitary taxable value, further, each jurisdiction will receive a
percentage share of revenue based on the jurisdiction's annual debt service requirements and the
percentage of property taxes received by each jurisdiction from unitary property taxes. Railroads will
continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.
The intent of Chapters 1457 and 921 is to provide redevelopment agencies with their appropriate
share of revenue generated from the property assessed by the State Board of Equalization. The Auditor
Controller has allocated $887.37 in unitary tax revenue to the Project Area for fiscal year 2007-08. For
purposes of Housing Set -Aside Revenue projections, it has been assumed that this amount will continue
to be allocated annually to the Project Area for the life of the projection.
Currently, the California electric utility industry has been undergoing significant changes in its
structure and in the way in which components of the industry are regulated. The Agency is unable to
predict the impact of these changes on its utility property tax revenues, or whether legislation inay be
proposed or adopted in response to industry restructuring, or whether any future litigation or legislation
may affect the State's method of assessing utility property and the allocation of assessed value to local
taxing agencies and, in turn, the receipt of such taxes by the Agency.
39
Housing Set -Aside
Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Redevelopment Law
requiring redevelopment agencies to set-aside 20 percent of all tax increment derived from redevelopment
project areas adopted after December 31, 1976 in a low and moderate income housing fund (such
amounts are referred to herein as the "Housing Set -Aside"). This low and moderate income housing
requirement could be reduced or eliminated if a redevelopment agency finds that: 1) no need exists in the
community to improve or increase the supply of low and moderate income housing; 2) that some stated
percentage less than 20 percent of the tax increment is sufficient to meet the housing need; or 3) that other
substantial efforts including the obligation of funds from state, local and federal sources for low and
moderate income housing of equivalent impact are being provided for in the community.
Chapter 1135, Statutes of 1985 amended Section 33334.3 and added Section 33334.6 and
33334.7 imposing such requirements on project areas for which the redevelopment plan was adopted
before January 1, 1977. Section 33334.6 expressly provides that, unless certain findings are made, a
redevelopment agency must first, before providing for payments of its bonds, set aside 20% of all tax
increment allocated to the agency in the Low and Moderate Income Housing Fund, unless such bonds are
issued to finance or refinance, in whole or in part, any indebtedness or other obligations existing on, and
created prior to, January 1, 1986, and contained in a statement of existing obligations adopted by
resolution of the redevelopment agency. Such legislation also provided that an agency may deposit less
than the full 20% amount in fiscal years prior to July 1, 1996, if necessary to provide for the completion
of programs approved prior to January 1, 1986, if such programs are contained on a statement of existing
programs adopted by resolution of the Agency.
The provisions of the Redevelopment Law regarding the funding of low and moderate income
housing funds have been frequently amended since their original adoption. In addition, the interpretations
of these laws by the California Attorney General and redevelopment agency counsels throughout the State
have at times been subject to variation and change. Section 33334.6 of the Redevelopment Law provides
that, under certain circumstances, redevelopment agencies may defer, in whole or in part, Housing Set -
Aside Payments. However, the projections of net tax increment revenues assume that the Agency will not
defer Housing Set -Aside payments, and the Housing Set -Aside payments will be the only revenues
available for payment on the Bonds. Such amounts are set forth as "Housing Set -Aside Revenues," as
indicated in [Table 2] of "APPENDIX D - FISCAL CONSULTANT'S REPORT."
Appropriations Limitations; Article XHIB of the California Constitution
On November 6, 1979, California voters approved Proposition 4, the so-called Gann Initiative,
which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit
the annual appropriations 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 government entity.
The California Legislature has added Section 33678 to the Redevelopment Law which provides
that the allocation of tax increment revenues to a redevelopment agency for the purpose of paying
principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by such
agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor
shall such portion of taxes be deemed receipt of taxes by, or an appropriation subject to the limitation of,
any other public body within the meaning or for the purpose of the Constitution and laws of the State of
California, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678
has been upheld in two California appellate court decisions, Brown v. Redevelopment Agency of the City
of Santa Ana and Bell Redevelopment Agency v. Woosley. The plaintiff in Brown petitioned the
California Supreme Court for a hearing of this case. The California Supreme Court formally denied the
40
petition and therefore the earlier court decisions are now final and binding. On the basis of these court
decisions, the Agency does not believe it is subject to Article XIIIB and has not adopted an appropriations
lirmt.
Tax Allocation Procedures of the County of Los Angeles
Tax Increment Revenue. Current tax payment practices by the County provide for payment to
the Agency of tax increment revenues for the various redevelopment project areas on a monthly basis
although the first payment to the Agency is not made until December for secured property. Except for
property tax advances made by the County to the Agency in December and April, actual payments to the
Agency are made on the basis of actual property tax collections in the project areas.
Tax Increment Revenue Receipts. Computed tax increment revenues expected to be received by
the Agency for the Project Area in each fiscal year for 2007-08 through 2042-43 are shown in Table 2 of
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
It should be noted that any variation between receipts and computed tax increment revenues is not
entirely attributable to delinquent unpaid taxes and/or impounded revenues In addition, adjustments to
property assessments are made by the County Assessor throughout the fiscal year, or as a result of
potential tax refunds. The tax increment revenue projections shown in Table 2 of "APPENDIX D -
FISCAL CONSULTANT'S REPORT" are not adjusted to reflect these types of variances.
County Collection Charge. The County retains a collection charge from tax increment revenues
disbursed to the Agency in order to recover charges for property tax administration. For fiscal year 2007-
08 the County will retain from the Agency a total of $47,838 attributable to the Project Area.
Base Year Valuation Adjustments. The Redevelopment Law provides that the base assessment
roll utilized for the allocation of tax increment revenues may be reduced by the taxable value, as shown
on the base roll, of those properties acquired for public use of tax exempt public entities. The precedent
for this action stems from the 1963 case of Redevelopment Agency of the City of Sacramento vs. Malaki,
216 Cal. App. 2d 480, and subsequent, related cases. The estimate of Housing Set -Aside Revenues as
shown in "APPENDIX D - FISCAL CONSULTANT'S REPORT", incorporates the Fiscal Year 1996-97
base year value as reported by the County. Future estimates are based on the assumption that the base
year value for the Project Area remains at the level reported by the County for the 2007-08 Fiscal Year.
Certification of Agency Indebtedness
A significant provision of the Redevelopment Law, Section 33675, was added by the Legislature
in 1976, providing for the filing not later than the first day of October of each year with the county
auditor, a statement of indebtedness certified by the chief fiscal officer of the agency for each
redevelopment project which receives tax increments. The statement of indebtedness is required to
contain the date on which any bonds were delivered, the principal amount, term, purpose and interest rate
of such bonds and the outstanding balance and amount due on such bonds. Similar information must be
given for each loan, advance or indebtedness that the agency has incurred or entered into to be payable
from tax increment.
As amended by Assembly Bill 1290 (Statutes of 1993, Chapter 942) ("AB 1290"), Section 33675
requires each redevelopment agency to file a reconciliation statement for each redevelopment project for
which the redevelopment agency receives tax increment revenues pursuant to Section 33670. The
reconciliation statement is to show, among other things, (i) for each loan, advance or indebtedness, for
each redevelopment project the total debt service obligations of the redevelopment agency to be paid in
the fiscal year for which the statement of indebtedness is filed, (ii) the total debt service remaining to be
1 41
paid on such indebtedness, and (iii) the available revenues as of the end of that fiscal year. "Available
revenues" consist of all tax increment revenues held by the redevelopment agency as cash or cash
equivalents and all cash or cash equivalents held by the redevelopment agency that are irrevocably
pledged or restricted to payment of a loan, advance or indebtedness that the redevelopment agency has
listed on a statement of indebtedness. For purposes of Section 33675, amounts held in a redevelopment
agency's Low and Moderate Income Housing Fund do not constitute available revenues, however, an
amount to be deposited by a redevelopment agency in its Low and Moderate Income Housing Fund does
constitute indebtedness of the redevelopment agency.
Section 33675(g) has been amended by AB 1290 to provide that payments of tax increment
revenues from the county auditor to a redevelopment agency may not exceed the redevelopment agency's
aggregate total outstanding debt service obligations minus the available revenues of the redevelopment
agency, as shown on the reconciliation statement. Payments to a trustee under a bond resolution or
indenture or payments to a public agency in connection with payments by such public agency pursuant to
a bond issue shall not be disputed in any action under Section 33675.
The Agency has determined that the amendments to Section 33675 limiting the payment of tax
increment revenues to an amount not greater than the difference between a redevelopment agency's total
outstanding debt obligations and total available revenues, as reported on the redevelopment agency's
reconciliation statement, will not have an adverse impact on the Agency's ability to meet its debt service
obligations.
Plan Limitations
The Redevelopment Law requires redevelopment plans to contain certain limitations, including
limitations on the number of tax dollars which may be divided and allocated to a redevelopment agency,
on the time to establish loans, advances and indebtedness, on the amount of bonded indebtedness that can
be outstanding at one time, on the life of the redevelopment plan or amendment and on the time to repay
indebtedness. See "THE REDEVELOPMENT PROJECT AREA — Plan Limitations" herein.
The Agency is of the opinion that these limitations for the Project Area will not impede its ability
to develop the Project Area in accordance with the Redevelopment Plan nor impair its ability in the future
to repay any obligation or indebtedness, including the Bonds, incurred by the Agency in connection with
the development of the Project Area in accordance with the Redevelopment Plan.
CONCLUDING INFORMATION
Tax Matters
The Internal Revenue Code of 1986, as amended (the "Code"), imposes certain requirements that
must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain
excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal
income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be
included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds.
The Agency has covenanted in the Indenture to comply with each applicable requirement of the Code
necessary to maintain the exclusion pursuant to section 103(a) of the Code of the interest on the Bonds
from the gross income of the owners thereof for federal income tax purposes.
In the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, under existing law interest on the
Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the
aforementioned covenant, the Bonds are not "specific private activity bonds" within the meaning of
section 57(a)(5) of the Code and, therefore, that the interest on the Bonds will not be treated as an item of
tax preferences for purposes of computing the alternative minimum tax imposed by section 55 of the
42
Code. The receipt or accrual of interest on the Bonds owned by a corporation may affect the computation
of the alternative minimum taxable income, upon which the alternative minimum tax is imposed, to the
extent that such interest is taken into account in determining the adjusted current earnings of that
corporation (75 percent of the excess, if any, of such adjusted current earnings over the alternative
minimum taxable income being an adjustment to alternative minimum taxable income (determined
without regard to such adjustment or to the alternative tax net operating loss deduction)).
To the extent that a purchaser of a Bond acquires that Bond at a price that exceeds the aggregate
amount of payments (other than payments of qualified stated interest within the meaning of section
1.1273-1 of the Treasury Regulations) to be made on the Bonds (determined, in the case of a callable
Bond, under the assumption described below), such excess will constitute "bond premium" under the
Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally
that bond premium on a tax-exempt obligation must be amortized on a constant yield, economic accrual
basis; the amount of premium so amortized will reduce the owner's basis in such obligation for federal
income tax purposes, but such amortized premium will not be deductible for federal income tax purposes.
In the case of a purchase of a Bond that is callable, the determination whether there is amortizable bond
premium, and the computation of the accrual of that premium, must be made under the assumption that
the Bond will be called on the redemption date that would minimize the purchaser's yield on the Bond (or
that the Bond will not be called prior to maturity if that would minimize the purchaser's yield). The rate
and timing of the amortization of the bond premium and the corresponding basis reduction may result in
an owner realizing a taxable gain when a Bond owned by such owner is sold or disposed of for an amount
equal to or in some circumstances even less than the original cost of the Bond to the owner
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the
initial offering price to the public of the Bonds of that maturity set forth on the inside cover of this
Official Statement is "original issue discount." Such original issue discount accruing on a Bond is treated
as interest excluded from the gross income of the owner thereof for federal income tax purposes and
exempt from California personal income tax. Original issue discount on any Bond purchased at such
initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term
of the Bond on the basis of a constant yield method and, within each semiannual period, will accrue on a
ratable daily basis. The amount of original issue discount on such a Bond accruing during each period is
added to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale,
redemption or payment on maturity) of such Bond. The Code includes certain provisions relating to the
accrual of original issue discount in the case of purchasers of Bonds who purchase such Bonds other than
at the initial offering price and pursuant to the initial offering.
Any person considering purchasing a Bond at a price that includes bond premium should consult
his or her own tax advisors with respect to the amortization and treatment of such bond premium,
including, but not limited to, the calculation of gain or loss upon the sale, redemption or other disposition
of the Bond. Any person considering purchasing a Bond of a maturity having original issue discount
should consult his or her own tax advisors with respect to the tax consequences of ownership of Bonds
with original issue discount, including the treatment of purchasers who do not purchase in the original
offering and at the original offering price, the allowance of a deduction for any loss on a sale or other
disposition, and the treatment of accrued original issue discount on such Bonds under federal individual
and corporate alternative minimum taxes.
Bond Counsel has not undertaken to advise in the future whether any events after the date of
issuance of the Bonds may affect the tax status of interest on the Bonds or the tax consequences of the
ownership of the Bonds. No assurance can be given that future legislation, or amendments to the Code, if
enacted into law, will not contain provisions that could directly or indirectly eliminate, or reduce the
benefit of, the exclusion of the interest on the Bonds from the gross income of the owners thereof for
federal income tax purposes. Furthermore, Bond Counsel expresses no opinion as to any federal, state or
43
local tax law consequences with respect to the Bonds, or the interest thereon, if any action is taken with
respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of bond
counsel if such advise or approval is given by counsel other that Bond Counsel.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from the gross
income of the owners thereof for federal income tax purposes, and is exempt from personal income taxes
of the State of California an owner's federal, state or local tax liability may otherwise be affected by the
ownership or disposition of the Bonds. The nature and extent of these other tax consequences will depend
upon the owner's tax status and other items of income or deduction. Without limiting the generality of
the foregoing, prospective purchasers of the Bonds should be aware that (1) section 265 of the Code
denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in
the case of a financial institution, that portion of an owner's interest expense allocated to interest on the
Bonds, (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code,
sect 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items,
including interest on the Bonds, (iii) interest on the Bonds earned by certain foreign corporations doing
business in the United States could be subject to a branch profits tax imposed by section 884 of the Code,
(iv) passive investment income, including interest on the Bonds, may be subject to federal income
taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings
and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S
corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social
Security and certain receipts or accruals of interest on the Bonds, and (vi) under section 32(1) of the Code,
receipt of investment income, including` interest on the Bonds, may disqualify the recipient thereof from
obtaining the earned income credit. Bond Counsel has expressed no opinion regarding any such other tax
consequences.
Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based
upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the Agency described above. No ruling has been sought from the
Internal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Bond
Counsel, and Bond Counsel's Opinion is not binding on the Service. The Service has an ongoing
program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the
Bonds is commenced, under current procedures the Service is likely to treat the Agency as the "taxpayer,"
and the Owners would have no right to participate in the audit process. In responding to or defending an
audit of the tax-exempt status of the interest on the Bonds, the Agency may have different or conflicting
interest from the Owners. Further, the disclosure of the initiation of an audit may adversely affect the
market price of the Bonds, regardless of the final disposition of the audit.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX E.
Financial Advisor
C.M. de Crinis & Co., Inc. has acted as financial advisor to the Agency concerning the Bonds.
As financial advisor, C.M. de Crinis & Co., Inc. will receive compensation contingent upon the sale and
delivery of the Bonds.
Fiscal Consultant
The Agency has retained the firm of HdL Coren & Cone, Diamond Bar, California, to act as
fiscal consultant (the "Fiscal Consultant") for the Agency on the Project Area. The full text of the Fiscal
Consultant's Report is attached hereto as "APPENDIX D."
44
Ratings
Moody's Investors Service and Standard & Poor's Ratings Group have given the Bonds a rating
of "Aaa" and "AAA", respectively, with the understanding that upon delivery of the Bonds, a policy
insuring the payment when due of principal of and interest on the Bonds will be issued by
. [In addition, S&P has assigned an underlying rating of " " to the
Bonds based on its assessment of the Agency's ability to make payments with respect to the Bonds
without giving effect to the Policy.] Such ratings reflect only the views of such organization and any
desired explanation of the significance of such ratings may be obtained from S&P and Moody's.
Generally, a rating agency bases its rating on the information and materials furnished to it and on
investigations, studies and assumptions of its own. There is no assurance such ratings will continue
for any given period of time or that such ratings will not be revised downward or withdrawn
entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so
warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect
on the market price of the Bonds.
Underwriting
The Bonds were sold by competitive bid to , as Underwriter, at a price
of $ , which includes an underwriter's discount of $ and a net original
issue discount of $ . The Underwriter intends to offer the Bonds to the public initially at
the prices set forth on the inside cover page of this Official Statement, which prices may subsequently
change without any requirement of prior notice.'
The Underwriter reserves the right to join with dealers and other underwriters in offering the
Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers
depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers
may reallow any such discounts on sales to other dealers.
No Litigation
There is no litigation pending or, to the Agency's knowledge, threatened to restrain or enjoin the
issuance, execution or delivery of the Bonds, to contest the validity of the Bonds, the Indenture, -or any
proceedings of the Agency with respect thereto. In the opinion of the Agency and its counsel, there are
no lawsuits or claims pending against the Agency which will materially affect the Agency's finances as to
impair the ability to pay principal of an interest on the Bonds when due.
Legal Matters
The legality of the issuance of the Bonds is subject to the approval of Fulbright & Jaworski
L.L.P., Los Angeles, California, Bond Counsel. A copy of the opinion will be substantially in the form
set forth in "APPENDIX E" herein. Burke, Williams & Sorensen, L.L.P., Los Angeles, California, serves
as legal counsel to the Agency, providing general legal services to the Agency with respect to
redevelopment matters. Fees payable to Bond Counsel are contingent upon successful sale and delivery
of the Bonds.
Miscellaneous
All of the preceding summaries of the Indenture, the Redevelopment Law, other applicable
legislation, the Redevelopment Plan for the Project Area, agreements and other documents 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. Reference is hereby made to such documents on file with the Agency for
further information in connection therewith.
\ 45
Any statements made in this Official Statement involving matters of opinion or of estimates,
whether or not so expressly stated; are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized.
The execution and delivery of this Official Statement by its Executive Director has been duly
authorized the Agency.
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
Executive Director
APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF
THEINDENTURE
A-1
APPENDIX B
AUDITED FINANCIAL STATEMENTS
OF THE CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
APPENDIX C
GENERAL INFORMATION RELATING TO
THE CITY OF SANTA CLARITA
Information contained in this APPENDIX Cis presented as general background data. The Bonds
are payable solely from the Housing Set -Aside Revenues and other sources as described herein. The
taxing power of the City of Santa Clarita, the State of California, or any political subdivision thereof is
not pledged to the payment of the Bonds.
General Background
The City is located in the Santa Clarita Valley (the "Valley"), which is comprised of the
communities of Canyon Country, Newhall, Saugus, and Valencia, all located in Los Angeles County (the
"County"). The following information specifically relates to the City and generally to the Santa Clarita
Valley.
The first discovery of gold in 1842 was the beginning of a transformation of the area of the City,
where the once -ancient Alliklik Indians, wild horses, Spanish explorers and European colonists lived.
After purchasing Rancho San Francisco (later known as Newhall Ranch) in 1875, Henry Mayo
sold a right-of-way to the Southern Pacific Railroad for $1 and a town site known as Newhall for another
$1. Not only did it become a rail center, but the first commercially producing oil well began operation in
Pico Canyon in 1875, followed by the state's first oil refinery in Railroad Canyon.
The City was officially incorporated on December 15, 1987, after a ballot measure was passed by
the City's residents. The City is a general law city and operates under a Council -Manager form of
government and provides, either directly or under contract with the County, a full range of municipal
services including public safety, public works (including the sewer system), parks and recreation,
community development, etc.
Geography and Climate
Santa Clarita Valley is located 35 miles northwest of Los Angeles and 40 miles east of the Pacific
Ocean. It covers 150 square miles and forms an inverted triangle with the San Gabriel and Santa Susana
mountain ranges, separating it from the San Fernando Valley and the Los Angeles Basin on the south, and
the San Joaquin Valley, Mohave 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 Clanta Valley.
The City of Santa Clarita covers approximately 50 square miles and is located 40 miles from Los
Angeles International Airport, 25 miles from the Burbank Airport; and 50 to 60 rrules from the ports of
Los Angeles and Long Beach, respectively. The City is accessible via Highway 126, the Golden State
and the Antelope Valley Freeways. Three Metrolink stations serve rail passengers from the San Fernando
Valley and Downtown Los Angeles.
In general, the climate in the City is sunny, warm and dry in the summer and semi -moist and mild
in the winters. The annual rainfall of 15 to 18 inches occurs primarily between November and March.
Municipal Government
The City provides general government services either with its own employees or through
contracts. The City has a Council Manager form of municipal government. The City Council appoints
the City Manager who is responsible for the day-to-day administration of City business and the
C-1
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 Council from among its members. As of
July 1, 2007, the City had a staff of 384.75 funded equivalent full time positions. The current members of
the City Council, term expiration and their principal occupations are as follows:
City Council
Marsha A. McLean, Mayor
Robert C. Kellar, Mayor Pro tem
Laurene F. Weste, Councilmember
Frank C. Ferry, Councilmember
Timothy B. Boydston, Councilmember*
Term Expires
Occupation
April 2010
Business Owner
April 2008
Retired Police Officer
April 2010
Community Advocate
April 2010
Educator
April 2008
Executive Director/
Artistic Director ,
* Appointed to fill vacancy upon election of Councilmember Cameron Smythe to State Assembly, 38th District.
Current City Management Staff includes the following:
Mr. Ken Pulskamp serves as the Executive Director of the Agency and City Manager of the City.
He was appointed to the positions November 5, 2002. A twenty-seven year veteran of local government
management, Ken previously served as Deputy City Manager of Fresno, California, Assistant City
Manager of Bakersfield, California and Assistant City Manager of Santa Clarita. During his tenure with
the City Ken has also served as the Acting Department Head of every City department. Ken has a
Bachelor of Arts from the California State University, Fresno and a Master of Public Administration from
the University of San Francisco.
Mr. Ken Striplin is currently the Assistant City Manager and Personnel Officer for the City of
Santa Clarita since September 2004. Previously Ken has served Santa Clanta as Assistant to the City
Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In addition,
Ken has served as Interim Director of two departments: Field Services and Planning and Economic
Development. Ken holds Bachelor of Arts and Master of Public Administration degrees from California
State University, Northridge, and a Doctor of Education in Organizational Leadership from Pepperdine
University.
Mr. Darren Hernandez , has been the Treasurer of the Agency and Director of Administrative
Services for the City of Santa Clanta since January 2004 and was named Deputy City Manager in July
2007. In this position he provides leadership to the Department of Administrative Services and serves the
City and Agency as Chief Financial Officer. Previously Darren 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.
Darren 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.
Municipal Services
The City provides park and recreation services, transit services, trash collection, street
maintenance, building inspection and planning services. As a "contract city," the City purchases certain
public services through contracts with other agencies and private companies. Contracting for services
enables the City to accomplish the essential administrative and operational functions of a municipality
with a relatively small workforce and payroll, and a minimum of facilities and equipment. The primary
example of the contract arrangement is the Santa Clanta Police Department, whose sworn and civilian
personnel are provided by the Los Angeles County Sheriffs Department. Fire protection is provided by
the Los Angeles County Fire Protection District. Other regularly contracted services include refuse and
recycling collection, landscaping and public transit services.
Education
The City is served by 47 elementary schools, 6 middle schools, 7 high schools and numerous
private and parochial schools. Three colleges are located in the Valley, California Institute of the Arts,
The Masters College and College of the Canyons. Collectively, their student population reached 15,079.
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.
Population
The following table shows the City's and County's population from 2003 through 2007 calendar
years.
CITY OF SANTA CLARITA AND LOS ANGELES COUNTY
Population
Year Los Angeles County City of Santa Clarita
2003 9,980,168 162,964
2004 10,101,547 164,905
2005 10,191,080 167,389
2006 10,257,994 167,631
2007 10,331,939 177,158
Source California State Department of Finance, as of January 1
Employment
The following table summarizes the City's employment and unemployment rates for 2002
through 2006 calendar years.
CITY OF SANTA CLARITA
Civilian Labor Force, Employment and Unemployment
Annual Averages
Civilian Labor Force
Employment
Unemployment
Total
Unemployment
Rate(a)
2002 2003 2004 2005 2006
84,800
84,600
85,300
87,300
88,300
3,600
3,700
3,500
2,900
2,600
88,400
88,300
88 800
90.20020
MOO
4.1%
4.2%
3.9%
3.2%
2.8%
(a) The unemployment rate is calculated using unrounded data
Source. California Employment Development Department
C-3
Largest Employers
Major employers within the Santa Clarita Valley are as follows:
SANTA CLARITA VALLEY
Major Employers
Company Product/Service Employees
Six Flags Magic Mountain
Saugus Union School District
William S. Hart Union High School
District
Princess Cruises
U.S. Postal Service
College of the Canyons
Henry Mayo Newhall Memorial Hospital
Newhall School District
The Master's College
Specialty Laboratories
Amusement Park 3,878
Education 2,095
Education 2,009
Travel
1,850
Processing & Distribution
1,707
Center
606
Education
1,411
Hospital
1,355
Education
825
Education
741
Medical Research &
700
Development
407
H.R. Textron
Aerospace
688
City of Santa Clarita
Government
606
California Institute of the Arts
Education
510
Arvato Services
Business Services
505
Aerospace Dynamics
Aerospace
437
Fanfare Media Works
Promotions/Direct Advertising
407
Advanced Bionics
Medical Device
375
Pharmavite
Nutritional Supplement
350
Castaic Union School District
Education
350
Target
Retail Store
345
Source First American Title Company's California Economic Forecast, October 2006
C-4
Commercial Activity and Sales Tax
The following tables show total taxable transactions and sales tax revenues within the City over
the last five calendar years in which annual data is available.
The following table shows a breakdown of the taxable sales within the City for 2006 calendar
year (the latest calendar year in which information is available).
CITY OF SANTA CLARITA
CITY OF SANTA CLARITA
— 2006
Taxable Transactions
Permits
Taxable Transactions
(Thousands of Dollars)
Year
Permits
Taxable Transactions
2002
5,458
1,246,643
2003
5,618
2,095,140
2004
5,999
2,290,510
2005-
6,336
2,673,395
2006
6,409
2,857,875
Source State Board of Equalization
Implements
65
The following table shows a breakdown of the taxable sales within the City for 2006 calendar
year (the latest calendar year in which information is available).
CITY OF SANTA CLARITA
Taxable Sales
— 2006
Type of Business
Permits
Taxable Transactions
Retail Stores
Apparel Stores
353
$ 120,944,000
General Merchandise Stores
162
419,102,000
Food Stores
78
106,582,000
Eating and Drinking Places
411
267,833,000
Home Furnishings and Appliances
231
78,993,000
Bldg. Material and Farm
Implements
65
215,033,000
Auto Dealers and Auto Supplies
112
639,229,000
Service Stations
40
265,323,000
Other Retail Stores
1,676
288,883,000
Retail Stores Total
3,128
$2,401,919,000
All Other Outlets
3,281
455,956,000
Totals All Stores
6,409
$2,857,875,000
Source State Board of Equalization
There is a geographic area within the City known as the "Santa Clanta Enterprise Zone" that
provides tax incentives to business. The Santa Clarita Enterprise Zone covers 97% of all commercial,
business, and industrial zoned land within the City. As of its final designation date on July 1, 2007, the
Santa Clarita Enterprise Zone will strengthen the region's local economy by providing significant
California state tax advantages to businesses located within the Zone.
C-5
Housing
As of January 1, 2007, the California Department of Finance reported that there were 36,020
single family detached units in the City, 6,938 single family attached units, 13,370 multifamily housing
units and 2,240 mobile home units. The vacancy rates is approximately 3.16%. Single family homes in
the City have values that range from $300,000 to well over $1 million. Rents range from $800 to $2800
per month for one- and two-bedroom apartments, with condominium and townhome rentals ranging
slightly higher.
Construction Activity
The following table shows the valuation of building permits issued in the City for the last five
calendar years in which the data is available.
Median Household Income
The U.S. Census Bureau American FactFinder reports that the median income of households in
the City for 2006 is $75,917 compared to $48,451 for the nation. Ninety percent of the households
received earnings and fourteen percent received retirement income other than Social Security, with
eighteen percent of the households receiving Social Security. These income sources are not mutually
exclusive, with some households receiving income from more than one source.
Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarita Valley.
Among them are Six Flags Magic Mountain Amusement Park and Gene Autry's Melody Ranch. For
water enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid.
The Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks
County Park and the City's community parks are also available for hiking and picnicking. William S.
Hart Park features a magnificent Spanish colonial mansion museum. Frazier Park and Mountain High are
within a 40 mile drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild, Disney
Studios, Santa Clarita Repertory Theater, as well as the Friendly Valley, Valencia Country Club,
Robinson's Ranch and Vista Valencia golf courses. Santa Clarita residents enjoy the City's distinctive
trail system. There are three County libraries located in the valley.
Financial Statements
The audited combined financial statements of the City are available through links obtained at the
City's website at www.santa-clarita com/cityhall/admin/cafr. The foregoing internet addresses are
included for reference only, and the information on these internet sites are not a part of this Official
Statement and are not incorporated by reference into this Official Statement. The audited combined
C-6
CITY OF SANTA CLARITA
Building Permits and Valuations
Year
Residential Permits
Residential Value
Non -Residential Value
Total
2002
441
135,731,000
58,085,000
193,816,000
2003
362
117,949,000
37,054,000
155,003,000
2004
864
261,539,000
51,935,000
313,574,000
2005
506
153,499,000
94,480,000
247,979,000
2006
954
83,497,806
144,909,433
228,407,239
Source.Economic Sciences Corporation/LA Regional Planning Report
Median Household Income
The U.S. Census Bureau American FactFinder reports that the median income of households in
the City for 2006 is $75,917 compared to $48,451 for the nation. Ninety percent of the households
received earnings and fourteen percent received retirement income other than Social Security, with
eighteen percent of the households receiving Social Security. These income sources are not mutually
exclusive, with some households receiving income from more than one source.
Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarita Valley.
Among them are Six Flags Magic Mountain Amusement Park and Gene Autry's Melody Ranch. For
water enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid.
The Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks
County Park and the City's community parks are also available for hiking and picnicking. William S.
Hart Park features a magnificent Spanish colonial mansion museum. Frazier Park and Mountain High are
within a 40 mile drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild, Disney
Studios, Santa Clarita Repertory Theater, as well as the Friendly Valley, Valencia Country Club,
Robinson's Ranch and Vista Valencia golf courses. Santa Clarita residents enjoy the City's distinctive
trail system. There are three County libraries located in the valley.
Financial Statements
The audited combined financial statements of the City are available through links obtained at the
City's website at www.santa-clarita com/cityhall/admin/cafr. The foregoing internet addresses are
included for reference only, and the information on these internet sites are not a part of this Official
Statement and are not incorporated by reference into this Official Statement. The audited combined
C-6
financial statements of the City are also available upon request. Such request should be directed to the
City Clerk's Office, 23920 Valencia Blvd., Santa Clarita, CA 91355.
City Investment Policy and Portfolio
The City has adopted policies and procedures for the management of the investment of
unexpended funds for the City itself and for other entities of the City, including the Authority, for which
the City provides financial management services. The three basic objectives of the policies and
procedures are: safety of invested funds, maintenance of sufficient liquidity to meet cash flow needs and
attainment of the maximum yield possible consistent with the first two objectives. The most recently
revised Investment Policy for the City was adopted on May 8, 2007. Under the City's Investment Policy
and in accordance with the Government Code, the City may invest in the following types of investments:
bankers acceptances to a maximum term of 180 days; commercial paper to a maximum maturity of 270
days; "A" rated corporate notes; certificates of deposit; obligations of the United States Treasury;
repurchase agreements to a maximum term of 1 year; obligations of the State of California; municipal
bonds; mutual funds; the Local Agency Investment Fund (LAIF) managed by the State Treasurer and the
Los Angeles County Pooled Investment Fund (LACPIF) administered by the Los Angeles County
Treasurer and Tax Collector.
In accordance with the Government Code, the City requires certain collateralization for public
deposits in banks and savings and loans, and has long-established safekeeping and custody procedures.
Estimated investments as of March 31, 2008 in all funds of the City had a weighted average
maturity of _ days and were comprised of the following:
Principal % of
Tvpe Amount Total
Money Market Funds
Treasury Securities
Non -Callable Agencies
Callable Agencies
Commercial Paper
Corporate Bonds
LAIF
LACPIF
100.00%
Source- City of Santa Clarita Finance Department.
Retirement Programs
The City contributes to the California Public Employee's Retirement System (PERS) an agent
multiple -employer public employee retirement system that acts as a common investment and
- administrative agent for participating public entities within the State of California.
All full-time and part-time employees are eligible to participate in the PERS. Benefits vest after
5 years of service. Benefits for employees vary based upon final yearly compensation, safety or non -
safety status and age at retirement. PERS also provides death and disability benefits.
City employees contribution rates are 8 percent of monthly earnings. The City currently pays the
employees contribution to PERS for both miscellaneous and safety employees. The City is required to
C-7
contribute remaining amounts necessary to fund the benefits for its members using the actuarial basis
recommended by PERS. The PERS contribution for 2007 was $4,279,569.
As of the latest actuarial valuation, June 30, 2005, the City's unfunded Entry Age Normal
Accrued Liability (AAL) is $8.114 million.
Deferred Compensation Plan
The City offers its employees a deferred compensation plan. Participation is optional, and allows
certain classifications of management to defer a portion of their salaries until future years. The deferred
compensation is not available to employees until death, retirement, termination, disability or certain
unforeseeable emergencies. City participation in contributions to the plans is mandatory. The City is
obligated to contribute amounts ranging from $2,000 to $15,000 per participant per year. During the
2006/07 year, there were 25 participants. The City contributed a total of $75,082 and employees
contributed $51,533. Total plan assets at June 30, 2006 were $1,830,847.
In addition to deferred compensation retirement benefits, the City provides post- retirement health
care benefits to all employees who retire from the City on or after attaining the age of 50 with 5 years
PERS credited service. The City pays the cost of the retirees enrollment including enrollment of family
members in a health benefit plan to a maximum of $913 per month. The City funds these amounts on a
pay-as-you-go basis. For 2006/07 there were 30 eligible participants, for which the City paid $196,181
for medical insurance premiums.
n
Employee Relations and Collective Bargaining
[[The City has a collective bargaining agreement with the Service Employees International Union
(SEN) Local 347. The contract's term is January 1, 2005 through January 1, 2007. A new contract is
currently under negotiation and is expected to be finalized within the next few months.]]
Risk Management
The City joined the Special Districts Risk Management Authority (SDRMA) in the fall of 2005.
SDRMA is a self insurance risk pool that serves as a not-for-profit public agency to its members.
Through SDRMA, the City currently holds a $500 general liability deductible. All general liability
claims above $500 and up to a limit of $10,000,000 are handled by SDRMA. On June 30, 2007,
$100,000 was accrued by the City for general liability claims that were received prior to the partnership
with SDRMA. While the ultimate losses that occurred prior to SDRMA are dependent on future events,
the City's management believes that the aggregate accrual is adequate to cover such losses. Settled
claims have not exceed any of these coverage amounts in any of the last three fiscal years and there were
no reductions in the City's insurance coverage during the year ended June 30, 2007.
In addition to general liability, the City maintains individual policies for autos, property, flood,
special events, worker's compensation and earthquake damage where appropriate.
14W
APPENDIX D
FISCAL CONSULTANT'S REPORT
D-1
APPENDIX E
FORM OF BOND COUNSEL OPINION
[Closing Date]
City of Santa Clarita Redevelopment Agency
23920 Valencia Boulevard
Santa Clarita, California 91355
-Opinion of Bond Counsel
with reference to
City of Santa Clarita Redevelopment Agency
Housing Set -Aside Tax Allocation Bonds, Series 2008
Ladies and Gentlemen:
In our role as Bond Counsel to the City of Santa Clarita Redevelopment Agency (the "Agency"),
we have examined certified copies of the proceedings taken in connection with the issuance by the
Agency of its $ aggregate principal amount of its Housing Set -Aside Tax
Allocation Bonds, Series 2008 (the "Bonds"). We have also examined supplemental documents furnished
to us and have obtained such certificates and documents from public officials as we have deemed
necessary for the purposes of this opinion. The Bonds are issued under the Community Redevelopment
Law (Part 1 of Division 24 of the Health and Safety Code of the State of California), as in existence on
the Closing Date (the "Redevelopment Law"), and pursuant to an Indenture, dated as of June 1, 2008 (the
"Indenture"), by and between the Agency and The Bank of New York Trust Company, N.A., as trustee
(the "Trustee"). The Bonds are being issued to finance a portion of the cost of redevelopment activities
within the Project Area. Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Indenture.
The Bonds are issued as fully registered bonds in the denomination of $5,000 or any integral
multiple thereof. The Bonds are dated, and bear interest from, the Closing Date. Interest on the Bonds is
payable semiannually on March 1 and September 1 of each year, commencing September 1, 2008.
The Bonds are subject to redemption prior to maturity as provided in the Indenture.
Based upon the foregoing, we are of the opinion that:
1. The Indenture has been duly and validly authorized, executed and delivered by the
Agency and, assuming such Indenture constitutes the legally valid and binding obligation of the Trustee,
constitutes the legally valid and binding obligation of the Agency, enforceable against the Agency in
accordance with its terms, and the Bonds are entitled to the benefits of the Indenture.
E-1
2. The proceedings for the issuance of the Bonds have been taken in accordance with the
laws and Constitution of the State of California, and the Bonds, having been issued in duly authorized
form and executed by the proper officials and delivered to and paid for by the purchasers, constitute legal
and binding special obligations of the.Agency enforceable in accordance with their terms.
3. The Bonds are secured by a first pledge of the Housing Set -Aside Revenues and all
moneys in the funds and accounts so specified and provided for in the Indenture.
4. The Internal Revenue Code of 1986 (the "Code"), imposes certain requirements that must
be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain
excluded from the gross income of the owners thereof for federal income tax purposes. Noncompliance
with such requirements could cause the interest on the Bonds to be included in gross income retroactive to
the date of issue of the Bonds. The Agency has covenanted in the Indenture to maintain the exclusion of
interest on the Bonds from the gross income of the owners thereof for federal income tax purposes.
In our opinion, under existing law, interest on the Bonds is exempt from personal income taxes of
the State of California and, assuming compliance with the aforementioned covenant, interest on the Bonds
is excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal
income tax purposes.
We are of the further opinions that under existing statutes, regulations, rulings and court
decisions, the Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of
the Code and, therefore, that interest on the Bonds will not be treated as an item of tax preference for
purposes of computing the alternative minimum tax imposed by section 55 of the Code. The receipt or
accrual of interest on Bonds owned by a corporation may affect the computation of the alternative
minimum taxable income, upon which the alternative minimum tax is imposed, to the extent that such
interest is taken into account in determining the adjusted current earnings of that corporation (75 percent
of the excess, if any, of such adjusted current earnings over the alternative minimum taxable income
being an adjustment to alternative minimum taxable income (determined without regard to such
adjustment or to the alternative tax net operating loss deduction)).
Except as stated in the preceding three paragraphs, we express no opinion as to any federal or
state tax consequences of the ownership or disposition of the Bonds. Furthermore, we express no opinion
as to any federal, state or local tax law consequences with respect to the Bonds, or the interest thereon, if
any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the
advice or approval of other bond counsel.
The opinions expressed in paragraphs (1) and (2) above are qualified to the extent the
enforceability of the Indenture and the Bonds 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
Indenture and the Bonds 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
E-2
opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any
changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a
guarantee of result and are not binding on the Internal Revenue Service; rather, such opinions represent
our legal judgment based upon our review of existing law that we deem relevant to such opinions and in
reliance upon the representations and covenants referenced above.
Very truly yours,
E-3
APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement") is made and entered into as
of June 1, 2008, by and between the City of Santa Clarita Redevelopment Agency (the "Agency") and
The Bank of New York Trust Company, N.A., as Dissemination Agent (the "Dissemination Agent"), in
connection with the issuance by the Agency of its $ Housing Set -Aside Tax Allocation
Bonds, Series 2008 (the "Housing Bonds"). The Housing Bonds are being issued pursuant to an
Indenture, dated as of June 1, 2008 (the "Indenture"), by and between the Issuer and The Bank of New
York Trust Company, N.A., as trustee (the "Trustee"). The Agency and the Dissemination Agent
covenant and agree as follows:
SECTION 1.Pur12ose of the Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Agency and the Dissemination Agent for the benefit of the Holders and Beneficial
Owners of the Housing Bonds and in order to assist the Participating Underwriters in complying with the
Rule (as defined below).
SECTION 2.Definitions. In addition to the definitions set forth in the Indenture, which apply to
any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
O
"Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Housing Bonds (including persons holding
Housing Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of
any Housing Bonds for federal income tax purposes.
"Disclosure Representative" shall mean the Treasurer of the Agency or his or her designee, or
such other officer or employee as the Agency shall designate in writing to the Dissemination Agent from
time to time.
"Dissemination Agent" shall mean The Bank of New York Trust Company, N.A., acting in its
capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing
by the Agency and which has filed with the Agency a written acceptance of such designation.
"Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. The National Repositories currently approved by the Securities and
Exchange Commission are set forth on the SEC website located at www.sec.gov/consumer/nnnsir.httn.
"Official Statement" shall mean the Official Statement relating to the Housing Bonds, dated
72008.
"Participating Underwriters" shall mean any or all of the original underwriters of the Housing
Bonds required to comply with the Rule in connection with offering of the Housing Bonds.
"Repository" shall mean each National Repository and each State Repository.
F-1
"Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean the State of California.
"State Repository" shall mean any public or private repository or entity designated by the State as
a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange
Commission. As of the date of this Disclosure Agreement, there is no State Repository.
"Trustee" means The Bank of New York Trust Company, N.A., as Trustee with respect to the
Housing Bonds, and any successor thereto.
SECTION 3.Provision of Annual Reports.
(a)The Agency shall cause the Dissemination Agent, not later than 240 days after the end of the
Agency's fiscal year (currently ending June 30), commencing with the report for the fiscal year ending
June 30, 2008, to provide to each Repository an Annual Report which is consistent with the requirements
of Section 4 of this Disclosure Agreement,_ The Annual Report may be submitted as a single document or
as separate documents comprising a package, and may include by reference other information as provided
in Section 4 of this Disclosure Agreement; provided that the audited financial statements of,the Agency
may be submitted separately from the balance of the Annual Report and later than the date required above
for the filing of the Annual Report if they are not available by that date. If the Agency's fiscal year
changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).
(b)Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for
providing the Annual Report to Repositories, the Agency shall provide the Annual Report to the
Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the
Trustee has not received a copy of the Annual Report, the Trustee shall contact the Agency and the
Dissemination Agent to determine if the Agency is in compliance with the first sentence of this subsection
(b). The Agency shall provide a written certification with each Annual Report furnished to the
Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the Annual Report
required to be furnished by it hereunder. The Dissemination Agent and Trustee may conclusively rely
upon such certification of the Agency and shall have no duty or obligation to review such Annual Report.
(c)If the Trustee is unable to verify that an Annual Report has been provided to Repositories by
the date required in subsection (a), the Trustee shall send a notice to each Repository or to the Municipal
Securities Rulemaking Board and the State Repository, if any, in, substantially the form attached as
Exhibit A.
(d)The Dissemination Agent shall:
(i)determine each year prior, to the date for providing the Annual Report the name and
address of each National Repository and the State Repository, if any; and.
(ii)if the Dissemination Agent is other than the Agency, file a report with the Agency
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the
date it was provided and listing all the Repositories to which it was provided.
F-2
(e)Any filing under this Disclosure Agreement may be made solely by transmitting such filing to
the Texas Municipal Advisory Council (the "MAC") as provided at http://www.diselosureusa.org unless
the United States Securities and Exchange Commission has withdrawn the interpretative release to the
MAC dated September 7, 2004.
SECTION 5.Content of Annual Report. The Agency's Annual Report shall contain or
incorporate by reference the following:
(a)Financial information including the general purpose financial statements of the
Agency for the preceding Fiscal Year, prepared in conformity with generally accepted accounting
principles as prescribed by the Governmental Accounting Standards Board and the American Institute of
Certified Public Accountants. If audited financial information is not available by the time the Annual
Report is required to be filed pursuant to Section 4(a) hereof, the financial information included in the
Annual Report may be unaudited, and the Agency will provide audited financial information to each
Repository as soon as practical after it has.been made available to the Agency.
(b)An update for the last fiscal year of the financial information in "Table 3 — Net
Assessed Valuation for Land Use Category Summary," "Table 4 — Ten Largest Property Taxpayers,"
"Table 5 — Historical Tax Increment Receipts" and an update on "THE REDEVELOPMENT PROJECT
AREA- Assessment Appeals" (to the extent based on actual appeal information and not estimates) located
in the Official Statement.
(c)Any or all of the items listed above may be incorporated by reference from other
documents, including official statements of debt issues of the Agency or related public entities, which
have been submitted to each of the Repositories or to the Securities and Exchange Commission. If the
document incorporated by reference is a final official statement, it must be available from the MSRB.
The Agency shall clearly identify each other document so incorporated by reference.
SECTION 5.Reporting of Significant Events.
(a)Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, in a
timely manner, to the MSRB, the State Repository, if any, and each Participating Underwriter, notice of
the occurrence of any of the following events with respect to the Housing Bonds, if material:
1. principal and interest payment delinquencies.
2. non-payment related defaults.
3. modifications to rights of Bondholders.
4. optional, contingent or unscheduled calls.
5. defeasances. i
6. rating changes.
7. adverse tax opinions or events affecting the tax-exempt status of the Housing Bonds.
unscheduled draws on the debt service reserves reflecting financial difficulties.
unscheduled draws on the credit enhancements reflecting financial difficulties.
F-3
10. substitution of the creditor liquidity providers or their failure to perform.
11. release, substitution or sale of property securing repayment of the Housing Bonds.
(b)The Trustee shall, within one (1) Business Day of obtaining actual knowledge of the
occurrence of any of the Listed Events, contact the Agency, inform the Agency of the Listed Event and
request that the Agency promptly notify the Dissemination Agent in writing whether or not to report such
Listed Event pursuant to Subsection(e) of this Section. For the purposes of this Disclosure Agreement
"actual knowledge" means actual knowledge at the corporate trust office of the Trustee by an officer of
the Trustee with responsibility for matters related to the administration of the Indenture.
(c)The Trustee shall, within one (1) Business Day of obtaining actual knowledge, of the
occurrence of any of the Listed Events, or as soon as reasonably practicable thereafter, contact the
Disclosure Representative, inform such person of the event, and request that the Agency promptly notify
the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f) and
promptly direct the Trustee whether or not to report such event to the, Bondholders. In the absence of
such direction the Trustee shall not report such event unless otherwise required to be reported by the
Trustee to the Bondholders under the Indenture. The Trustee may conclusively rely upon such direction
(or lack thereof). For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of
such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Trustee
with regular responsibility for the administration of matters related to the Indenture. The Trustee shall
have no responsibility to determine the materiality of any of the Listed Events
(d)Whenever the Agency obtains knowledge of the occurrence of a Listed Event, whether
because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Agency
shall as soon as possible determine if such event would be material under applicable federal securities
laws.
(d)If the Agency has determined that knowledge of the occurrence of a Listed Event would be
material under applicable federal securities laws, the Agency shall promptly notify the Dissemination
Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to
subsection (f).
(e)If in response to a request under subsection (b), the Agency determines that the Listed Event
would not be material under applicable federal securities laws, the Agency shall so notify the
Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence
pursuant to subsection (f).
(f)If the Dissemination Agent has been instructed by the Agency to report the occurrence of a
Listed Event, the Dissemination Agent shall promptly file a notice of such occurrence with the
Repositories. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and
(5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is
given to Holders of affected Housing Bonds pursuant to the Indenture.
SECTION 6.Termination of Reporting Obligation. The Agency's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Housing Bonds. If such termination occurs prior to the final maturity of the Housing Bonds, the
Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 7.Dissemination Agent. The Agency hereby appoints The Bank of New York Trust
Company, N.A. as the initial Dissemination Agent and may, from time to time, discharge, appoint or
F-4
engage any other Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination
Agent. The Dissemination Agent agrees to perform only those duties of the Dissemination Agent
specifically set forth in the Agreement, and no implied duties, covenants or obligations shall be read into
this Agreement against the Dissemination Agent. The Dissemination Agent shall not be responsible in
any manner for the form or content of any notice or report prepared by the Agency pursuant to this
Disclosure Agreement. The Dissemination Agent shall have no duty to prepare any information report
nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Agency in
a timely manner and in a form suitable for filing. The Dissemination Agent may resign by providing
thirty days written notice to the Agency and the Trustee.
SECTION 8.Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Agency may amend this Disclosure Agreement, (and the Trustee and Dissemination
Agent shall agree to any amendment so requested by the Agency), provided, neither the Trustee nor the
Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases its
duties or obligations hereunder and any provision of this Disclosure Agreement may be waived, provided
that the following conditions are satisfied:
(a)If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it may only be
made in connection with a change in circumstances that arises from a change in legal requirements,
change in law, or change in the identity, nature or status of an obligated person with respect to the
Housing Bonds, or the type of business conducted;
(b)The undertaking, as amended or taking into account such waiver, would, in the opinion of,
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
original issuance of the Housing Bonds, after taking into account any amendments or interpretations of
the Rule, as well as any change in circumstances; and
(c)The amendment or waiver either (i) is approved by the Beneficial Owners in the same manner
as provided in the Indenture for amendments to the Indenture with the consent of Beneficial Owners, or
(ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially impair the
interests of the Beneficial Owners.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a
narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case
of a change of accounting principles, on the presentation) of financial information or operating data being
presented by the Agency. In addition, if the amendment relates to the accounting principles to be
followed in preparing financial statements, (i) notice of such change shall be given in the same manner as
for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made
shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
SECTION 9.Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Agency from disseminating any other information, using the means of dissemination set forth
in this Disclosure Agreement or any other means of communication, or including any other information in
any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Agreement. If the Agency chooses to include any information in any Annual Report or notice
of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure
F-5
Agreement, the Agency shall have no obligation under this Disclosure Agreement to update such
information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the Agency or the Trustee to comply with any
provision of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any
Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding
Housing Bonds, shall but only to the extent funds in an amount satisfactory to the Trustee have been
provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or
additional charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of
its attorneys), or any Beneficial Owner of the Housing Bonds may take such actions as may be necessary
and appropriate, including seeking mandate or specific performance by court order, to cause the Agency
or Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure
Agreement. A default under this Disclosure Agreement by the Agency or the Dissemination Agent shall
not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure
Agreement in the event of any failure of the Agency or the Trustee to comply with this Disclosure
Agreement shall be an action to compel performance. No Bondholder or Beneficial Owner may institute
such action, suit or proceeding to compel performance unless they shall have first delivered to the Agency
satisfactory written evidence of their status as such, and a written notice of and request to cure such
failure, and the Agency shall have refused to comply therewith within a reasonable time.
SECTION I I.Duties, Immunities'and Liabilities of the Trustee and Dissemination Agent. Article
VI of the Indenture pertaining to the Trustee is hereby made applicable to this Disclosure Agreement as if
this Disclosure Agreement were (solely for this purpose) contained in the Indenture and the Trustee and
Dissemination Agent shall be entitled to the protections, limitations from liability and indemnities
afforded the Trustee thereunder. The Dissemination Agent shall have only such duties as are specifically
set forth in this Disclosure Agreement, and the Agency agrees to indemnify and save the Dissemination
Agent,. and the Trustee and their officers, directors, employees and agents, harmless against any loss,
expense and liabilities which it may incur 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 Dissemination Agent's or the Trustee's respective
negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Agency
for its services provided hereunder in accordance with its schedule of fees as amended from time to time
and all expenses, legal fees and advances made or incurred by the Dissemination Agent in, the
performance of its duties hereunder. The Dissemination Agent and the Trustee shall have no duty or
obligation to review any information provided to them hereunder and shall not be deemed to be, acting in
any fiduciary capacity for the Agency, the Bondholders, or any other party. Neither the Trustee or the
y,
Dissemination Agent shall have any liability to the Bondholders or any other partffor any monetary
damages or financial liability of any kind whatsoever related to or arising from this Agreement. Any
company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall
be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any
further act. The obligations of the Agency under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Housing Bonds.
SECTION 12.Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Agency, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners
from time to time of the Housing Bonds, and shall create no rights in any other person or entity.
SECTION 13.Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
F-6
To the Agency: City of Santa Clarita Redevelopment Agency
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Darren P. Herndndez, Treasurer
To the Dissemination Agent: The Bank of New York Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: Corporate Trust Department
Any person may, by written notice to the other persons listed above, designate a different address
or telephone number(s) to which subsequent notices or communications should be sent.
IN WITNESS WHEREOF, the parties hereto have caused ihis Continuing Disclosure Agreement
to be duly executed and delivered by their respective officers as of the date first above written.
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
Darren P. Herndndez, Director of Administrative
Services
THE BANK OF NEW YORK TRUST
COMPANY, N.A.
Authorized Officer
F-7
EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Santa Clarita Redevelopment Agency
Name of Obligated Person: City of Santa Clarita Redevelopment Agency
Name of Issue: $ City of Santa Clarita Redevelopment Agency, Housing
Set -Aside Tax Allocation Bonds, Series 2008
Date of Issuance: June _, 2008
NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect to the
above-named Housing Bonds as required by the Continuing Disclosure Agreement executed by the
Agency on the date of issuance of the Housing Bonds. [The Agency anticipates that the Annual Report
will be filed by I
Dated:
C
F-8
THE BANK OF NEW YORK TRUST
COMPANY, N.A., on behalf of the City of Santa
Clarita Redevelopment Agency
LIN
0
EXHIBIT B
NAME AND CUSIP NUMBERS OF HOUSING BONDS
Name of Issuer: City of Santa Clarita Redevelopment Agency
Name of Obligated Person: City of Santa Clarita Redevelopment Agency
Name of Issue:
$ City of Santa Clarita Redevelopment Agency, Housing
Set -Aside Tax Allocation Bonds, Series 2008
Date of Issuance:
June 2008
Date of Official Statement:
'2008
CUSIP Number -
CUSIP Number
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number.
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number -
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number
CUSIP Number.
CUSIP Number:
F-9
APPENDIX G
BOOK -ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the
accuracy or completeness thereof. The Agency cannot and does 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) Bonds representing ownership interest in or
other confirmation or ownership interest in the Bonds, or (c) prepayment 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 Official
Statement. 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.
General
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 Bond will be issued for each maturity of the Bonds, in the aggregate principal
amount of such maturity, and will be deposited with DTC.
DTC, the world's largest 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 2.2 million
issues of U.S. and non -U.S. equity, 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, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income
Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also
subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange
LLC, and the National Association of Securities Dealers, Inc. 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 Standard & Poor's highest rating: AAA.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Conumssion.
More information about DTC can be found at www.dtcc com and www.dtcM. The information found
on such websites is not incorporated herein by reference.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
G-1
purchase. Beneficial Owners are, however, expected,to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the Agency (or the Trustee on behalf thereof) as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to
credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information
from the Agency or 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 nor its
nominee, Trustee, or the Agency, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal, premium, if any, and interest payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the responsibility of the
Agency or Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct
and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to
transfer the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for
physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records
and followed by a book -entry credit of tendered Bonds to the Trustee's DTC account.
G-2
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Agency or Trustee. Under such circumstances, in the event that a
successor depository is not obtained, Bonds are required to be printed and delivered.
The Agency may decide to discoriiinud uge of the system of book -entry transfers through DTC (or
a successor securities depository). Discontinuance of use of the system of book -entry transfers through
DTC may require the approval of DTC participants under DTC's operational arrangements. In that event,
Bonds will be printed and delivered.
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the
accuracy thereof.
Discontinuation of Book -Entry Only System; Payment to Beneficial Owners
In the event that the book -entry system described above is no longer used with respect to the
Bonds, the following provisions will govern the payment, transfer and exchange of the Bonds.
The principal of the Bonds and any premium and interest upon the redemption thereof prior to the
maturity will be payable in lawful money of the United States of America upon presentation and
surrender of the Bonds at the office of the Trustee. Interest on the Bonds will be paid by the Trustee by
check of the Trustee mailed by first class mail on the Interest Payment Date to the Owner at the address of
such Owner as its appears on the Registration Books; provided however, that payment of interest will be
made by wire transfer in immediately available funds to an account in the United States of America to any
Owner of Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish written wire
instructions to'the Trustee before the applicable Record Date.
Any Bond may be exchanged for Bonds of any authorized denomination upon presentation and
surrender at the office of the Trustee, together with a request for exchange signed by the registered owner
or by a person legally empowered to do so in a form satisfactory to the Trustee. A Bond may be
transferred only on the Bond registration books upon presentation and surrender of the Bond at such
office of the Trustee together with an assignment executed by the registered owner or by a person legally
empowered to do so in a form satisfactory to the Trustee. Upon exchange 'or transfer, the Trustee shall
complete, authenticate and deliver a new Bond or Bonds of any authorized denomination or
denominations requested by the owner equal in the aggregate to the unmatured principal amount of the
Bond surrendered and bearing interest at the same rate and maturing on the same date.
Neither the Agency nor the Trustee will be required to exchange or transfer any Bond during the
period established by the Trustee for the selection of Bonds for redemption or the portion of any Bond
which the Trustee has selected for redemption.
G-3
APPENDIX H
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
H-1
e,
PRELIMNARY OFFICIAL STATEMENT DATED MAY 2008
NEW ISSUE — BOOK ENTRY ONLY
5/2/08
RATINGS: S&P: "
Moody's:
Insured)
Underlying Rating S&P" 11
See "Ratings" herein
In the opinion of Fulbright & Jaworski L L P, Los Angeles, California, Bond Counsel, under existing law, the interest on the Bonds is exempt from
personal income taxes of the State of California and, assuming compliance with the tax covenants described herein, interest on the Bonds is excluded pursuant to
section 103(a) of the Internal Revenue Code of 1986, as amended, from the gross income of the owners thereof for federal income tax purposes and is not an item
of preference for purposes of the federal alternative minimum tax See "TAX MATTERS" herein
Dated Date of Delivery
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
TAX ALLOCATION BONDS, SERIES 2008
(Newhall Redevelopment Project Area)
Due As shown on the inside front cover
The City of Santa Clanta Redevelopment Agency (the "Agency") will issue its Tax Allocation Bonds, Senes 2008 (Newhall
Redevelopment Project Area) (the "Bonds") pursuant to an Indenture, dated as of June 1, 2008 (the "Indenture"), by and between the Agency
and The Bank of New York Trust Company, N A , as trustee for the Bonds (the "Trustee") The Bonds are payable from and secured by Tax
Revenues (as hereinafter defined) from the Agency's Newhall Redevelopment Project Area (the "Project Area") and funds and accounts held
under the Indenture
Proceeds of the Bonds will be used to (i) fund redevelopment activities within the Project Area, (n) fund a reserve fund, and (iii) pay
costs incurred in connection with the issuance, sale, and delivery of the Bonds, including the premium of a financial guaranty insurance policy
The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co , as nominee of The
Depository Trust Company, New York, New York ("DTC") which will act as securities depository of the Bonds. Individual purchases of the
Bonds may be made in book -entry form only, in multiples of $5,000 Pnncipal of and interest on the Bonds will be paid directly to DTC by the
Trustee Principal of the Bonds is payable on the dates set forth on the inside cover page hereof Interest on the Bonds is payable on March 1
and September 1 of each year, commencing September 1, 2008 (the "Interest Payment Dates").
The Bonds are subject to optional and mandatory redemption as described herein.
Subject to certain conditions, additional obligations on a parity basis with the Bonds may be incurred in the
future by the Agency.
Payment of the pnncipal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy to be issued
by to be issued simultaneously with the delivery of the Bonds.
[INSERT INSURER LOGO]
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY AND AS SUCH ARE NOT A DEBT OF THE CITY OF
SANTA CLARITA (THE "CITY"), THE STATE OF CALIFORNIA (THE "STATE"), OR ANY OF THEIR POLITICAL SUBDIVISIONS
(OTHER THAN THE AGENCY), AND NEITHER THE CITY, THE STATE, NOR ANY OF THEIR POLITICAL SUBDIVISIONS
(OTHER THAN THE AGENCY) IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AGENCY AS SET FORTH IN THE INDENTURE NEITHER THE
MEMBERS OF THE AGENCY NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY FOR THE BONDS. THE
AGENCY HAS NO TAXING POWER THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS IN CONTRAVENTION OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION
This cover page contains information for quick reference only. It is not a summary of this issue. Potential purchasers must read
the entire Official Statement to obtain information essential to making an informed investment decision.
The Bonds were awarded to (the "Purchaser") on June , 2008 pursuant to the terms of a competitive bid The Bonds are
offered when, as and if issued, subject to the approval as to their legality by Fulbright & Jaworski L L P , Los Angeles, California, Bond Counsel Certain legal
matters will be passed on for the Agency by Fulbright & Jaworski L L P , Los Angeles, Califomia, as Disclosure Counsel, and for the Agency by Burke,
Williams & Sorensen, L L P, Los Angeles, California, as Agency Counsel It is anticipated that the Bonds will be available for delivery in book -entry form
through the facilities of DTC on or about June _ 2008
Dated June—, 2008
Preliminary, subject to change
Maturity Date
(September 1)
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
MATURITY SCHEDULE FOR THE BONDS
$ Serial Bonds
(Base CUSIP:" )
Principal Interest
Amount Rate Yield Price
$ Term Bonds
$ % Term Bonds due September 1, 20_ — Price: to
CUSIP No:
% CUSIP*.
CUSIP data, copyright 2008, American Bankers Association. CUSIP data herein are provided for convenience of
reference only. Neither the Agency nor the Underwriter assume any responsibility for the accuracy of such data.
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
SANTA CLARITA, CALIFORNIA
AGENCY MEMBERS AND CITY COUNCIL
Marsha A. McLean, Agency Chairperson/Mayor
Robert C. Kellar, Agency Vice Chairperson/Mayor Pro Tempore
Frank C. Ferry, Agency Member/Councilmember
Laurene F. Weste, Agency Member/Councilmember
Timothy B. Boydston, Agency Member/Councilmember
AGENCY STAFF AND CITY STAFF
Kenneth R. Pulskamp, Executive Director/City Manager
Kenneth W. Striplin, Ed.D., Assistant City Manager
Darren P. Hernandez, Treasurer/Deputy City Manager & Director of Administrative Services
Paul D. Brotzman, Director of Community Development
, Redevelopment Manager
Carl K. Newton, Agency Counsel/City Attorney
Sharon L. Dawson, Secretary/City Clerk/
SPECIAL SERVICES
Bond and Disclosure Counsel
Fulbright & Jaworski L.L.P.
Los Angeles, California
Trustee
The Bank of New York Trust Company, N.A.
Los Angeles, California
Financial Advisor to the Agency
C.M. de Crinis & Co., Inc.
Sherman Oaks, California
Fiscal Consultant
HdL Coren & Cone
Diamond Bar, California
No dealer, broker, salesperson or other person has been authorized by the City of Santa Clarita Redevelopment Agency
(the "Agency") or the City of Santa Clanta (the "City") to give any information or to make any representations other than those
contained herein and, if given or made, such other information or representations 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 any Bonds by any person in any jurisdiction in which such offer of solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to whom 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. Statements contained in
this Official Statement which involve estimates, forecasts or matter of opinion, whether or not expressly so described herein, are
intended solely as such and are not to be construed as a representation of fact.
Cautionary Information Regarding Forward -Looking Statements in this Official Statement
Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking
statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United
States Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such
statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget," or other sumlar
words and include, but are not limited to, statements under the caption "THE REDEVELOPMENT PROJECT AREA - Projected
Taxable Valuation and Tax Revenues, Debt Service Coverage."
The achievement of certain results or other expectations contained in such forward-looking statements involves known
and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements While the Agency has agreed to provide certain on going financial and operating data for a limited period of time
(see "INTRODUCTION - Continuing Disclosure"), the Agency does not plan to issue any updates or revisions to those forward-
looking statements if or when its expectations or events, conditions or circumstances on which such statements are based change.
The information set forth herein has been obtained from the City, the Agency and other sources that are believed to be
reliable, but it is not guaranteed as to its accuracy or completeness. 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 Agency or the City since the date hereof
All summaries of the resolutions, the Indenture, laws and statutes or other documents 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 Underwriter has
reviewed the information in this Official Statement in accordance with its responsibilities to investors under the federal securities
laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or
completeness of such information.
This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be
reproduced or used, in whole or in part, for any other purpose.
The Bonds have not been registered under the Securities Act of 1933, as amended, nor has the Indenture been qualified
under the Trust Indenture Act of 1939, as amended, in reliance upon an exception from the registration requirements contained in
such acts. The Bonds have not been registered or qualified under the securities laws of any state.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE UNDERWRITER MAY OFFER AND SELL BONDS TO CERTAIN DEALERS AND OTHERS AT A PRICE
LOWER THAN THE OFFERING PRICE. THE OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE
ORIGINAL UNDERWRITER.
TABLE OF CONTENTS
Pages
INTRODUCTION .. ... . .... . . .....
. ....... .. . I
TheBonds .... .. ......... ....... ... ...............
.. . . . . .... I
City and the Agency ...... .. . .. .. . ..............
.. .. ... I
The Redevelopment Plan . . . . .. .. .. .....
................ 2
Financial Statements.
.20
Tax Allocation Financing .... .......... ................
........ 2
Security for the Bonds .... ...................... .
.. .......... .. 2
Professionals Involved in the Offering ...........
. .. .3
Summaries of Documents .... ....................
.. .. . .. .. .. . 3
Continuing Disclosure .. ......... ............... .
..... .. .. .. .. 3
THE FINANCING PLAN. .. .. .. . ... ......... ... .. 4
Use of Bond Proceeds ... .... . .4
Plan of Financing. . . . .. .. .. . . .. . ..... ........ 4
Sources and Uses of Funds .. . . . . . ... ..... .. ... 5
Annual Debt Service ... . .......... . .... .............6
THE BONDS .. .. ........ ..... .. . .. 7
Authority for Issuance ... .. ..
Description of the Bonds . . .. . ... ........ . . ..7
Redemption 7
Redemption Provisions . . .. .. .. ..... .... . .. .. . 8
Registration, Transfer and Exchange .... . .. .. ............ 9
Book -Entry Only System .. .... . .. . .... .. ...... . .... ....... 9
SECURITY FOR THE BONDS ....... . . ... .. .. .. .. .. . . .. .. 9
Tax Allocation Financing .. .. .. .. .. 9
Allocation of Taxes . ..... ..... 10
Limited Liability.. . . . .. .......... .. .. .. .. .. . I I
Application of Tax Revenues.. 12
Reserve Account... . . ... . .. .... .. .... . . . . ... ......12
Issuance of Additional Bonds . . ... . . .. .. .......... .. 12
Issuance of Subordinate Debt ..... ...... .. .. . . . ...... ... 13
THE INSURER AND THE FINANCIAL
GUARANTY INSURANCE POLICY ............. .. .... 13
THE CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY ............. .14
Agency Members 14
Agency Administration .... . . . . . . . . ... 14
Agency Powers ... .. .... . ............. .
15
Factors Affecting Redevelopment Agencies
Generally... .. .. .. .. .. . ......... .. 15
Filing of Statement of Indebtedness..... .. . . . . . . . 16
Financial Statements ..................... . .... . .. . . . . . 16
Regulatory Issues 16
MAP............... ......... ........... .17
THE REDEVELOPMENT PROJECT AREA...........
18
Redevelopment Plan....
.18
Bond and Tax Increment Limitations
18
Housing Set -Aside Requirements
.20
Tax Sharing Statutes
.20
Historical Assessed Valuations .
Concentration of Ownership
Tax Rates .......................... .... ..
..... .. .. .. . 22
Pages
Major Taxpayers . .. . . . . .......... . .. . .... . 23
Historical Tax Increment Receipts. ..... ...... . ... . 24
Assessment Appeals . ... . . ... . .... . .... ...... . 25
Financial Information . . . . . . . ..... .. ............ 26
Projected Taxable Valuation and Tax Revenues,
Debt Service Coverage . ......................... 26
Agency Activity .. .. ........ ...... ..30
BONDOWNERS'RISKS .......... ... .... .. ... .. .... 30
Bonds Are Limited Obligations and Not General
Property Tax Limitations - Article XIIIA.
Obligations .. ..... .. ............
...30
Reduction in Taxable Value, Plan Limitations.
.30
Reduction in Inflationary Rate and Changes in
Proposition 87 . ... .. . ................. ...... ... ... .. ....
Legislation, Further Initiatives ...
...31
Concentration of Ownership
31
County of Orange vs. Orange County Assessment
Unitary Taxation of Utility Property. .
Appeals Board
31
Levy and Collection
32
State Budget Deficit
32
Additional Financing .. ....... . ...
...33
Loss of Tax Exemption
34
Seismic Risk and Flood Risk ...... .. . ... . . ........
34
Property Tax Appeals .. ... ... . .. ....34
Plan Limitations .. . ... ..... ..
Hazardous Substances
35
Enforceability of Remedies.. ..... . .
35
Investment of Funds ....... .. ..
35
Assumptions and Projections ... .......
..35
Secondary Market........ .. .. .. .. . ............. .. ..
. 35
LIMITATIONS ON TAX REVENUES . .........
36
Property Tax Limitations - Article XIIIA.
36
Challenges to Article XIIIA...
36
Implementing Legislation
37
Proposition 87 . ... .. . ................. ...... ... ... .. ....
. 37
Property Tax Collection Procedures . ..... .
.37
Tax Collection Fees . .......... . .. . ... . . . ........
.. 39
Unitary Taxation of Utility Property. .
.....39
Housing Set -Aside
.....39
Appropriations Limitations, Article XIIIB of the
California Constitution .... .. .. . .. . ....
40
Tax Allocation Procedures of the County of Los
Angeles
41
Certification of Agency Indebtedness
41
Plan Limitations .. . ... ..... ..
...42
CONCLUDING INFORMATION....
42
Tax Matters
42
Financial Advisor .. . ... .. .. . ..... ....
....,44
Fiscal Consultant ................. . .. .
. ........ ..... 44
Ratings.. ...... . . .... ........ . . ..
. .. .. ........ 44
Underwriting .. .. .. .. .. ........... ....
. 45
No Litigation.
..45
Legal Matters .... . . . ................
. .... . ........... . 45
Miscellaneous . .. .......
45
TABLE OF CONTENTS
Paces Pates
4
APPENDIX A SUMMARY OF CERTAIN
ii
0
PROVISIONS OF THE
INDENTURE......................
A-1
APPENDIX B
AUDITED FINANCIAL
STATEMENTS OF THE CITY
OF SANTA CLARITA
REDEVELOPMENT AGENCY
FOR THE FISCAL YEAR
ENDED JUNE 30, 2007.........
B-1
APPENDIX C
GENERAL INFORMATION
RELATING TO THE CITY OF
SANTA CLARITA . .. .....
C-1
APPENDIX D
FISCAL CONSULTANT'S
REPORT ............................
D -I
APPENDIX E
FORM OF BOND COUNSEL
OPINION ... .. .....................E-1
APPENDIX F
FORM OF CONTINUING
DISCLOSURE AGREEMENT
F-1
APPENDIX G
BOOK -ENTRY ONLY SYSTEM ..
G-1
APPENDIX H
FORM OF financial guaranty
INSURANCE POLICY .........
H-1
ii
0
CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
TAX ALLOCATION BONDS, SERIES 2008
(Newhall Redevelopment Project Area)
INTRODUCTION
This Introduction does not purport to be complete, and reference is made to the body of this
Official Statement,'appendices and the documents referred to herein for more complete information with
respect to the matters concerning the Bonds. Potential investors are encouraged to read the entire
Official Statement. Capitalized terms used and not defined in this Introduction shall have the meanings
assigned to them elsewhere in this Official Statement.
The Bonds
This Official Statement, including the cover page and appendices, is provided to furnish
information in connection with the sale by the City of Santa Clarita Redevelopment Agency (the
"Agency") of $ ' aggregate principal amount of its Tax Allocation Bonds, Series 2008
(Newhall Redevelopment Project Area) (the "Bonds").
The Bonds are being issued pursuant to the Constitution and the laws of the State of California
(the "State"), including the California Community Redevelopment Law (codified in Part 1 of Division 24
of the California Health and Safety Code) (the "Redevelopment Law"), a resolution of the Agency
adopted on May , 2008, and an Indenture, dated as of June 1, 2008 (the "Indenture"), by and between
the Agency and The Bank of New York Trust Company, N.A., as the trustee (the "Trustee").
The Agency is the redevelopment agency of the City of Santa Clarita, California (the "City") and
functions as, and has the power and jurisdiction of, the redevelopment agency of the City. The Agency
will use the proceeds of the sale of the Bonds to (i) fund certain redevelopment projects within the
Newhall Redevelopment Project Area (the "Project Area"), (ii) fund a reserve fund, and (iii) pay costs of
issuance of the Bonds, including the premium of a financial guaranty insurance policy.
The Bonds are special obligations of the Agency payable exclusively from the Tax Revenues (as
hereinafter defined), amounts held in the Special Fund created pursuant to the Indenture and certain
amounts held in the Debt Service Fund. Subject to certain conditions, additional obligations on a parity
basis with the Bonds may be incurred in the future by the Agency. Concurrent with the issuance of the
Bonds, the Agency will issue its Housing Set -Aside Tax Allocation Bonds, Series 2008, secured by
certain tax increment revenues constituting housing set-aside revenues that are not a part of the Tax
Revenues. See "THE FINANCING PLAN" herein.
City and the Agency
The City is a general law city, incorporated in 1987. 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 Council appoints the City Manager who is
responsible for the day-to-day administration of City business and coordination of all departments. The
Mayor is selected by the City Council from among its members. The City provides general government
services either with its own employees or through contracts.
+ Prelirmnary, subject to change.
On November 28, 1989, pursuant to California Health'and Safety Code Section 33000 et seq ,
entitled "Community Redevelopment Law," the City activated its redevelopment agency. The Agency is
governed by a five -member board which consists of all members of the City Council of the City. See
"THE CITY OF SANTA CLARITA REDEVELOPMENT AGENCY" herein.
There exists one project area within the Agency known as the "Newhall Redevelopment Project
Area.."
The Redevelopment Plan
The Project Area is approximately 913.6 acres in size and consists of a single, very irregular area
within the City. The Project Area is located between'Interstate 5 and State Highway 14 and includes the
commercial corridors along Lyons Avenue and San Fernando Road. The Project Area is generally
bounded on the west by Interstate 5,,on the east by State Highway 14 and on the north by the intersection
of San Fernando Road and Magic Mountain Parkway. The Project Area extends approximately four
blocks to the east and west of San Fernando Road between its intersection with Lyons Avenue and its
intersection with 16th Street. It also includes a large area on the north side of San Fernando Road
between its intersections with Lyons Avenue and with Pine Street. Large areas that are beyond the
immediate San Fernando Road corridor exist southeast of the intersection with Pine Street and at the
intersection with State Highway 14. Several areas that extend beyond the immediate Lyons Avenue
corridor exist near the intersection with Valley Street and near the Lyons Avenue intersection with
Interstate 5. The City Council adopted Ordinance No. 97-12 on July 8, 1997, which adopted the
Redevelopment Plan for the Project Area. See "APPENDIX D - FISCAL CONSULTANT'S REPORT."
Financial Statements
The Agency's audited financial statements for the fiscal year ended June 30, 2007, are included in
"APPENDIX B" and should be read in their entirety. The Agency's financial statements were audited by
the independent accounting firm of Dielh, Evans & Company, LLP (the "Auditor"). No post -audit review
was requested or performed. The Agency's audited financial statements for the year ended June 30, 2007,
and prior years are on file for public inspection with the Secretary of the Agency. Copies can also be
obtained from the City Clerk at 23920 Valencia Blvd., Santa Clarita, CA 91355.
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of tax increment revenues collected within a redevelopment project area. The taxable valuation
of a redevelopment project area last equalized prior to adoption of the redevelopment plan (the base roll)
is established and, except for any period during which the taxable valuation drops below the base year
level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate
upon the base roll. With limited exceptions, taxes collected upon any increase in taxable valuation over
the base roll are allocated to a redevelopment agency and may be pledged by a redevelopment agency to
the repayment of any indebtedness incurred in financing or refinancing a redevelopment project.
Redevelopment agencies themselves have no authority to levy property taxes and must look specifically
to the allocation of tax increment revenues described above.
Security for the Bonds
The Bonds are special obligations of the Agency payable solely from "Tax Revenues" (see
"SECURITY FOR THE BONDS - Allocation of Taxes") and other funds and accounts pledged pursuant
to the Indenture. Tax Revenues are defined generally as the taxes eligible for allocation to the Agency
pursuant to the Redevelopment Law in connection with the Project Area as provided in the
Redevelopment Plan, excluding (1) housing set-aside revenues, and (ii) amounts of taxes payable to taxing
2
agencies pursuant to Section 33607.5 of the Redevelopment Law, except to the extent that such payments
are subordinated to the Bonds. [The Agency sought and received subordination of the Tax Sharing
Statutory Payments to the Bonds.] See "THE REDEVELOPMENT PROJECT AREA — Tax Sharing
Statutes" and "LIMITATIONS ON TAX REVENUES" herein.
For additional information regarding security for the Bonds, see "SECURITY FOR THE
BONDS" herein. The Agency's receipt of Tax Revenues is subject to certain risks and limitations. See
"BONDOWNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein.
Professionals Involved in the Offering
The Bank of New York Trust Company, N.A., Los Angeles, California, will act as Trustee with
respect to the Bonds. HdL Coren & Cone, Diamond Bar, California, has acted as Fiscal Consultant to the
Agency and has prepared a report (set forth in "APPENDIX D" hereto) on projected taxable values and
anticipated tax increment revenues in the Project Area. C.M. de Crinis & Co., Inc., Sherman Oaks,
California, has served as Financial Advisor to the Agency in connection with the Bonds and has assisted
the Agency in structuring the Bonds.
All proceedings in connection with the issuance of the Bonds are subject to the approval of
Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel. Burke Williams & Sorensen,
L.L.P., currently serves as legal counsel to the Agency, and provides general legal services to the Agency
with respect to redevelopment matters. Certain legal matters will be passed on for the Agency by
Fulbright & Jaworski L.L.P., Disclosure Counsel to the Agency. The fees and expenses of Bond Counsel,
Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of the Bonds.
Summaries of Documents
This Official Statement includes descriptions of the Bonds, the Indenture, the Agency, the City,
the Project Area, the Redevelopment Law, and various agreements. The descriptions and summaries of
documents do not purport to be comprehensive or definitive, and reference is made to each document for
the complete details of all terms and conditions. All statements are qualified in their entirety by reference
to each document and, with respect to certain rights and remedies, to laws and principles of equity
relating to creditors' rights generally. Undefined capitalized terms shall have the meanings set forth in
the Indenture. Copies of the Indenture are available for inspection during business hours at the corporate
trust office of the Trustee in Los Angeles, California.
This Official Statement speaks only as of its date, as set forth on the cover, and the information
and expressions of opinion are subject to change without notice. Neither the delivery of this Official
Statement nor any sale of Bonds shall under any circumstances create any implication that there has been
no change in the affairs of the Agency or the City or the Project Area since the date set forth on the cover.
Continuing Disclosure
The Agency has covenanted for the benefit of the Owners (including beneficial owners of the
Bonds) to provide certain financial information and operating data relating to the Agency (the "Annual
Report") by not later than 240 days following the end of the Agency's fiscal year (which currently ends
June 30), commencing with the report for the 2007-08 Fiscal Year (which is due no later than March 31,
2009), and to provide notices of the occurrence of certain enumerated events, if material. The Agency has
entered into a Continuing Disclosure Agreement ("Continuing Disclosure Agreement") for the benefit of
the Bond Owners with The Bank of New York Trust Company, N.A. ("The Bank of New York') under
which the Agency has designated The Bank of New York as Dissemination Agent. The Annual Report
and any notices of material events will be filed with each Nationally Recognized Municipal Securities
Information Repository (and with the appropriate State information repository, if any) (the
"Repositories"). The specific nature of the information to be contained in the Annual Report or the
notices of material events is summarized under the caption "APPENDIX F,— FORM OF CONTINUING
DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Underwriter in
complying with S.E.C. Rule 15c2 -12(b)(5) (the "Rule").
This the Agency's first continuing disclosure obligation. Since the effective date of the
continuing disclosure requirements under the Rule, the City has filed annual reports to comply with its
disclosure requirements. However, during 2005, the report for an existing indebtedness consisting of the
City's 2003-04 audited financials was not filed in a timely manner but has since been filed. The City's
2003-04 audited financials were, however, on file with the Repositories due to the City's timely filing of
reports for its remaining undertakings. The City has taken steps to better monitor its compliance and
ensure timely filing of future annual reports and is currently in compliance with its disclosure
requirements. The City is currently in compliance with all of its undertakings.
THE FINANCING PLAN
Use of Bond Proceeds
Proceeds from the sale of the Bonds will be used to (i) fund certain redevelopment projects within
the Newhall Redevelopment Project Area (the "Project Area"), (ii) fund a debt service reserve account for
the Bonds and any parity bonds, and (iii) pay costs of issuance of the Bonds, including the premium of a
financial guaranty insurance policy.
Plan of Financing
A portion of proceeds of the Bonds will be used to assist the Agency in financing redevelopment
activities within the Project Area as well as to fund a debt service reserve account for the Bonds and any
parity bonds. The Agency intends to apply the net proceeds of the Bonds to finance certain
redevelopment activities within and of benefit to the Project Area, including, but not limited to,
[public capital improvements].
Concurrent with the issuance of the Bonds, the Agency will issue its $ Housing
Set -Aside Tax Allocation Bonds, Series 2008 (the "Housing Bonds"). These bonds will be issued under a
separate indenture and secured by a pledge of Housing Set -Aside Revenues.
V
`i
Sources and Uses of Funds
The following table shows the estimated sources and uses of the proceeds from the sale of the
Bonds and certain other moneys:
Sources And Uses Of Funds
Sources:
Par Amount
Less/Plus: Net Original Issue Discount/Premium
Less: Underwriter's Discount
Total Sources
Uses:
Redevelopment Fund
Debt Service Reserve Account
Costs of Issuance(')
Total Uses
(1) Costs of Issuance include Bond Counsel, Disclosure Counsel, Financial Advisor, Fiscal Consultant,
Trustee fees and expenses, rating agency fees and bond insurance premium, printing expenses and
other costs related to the issuance of the Bonds.
[Remainder of page intentionally left blank.]
Annual Debt Service
The following tables show the scheduled annual debt service for the Bonds.
TABLE 1
Annual Debt Service Schedule
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
Total
ArinualMebt;,A
THE BONDS
Authority for Issuance
The Bonds are issued pursuant to the Constitution and laws of the State and under authority
granted to the Agency by the Redevelopment Law constituting Part 1 of Division 24 of the California
Heath and Safety Code, as amended, a resolution of the Agency adopted on May _, 2008, and the
Indenture.
The Bonds are special obligations of the Agency and as such are not a debt of the City, the State,
or any of their political subdivisions (other than the Agency), and neither the City, the State, nor any of
their political subdivisions (other than the Agency) is liable for their payment. In no event shall the
Bonds be payable out of any funds or properties other than those of the Agency as set forth in the
Indenture. The Bonds do not constitute an indebtedness in contravention of any constitutional or
statutory debt limit or restriction. For a discussion of some of the risks associated with the purchase of
the Bonds, see `BONDOWNERS' RISKS" herein. The Agency has no taxing powers.
Description of the Bonds
The Bonds will be issued in authorized denominations and multiples of $5,000 each and will be
dated their date of delivery. The Bonds mature on the respective dates and bear interest at the respective
rates per annum set forth on the inside cover page. Interest on the Bonds is payable on March 1 and
September 1 of each year, commencing September 1, 2008 (collectively, the "Interest Payment Dates").
The Bonds will be issued as one fully registered bond without coupons for each maturity and,
when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York (the "DTC"). DTC will act as securities depository of the Bonds.
Individual purchases may be made in book -entry form only, in the principal multiples of $5,000.
Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal and
interest will be paid to DTC, which will in turn remit such principal and interest to its participants for
subsequent disbursement to the beneficial owners of the Bonds as described herein. See "APPENDIX G -
BOOK -ENTRY ONLY SYSTEM" herein.
Redemption
Optional Redemption. The Bonds maturing on or after September 1, 20_ are subject to optional
redemption prior to maturity at the option of the Agency on any date on or after September 1, 20_, as a
whole or in part and by lot, without premum, from any source and deposited with the Trustee (notice of
such redemption having been given by the Agency to the Trustee no later than 45 days prior to the date of
redemption), at a redemption price equal to the principal amount to be redeemed, together with accrued
interest to the date fixed for redemption.
Mandatory Sinking Account Redemption. The Term Bonds maturing on September 1, 20_ are
subject to mandatory redemption, in part by lot, from mandatory sinking account installments set forth in
the following schedule on September 1 in each year commencing September 1, 20_, at a redemption
price equal to the principal amount to be redeemed (without premium), together with interest accrued to
the date fixed for redemption.
7
Mandatory Sinking Account Payments
Term Bonds Maturing September 1, 20_
Redemption Date
(September 1) Principal Amount
*Matunty
Redemption Provisions
Purchase in Lieu of Redemption
r
In lieu of such redemption, the Trustee, upon the request of the Agency, may apply amounts in
the applicable Sinking Account to the purchase of Term Bonds at public or private sale, as and when and
at such prices (including brokerage and other charges, but excluding accrued interest, which is payable
from the applicable Interest Account) as may be directed in writing by the Agency, except that the
purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the
Term Bonds being purchased. The par amount of any Term Bonds so purchased by the Agency in any
twelve-month period ending 30 days prior to any Principal Payment Date in any year immediately
preceding any March 1 or September 1 (as applicable) will be credited toward and will reduce the
principal amount of applicable Term Bonds required to be redeemed on such Principal Payment Date of
such year.
Notice of Redemption
Notice of redemption shall be mailed by first class mail by the Trustee, not less than 30 days prior
to the redemption date to the respective Holders of the Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee. Each notice of redemption will state the date of such
notice, the redemption price, place or places of redemption (including the name. and appropriate address
of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such
maturity is to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be
redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal
amount thereof to be redeemed. Failure to receive such notice shall not invalidate any of the proceedings
taken in connection with such redemption.
Selection of Bondsfor Redemption
If less than all Outstanding Bonds of a Series maturing on any one date are to be redeemed at any
one time, the Trustee will select the Bonds of such Series to be redeemed by lot. If some but not all of the
Bonds of such Series have been redeemed pursuant to optional redemption described above, the total
amount of mandatory sinking account payments to be made subsequent to such redemption shall be
reduced as specified in writing by the Agency to the Trustee which reduction, to the extent practicable,
shall result in approximately equal Annual Debt Service on the Bonds Outstanding of such Series
following such redemption. If Outstanding Bonds of a Series maturing on more than one date are to be
redeemed at any one time, the Agency will select the maturities of Bonds of such Series to be so
redeemed.
Effect of Redemption
If notice of redemption has been duly given and money for the payment of the redemption price
of the Bonds called for redemption is held by the Trustee, then on the redemption date designated in such
notice the Bonds so called for redemption will become due and payable, and from and after the date so
designated interest on the redeemed Bonds will cease to accrue, and the Holders of the redeemed Bonds
shall have no rights except to receive payment of the redemption price.
Registration, Transfer and Exchange
Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept
pursuant to the provisions of the Indenture, by the person in whose name it is registered, in person or by
his duly authorized attorney, upon 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 or Bonds is surrendered for transfer, the Agency will execute and the
Trustee will authenticate and deliver a new Bond or Bonds of like series, tenor, maturity and principal
amount. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in
connection with any such transfer will be paid by the Agency, except that the Trustee will 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.
Bonds may be exchanged at the office of the Trustee for the same aggregate principal amount of
Bonds of the same series and maturity 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 will
be paid by the Agency, except that the Trustee will 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.
Book -Entry Only System
The Depository Trust Company ("DTC") will act as securities depository for the Bonds. The
ownership of each such separate single fully registered Bond shall be registered in the bond register in the
name of Cede & Co., as nominee of DTC. For further information regarding DTC, please refer to
"APPENDIX G" hereto.
SECURITY FOR THE BONDS
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of tax increment revenues collected within a project area. The taxable valuation of a project
area last equalized prior to adoption of the redevelopment plan, or the base roll, is established and except
for any period during which the taxable valuation drops below the base year level, the jurisdictions
receiving property tax revenue or the taxing agencies thereafter receive the taxes produced by the levy of
the current tax rate upon the base roll. With certain limited exceptions, taxes collected upon any increase
in taxable valuation over the base roll are allocated to a redevelopment agency and may be pledged as
security to a bond issue. Redevelopment agencies themselves have no authority to levy property taxes
and must look specifically to the allocation of tax increment revenues as indicated above.
G7
Allocation of Taxes
As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the
Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, taxes
levied upon taxable property in the Project Area (or applicable portions) each year by or for the benefit of
the State of California, any city, county, city and county, district or other public corporation (the "taxing
agencies") for fiscal years beginning after the effective date of the Project Area (or applicable portions)
are divided as follows:
(a) The portion equal to the amount of taxes produced by the current tax rate, applied
to the assessed valuation of property in the Project Area (or applicable portion) as shown on the
applicable base year assessment roll as last equalized prior to the establishment of the Project Area (or
applicable portion thereof) shall be, when collected, paid to those respective taxing agencies;
(b) Except for taxes which are attributable to a tax levy by a taxing agency for the
purpose of producing revenues to repay bonded indebtedness approved by the voters of the taxing agency
on or after January 1, 1989, which shall be allocated to and when collected shall be paid to the respective
taxing agency, that portion of levied taxes each year in excess of such amount, including (to the extent
permitted by law) all payments and reimbursements, if any, to the Agency specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations, will be allocated to, and when
collected, will be paid to the Agency to pay the principal of and interest on loans to, money advanced to,
or indebtedness incurred by the Agency to finance redevelopment projects.
Revenues generated as set forth above and allocated to the Agency are generally referred to as tax
increment revenues. Tax Revenues (as defined below) that secure the Bonds are a portion of such tax
increment revenues. Tax Revenues are generally those tax increment revenues received by the Agency
within the limitations of the Redevelopment Plan ("Plan Limitations," as described below) and remaining
after deductions for payments deposited into the low and moderate income housing fund, and
unsubordinated payments to taxing entities pursuant to "Tax Sharing Statutes" (see "Tax Sharing
Statutes"). [[Following the procedure set forth in Section 33607.5, the Agency sought and received
approval that the payments to affected taxing agencies from Tax Revenues be subordinated to debt
service payments on the Bonds.]]
Section 33607.8 of the Law provides that notwithstanding the tax sharing requirements, the
Agency may make payments to a taxing entity that is a state water supply contractor. These payments
may not exceed the amounts that the taxing entity would have received from an override tax approved by
voters prior to July 1, 1978 absent the existence of the Project Area. In addition, the payments made shall
be made for the purpose of funding the payments of the state water supply contractor pursuant to its water
supply contract with the Department of Water Resources. The section further stipulates that payments
made to the water supply contractor shall not cause any reduction in the statutory tax sharing amounts that
are required to be paid to the other taxing entities. The Castaic Lake Water Agency requested and the
Agency agreed to make such payments. This requirement is included in the language of the
redevelopment plan and the projected Tax Revenues are net of these estimated payments.
The term "Plan Limitations" means the limitations contained or incorporated in the
Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from tax increment
revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided
and allocated to the Agency pursuant to the Redevelopment Plan, (c) the period of time for establishing or
incurring indebtedness payable from tax increment revenues and (d) the period of time for receiving tax
increment revenues to repay indebtedness, in each case established pursuant to Section 33333.4 or
33333.6 of the Redevelopment Law. See "THE REDEVELOPMENT PROJECT AREA - Plan
Limitations."
10
Pursuant to the provisions of the Indenture, the Agency has pledged that portion of the tax
increment revenues that constitute the Tax Revenues to the Bonds. Except as provided in the Indenture,
the Bonds, and any other additional bonds are equally secured by a first pledge of and lien on all of the
Tax Revenues and a first and exclusive pledge of and lien upon all of the' moneys in the funds and
accounts created pursuant to the Indenture, including all amounts derived from the investment of such
moneys, subject to application in accordance with the Indenture, without preference or priority for series,
issue, number, sale date, date of execution or date of delivery. Except for the Tax Revenues and such
moneys, no funds or properties of the Agency are pledged to, or otherwise liable for, the payment of
principal of or interest on the Bonds.
"Tax Revenues" are defined in the Indenture to mean, for each Bond Year, the taxes (including
all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by
reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the
Redevelopment Law in connection with the Project Area, as provided in the Redevelopment Plan
(excluding, to the extent there are any, (i) housing set-aside revenues and (ii) amounts payable to taxing
agencies pursuant to Sections 33607.5 [and 33607.8] of the Redevelopment Law, except to the extent
such payments are subordinated pursuant to subsection (e) of Section 33607.5 of the Redevelopment Law.
Any Tax Revenues received following deposit in the Special Fund in excess of the aggregate
amount required to be transferred to the Interest Account, the Principal Account, the Sinking Account and
the Reserve Account during such Bond Year pursuant to the Indenture will be released from the pledge
and lien under the Indenture and thereafter, may be used for any lawful purpose of the Agency. See
"APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" contained herein.
L
In consideration of the acceptance of the Bonds by those who hold the same from time to time,
the Indenture is deemed to be and constitutes a contract between the Agency and the Owners from time to
time of the Bonds. The covenants and agreements set forth in the Indenture to be performed on behalf of
the Agency will be for the equal and proportionate benefit, security and protection of all Owners of the
Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any
of the other Bonds, by reason of the number or date thereof or the time of sale, execution and delivery
thereof, or otherwise for any cause whatsoever, except as expressly provided therein.
Limited Liability
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY AND AS SUCH ARE NOT
A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF THEIR POLITICAL
SUBDIVISIONS (OTHER THAN THE AGENCY) AND NEITHER THE CITY, THE STATE, NOR
ANY OF THEIR POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) IS LIABLE FOR
THE PAYMENT THEREOF. IN NO EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AGENCY SET FORTH IN THE
INDENTURE.
Any future decrease in the taxable valuation of property in the Project Area or in the applicable
tax rates relating thereto will reduce the tax increment revenues allocated to the Agency from the Project
Area and correspondingly may have an adverse impact on the ability of the Agency to pay the principal of
and interest on the Bonds. The Agency has no power to levy and collect property taxes, and any property
tax limitation, legislative measures, voter initiative or provisions or additional sources of income to taxing
agencies having the effect of reducing the property tax could reduce the amount of Tax Revenues that
would otherwise be available to pay debt service on the Bonds. Likewise, broadened property tax
exemptions could have a similar effect. See `BONDOWNERS' RISKS" herein.
11
Application of Tax Revenues
The Indenture provides that the Agency will deposit all of the Tax Revenues received in any
Bond Year in the Special Fund to be held by the Agency, until such time that the amounts on deposit in
the Special Fund equal the aggregate amounts required to be transferred to the Trustee to pay debt service
on the Bonds and other additional bonds, plus the amount, if any, necessary to restore the balance in the
Reserve Account to the Reserve Account Requirement during such Bond Year. Amounts in excess
thereof will be released from the pledge and lien of the Indenture for the security of the Bonds and the
other additional bonds. See "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE."
Reserve Account
The Indenture requires the establishment of a Debt Service Reserve Account in an amount equal
to the Reserve Account Requirement, or $ following the issuance of the Bonds. "Reserve
Account Requirement" means, as of any calculation date, an amount equal to the least of (i) 10% of the
proceeds (within the meaning of Section 148 of the Code) of that portion of the Bonds and Additional
Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of Average
Annual Debt Service or (iii) Maximum Annual Debt Service.
On or before each Interest Payment Date, the Trustee will set aside from the Debt Service Fund
and deposit in the Reserve Account such amount of money (or other authorized deposit of security, as
contemplated by the following paragraph) as is required to restore the balance in the Reserve Account to
an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve
Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest
Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at
any time in any of such accounts, or for the purpose of paying the interest on or principal of the Bonds or
Additional Bonds in the event that no other money of the Agency is lawfully available therefor, except
that for so long as the Agency is not in default hereunder, any amount in the Reserve Account in excess of
the Reserve Account Requirement may be withdrawn from the Reserve Account and transferred to the
Agency for use of any lawful purpose.
The Reserve Account Requirement may be satisfied by crediting to the Reserve Account moneys
or a Qualified Reserve Account Credit Instrument or any combination thereof, which in the aggregate
make funds available in the Reserve Account in an amount equal to the Reserve Account Requirement.
See "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Issuance of Additional Bonds
The Agency may at any time after the issuance and delivery of the Bonds under the Indenture
issue Additional Bonds payable from the Tax Revenues and secured by a lien and charge upon the Tax
Revenues equal to and on a parity with the lien and charge securing the Bonds issued under the Indenture,
but only subject to specific conditions, including the requirement that Tax Revenues based upon the
assessed valuation of taxable property in the Project Area as shown on the most recently equalized
assessment roll preceding the date of the Agency's adoption of the Supplemental Indenture providing for
the issuance of such Additional Bonds, plus at the option of the Agency the Additional Allowance, will be
in an amount equal to at least 145% of Maximum Annual Debt Service following the issuance of such
Additional Bonds, as evidenced by a Consultant's Report. For purposes of calculating Tax Revenues, a
tax rate of $1.00 per $100 of assessed valuation shall be assumed. See "APPENDIX A - SUMMARY OF
CERTAIN PROVISIONS OF THE INDENTURE."
12
Issuance of Subordinate Debt
The Agency may incur subordinate debt in the form of tax allocation bonds, or other debt secured
by a subordinate pledge of Tax Revenues (the "Subordinated Bonds"), provided, however, that (1) no
such issuance shall cause the Agency to exceed any tax increment limit applicable to it under the
Redevelopment Plan or the Redevelopment Law, and (2) the tax increment revenues subject to the pledge
securing such Subordinated Bonds, based upon the assessed valuation of taxable property in the Project
Area as shown on the most recently equalized assessment roll preceding the date of the issuance of such
Subordinated Bonds plus, at the option of the Agency, the Additional Allowance, shall be in an amount
equal to at least 100% of maximum annual debt service of all the outstanding Subordinated Bonds
secured by such tax increment revenues following the issuance of such Subordinated Bonds. See "THE
REDEVELOPMENT PROJECT AREA - Plan Limitations" and "APPENDIX A - SUMMARY OF
CERTAIN PROVISIONS OF THE INDENTURE" contained herein.
THE INSURER AND THE FINANCIAL GUARANTY INSURANCE POLICY
[Remainder of page intentionally left blank.]
13
THE CITY OF SANTA CLARITA REDEVELOPMENT AGENCY
Agency Members
The Agency was activated November 28, 1989 by the City pursuant to the State of California
Health and Safety Code Section 33000 et seq., entitled "Community Redevelopment Law." The
Redevelopment Agency did not incur any debt nor establish any projects. The Agency functions as, and
has the power and jurisdiction of, a redevelopment agency of the City under the Community
Redevelopment Law. The City Council adopted Ordinance No. 97-12 on July 8, 1997, which adopted the
Redevelopment Plan. The Agency is governed by a five -member board which consists of all members of
the City Council of the City. City Council/Agency members, their occupations and term expiration dates,
are as follows:
City Council
Marsha A. McLean, Mayor
Robert C. Kellar, Mayor Pro tem
Laurene F. Weste, Councilmember
Frank C. Ferry, Councilmember
Timothy B. Boydston, Councilmember*
Term Expires
Occupation
April 2010
Business Owner
April 2008
Retired Police Officer
April 2010
Community Advocate
April 2010
Educator
April 2008
Executive Director/
Artistic Director
* Appointed to fill vacancy upon election of Councilmember Cameron Smythe to State Assembly, 38th Distnct
Agency Administration
Mr. Ken Pulskamp serves as the Executive Director of the Agency and the City Manager of the
City and was appointed to the position November 5, 2002. A twenty-seven year veteran of local
government management, Ken previously served as Deputy City Manager of Fresno, California, Assistant
City Manager of Bakersfield, California and Assistant City Manager of Santa Clarita. During his tenure
with the City Ken has also served as the Acting Department Head of every City department. Ken has a
Bachelor of Arts from the California State University, Fresno and a Master of Public Administration from
the University of San Francisco.
Mr. Ken Striplin is currently the Assistant City Manager and Personnel Officer for the City of
Santa Clarita since September 2004. Previously Ken has served Santa Clarita as Assistant to the City
Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In addition,
Ken has served as Interim Director of two departments: Field Services and Planning and Economic
Development. Ken holds Bachelor of Arts and Master of Public Administration degrees from California
State University, Northridge, and a Doctor of Education in Organizational Leadership from Pepperdine
University.
Mr. Darren Hernandez has been the Treasurer of the Agency and the Director of Administrative
Services for the City of Santa Clanta since January 2004 and was named Deputy City Manager in July
2007. In this position he provides leadership to the Department of Adrmnistrative Services and serves the
City as Chief Financial Officer. Previously Darren 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. Darren
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.
14
Mr. Paul Brotzman is the Director of Community Development for the City. He has been with
the City since April of 2005. The Community Development Department encompasses the divisions of
Planning, Economic Development and Community Preservation. Paul attended Wilkes University, in
Wilkes-Barre, PA where he received a Bachelors of Science (Political Science) degree. His post graduate
studies were done at Muhlenberg College and Claremont Graduate School. Before coming to Santa
Clarita, Paul was a public sector manager and private sector CEO. He served as the city manager for the
City of West Hollywood from 1985 through 1996. In this capacity, he helped to establish a new
government structure and develop a system for the delivery of city services. Paul also worked for the
City of Martinez, California from 1979 through 1985, helping revitalize the historic old town, expand and
develop a regional waterfront park and city -operated marina, as well as develop a city park and trail
network. Paul is a member of the Board of Directors for the West Hollywood Community Housing
Corporation which is a non-profit organization that develops and manages affordable housing for low
income families, seniors and people living with disabilities. He is also a member of the Board of
Directors for Union Station which is a non-profit organization that provides emergency and transition
housing for the homeless.
recently was hired as Redevelopment Manager. [More to follow].
Agency Powers
All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the
Agency is a separate public body and exercises governmental functions, including planning and
implementing redevelopment projects.
The Agency may exercise the right to issue bonds for authorized purposes and to expend their
proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency
may demolish buildings, clear land and cause to be constructed certain improvements, including streets,
sidewalks, and utilities, and can further prepare for use as a building site any real property which it owns
or administers.
The Agency may, from any funds made available to it for such purposes, pay for all or part of the
value of land and the cost of buildings, facilities or other improvements to be publicly owned, provided
that such improvements are expressly found to be of benefit to a redevelopment project and cannot be
financed by any other reasonable method. The Agency may not construct or develop buildings, with the
exception of public buildings and housing, and generally must sell or lease cleared property which it
acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment
plan, and may further specify a period within which such redevelopment must begin and be completed.
The Agency Board adopted a budget for fiscal year 2007-08 on June 12, 2007.
Factors Affecting Redevelopment Agencies Generally
Other features of the Redevelopment Law that bear on redevelopment agencies include general
provisions which require public agencies to award contracts for construction only after competitive
bidding. The Redevelopment Law provides that construction in excess of a minimum amount undertaken
by the Agency shall be done only after competitive bidding. California statutes also provide for offenses
punishable as felonies that involve direct or indirect interest of a public official in a contract made by such
official in his official capacity. In addition, the Redevelopment Law generally prohibits any Agency or
City official or employee who, in the course of his duties, is required to participate in the formulation or
approval of plans or policies, from acquiring any interest in property in the Project Area.
15
Filing of Statement of Indebtedness
Section 33675 of the Redevelopment Law requires that the Agency file, not later than the first
day of October of each year with the county auditor, a statement of indebtedness certified by the chief
financial officer of the Agency for each redevelopment project for which the redevelopment plan provides
for the division of taxes pursuant to Section 33670 of the Redevelopment Law. The statement of
indebtedness is required to contain, among other things, the date on which the bonds were delivered, the
principal amount, term, purpose, interest rate and total interest of the bonds, the principal amount and the
interest due in the fiscal year in which the statement of indebtedness is filed and the outstanding balance
and amount due on the bonds. Similar information must be given for each loan, advance or indebtedness
that the Agency has incurred or entered into which is payable from tax increment. The Agency has made
such a filing for fiscal year 2006-07.
Financial Statements
Included in this Official Statement as "APPENDIX B" are the audited financial statements of the
Agency for the year ended June 30, 2007, reproduced from the report thereon rendered by Dielh, Evans &
Company, LLP, independent accountants for the Agency. No post -audit review was requested or
performed.
Regulatory Issues
The Agency is in material compliance with the provisions of the California Environmental
Quality Act, constituting Division 13 (commencing with Section 21000) of the California Public
Resources Code, with respect to the Project Area.
16
a
E
C
c
THE REDEVELOPMENT PROJECT AREA
Redevelopment Plan
Under the Redevelopment Law, every redevelopment agency is required to adopt, by ordinance, a
redevelopment plan for each redevelopment project specifically authorized in the adopted redevelopment
plan. A redevelopment plan is a legal document, the content of which is. largely prescribed in the
Redevelopment Law rather than a "plan" in the customary sense of the word.
The overall objective of the Redevelopment Plan is to eliminate blighted conditions in the Project
Area by undertaking all appropriate projects pursuant to the Redevelopment Law. The general objective
is to encourage investment in the Project Area by the private sector, to eliminate blighted conditions and
to upgrade the quality of the community. The Redevelopment Plan provides for the acquisition of
property, the demolition of buildings and improvements, the relocation of any displaced occupants, and
the construction of streets, parking facilities, utilities and other public improvements. The
Redevelopment Plan also allows the redevelopment of land by private enterprise, the rehabilitation of
structures, the rehabilitation or construction of low and moderate income housing, and participation by
owners and the tenants of properties in the Redevelopment Project.
The Project Area is approximately 913.6 acres in size and consists of a single, very irregular area
within the City. The Project Area is located between Interstate 5 and State Highway 14 and includes the
commercial corridors along Lyons Avenue and San Fernando Road. The Project Area is generally
bounded on the west by Interstate 5, on the east by State Highway 14 and on the north by the intersection
of San Fernando Road and Magic Mountain Parkway. The Project Area extends approximately four
blocks to the east and west of San Fernando Road between its intersection with Lyons Avenue and its
intersection with 16th Street. It also includes a large area on the north side of San Fernando Road
between its intersections with Lyons Avenue and with Pine Street. Large areas that are beyond the
immediate San Fernando Road corridor exist southeast of the intersection with Pine Street and at the
intersection with State Highway 14. Several areas that extend beyond the immediate Lyons Avenue
corridor exist near the intersection with Valley Street and near the Lyons Avenue intersection with
Interstate 5. The Redevelopment Plan for the Newhall Redevelopment Project Area was adopted on
July 8, 1997 by Ordinance No. 97-12 of the City. The base year of the Project Area was set in 1996-97.
The 1996-97 base year assessed valuation is $266,351,517.
Of the 913.6 acres within the Project Area, 189.42 acres are vacant, which acres are zoned
commercial/industrial. Of the remaining acres, acres are zoned commercial/industrial with
acres zoned residential.
The Agency passed a Specific Plan in December 2005 to transform downtown Newhall into a
thriving, mixed-use, pedestrian -oriented urban village with a series of economic engines. The Specific
Plan consists of a 20 -block downtown served by Metrolink commuter rail, a commercial corridor in
downtown, two flanking neighborhoods, and an industrial district. Upon buildout, the Specific Plan will
include up to 1,092 new residential units and nearly 1 million square feet of new commercial space. A
portion of this growth will be attributed to new development, while some will also include revitalization
of existing buildings.
Bond and Tax Increment Limitations
Chapter 942, Statutes of 1993 (AB 1290), established limits on redevelopment plans adopted after
December 31, 1993. The Redevelopment Plan for the Project Area was adopted after December 31, 1993.
AB 1290 specified that the effectiveness of a redevelopment plan adopted after 1993 shall expire 30 years
from the date of adoption of the Redevelopment Plan. The time limit for establishing indebtedness is 20
years from the date of adoption of the redevelopment plan and the Agency may repay indebtedness for a
18
total of 45 years from the date of the adoption of the redevelopment plan. Any eminent domain
proceedings undertaken by the Agency must be initiated within 12 years of the adoption date of the
Redevelopment Plan. The Redevelopment Plan set a limit of July 8, 2027 for the effectiveness of the
Redevelopment Plan, and a limit of July 8, 2042 for the collection of Tax Increment Revenues for the
Project Area.
Pursuant to the Redevelopment Plan, the total amount of bonded indebtedness outstanding at one
time incurred by the Agency and payable from tax increment revenues, including Housing Set -Aside
Revenues, from the Project Area may not exceed $60,000,000. Following the issuance of the Bonds, and
the Housing Bonds issued concurrently, the Agency will have $ of outstanding
bonded indebtedness secured by Tax Revenues, $ of outstanding bonded debt secured
by the Housing Set -Aside Revenues, and approximately and $[11,461,382] of subordinated loan debt.
Legislation passed in 2003 (SB 1045) and 2004 (SB 1096) permits redevelopment agencies to
extend their ability to collect tax increment by up to one year for each Educational Revenue
Augmentation Fund ("ERAF") payment made in 2003-04, 2004-05 and 2005-06. The extensions for
2004-05 and 2005-06 pursuant to SB 1096 apply only to plans with existing limits on the effectiveness of
the plan that are less than 20 years from the last day of the fiscal year in which the ERAF payment is
made, which is not the case for the Project Area. [[The City is entitled to but has yet to adopt an
ordinance pursuant to SB 1045 extending its effectiveness and termination for an additional year. The
City has adopted this ordinance on .]]
A summary of the limitations imposed by the Redevelopment Plan are as follows:
Plan Expiration Date: July 8, 2028
Last Date to Collect Tax Increment Revenues (other than Housing Fund purposes): July 8, 2043
Last Date to Incur Debt (other than Housing Fund debt): July 8, 2017
Maximum Bonded Indebtedness Supported by Tax Increment Revenues: $60,000,000
The Agency is of the opinion that these limitations will not impede its ability to develop the
Project Area in accordance with the Redevelopment Plan nor impair its ability in the future to repay any
obligation or indebtedness, including the Bonds, incurred by the Agency in connection with the
development of the Project Area in accordance with the Redevelopment Plan.
The Agency has covenanted under the Indenture to manage its fiscal affairs in a manner which
enables it to comply with the Plan Limitations, and not to issue any bonds, notes or other obligations
which would cause the Plan Limitations to be exceeded or violated.
Housing Set -Aside Requirements
In accordance with Section 33334.2 of the Redevelopment Law, not less than twenty percent
(20%) of all taxes which are allocated to the Agency shall be set aside in a Low and Moderate Housing
Fund and shall be used by the Agency for purposes of improving, increasing and preserving the City's
supply of housing for persons and families of low or moderate income (including the payment of
indebtedness issued or incurred for such purposes). The projected Tax Revenues reflect the 20%
deduction of the tax increment revenues for low and moderate housing.
Tax Sharing Statutes
Prior to 1994, under the Redevelopment Law, a redevelopment agency could enter into an
agreement to pay increment revenues to any taxing agency that has territory located within a
19
redevelopment project in an amount which in the agency's determination is appropriate to alleviate any
financial burden or detriment caused by the redevelopment project. The Redevelopment Law was
amended in 1993 (AB1290) to provide, among other things, for mandatory pass-throughs of tax
increment revenues to affected taxing agencies in lieu of negotiated pass-through agreements ("Tax
Sharing Statutes"). These provisions apply to the Redevelopment Plan. These Tax Sharing Statutes
amounts equal a fixed percentage of the tax increment revenues received by an agency after the amount
required to be deposited in the Low and Moderate Income Housing Fund has been deducted.
Commencing with the first fiscal year in which the Agency receives tax increment revenues
through the last fiscal year in which the Agency receives tax increment revenues, the amount paid to
affected taxing agencies is equal to 25% of tax increment revenues received after the deduction of the
deposit to the Low and Moderate Income Housing Fund.
Commencing with the 11th fiscal year through the last fiscal year the amount paid to affected
taxing agencies in addition to the amount described in the preceding paragraph and after deducting the
amount allocated to the Low and Moderate Income Housing Fund, is an amount equal to 21% of the
portion of tax increment revenues by the Agency which shall be calculated by applying the tax rate
against the amount of assessed value by which the current year assessed value exceeds the first adjusted
base year assessed value. The first adjusted base year assessed value of the Project Area is the assessed
value of the Project Area in the 10th fiscal year in which the agency receives applicable tax allocations.
Commencing with the 31st fiscal year and continuing through the last fiscal year the amount paid
to affected taxing agencies, in addition to the amounts described in the two preceding paragraphs and
after deducting the amount allocated to the Low and Moderate Income Housing Fund, is an amount equal
to 14% of the portion of tax increment revenues received by the Agency which shall be calculated by
applying the tax rate against the amount of assessed value by which the current year assessed value
exceeds the second adjusted base year assessed value. The second adjusted base year assessed value is
the assessed value of the Project Area in the 30th fiscal year in which the Agency receives applicable tax
increment revenues.
Affected taxing agencies with jurisdictions within the Project Area include the following: County
of Los Angeles, Los Angeles County Public Library, Los Angeles County Fire District, Los Angeles
County Flood Control Improvement District, Greater Los Angeles County Vector Control District, Los
Angeles County Sanitation District, Newhall County Water District, Newhall Elementary School District,
Saugus Union School District, William S. Hart Union High School District, College of the Canyons
Community College District, and the City of Santa Clarita.
[[The Agency sought and received subordination of the Tax Sharing Statutory Payments. The
Agency's obligation to make Tax Sharing Statutory Payments to those agencies is subordinate to the
payment of principal of and interest on the Bonds. The Tax Revenue projections include the subordinated
Tax Sharing Statutory Payments for all affected taxing agencies. ]]
Section 3,3607.8 of the Law provides that notwithstanding the tax sharing requirements outlined
above, the Agency may make payments to a taxing entity that is a state water supply contractor. These
payments may not exceed the amounts that the taxing entity would have received from an override tax
approved by voters prior to July 1, 1978 absent the existence of the Project Area. In addition, the
payments made shall be made for the purpose of funding the payments of the state water supply
contractor pursuant to its water supply contract with the Department of Water Resources. The section
further stipulates that payments made to the water supply contractor shall not cause any reduction in the
statutory tax sharing amounts that are required to be paid to the other taxing entities. The`Castaic Lake
Water Agency requested and the Agency agreed to make such payments. This requirement is included in
PQ1
the language of the redevelopment plan and the projected Tax Revenues are net or these estimated
payments. See APPENDIX D for a discussion of agreement with the Castaic Lake Water Agency.
Historical Assessed Valuations
The Agency's source of Tax Revenues pledged to pay debt service on the Bonds is the tax
increment revenues from the Project Area as reported by the Los Angeles County Auditor -Controller's
office. The following is a summary of the historical taxable valuation and is not intended to aid in the
prediction of future Tax Revenues. The 1996-97 base year assessed valuation is $266,351,517.
TABLE 2
NEWHALL REDEVELOPMENT PROJECT AREA
HISTORICAL AND INCREMENTAL ASSESSED VALUATIONS
Unsecured
Base Year
1996-97
2003-04
2004-05
2005-06
2006-07
2007-08
Secured (2)
0
0
0
0
Improvements 6,557,624
6,272,382
Land
120,671,193
161,159,305
180,876,309
273,321,137
295,842,625
335,974,647
Improvements
126,203,945
159,730,716
166,984,338
176,610,145
185,336,928
205,086,767
Personal Property
3,392,830
3,829,513
2,342,343
2,461,597
2,567,530
2,346,546
Exemptions
(1,848,103)
(4,148,124)
(5,083,826)
(4,859,824)
(9,028,844)
(4,630,171)
Total
$248,419,865
$320,571,410
$345,119,164
$447,533,055
$474,718,239
$538,777,789
Unsecured
Land 0
0
0
0
0
0
Improvements 6,557,624
6,272,382
6,326,173
5,901,959
26,593,269
28,204,577
Personal Property 11,376,128
19,035,089
22,151,970
23,034,914
25,569,962
48,299,529
Exemptions (2,100)
(33,000)
(33,000)
(91,000)
(16,300)
(217,300)
Total $17,931,652
$25,274,471
$28,445,143
$28,845,873
$52,146,931
$76,286,806
Grand Total $266,351,517
5345,845.881
$37,564,307
$476,378,928
$526,865,170
$615,064,595
Annual Incremental Value
$79,494,364
$107,212,790
$210,027,411
$260,513,653
$348,713,078
Change in Value from Prior Year
19,453,491
27,718,426
102,814,621
50,486,242
88,199,425
% Change in Total Value
5.96%
8.01%
27.52%
10.60%
16.74%
(1) Assessed Values data provided by the County of Los Angeles.
(2) Secured values include state assessed non -unitary utility property
Source: Fiscal Consultant's Report.
SB392, passed on July 26, 1999, amended Section 96.6 of the California Revenue and Taxation
Code. SB392 clarified the method of calculating property tax increment to be consistent with the
provisions of California Health and Safety Code Section 33670. Tax increment is calculated as the sum
of increases and decreases in property taxes for a project area for each of the secured and unsecured roll
on the date a project area is created. In the event the overall sum of either roll is negative, that roll is
assigned a "0". A few counties were calculating the sum of increases and decreases on a tax rate area
(TRA) basis rather than a project area basis. In the event the sum of a TRA was negative, a "0" was
assigned. This methodology led to calculations which were too high and therefore SB 392 was needed to
clarify existing law. The County has been and will continue to utilize the sum of increases and decreases
over a project area.
21
The total fiscal year 2007-08 net taxable assessed value for the Project Area is $615,064,595.
Table 3 shows a breakdown of the different land uses within the Project Area and is based on the net
taxable assessed valuation for the Project Area for fiscal year 2007-08. As shown in Table 3, residential
property is the most significant category of land uses within the Project Area.
TABLE 3
City of Santa Clarita Redevelopment Agency
Net Taxable Assessed Value for Land Use Category Summary(i)
(Newhall Redevelopment Project Area)
Tax Rates
Tax rates will vary from area to area within a State, as well ' as within a community and a project
area. The tax rate for any particular parcel is based upon the jurisdictions levying the tax rate for the area
where the parcel is located. The tax rate consists of the general levy rate of $1.00 per $100 of taxable
values and the override tax rate, which is that portion of the tax rate that exceeds the general levy tax rate
in order to pay voter approved indebtedness or contractual obligations that existed prior to the enactment
of Proposition 13. Revenues associated with the override tax rates have not been included in the
projections of the net Tax Revenues. The projections are effectively based on a 1.0% tax rate. See
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
Major Taxpayers
The following table shows the ten largest taxpayers in the Project Area on the secured roll for the
2007-08 assessment year. The information has been gathered by the Agency, but the accuracy or
completeness of such information is not guaranteed by the Agency. See "APPENDIX D — FISCAL
CONSULTANT'S REPORT."
22
2007-08
Category
No. of Parcels
Net Taxable Value
Percentage
Residential
723
$227,034,818
36.91%
Commercial
222
157,992,828
25.68%
Industrial
44
41,289,831
6.71%
Irrigated
1
164,312
0.03%
Dry Farm
7
18,612,756
3.03%
Recreational
6
3,363,517
0.55%
Institutional
14
8,195,894
1.33%
Miscellaneous (2)
2
46,770
0.01%
Vacant Land
170
78,550,749
12.77%
Exempt
108
0
0.00%
Subtotal
1,297
$535,251,475
87.02%
Possessory
3,526,314
0.58%
Unsecured
76,286,806
12.40%
Subtotal
$ 79,813,120
12.98%
TOTAL
1,297
$615,064,595
100.00%
(1) Data provided by the County of Los
Angeles.
Source: Fiscal Consultant's Report.
Tax Rates
Tax rates will vary from area to area within a State, as well ' as within a community and a project
area. The tax rate for any particular parcel is based upon the jurisdictions levying the tax rate for the area
where the parcel is located. The tax rate consists of the general levy rate of $1.00 per $100 of taxable
values and the override tax rate, which is that portion of the tax rate that exceeds the general levy tax rate
in order to pay voter approved indebtedness or contractual obligations that existed prior to the enactment
of Proposition 13. Revenues associated with the override tax rates have not been included in the
projections of the net Tax Revenues. The projections are effectively based on a 1.0% tax rate. See
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
Major Taxpayers
The following table shows the ten largest taxpayers in the Project Area on the secured roll for the
2007-08 assessment year. The information has been gathered by the Agency, but the accuracy or
completeness of such information is not guaranteed by the Agency. See "APPENDIX D — FISCAL
CONSULTANT'S REPORT."
22
TABLE 4
City of Santa Clarita Redevelopment Agency
Ten Largest Property Taxpayers 2007-08
(Newhall Redevelopment Project Area)
% of % of
Assessee Use No. of 2007-08 Total Incre.
Parcels Value Value
Secured Unsecured Total
1) Casden Santa Clarita LLC Vacant 24 $78,029,956 $78,029,956 12.69% 22.38%
2) C Native Exchange I LLC Unsecured 32 45,090,320 45,090,320 7.33% 12.93%
3) Saugus Station LLC Industrial 6 16,134,349 16,134,349 2.62% 4.63%
4) Hollywood Carlton Prop. LLC Residential 7 10,011,250 10,011,250 1.63% 2.87%
5) Lyons Properties Limited Commercial 1 9,079,570 9,079,570 1.48% 2.60%
6) 25805 San Fernando LLC Commercial 1 7,250,000 7,250,000 1.18% 2.08%
7) Xenon Investment Corporation Residential 3 6,987,400 6,987,400 1.14% 2.00%
8) Mulberry Park Delaware LLC Residential 2 6,929,996 6,929,996 1.13% 1.99%
9) RCB Properties LLC Commercial 2 6,416,353 6,416,353 1.04% 1.84%
10) Walnut Townhomes LLC Residential, 3 6,528,000 6,528,000 1.06% 1.87%
TOTAL MAJOR ASSESSEES 52 $147,366,874 $45,090,320 $192,457,194 31.29% 55.19%
TOTAL PROJECT VALUE $538,777,789 $76,286,806 $615,064,595
INCREMENTAL VALUE $290,357,924 $58,355,154 $348,713,078
Source. Fiscal Consultant's Report.
The ten (10) largest taxpayers own properties whose combined assessed value accounts for
approximately 27% of the secured roll and 31% of the 2007-08 total assessed value of the Project Area.
The reduction in assessed valuation of taxable property in the Project Area caused by the complete or
partial destruction of such properties would likely result in a reduction in Tax Revenues which secure the
Bonds. In such event, the Agency's ability to timely pay principal and interest on the Bonds may be
adversely affected.
The following is information about the largest secured taxpayers in the Project Area. The
information has been gathered by the City and the Agency from various taxpayers and other sources
believed to be reliable, but the accuracy or completeness of such information is not guaranteed by the
Agency or the City.
Casden Santa Clarita LLC owns 24 parcels within the Project Area consisting of approximately
96 acres of vacant commercial and industrial land. Casden Santa Clarita LLC is controlled by Casden
Properties LLC, Beverly Hills, California, whose chairman and chief executive officer is Alan I. Casden,
a Southern California real estate developer of multifamily residential units. Mr. Casden, a self-made
billionaire, is listed in Forbes 400 Richest Americans.
23
The Casden properties constitute a major part of the City's effort to develop the North Newhall
Specific Plan. The City is in the process of hiring consultants and proceeding with planning and
environment assessment of this area. Ultimate development of the Casden properties will be dictated by
the terms of the specific plan once it is adopted. It is anticipated that the specific plan will envision some
combination of commercial, industrial and residential uses.
C Native Exchange I LLC is an entity controlled by Time Warner Cable Inc. ("Time Warner
Cable") and used by it as the assessee for many of its unsecured holdings within Los Angeles County.
The unsecured value of the parcels represent the assessed value of cable facilities within the Project Area.
Time Warner Cable (NYSE:TWC) is the second-largest cable operator in the U.S. delivering services to
approximately 26 million homes. More information about Time Warner Cable can be found at
www.timewamercable.com. The foregoing internet address is included for reference only, and the
information on this internet site is not a part of this Official Statement and is not incorporated by
reference into this Official Statement.
Historical Tax Increment Receipts
The following are the actual tax increment revenues for the Project Area from Fiscal Year 2003-
04 through Fiscal Year 2006-07, including the actual receipts of tax increment for the Project Area. See
"APPENDIX D — FISCAL CONSULTANT'S REPORT."
TABLES
City of Santa Clarita Redevelopment Agency
Historical Tax Increment Receipts
(Newhall Redevelopment Project Area)
Fiscal Year
2003-04
2004-05
2005-06
2006-07
Adjusted Tax Levy
$883,031
$1,128,831
$2,237,235
$2,806,040
Current Yr. Apportionment
857,661
1,095,975
2,179,333
2,708,386
Current Yr. Collection %
97.13%
97.09%
97.41%
96.52%
Prior Yr. Collection
183,064
568,997
650,342
438,193
Total Apportionment
$1,040,724
$1,664,972
$2,829,675
$3,146,578
Total Collection %
117.86%
147.50%
126.48%
112.14%
ERAF
(27,045)
(63,861)
(82,114)
---
Admin Fees
(14,844)
(18,034)
(31,508)
(34,489)
Total Receipts
$ 998,835
$1,583,077_
$2,716,053
$3,112,089
Source. Los Angeles County Auditor -Controller's Office, Disbursement Tar Division "CRA Remittance Advice " and the City.
The Agency has collected between 112% and 147% of its tax increment charges over the past
four years. The administrative fees shown in Table 5 consist of the County administrative charge.
Assessment Appeals
An assessee of locally -assessed or state -assessed property may contest the taxable value enrolled
by the county assessor or by the State Board of Equalization ("SBE"), respectively. The assessee of
SBE -assessed property or locally -assessed personal property, the valuation of which are subject to annual
reappraisal, actually contests the determination of the full cash value of property when filing an
assessment appeal. Because of the limitations to the determination of the full cash value of
locally -assessed real property by Article XIIIA, an assessee of locally assessed real property generally
contests the original determination of the base assessment value of the parcel, i:e. the value assigned after
24
a change of ownership or completion of new construction. In addition, the assessee of locally -assessed
real property may contest the current assessment value (the base assessment value plus the compounded
annual inflation factor) when. specified conditions have caused the full cash value to drop below the
current assessment value.
At the time of reassessment, after a change of ownership or completion of new construction, the
assessee may appeal the base assessment value of the property. Under an appeal of a base assessment
value, the assessee appeals the actual underlying market value of the sale transaction or the recently
completed improvement. A base assessment appeal has significant future revenue impact because a
reduced base year assessment will then reduce the compounded value of the property prospectively.
Except for the 2% inflation factor, the value of the property cannot be increased until a change of
ownership occurs or additional improvements are added.
Pursuant to Section 51(b) of the Revenue and Taxation Code, the assessor may place a value on
the tax roll lower than the compounded base assessment value, if the full cash value of real property has
been reduced by damage, destruction, depreciation, obsolescence, removal of property or other factors
causing a decline in the value. Reductions in value pursuant to Section 51(b), commonly referred to as
Proposition 8 appeals, can be achieved. either by formal appeal or administratively by assessor staff
appraising the property. A reduced full cash value placed on the tax roll does not change the base
assessment value. The future impact of a parcel subject to a Proposition 8 appeal is dependent upon a
change in the conditions which caused the drop in value. In fiscal years subsequent to a successful
Proposition 8 appeal, the assessor may determine that the value of the property has increased as a result of
corrective actions or improved market conditions and enroll a value on the tax roll up to the parcel's
compounded base assessment value.
The taxable value of utility property may be contested by utility companies and railroads to the
SBE. Generally, the impact of utility appeals is on the State-wide value of a utility determined by the
SBE. As a result, the successful appeal of a utility may not affect the taxable value of a project area but
could affect a project area's allocation of unitary property taxes.
The actual impact of assessment appeals on Tax Revenues is dependent upon the actual revised
value of assessments resulting from values determined by the Los Angeles County Assessment Appeals
Board or through litigation and the ultimate timing of successful appeals. Because the County Controller
adjusts revenues to the Agency to reflect roll corrections from successful appeals, the Agency may bear
the burden of appeals. The actual valuation impact to the Project Area from successful assessment
appeals will occur on the assessment roll prepared after the actual valuation reduction.
Table I of the Fiscal Consultant's Report (see Appendix D) summarizes the status of the
assessment appeals in the Project Area.
Mi
Through December 2007, 12 Proposition 8 appeals have been filed for assessment reductions
with the County. Of the 12 appeals filed, 3 have resulted in assessed value reductions totaling $440,960,
or about 0.07% of the total Project Area assessed value. The successful appeals' averaged a 13.1%
reduction in value ($440,960 actual reduction based on $3,365,960 requested reduction). However, 2
appeals are still pending by RCB Properties LLC, a top ten taxpayer, in which they are seeking a 58.54%
reduction in 2006-07 tax roll values. This could result in a total reduction of over $3 million, or about
less than 0.5% of the current total assessed value. Historically, approximately 33.3% of appeals filed
received assessment valuation reductions. The Fiscal Consultant's analysis of appeals data indicates that
appeals are rarely granted at the applicant's value of opinion and it is unlikely the pending appeals within
the Project Area will result in a reduction of over $3 million. The remaining 7 Proposition 8 appeals have
either been withdrawn or denied. Based upon the historical average rate of requested reductions, the
Fiscal Consultant estimates that the County will approve a reduction of $355,435 of assessed value or
approximately 0.057% of the total assessed value of the Project Area. The projected Tax Revenues have
taken into account the estimated reduction. See "APPENDIX D" for more detailed discussion of appeals
by the Fiscal Consultant.
Gross tax increment revenue was not reduced to reflect any impact of future appeals or potential
refunds which may occur for future appeals.
Financial Information
Included in this Official Statement, as APPENDIX B, are the audited financial statements of the
Agency for the Fiscal Year ended June 30, 2005.
Other than the Bonds, the Agency has incurred no bonded indebtedness secured by Tax
Revenues. Concurrent with the issuance of the Bonds, the Agency will issue its Series 2008 Housing Set -
Aside Tax Allocation Bonds. These bonds will be issued under a separate indenture and secured by a
pledge of Housing Funds.
As of , the Agency has restructured its debt with the City and entered into one (1)
note obligation representing loans from the City for the Redevelopment Project. The note, dated
2008, in the principal amount of $ and bearing interest at the rate of
is due , and has an outstanding balance of $
These amounts represent moneys expended for administrative services and public improvements
advanced by the City. The amounts owed to the City are subordinate to other indebtedness of the
Redevelopment Project, including the Bonds, with respect to application of Tax Revenues. After the
issuance of the Bonds, the Project Area will have $ aggregate principal amount of the
Bonds outstanding, $ aggregate principal amount of Housing Bonds and
approximately$ million of subordinate loan debt.
Projected Taxable Valuation and Tax Revenues; Debt Service Coverage
Table 6 shows the analysis of projected growth of assessed valuation in the Project Area and the
resulting net tax increment revenues over the next thirty-five years, as estimated by the Fiscal Consultant.
Table 7 depicts the projected net tax increment revenue available to pay debt service on the Bonds based
on such growth of assessed valuation in the Project Area, as estimated by the Fiscal Consultant. See
"APPENDIX D — FISCAL CONSULTANT'S REPORT" for more information regarding these
projections.
Receipt of projected net tax increment revenues in the amounts and at the time projected by the
Fiscal Consultant depends on the realization of certain assumptions relating to the net tax increment
26
revenues. See "APPENDIX D — FISCAL CONSULTANT'S REPORT" for a discussion of the
assumptions used in preparing the tax revenue projections. Based upon the projected net tax increment
revenues, the Agency expects sufficient funds should be available to the Agency to pay principal of and
interest on the Bonds. Although the Agency believes that the assumptions utilized by the Fiscal
Consultant are reasonable, the Agency provides no assurance that the projected net tax increment
revenues will be realized. To the extent that the assumptions are not actually realized, the Agency's
ability to timely pay principal and interest on the Bonds may be adversely affected. Key assumptions
include:
❑ Tax rates have been estimated based on a 1.0% tax rate;
❑ For determining projected gross tax increment revenues from"the Project Area, secured and
unsecured real property assessed values are increased at 2% per year;
❑ 20% of the gross revenue to be allocated from the Project Area to the Agency has been
deducted from the projected net tax increment revenue projections for the Housing Set -Aside;
❑ Other than payments due the Castaic Lake Water Agency, no deductions were made to the gross
tax increment for Tax Sharing Statutory Payments since such Tax Sharing Statutory Payments for the
affected taxing agencies are subordinate to the payment of the principal of and interest on the Bonds;
❑ There have not been any deductions to the gross tax increment revenue to recognize the impact
of future tax delinquencies;
❑ A reduction of $355,435 in total assessed value was estimated for 2008-09 due to pending
appeals. Gross tax increment revenue was not reduced to reflect any impact of future appeals or potential
refunds which may occur for future appeals; and
❑ Anticipated valuation increase of $11.89 million has been added to the 2008-09 assessment roll
due to ownership changes for sales through December 31, 2007. See "APPENDIX D — FISCAL
CONSULTANT'S REPORT" for more information regarding these projections.
27
7 V 1 ��.-I�MOtlOhI�o00MMMMI-LOLO(DMN(D tNNN TcoM V'O(D Q—MM
I-MV'WmwNI-NC`M00MM ,1.0 WN 00�t I-NI-NI-NthNWITMU) I-
a�+ aCip�y MM00--NNCMMV•"ttOLOCol%-r.-M M M00--NNMMItItLO0(OI-I.-
N cNi N N N N N N N N N N N N N N N N M M M M M M c M M M M (M c M M M M
zaw
V
r.
C O y"(DMOOM�_OIZ1Z00O�(DO(OM���MCDO(DN __�O(D�(O
NIS CO LOOLOOLO-CDNI`COO) M_Il-MO(DLO TMNN NNCO V•
L H r-rl- oOMMOOr--NNM(M V V_M (OIh0000MO-NCMV'lo(O_-COMO-----------------------------
.-
C CA C4
AO
�rCO LONMOMrMf� LnM.•-.OMOl�CO�Lo 11')MrOM00 l�CD In Ln Flo lnO
Ln Il-hNMMO NNM V,LO(OI.-I-NMO-NM�LnCD(Di.-0DM0 NMttLO
NNNNNNMMMMmMMMMmmM V' V'�V' 'IT V• V• V- V toLO0LoLOLO
CD MI�N00 V'O I�t17M��O�NM(O OONCD �I�M000 (_�(O
N t - MN V•I.- ONMM I.- O M O O N(O M M(O O IT C` MM M C -N CD O Loa
I,- I,-t-CAwW000MOOO-- NNNMMV_V_V- 00(DOrti0OwM
V• LOU') LnLntoto OCDCO(D (D I�vvvvMMMMMMM mOOOO.-----N N
CO IO Il- NMM - COM V, I- MN V•M Il- oo NO - (D V•tn OMNMM V'N0NMMM
N O M- M CD O M I- - M Cl M O M -� V' - W LO M - O M oO r- t-. O M O N,,t CO M
(CL MMr-NMLO(CI I�MONMLoOcc 13-MV•(D0:ONMLoI�M--MOOON"
m M M It V• � V' V' V' I'*LO LO LO LO w oo m m M M M
LO tO to (D (O (O (O (O I� I� I� ti I� I�
MaMCMrl-MM V•(ONMM-MOM-_ V-M�LO Ohr-Mco- NhNI-MWI-
MIM(OOotntiTl�l-MI-O0M0 Nmaw0(D(0MLOLnMM ra(O V'LOM
C� Ln N N 'It M CO CD cc M � - Ln � O C' I� LO (D -- 00 Cl 'et N V_ M Oct -- I- cc M -I V• -I N
OO (Mlot`MNLONN(DO V'MI-m V•aCDMMtl- V N0Wrl-r-(DCDI-wm M
MM0M -'TWr- W 0-N q-M1-MaNMtnl-MN"tCDMaN*CDM
MMMM't It V' V•"TI-LOMLOLOCntoMCOCD0CDCDCDhhI-�I-wMMw0oM
H9
N LONtn0oti11,0t-MMON-NO(MCO ItwI-MMMOI-M�CO V M0P'-M
LO (DOOM M O N M N N OC) M LO (0 (D (0 CD t` O LO M Ln -M O00v(A Lo 00 V
M 000(OCOOOMOMNtiV'LOOO�MLOO_ODO.,tNMOOCDI-MND.-r-COlOMM0
O LO I-: M - M CD M LO OJ N CD O LO O LO (D M M (O M O CO CD Ld I t CM C6 C6 C6 LO I- M
CO M 11-T0r-WM NMLO0MMN0r- W ON�LotiM-M0r-m 2
NN CDCDCOOCO(D 00 w OOOwMMMMMMOOOOO
c c e e e c c c e c e c c c e c c c c o c c c c c c o e c c e c c e
C00000000000000000000000000000000ooa
�00a0aaaao00000000000a0aaaao0000000 0
Q N N N NN NN N N NN N N N (V N NN N N N N N N N N N N NN N N N (V
5
c
MMO- NM,I-LoO�MMO NM V•LOCOh0oMO NM'TLoCDI-MMO N
9977--777 - -- N N N N N N N CV N N M M oM cM M M M M C? M� V• �t
(-006)O-NM"tLf7CDhc0m0 NMV'LnCOt-00M0 NM V Ln (Ot`OOMO
000 - - - N N N N N N N N N N M M M M M M M M co co V•� t U
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N O
U
_h
U,
N
U
Y
O
00
N
O
OOM- q,MLO V' LotiNMMMNM(OCOM It P--I'1q,I-MM MMU')tooaMM
H
CDhOOMO--NCMV:LOCDhcOMOrM V: Ln CD 00 MON CM"(Ot`MON V'LnI�M
C>;
C'j NM(Mm m m m m m m mit V' V' V' V• V• V• V•Ln LO M 00 LO LLQ CD co (D co (0 co
�rCO LONMOMrMf� LnM.•-.OMOl�CO�Lo 11')MrOM00 l�CD In Ln Flo lnO
Ln Il-hNMMO NNM V,LO(OI.-I-NMO-NM�LnCD(Di.-0DM0 NMttLO
NNNNNNMMMMmMMMMmmM V' V'�V' 'IT V• V• V- V toLO0LoLOLO
CD MI�N00 V'O I�t17M��O�NM(O OONCD �I�M000 (_�(O
N t - MN V•I.- ONMM I.- O M O O N(O M M(O O IT C` MM M C -N CD O Loa
I,- I,-t-CAwW000MOOO-- NNNMMV_V_V- 00(DOrti0OwM
V• LOU') LnLntoto OCDCO(D (D I�vvvvMMMMMMM mOOOO.-----N N
CO IO Il- NMM - COM V, I- MN V•M Il- oo NO - (D V•tn OMNMM V'N0NMMM
N O M- M CD O M I- - M Cl M O M -� V' - W LO M - O M oO r- t-. O M O N,,t CO M
(CL MMr-NMLO(CI I�MONMLoOcc 13-MV•(D0:ONMLoI�M--MOOON"
m M M It V• � V' V' V' I'*LO LO LO LO w oo m m M M M
LO tO to (D (O (O (O (O I� I� I� ti I� I�
MaMCMrl-MM V•(ONMM-MOM-_ V-M�LO Ohr-Mco- NhNI-MWI-
MIM(OOotntiTl�l-MI-O0M0 Nmaw0(D(0MLOLnMM ra(O V'LOM
C� Ln N N 'It M CO CD cc M � - Ln � O C' I� LO (D -- 00 Cl 'et N V_ M Oct -- I- cc M -I V• -I N
OO (Mlot`MNLONN(DO V'MI-m V•aCDMMtl- V N0Wrl-r-(DCDI-wm M
MM0M -'TWr- W 0-N q-M1-MaNMtnl-MN"tCDMaN*CDM
MMMM't It V' V•"TI-LOMLOLOCntoMCOCD0CDCDCDhhI-�I-wMMw0oM
H9
N LONtn0oti11,0t-MMON-NO(MCO ItwI-MMMOI-M�CO V M0P'-M
LO (DOOM M O N M N N OC) M LO (0 (D (0 CD t` O LO M Ln -M O00v(A Lo 00 V
M 000(OCOOOMOMNtiV'LOOO�MLOO_ODO.,tNMOOCDI-MND.-r-COlOMM0
O LO I-: M - M CD M LO OJ N CD O LO O LO (D M M (O M O CO CD Ld I t CM C6 C6 C6 LO I- M
CO M 11-T0r-WM NMLO0MMN0r- W ON�LotiM-M0r-m 2
NN CDCDCOOCO(D 00 w OOOwMMMMMMOOOOO
c c e e e c c c e c e c c c e c c c c o c c c c c c o e c c e c c e
C00000000000000000000000000000000ooa
�00a0aaaao00000000000a0aaaao0000000 0
Q N N N NN NN N N NN N N N (V N NN N N N N N N N N N N NN N N N (V
5
c
MMO- NM,I-LoO�MMO NM V•LOCOh0oMO NM'TLoCDI-MMO N
9977--777 - -- N N N N N N N CV N N M M oM cM M M M M C? M� V• �t
(-006)O-NM"tLf7CDhc0m0 NMV'LnCOt-00M0 NM V Ln (Ot`OOMO
000 - - - N N N N N N N N N N M M M M M M M M co co V•� t U
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N O
U
_h
U,
N
U
Y
O
00
N
TABLE 7
City of Santa Clarita Redevelopment Agency
Projected Tax Revenues and Debt Service Coverage
(Newhall Redevelopment Project Area)
Year Ending
June 30
Estimated Tax Bonds Debt
Revenues Service(t)
Debt Service Subordinated
Coverage Pass-thrus
2009
$2,770,000
$ 773,000
2010
2,859,000
818,000
2011
2,951,000
863,000
2012
3,044,000
911,000
2013
3,138,000
959,000
2014
3,235,000
1,007,000
2015
3,334,000
1,057,000
2016
3,435,000
1,108,000
2017
3,537,000
1,159,000
2018
3,642,000
1,211,000
2019
3,749,000
1,266,000
2020
3,858,000
1,320,000
2021
3,969,000
1,376,000
2022
4,082,000
1,433,000
2023
4,198,000
1,491,000
2024
4,316,000
1,551,000
2025
4,436,000
1,611,000
2026
4,559,000
1,673,000
2027
4,684,000
1,736,000
2028
4,812,000
1,800,000
2029
4,942,000
1,866,000
2030
5,077,000
1,952,000
2031
5,214,000
2,041,000
2032
5,354,000
2,132,000
2033
5,497,000
2,225,000
2034
5,643,000
2,320,000
2035
5,791,000
2,415,000
2036
5,943,000
2,514,000
2037
6,098,000
2,614,000
2038
6,255,000
2,715,000
2039
6,416,000
2,820,000
2040
6,580,000
2,926,000
2041
6,748,000
3,035,000
2042
6,919,000
3,146,000
(1) For the year ending September 1
Source Fiscal Consultant and Financial Advisor
29
Agency Activity
The Agency has been actively involved in the redevelopment of properties located within the
Project Area, including the following projects:
recent completion of the Newhall Restripe and Signal Project at a cost of approximately
$900,000, including signal modifications, new signal installation, installation of handicap
access ramps, re -striping for added parking, and re-routing of traffic onto a new arterial
street;
installation underway of new street identification and overhead signs to reflect new street
names to replace San Fernando Road;
design work for Main Street Streetscape Phase 1 to include storm drain, landscape and
streetscape for five blocks of Old Town Newhall; and
plans for a library, 5h Street and Newhall Avenue traffic circle and a mixed-use project
consisting of public parking, residential and commercial uses.
BONDOWNERS' RISKS
Investment in the Bonds involves elements of risk. The following section describes certain
specific risk factors affecting the payment and security of the Bonds. The following discussion of risks
is not meant to be an exhaustive list of the risks associated with the purchase of the Bonds and the
order of discussion of such risks does not necessarily reflect the relative importance of the various
risks. Potential investors are advised to consider the following factors along with all other information
in this Official Statement in evaluating the Bonds. There can be no assurance that other risk factors
not discussed under this caption will not become material in the future.
Bonds Are Limited Obligations and Not General Obligations
The Bonds and the interest thereon are limited obligations of the Agency and do not constitute a
general obligation of the Agency. See "SECURITY AND SOURCES OF PAYMENT FOR BONDS"
herein. No Owner of the Bonds may compel exercise of the taxing power of the State of California or any
of its political subdivisions or agencies to pay the principal of, premium, if any, or interest due on the
Bonds.
The Bonds do not evidence a debt of the Agency or the City within the meaning of any
constitutional or statutory debt limitation provision.
Reduction in Taxable Value; Plan Limitations
Tax Revenues allocated to the Agency are determined by the amount of incremental taxable value
in the Project Area and the current rate or rates at which property in the Project Area is taxed. The
reduction of taxable values of property in the Project Area caused by economic factors beyond the
Agency's control, such as a relocation out of the Project Area by one or more major property owners,
successful appeals by property owners for a reduction in property's assessed value, blanket reductions in
assessed value due to general reductions in property values or the complete or partial destruction of such
property caused by, among other eventualities, an earthquake or other natural disaster, could cause a
reduction in Tax Revenues securing the Bonds. These risks and risks of delinquent payments may
generally be exacerbated by the relatively high concentration of ownership in the Project Area See "THE
REDEVELOPMENT PROJECT AREA - Major Taxpayers." Such reduction of Tax Revenues could
30
have an adverse effect on the Agency's ability to make timely payments of principal of and interest on the
Bonds.
In addition, limitations on the Agency's receipt and use of tax increment revenues may also affect
the availability of Tax Revenues. See "LIMITATIONS ON TAX REVENUES" and "THE
REDEVELOPMENT PROJECT AREA - Plan Limitations."
Reduction in Inflationary Rate and Changes in Legislation; Further Initiatives
As described in greater detail below (see "LIMITATIONS ON TAX REVENUES"),
Article XIIIA of the California Constitution provides that the full cash value base of real property used in
determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed
a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price
index or comparable local data. Such measure is computed on a calendar year basis.
Article XIIIA of the California Constitution, which significantly affected the rate of property
taxation, was adopted pursuant to California's constitutional initiative process. From time to time, other
initiative measures could be adopted by California voters. The adoption of any such initiative might alter
the calculation of tax increment revenues, reduce the property tax rate, or broaden property tax
exemptions. Future legislative reallocation of the 1% basic levy among the affected taxing entities could
increase the taxes retained by certain taxing entities with a corresponding reduction in Tax Revenues. See
"LIMITATIONS ON TAX REVENUES - Property Tax Limitations - Article IIIA."
Concentration of Ownership
The top ten largest secured property taxpayers in the Project Area account for approximately 31%
of the total secured and unsecured assessed value of the Project Area for 2007-08. Concentration of
ownership presents a risk in that if one or more of the largest property owners were to default on their
taxes, or were to successfully appeal the tax assessments on property within the Project Area, a substantial
decline in Tax Revenues could result. Property taxes for the ten largest assessees in the Project Area are
current. See "THE REDEVELOPMENT PROJECT AREA — Major Taxpayers" herein.
County of Orange vs. Orange County Assessment Appeals Board
In 2003, the Orange County Superior Court entered a final judgment in the Bezaire v. County of
Orange case (also known as the "Prop. 13" or "2% Case") holding that the Orange County Assessor (the
"Assessor") had violated the 2% maximum annual inflation adjustment limit of Article XIIIA of the
California Constitution when the Assessor attempted to compensate for the failure to increase the taxable
value of a single family residential property the previous year when the market value of the property
declined below its taxable value, by increasing the assessed value by 4% the following year. The
Assessor established the 4% value increase by attempting to recapture two years of inflation adjustments.
The State Board of Equalization had approved this methodology for increasing assessed values in similar
circumstances, and in 2002, two other local courts (Los Angeles and San Diego) ruled differently than
Orange County on the same issue, affirming the latter practice.
The Superior Court had ruled in favor of a motion to restate the complaint as a class action,
whose members consisted of those Orange County taxpayers whose property assessments rose more than
2% due to the cumulative effect of current assessments with those of previous years. If upheld on appeal,
the class action suit could have resulted in the return in excess of $500 million to taxpayers in Orange
County. In June, 2003 the Orange County Assessor and the Tax Collector in conjunction with the County
of Orange, filed an appeal to the Court of Appeal of the State of California, Fourth District, Division
Three. In 2004, the Court of Appeal reversed the lower court, entering judgment in favor of Orange
County, finding that the trial court erred in ruling that assessments are always limited to no more than 2%
31
of the previous year's assessment. The Court of Appeal ruled that the base on which the inflation factor is
figured remains that of the original purchase price (or assessment at time of genuine new construction),
not any reduced base resulting from a reassessment in the wake of declining property values. The State
Supreme Court declined to hear an appeal of this case, and no further appeal has been filed. Despite its
current status, this litigation illustrates how legal proceedings maybe brought to challenge property tax
valuations, the outcome./of which may have unpredictable effects on the Agency's receipt of Tax
Revenues.
Levy and Collection
The Agency has no independent power to levy and collect property taxes. Any reduction in the
tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the
Tax Revenues, and accordingly, could have an adverse impact on the ability of the Agency to make debt
service payments on the Bonds. Likewise, delinquencies in the payment of property taxes could have an
adverse effect on the Agency's ability to make timely debt service payments on the Bonds. The County
currently allocates tax increment revenues to the Agency based upon the tax increment actually collected.
The tax increment revenue projections provided in Tables 6 and 7 present the amount of net tax
increment expected to be allocated from the Project Area over the term of the projections. Tax increment
revenue figures represented in these Tables have been reduced for County administration fees, but do not
include supplemental tax revenues and have not been reduced for delinquencies or successful assessment
appeals activity.
State Budget Deficit
The State budget for Fiscal Year 199344 transferred $2.6 billion to school districts from cities,
counties and other local governments, including redevelopment agencies. As part of the budget's transfer
of moneys to school districts, the State Legislature adopted SB 1135 which required redevelopment
agencies to transfer approximately $65 million to the Educational Revenue Augmentation Fund
("ERAF") in both Fiscal Years 1993-94 and 1994-95. As a result of the enactment of AB 1768 (Statutes
of 2002, Chapter 1127), the Agency made its first ERAF contribution of $16,709 to the State for Fiscal
Year 2002-03 with funds from the Project Area.
The State budget for 2003-04 included a $135 million sluff of redevelopment agency tax
increment revenues to ERAF. The Agency paid $27,045 from funds on hand in the Project Area.
The State budget for 2004-05 included a shift of property tax revenues from local governments to
ERAF totaling approximately $1.3 billion over a period of two years, of which a total of $250 million
would come from redevelopment agencies. The Agency made its ERAF payment of $63,861 prior to the
May 10, 2005 deadline. For fiscal year 2005-06, the Agency's ERAF payment was calculated by the
California Department of Finance to be $82,114 and was paid prior to the May 10, 2006 deadline.
Pursuant to the State's 2006-07 Budget, local governments are no longer required to shift
property taxes to the ERAF pursuant to the provisions of Proposition 1A.
Proposition 1A. Proposition IA (SCA 4), proposed by the Legislature in connection with the
2004-05 Budget Act and approved by the voters -in November 2004, 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
32
must be approved by two-thirds of both houses of the State 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 of the State Legislature and certain other conditions are
met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among
local governments within a county. Proposition IA also provides that if the State reduces the Vehicle
License Fee rate currently in effect, which is 0.65 percent of vehicle value, the State must provide local
governments with equal replacement revenues. Further, Proposition IA required the State, beginning
March 1, 2006, to suspend State mandates affecting cities, counties and special districts, schools or
community colleges, excepting mandates relating to employee rights, in any year that the State does not
fully reimburse local governments for their costs of compliance with such mandates.
Current and Future Budgets. On January 10, 2008, the Governor, by proclamation, declared
that the State was in a fiscal emergency and called a special session of the State Legislature to reduce the
current year's spending. The State Department of Finance reported that, a combination of lowered
revenue receipts and projections and increased costs has resulted in a projected $3.3 billion budget
shortfall for fiscal year 2007-08, which is projected to grow to a $14.5 billion cumulative budget shortfall
for fiscal year 2008-09. The Governor's 2008-09 Proposed Budget calls for significant reductions to
most State programs and expenditures. Although the 2008-09 Proposed Budget does not include any
ERAF shifts or other substantive reallocation of tax increment revenues, the State's budget for fiscal year
2008-09, when finally adopted, will likely include many changes from the current 2008-09 Proposed
Budget, reflecting further review and negotiations among the Governor and State legislators.
The Agency cannot predict whether future State budget legislation will further divert moneys
from redevelopment agencies, and the effect such diversion would have on the receipt of Tax Revenues
and, accordingly, the payment of debt service on the Bonds. There can be no assurances that the State
will not continue to experience budget gaps in the future. The Agency cannot predict the impact current
and future State fiscal shortfalls will have on the Tax Revenues. The projections of Tax Revenues
prepared by the Fiscal Consultant currently do not reflect a shift of Tax Revenues.
Information about the State budget and State spending is regularly available at various State -
maintained websites. Text of the budget may be found at the website of the Department of Finance,
www.dof.ca.gov, under the heading "California Budget." An impartial analysis of the budget is posted by
the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State of California official
statements, many of which contain a summary of current and past State budgets may be found at the
website of the State Treasurer, www.treasurer.ca.gov. The foregoing internet addresses are included for
reference only, and the information on these internet sites are not apart of this Official Statement and are
not incorporated by reference into this Official Statement. Although it is unclear at this time what impact
(if any) future proposals similarly targeted for diversion to the State's General Fund will have on the
Agency's Housing Fund or other monies for its redevelopment activities, potential buyers of the Bonds
should be aware of these developments.
Additional Financing
Following the issuance of the Bonds, the Agency may issue one or more additional series of
bonds and/or notes in an aggregate principal amount which (when added to the Bonds and the Housing
Bonds) do not exceed the limitations set forth in the Redevelopment Plan. See "THE FINANCING
PLAN" and "LIMITATIONS ON TAX REVENUES." Subject to compliance with the limitations of the
Indenture, such obligations may be issued on a parity with or subordinate to the Bonds. See "SECURITY
FOR THE BONDS — Issuance of Additional Bonds" and "-Issuance of Subordinated Debt."
33
Loss of Tax Exemption
In order to maintain the exclusion from gross income for federal income tax purposes- of the
interest on the Bonds, the Agency has covenanted in the Indenture to comply with each applicable
requirement of Section 103 and Sections 141 through 150 of the Internal Revenue Code of 1986, as
amended, relative to arbitrage and avoidance of characterization as private activity bonds, among other
things. The interest on the Bonds could become includable in gross income for purposes of federal
income taxation retroactive to the date of issuance of the Bonds as a result of acts or omissions of the
Agency in violation of covenants in the Indenture. Should such an event of taxability occur, the Bonds
are not subject to acceleration, redemption or any increase in interest rates and will remain Outstanding
until maturity or until redeemed under one of the redemption provisions contained in the Indenture. See
"TAX MATTERS" herein.
Seismic Risk and Flood Risk
The City, like all.California communities, may be subject to unpredictable seismic activity.
There is no evidence that a ground surface rupture will occur in the event of an earthquake, but there is
significant potential for destructive ground -shaking during the occurrence of a major seismic event. In
addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such
an event. In the event of a severe earthquake, there may be significant damage to both property and
infrastructure in the Project Area. As a result, the value of taxable land in the Project Area could be
diminished in the aftermath of such an earthquake, through appeals, thereby reducing the amount of Tax
Revenues (see "Property Tax Appeals" herein).
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. The City
sustained damages as a result of the 1994 Northridge Earthquake. [More to follow] 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 Project Area is subject to very minimal flood risk. Discussion offlood risk.]]
Property Tax Appeals
There have been 12 assessment appeals filed by landowners within the Project Area for the period
commencing with the 1996-07 fiscal year and continuing to December 2007. Of the 12 appeals filed, 3
have been resolved with a reduction in value. There are 2 appeals currently pending. See "THE
REDEVELOPMENT PROJECT AREA — Assessment Appeals" and "APPENDIX D - FISCAL
CONSULTANT'S REPORT." Within the Project Area and based on assessment appeals data through
December, 2007 and using the historical averages for owners successfully appealing their assessed values
the Fiscal Consultant projects that a total of $355,435 in assessed value will be taken from the 2008-09
tax rolls. This projected reduction has been incorporated into the projection of tax revenues. Reductions
in assessed value due to any future assessment appeals which may be filed have not been taken into
consideration in projecting future gross tax increment revenue.
Any reduction of assessed valuations could result in a reduction of the Tax Revenues, which in
turn could impair the ability of the Agency to make payments of principal of and/or interest on the Bonds
when due.
34
Hazardous Substances
An environmental condition that may result in the reduction in the assessed value of parcels
would be the discovery of a hazardous substance that would limit the beneficial use of a property within
the Project Area. In general, the owners and operators of a property may be required by law to remedy
conditions of the property relating to releases or threatened releases of hazardous substances. The owner
may be required to remedy a hazardous substance condition of property whether or not the owner or
operator has anything to do with creating or handling the hazardous substance. The effect, therefore,
should any of the property within the Project Area be affected by a hazardous substance would be to
reduce the marketability and value of the property by the costs of remedying the condition, causing a
reduction of the Tax Revenues available to pay debt service on the Bonds.
Enforceability of Remedies
The remedies available to the Trustee and the registered owners of the Bonds upon an event of
default under the Indenture or any other document described herein are in many respects dependent upon
regulatory and judicial actions which are often subject to discretion and delay. Under existing law and
judicial decisions,- the remedies provided for under such documents may not be readily available or may
be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be
qualified to the extent that the enforceability of the legal documents with respect to the Bonds is subject to
limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of
creditors generally and by equitable remedies and proceedings generally.
Investment of Funds
The Reserve Account and all other funds held under the Indenture are required to be invested in
Authorized Investments as provided under the Indenture. See APPENDIX A - SUMMARY OF
CERTAIN PROVISIONS OF THE INDENTURE." All investments, including Authorized Investments,
authorized by law from time to time for investments by redevelopment agencies contain a certain degree
of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market
value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts
held under the Indenture, or the funds and accounts held by the Agency could have a material adverse
effect on the security for the Bonds and/or the financial condition of the Agency.
Assumptions and Projections
Any reduction in Tax Revenues, whether for any of the foregoing reasons or any other reason,
could have an adverse effect on the Agency's ability to make timely payments of principal of, premium, if
any, and interest on the Bonds, which are secured by such Tax Revenues. To estimate the total Tax
Revenues available to pay debt service on the Bonds, the Fiscal Consultant has made certain assumptions
with regard to the assessed valuation in the Project Area, future tax rates, and the percentage of taxes
collected. See "APPENDIX D — FISCAL CONSULTANT'S REPORT" for a full discussion of the
assumptions underlying the projections set forth herein with respect to Tax Revenues. The, Agency
believes these assumptions to be reasonable, but to the extent that the assessed valuations, the tax rates,
and the percentage of taxes collected are less than the Agency's assumptions, the total Tax Revenues
available will, in all likelihood, be less than those projected herein. See "THE REDEVELOPMENT
PROJECT AREA — Projected Taxable Valuation and Tax Revenues; Debt Service Coverage" herein.
Secondary Market
There can be no assurance that there will be a secondary market for the Bonds, or if a secondary
market exists, that such Bonds can be sold for any particular price. Occasionally, because of general
market conditions or because of adverse history or economic prospects connected with a particular issue,
35
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, pricing of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could substantially differ from the original purchase price.
LIMITATIONS ON TAX REVENUES
Property Tax Limitations - Article XIIIA
California voters, on June 6, 1978, approved an amendment (commonly known as both
Proposition 13 and the Jarvis -Gann Initiative) to the California Constitution. This amendment, which
added Article XIIIA to the California Constitution, among other things, affects the valuation of real
property for the purpose of taxation in that it defines the full cash value of property to mean "the county
assessor's valuation of real property as shown on the 1975/76 tax bill under full cash value, or thereafter,
the appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a
rate not to exceed 2% per year, or any reduction in the consumer price index or comparable local data, or
any reduction in the event of declining property value caused by damage, destruction or other factors. See
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
Article XIIIA further limits the amount of any ad valorem tax on real property to 1% of the full
cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the
voters prior to July 1, 1978. In addition, an amendment to Article XIII was adopted in August 1986 by
initiative that exempts any bonded indebtedness approved by two-thirds of the votes cast by voters for the
acquisition or improvement of real property from the 1 percent limitation. On December 22, 1978, the
California Supreme Court upheld the amendment over challenges on several state and federal
constitutional grounds (Amador Valley Joint Union School District v. State Board of Equalization).
In the general election held November 4, 1986, voters of the State of California approved two
measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended
Article XIIIA to provide that the terms "purchased" and "change of ownership," for purposes of
determining full cash value of property under Article XIIIA, do not include the purchase or transfer of
(1) real property between spouses and (2) the principal residence and the first $1,000,000 of other
property between parents and children.
Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over age 55 who
sell their residence to buy or build another of equal or lesser value within two years in the same county, to
transfer the old residence's assessed value to the new residence. Pursuant to Proposition 60, the
Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in
the event of declining property values caused by damage, destruction or other factors, to provide that
there would be no increase in the "full cash value" base in the event of reconstruction of property
damaged or destroyed in a disaster and in certain other minor or technical ways. See `BONDOWNERS'
RISKS - Reduction in Taxable Value; Plan Limitations" herein.
Challenges to Article XIIIA
California trial and appellate courts have upheld the constitutionality of Article XIIIA's
assessment rules in three significant cases. The United States Supreme Court in an appeal to one of these
cases upheld the constitutionality of Article XIIIA's tax assessment system. The Agency cannot predict
whether there will be any future challenges io California's present system of property tax assessment and
cannot evaluate the ultimate effect on the Agency's receipt of Tax Revenues should a future decision hold
unconstitutional the method of assessing property.
Y
36
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 X111A, $4.00 per $100 assessed
valuation (based on the traditional practice in California of using 25% of full cash value as the assessed
value for tax purposes).
J
The apportionment of property taxes in fiscal years after 1978-79 has been revised pursuant to
Statutes of 1979, Chapter 282 which provides relief funds from State moneys beginning in fiscal year
1978-79 and is designed to provide a permanent system for sharing State taxes and budget surplus funds
with local agencies. Under Chapter 282, cities and countries receive about one-third more of the
remaining property tax revenues collected under Proposition 13 instead of direct State aid. School
districts receive a correspondingly reduced amount of property taxes, but receive compensation directly
from the State and are given additional relief. Chapter 282 does not affect the derivation of the base levy
($1.00 per $100 taxable valuation) and the bonded debt tax rate.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of
ownership, 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 except for certain utility property assessed by the
State Board of Equalization which is allocated by a different method discussed herein.
Proposition 87
Under prior State law, if a taxing entity increased its tax rate to obtain revenues to repay voter
approved general obligation bonds, any redevelopment project area which included property affected by
the tax rate increase would realize a proportionate increase in tax increment.
Proposition 87, approved by the voters of the State on November 8, 1993, requires that all
revenues produced by a tax rate increase (approved by the -voters on or after January 1, 1989) go directly
to the taxing entity which increases the tax rate to repay the general obligation bonded indebtedness. As a
result, redevelopment agencies no longer receive an increase in tax increment when taxes on property in
the project area are increased to repay voter approved general obligation debt.
Property Tax Collection Procedures
Classifications. In California, property that is subject to ad valorem taxes is classified as
"secured" or "unsecured." Secured and unsecured property is entered on separate parts of the assessment
roll maintained by the county assessor. The secured classification includes property on which any
property tax levied by the county becomes a lien on that property sufficient, in the opinion of the county
assessor, to secure payment of the taxes. Every tax that becomes a lien on secured property has priority
over all other liens on the secured property, regardless of the time of the creation of other liens. A tax
levied on unsecured property does not become a lien against the taxes on unsecured property, but may
become a lien on certain other property owned by the taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the two
classifications of property. The taxing authority has four ways of collecting unsecured property taxes in
the absence of timely payment by the taxpayer: (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 recording in the county
recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of
the personal property, improvements or possessory interests belonging or assessed to the assessee.
37
The exclusive means of enforcing the payment of delinquent taxes with respect to property on the
secured roll is the sale of property securing the taxes to the State for the amount of taxes that are
delinquent.
Current tax payment practices by,the County provide for payment to the Agency of tax increment
revenues monthly throughout the fiscal year, with the majority of tax increment revenues paid to the
Agency in mid-December and mid-April. A final reconciliation is made after the close of the fiscal year to
incorporate all adjustments to previously reported current year taxable values. The difference between
the final reconciliation and tax increment revenues previously allocated to the Agency is allocated in late
July.
Penalties. A 10% penalty is added to delinquent taxes that have been levied with respect to
property on the secured roll. In addition, property on the secured roll on 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 a delinquency penalty, plus a redemption penalty of I% 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. A 10% penalty also applies to the
delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1% per month
accrues with respect to such taxes beginning the first day of the third month following the delinquency
date.
Delinquencies. The valuation of property is determined as of January 1 each year and equal
installments of taxes levied upon secured property become delinquent on the following December 10 and
April 10. Taxes on unsecured property are due January 1 and become delinquent on the succeeding
August 31.
Supplemental Revenue. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498),
provides for the supplemental assessment and taxation of property as of the occurrence of a change in
ownership or completion of new construction. Previously, statutes enabled the assessment of such
changes only as of the next tax lien date (March 1 was used as the lien date as of the enactment of Chapter
498; however, as discussed below, the lien date was changed by legislation enacted in 1995) following the
change and thus delayed the realization of increased property taxes from the new assessments for up to 14
months. As enacted, Chapter 498 provides increased revenue to redevelopment agencies to the extent that
supplemental assessments as a result of new construction or changes of ownership occur within the
boundaries of redevelopment projects subsequent to the lien date. To the extent such supplemental
assessments occur within the Project Area, Tax Revenues may increase. The receipt of supplemental tax
increment revenues by taxing entities typically follow the change of ownership by a year or more. The
Fiscal Consultant has not included revenues resulting from Supplemental Assessments in their projections
nor have they deducted any potential supplemental revenue collection fees.
Actual tax increment receipts presented in Table 3 include supplemental roll revenue.
Supplemental roll revenue is generated by the tax increment revenue created when a sale takes place or
construction project is completed after January 1 of a given year (the Assessor's cut-off date for value to
be attributed to next year's assessment roll) but re -assessment occurs and the owner is issued a
supplemental tax bill for the period between the sale or completion of the construction and the next
regular tax bill. Because these revenues are unpredictable, they have not been projected.
M
Tax Collection Fees
Pursuant to legislation enacted by the State Legislature (SB 2557 and AB 1924), the County of
Los Angeles collects certain administrative fees for the collection and allocation of tax increment revenue
to the Agency. Tax increment projections presented in Table 1 and Table 2 are net of anticipated
administrative fee charges by the County. See "APPENDIX D - FISCAL CONSULTANT'S REPORT".
Unitary Taxation of Utility Property
AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with fiscal year 1988-89,
assessed value derived from State -assessed unitary property (consisting mostly of operational property
owned by certain railroad and utility companies) is to be allocated county -wide as follows: (i) each tax
rate area will receive the same amount from each assessed utility received in the previous fiscal year
unless the applicable county -wide values are insufficient to do so, in which case values will be allocated
to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous
fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility
according to a specified formula. Additionally, the lien date on State -assessed property is changed from
March 1 to January 1. AB 454 (Statutes of 1987, Chapter 921) further modifies Chapter 1457 regarding
the distribution of tax revenues derived from property assessed by the State Board of Equalization.
Chapter 921 provides for the consolidation of all State -assessed property, except for regulated railroad
property, into a single tax rate area in each county. Chapter 921 further provides for a new method of
establishing tax rates on State -assessed property and distribution of property tax revenues derived from
State -assessed property to taxing jurisdictions within each county as follows: for revenues generated from
the one percent tax rate, each jurisdiction, including redevelopment project areas, will receive a
percentage up to 102% of its prior year State -assessed unitary revenue; and if county -wide revenues
generated for unitary property are greater than 102% of the previous year's unitary revenues, each
jurisdiction will receive a percentage share of the excess unitary revenue generated from the application
of the debt service tax rate to county wide unitary taxable value, further, each jurisdiction will receive a
percentage share of revenue based on the jurisdiction's annual debt service requirements and the
percentage of property taxes received by each jurisdiction from unitary property taxes. Railroads will
continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.
The intent of Chapters 1457 and 921 is to provide redevelopment agencies with their appropriate
share of revenue generated from the property assessed by the State Board of Equalization. The Auditor
Controller has allocated $887.37 in unitary tax revenue to the Project Area for fiscal year 2007-08. For
purposes of Tax Revenue projections, it has been assumed that this amount will continue to be allocated
annually to the Project Area for the life of the projection.
Currently, the California electric utility industry has been undergoing significant changes in its
structure and in the way in which components of the industry are regulated. The Agency is unable to
predict the impact of these changes on its utility property tax revenues, or whether legislation may be
proposed or adopted in response to industry restructuring, or whether any future litigation or legislation
may affect the State's method of assessing utility property and the allocation of assessed value to local
taxing agencies and, in turn, the receipt of such taxes by the Agency.
Housing Set -Aside
Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Redevelopment Law
requiring redevelopment agencies to set-aside 20 percent of all tax increment derived from redevelopment
project areas adopted after December 31, 1976 in a low and moderate income housing fund (such
amounts are referred to herein as the "Housing Set -Aside"). This low and moderate income housing
requirement could be reduced or eliminated if a redevelopment agency finds that: 1) no need exists in the
39
community to improve or increase the supply of low and moderate income housing; 2) that some stated
percentage less than 20 percent of the tax increment is sufficient to meet the housing need; or 3) that other
substantial efforts including the obligation of funds from state, local and federal sources for low and
moderate income housing of equivalent impact are being provided for in the community.
Chapter 1135, Statutes of 1985 amended Section 33334.3 and 'added Section 33334.6 and
33334.7 imposing such requirements on project areas for which the redevelopment plan was adopted
before January 1, 1977. Section 33334.6 expressly provides that, unless certain findings are made, a
redevelopment agency must fust, before providing for payments of its bonds, set aside 20% of all tax
increment allocated to the agency in the Low and Moderate Income Housing Fund, unless such bonds are
issued to finance or refinance, in whole or in part, any indebtedness or other obligations existing on, and
created prior to, January 1, 1986, and contained in a statement of existing obligations adopted by
resolution of the redevelopment agency. Such legislation also provided that an agency may deposit less
than the full 20% amount in fiscal years prior to July 1, 1996, if necessary'to provide for the completion
of programs approved prior to January 1, 1986, if such programs are contained on a statement of existing
programs adopted by resolution of the Agency.
The Tax Revenues are net of the amounts subject to Sections 33334 2, 33334.6 and 33334.3 of
the Redevelopment Law. See "APPENDIX D - FISCAL CONSULTANT'S* REPORT" herein.
The provisions of the Redevelopment Law regarding the funding of low and moderate income
housing funds have been frequently amended since their original adoption. In addition, the interpretations
of these laws by the California Attorney General and redevelopment agency counsels throughout the State
have at times been subject to variation and change. Section 33334.6 of the Redevelopment Law provides
that, under certain circumstances, redevelopment agencies may defer, in whole or in part, Housing Set -
Aside Payments. However, the projections of net tax increment revenues assume that the Agency will not
defer Housing Set -Aside payments, and that amounts computed net of the Housing Set -Aside payments
will be the only revenues available for payment on the Bonds. Such amounts are set forth as "Tax
Revenues," as indicated in Table 2A of "APPENDIX D - FISCAL CONSULTANT'S REPORT."
Appropriations Limitations; Article XIIIB of the California Constitution
On November 6, 1979, California voters approved Proposition 4, the so-called Gann Initiative,
which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit
the annual appropriations 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 government entity.
The California Legislature has added Section 33678 to the Redevelopment Law which provides
that the allocation of tax increment revenues to a redevelopment agency for the purpose of paying
principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by such
agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor
shall such portion of taxes be deemed receipt of taxes by, or an appropriation subject to the limitation of,
any other public body within the meaning or for the purpose of the Constitution and laws of the State of
California, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678
has been upheld in two California appellate court decisions, Brown v. Redevelopment Agency of the City
of Santa Ana and Bell Redevelopment Agency v.' Woosley. The plaintiff in Brown petitioned the
California Supreme Court for a hearing of this case. The California Supreme Court formally denied the
petition and therefore the earlier court decisions are now final and binding. On the basis of these court
decisions, the Agency does not believe it is subject to Article XIIIB and has not adopted an appropriations
limit.
40
Tax Allocation Procedures of the County of Los Angeles
Tax Increment Revenue. Current tax payment practices by the County provide for payment to
the Agency of tax increment revenues for the various redevelopment project areas on a monthly basis
although the first payment to the Agency is not made until December for secured property. Except for
property tax advances made by the County to the Agency in December and April, actual payments to the
Agency are made on the basis of actual property tax collections in the project areas.
Tax Increment Revenue Receipts. Computed tax increment revenues expected to be received by
the Agency for the Project Area in each fiscal year for 2007-08 through 2042-43 are shown in Table 2 of
"APPENDIX D - FISCAL CONSULTANT'S REPORT."
It should be noted that any variation between receipts and computed tax increment revenues is not
entirely attributable to delinquent unpaid taxes and/or impounded revenues. In addition, adjustments to
property assessments are made by the County Assessor throughout the fiscal year, or as a result of
potential tax refunds. The tax increment revenue projections shown in Table 2 of "APPENDIX D -
FISCAL CONSULTANT'S REPORT" are not adjusted to reflect these types of variances.
County Collection Charge. The County retains a collection charge from tax increment revenues
disbursed to the Agency in order to recover charges for property tax administration. For fiscal year 2007-
08 the County will retain from the Agency a total of $47,838 attributable to the Project Area.
Base Year Valuation Adjustments. The Redevelopment Law provides that the base assessment
roll utilized for the allocation of tax increment revenues may be reduced by the taxable value, as shown
on the base roll, of those properties acquired for public use of tax exempt public entities. The precedent
for this action stems from the 1963 case of Redevelopment Agency of the City of Sacramento vs. Malaki,
216 Cal. App. 2d 480, and subsequent, related cases. The estimate of Tax Revenues as shown in
"APPENDIX D - FISCAL CONSULTANT'S REPORT", incorporates the Fiscal Year 1996-97 base year
value as reported by the County. Future estimates are based on the assumption that the base year value
for the Project Area remains at the level reported by the County for the 2007-08 Fiscal Year.
Certification of Agency Indebtedness
A significant provision of the Redevelopment Law, Section 33675, was added by the Legislature
in 1976, providing for the filing not later than the first day of October of each year with the county
auditor, a statement of indebtedness certified by the chief fiscal officer of the agency for each
redevelopment project which receives tax increments. The statement of indebtedness is required to
contain the date on which any bonds were delivered, the principal amount, term, purpose and interest rate
of such bonds and the outstanding balance and amount due on such bonds. Sirmlar information must be
given for each loan, advance or indebtedness that the agency has incurred or entered into to be payable
from tax increment.
As amended by Assembly Bill 1290 (Statutes of 1993, Chapter 942) ("AB 1290"), Section 33675
requires each redevelopment agency to file a reconciliation statement for each redevelopment project for
which the redevelopment agency receives tax increment revenues pursuant to Section 33670. The
reconciliation statement is to show, among other things, (1) for each loan, advance or indebtedness, for
each redevelopment project the total debt service obligations of the redevelopment agency to be paid in
the fiscal year for which the statement of indebtedness is filed; (ii) the total debt service remaining to be
paid on such indebtedness, and (iii) the available revenues as of the end of that fiscal year. "Available
revenues" consist of all tax increment revenues held by the redevelopment agency as cash or cash
equivalents and all cash or cash equivalents held by the redevelopment agency that are irrevocably
pledged or restricted to payment of a loan, advance or indebtedness that the redevelopment agency has
41
J
listed on a statement of indebtedness. For purposes of Section 33675, amounts held in a redevelopment
agency's Low and Moderate Income Housing Fund do not constitute available revenues, however, an
amount to be deposited by a redevelopment agency in its Low and Moderate Income Housing Fund does
constitute indebtedness of the redevelopment agency.
Section 33675(g) has been amended by AB 1290 to provide that payments of tax increment
revenues from the county auditor to a redevelopment agency may not exceed the redevelopment agency's
aggregate total outstanding debt service obligations minus the available revenues of the redevelopment
agency, as shown on the reconciliation statement. Payments to a trustee under a bond resolution or
indenture or payments to a public agency in connection with payments by such public agency pursuant to
a bond issue shall not be disputed in any action under Section 33675.
The Agency has determined that the amendments to Section 33675 limiting the payment of tax
increment revenues to an amount not greater than the difference between a redevelopment agency's total
outstanding debt obligations and total available revenues, as reported on the redevelopment agency's
reconciliation statement, will not have an adverse impact on the Agency's ability to meet its debt service
obligations.
Pian Limitations
The Redevelopment Law requires redevelopment plans to contain certain limitations, including
limitations on the number of tax dollars which may be divided and allocated to a redevelopment agency,
on the time to establish loans, advances and indebtedness, on the amount of bonded indebtedness that can
be outstanding at one time, on the life of the redevelopment plan or amendment and on the time to repay
indebtedness. See "THE REDEVELOPMENT PROJECT AREA — Plan Limitations" herein.
The Agency is of the opinion that these limitations for the Project Area will not impede its ability
to develop the Project Area in accordance with the Redevelopment Plan nor impair its ability in the future
to repay any obligation or indebtedness, including the Bonds, incurred by the Agency in connection with
the development of the Project Area in accordance with the Redevelopment Plan.
CONCLUDING INFORMATION
Tax Matters
The Internal Revenue Code of 1986, as amended (the "Code'), imposes certain requirements that
must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain
excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal
income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be
included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds.
The Agency has covenanted in the Indenture to comply with each applicable requirement of the Code
necessary to maintain the exclusion pursuant to section 103(a) of the Code of the interest on the Bonds
from the gross income of the owners thereof for federal income tax purposes
11
In the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, under existing law interest on the
Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the
aforementioned covenant, the Bonds are not "specific private activity bonds" within the meaning of
section 57(a)(5) of the Code and, therefore, that the interest on the Bonds will not be treated as an item of
tax preferences for'purposes of computing the alternative minimum tax imposed by section 55 of the
Code. The receipt or accrual of interest on the Bonds owned by a corporation may affect the computation
of the alternative minimum taxable income, upon which the alternative minimum tax is imposed, to the
extent that such interest is taken into account in determining the adjusted current earnings of that
corporation (75 percent of the excess, if any, of such adjusted current earnings over the alternative
42
minimum taxable income being an adjustment to alternative minimum taxable income (determined
without regard to such adjustment or to the alternative tax net operating loss deduction)).
To the extent that a purchaser of a Bond acquires that Bond at a price that exceeds the aggregate
amount of payments (other than payments of qualified stated interest within the meaning of section
1.1273-1 of the Treasury Regulations) to be made on the Bonds (determined, in the case of a callable
Bond, under the assumption described below), such excess will constitute "bond premium" under the
Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally
that bond premium on a tax-exempt obligation must be amortized on a constant yield, economic accrual
basis; the amount of premium so amortized will reduce the owner's basis in such obligation for federal
income tax purposes, but such amortized premium will not be deductible for federal income tax purposes.
In the case of a purchase of a Bond that is callable, the determination whether there is amortizable bond
premium, and the computation of the accrual of that premium, must be made under the assumption that
the Bond will be called on the redemption date that would minimize the purchaser's yield on the Bond (or
that the Bond will not be called prior to maturity if that would minimize the purchaser's yield). The rate
and timing of the amortization of the bond premium and the corresponding basis reduction may result in
an owner realizing a taxable gain when a Bond owned by such owner is sold or disposed of for an amount
equal to or in some circumstances even less than the original cost of the Bond to the owner.
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the
initial offering price to the public of the Bonds of that maturity set forth on the inside cover of this
Official Statement is "original issue discount." Such original issue discount accruing on a Bond is treated
as interest excluded from the gross income of the owner thereof for federal income tax purposes and
exempt from California personal income tax. Original issue discount on any Bond purchased at such
initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term
of the Bond on the basis of a constant yield method and, within each'semiannual period, will accrue on a
ratable daily basis. The amount of original issue discount on such a Bond accruing during each period is
added to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale,
redemption or payment on maturity) of such Bond. The Code includes certain provisions relating to the
accrual of original issue discount in the case of purchasers of Bonds who purchase such Bonds other than
at the initial offering price and pursuant to the initial offering.
Any person considering purchasing a Bond at a price that includes bond premium should consult
his or her own tax advisors with respect to the amortization and treatment of such bond premium,
including, but not limited to, the calculation of gain or loss upon the sale, redemption or other disposition
of the Bond. Any person considering purchasing a Bond of a maturity having original issue discount
should consult his or her own tax advisors with respect to the tax consequences of ownership of Bonds
with original issue discount, including the treatment of purchasers who do not purchase in the original
offering and at the original offering price, the allowance of a deduction for any loss on a sale or other
disposition, and the treatment of accrued original issue discount on such Bonds under federal individual
and corporate alternative minimum taxes.
Bond Counsel has not undertaken to advise in the future whether any events after the date of
issuance of the Bonds may affect the tax status of interest on the Bonds or the tax consequences of the
ownership of the Bonds. No assurance can be given that future legislation, or amendments to the Code, if
enacted into law, will not contain provisions that could directly or indirectly eliminate, or reduce the
benefit of, the exclusion of the interest on the Bonds from the gross income of the owners thereof for
federal income tax purposes. Furthermore, Bond Counsel expresses no opinion as to any federal, state or
local tax law consequences with respect to the Bonds, or the interest thereon, if any action is taken with
respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of bond
counsel if such advise or approval is given by counsel other that Bond Counsel.
43
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from the gross
income of the owners thereof for federal income tax purposes, and is exempt from personal income taxes
of the State of California an owner's federal, state or local tax liability may otherwise be affected by the
ownership or disposition of the Bonds. The nature and extent of these other tax consequences will depend
upon the owner's tax status and other items of income or deduction. Without limiting the generality of
the foregoing, prospective purchasers of the Bonds should be aware that (i) section 265 of the Code
denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in
the case of a financial institution, that portion of an owner's interest expense allocated to interest on the
Bonds, (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code,
sect 832(b)(5)(13)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items,
including interest on the Bonds, (iii) interest on the Bonds earned by certain foreign corporations doing
business in the United States could be subject to a branch profits tax imposed by section 884 of the Code,
(iv) passive investment income, including interest on the Bonds, may be subject to federal income
taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings
and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S
corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social
Security and certain receipts or accruals of interest on the Bonds, and (vi) under section 32(i) of the Code,
receipt of investment income, including interest on the Bonds, may disqualify the recipient thereof from
obtaining the earned income credit. Bond Counsel has expressed no opinion regarding any such other tax
consequences.
Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based
upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the Agency described above. No ruling has been sought from the
Internal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Bond
Counsel, and Bond Counsel's Opinion is not binding on -the Service. The Service has an ongoing
program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the
Bonds is commenced, under current procedures the Service is likely to treat the Agency as the "taxpayer,"
and the Owners would have no right to participate in the audit process. In responding to or defending an
audit of the tax-exempt status of the interest on the Bonds, the Agency may have different or. conflicting
interest from the Owners. Further, the disclosure of the initiation of an audit may adversely affect the
market price of the Bonds, regardless of the final disposition of the audit.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX E.
Financial Advisor
C.M. de Cnnis & Co., Inc. has acted as financial advisor to the Agency concerning the Bonds.
As financial advisor, C.M. de Crinis & Co., Inc. will receive compensation contingent upon the sale and
delivery of the Bonds.
Fiscal Consultant
The Agency has retained the firm of HdL Coren & Cone, Diamond Bar, California, to act as
fiscal consultant (the "Fiscal Consultant") for the Agency on the Project Area. The full text of the Fiscal
Consultant's Report is attached hereto as "APPENDIX D."
Ratings
Moody's Investors Service and Standard & Poor's Ratings Group have given the Bonds a rating
of "Aaa" and "AAA", respectively, with the understanding that upon delivery of the Bonds, a policy
insuring the payment when due of principal of and interest on the Bonds will be issued by
. [In addition, S&P has assigned an underlying rating of " " to the
44
Bonds based on its assessment of the Agency's ability to make payments with respect to the Bonds
without giving effect to the Policy.] Such ratings reflect only the views of such organization and any
desired explanation of the significance of such ratings may be obtained from S&P and Moody's.
Generally, a rating agency bases its rating on the information and materials furnished to it and on
investigations, studies and assumptions of its own. There is no assurance such ratings will continue
for any given period of time or that such ratings will not be revised downward or withdrawn
entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so
warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect
on the market price of the Bonds.
Underwriting
The Bonds were sold by competitive bid to , as Underwriter, at a price
of $ , which includes an underwriter's discount of $ and a net original
issue discount of $ . The Underwriter intends to offer the Bonds to the public initially at
the prices set forth on the inside cover page of this Official Statement, which prices may subsequently
change without any requirement of prior notice.
The Underwriter reserves the right to join with dealers and other underwriters in offering the
Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers
depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers
may reallow any such discounts on sales to other dealers.
No Litigation
There is no litigation pending or, to the Agency's knowledge, threatened to restrain or enjoin the
issuance, execution or delivery of the Bonds, to contest the validity of the Bonds, the Indenture, or any
proceedings of the Agency with respect thereto. In the opinion of the Agency and its counsel, there are
no lawsuits or claims pending against the Agency which will materially affect the Agency's finances as to
impair the ability to pay principal of an interest on the Bonds when due.
Legal Matters
The legality of the issuance of the Bonds is subject to the approval of Fulbright & Jaworski
L.L.P., Los Angeles, California, Bond Counsel. A copy of the opinion will be substantially in the form
set forth in "APPENDIX E" herein. Burke, Williams & Sorensen, L.L.P., Los Angeles, California, serves
as legal counsel to the Agency, providing general legal services to the Agency with respect to
redevelopment matters. Fees payable to Bond Counsel are contingent upon successful sale and delivery
of the Bonds.
Miscellaneous
All of the preceding summaries of the Indenture, the Redevelopment Law, other applicable
legislation, the Redevelopment Plan for the Project Area, agreements and other documents 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. Reference is hereby made to such documents on file with the Agency for
further information in connection therewith.
Any statements made in this Official Statement involving matters of opinion or of estimates,
whether or not so expressly stated, are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized.
45
The execution and delivery of this Official Statement by its Executive Director has been duly
authorized the Agency.
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
LE
46
Executive Director
APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF
THEINDENTURE
A-1
APPENDIX B
AUDITED FINANCIAL STATEMENTS
OF THE CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
APPENDIX C
GENERAL INFORMATION RELATING TO
THE CITY OF SANTA CLARITA
Information contained in this APPENDIX C is presented as general background data. The Bonds
are payable solely from the Tax Revenues and other sources as described herein. The taxing power of the
City of Santa Clarita, the State of California, or any political subdivision thereof is not pledged to the
payment of the Bonds.
General Background
The City is located in the Santa Clarita Valley (the "Valley"), which is comprised of the
communities of Canyon Country, Newhall, Saugus, and Valencia, all located in Los Angeles County (the
"County"). The following information specifically relates to the City and generally to the Santa Clanta
Valley.
The first discovery of gold in 1842 was the beginning of a transformation of the area of the City,
where the once -ancient Alliklik Indians, wild horses, Spanish explorers and European colonists lived.
After purchasing Rancho San Francisco (later known as Newhall Ranch) in 1875, Henry Mayo
sold a right-of-way to the Southern Pacific Railroad for $1 and a town site known as Newhall for another
$1. Not only did it become a rail center, but the first commercially producing oil well began operation in
Pico Canyon in 1875, followed by the state's first oil refinery in Railroad Canyon.
The City was officially incorporated on December 15, 1987, after a ballot measure was passed by
the City's residents. The City is a general law city and operates under a Council -Manager form of
government and provides, either directly or under contract with the County, a full range of municipal
services including public safety, public works (including the sewer system), parks and recreation,
community development, etc.
Geography and Climate
Santa Clarita Valley is located 35 miles northwest of Los Angeles and 40 miles east of the Pacific
Ocean. It covers 150 square miles and forms an inverted triangle with the San Gabriel and Santa Susana
mountain ranges, separating it from the San Fernando Valley and the Los Angeles Basin on the south, and
the San Joaquin Valley, Mojave Desert and Angeles National Forest to the north. The Santa Clara River
and its tributaries drain over 490,000 acres of mountains and canyons forming Santa Clarita Valley.
The City of Santa Clarita covers approximately 50 square miles and is located 40 miles from Los
Angeles International Airport, 25 miles from the Burbank Airport; and 50 to 60 miles from the ports of
Los Angeles and Long Beach, respectively. The City is accessible via Highway 126, the Golden State
and the Antelope Valley Freeways. Three Metrolink stations serve rail passengers from the San Fernando
Valley and Downtown Los Angeles.
In general, the climate in the City is sunny, warm and dry in the summer and semi -moist and mild
in the winters. The annual rainfall of 15 to 18 inches occurs primarily between November and March.
Municipal Government
The City provides general government services either with its own employees or through
contracts. The City has a Council Manager form of municipal government. The City Council appoints
the City Manager who is responsible for the day-to-day adrninistration of City business and the
C-1
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 Council from among its members. As of
July 1, 2007, the City had a staff of 384.75 funded equivalent full time positions. The current members of
the City Council, term expiration and their principal occupations are as follows:
City Council
Marsha A. McLean, Mayor
Robert C. Kellar, Mayor Pro tem
Laurene F. Weste, Councilmember
Frank C. Ferry, Councilmember
Timothy B. Boydston, Councilmember*
Term Expires
Occupation
April 2010
Business Owner
April 2008
Retired Police Officer
April 2010
Community Advocate
April 2010
Educator
April 2008
Executive Director/
Artistic Director
* Appointed to fill vacancy upon election of Councilmember Cameron Smythe to State Assembly, 38th District.
Current City Management Staff includes the following:
Mr. Ken Pulskamp serves as the Executive Director of the Agency and City Manager of the City.
He was appointed to the positions November 5, 2002. A twenty-seven year veteran of local government
management, Ken previously served as Deputy City Manager of Fresno, California, Assistant City
Manager of Bakersfield, California and Assistant City Manager of Santa Clarita. During his tenure with
the City Ken has also served as the Acting Department Head of every City department. Ken has a
Bachelor of Arts from the California State University, Fresno and a Master of Public Administration from
the University of San Francisco.
Mr. Ken Striplin is currently the Assistant City Manager and Personnel Officer for the City of
Santa Clarita since September 2004. Previously Ken has served Santa Clarita as Assistant to the City
Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In addition,
Ken has served as Interim Director of two departments: Field Services and Planning and Economic
Development. Ken holds Bachelor of Arts and Master of Public Administration degrees from California
State University, Northridge, and a Doctor of Education in Organizational Leadership from Pepperdine
University.
Mr. Darren Hernandez has been the Treasurer of the Agency and Director of Administrative
Services for the City of Santa Clarita since January 2004 and was named Deputy City Manager in July
2007. In this position he provides leadership to the Department of Administrative Services and serves the
City and Agency as Chief Financial Officer. Previously Darren 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.
Darren has a, Bachelor of Arts degree from the State University of New York and studied public
adininistration as a graduate student at the Maxwell School of Syracuse University.
Municipal Services
The City provides park and recreation services, transit services, trash collection, street
maintenance, building inspection and planning services. As a "contract city," the City purchases certain
public services through contracts with other agencies and private companies. Contracting for services
enables the City to accomplish the essential administrative and operational functions of a municipality
with a relatively small workforce and payroll, and a minimum of facilities and equipment. The primary
example of the contract arrangement is the Santa Clanta Police Department, whose sworn and civilian
personnel are provided by the Los Angeles County Sheriffs Department. Fire protection is provided by
.wj
the Los Angeles County Fire Protection District. Other regularly contracted services include refuse and
recycling collection, landscaping and public transit services.
Education
The City is served by 47 elementary schools, 6 middle schools, 7 high schools and numerous
private and parochial schools. Three colleges are located in the Valley, California Institute of the Arts,
The Masters College and College of the Canyons. Collectively, their student population reached 15,079.
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.
Population
The following table shows the City's and County's population from 2003 through 2007 calendar
years.
CITY OF SANTA CLARITA AND LOS ANGELES COUNTY
Population
Year Los Angeles County City of Santa Clarita
2003 9,980,168 162,964
2004 10,101,547 164,905
2005 10,191,080 167,389
2006 10,257,994 167,631
2007 10,331,939 177,158
Source. California State Department of Finance, as of January I
Employment
The following table summarizes the City's employment and unemployment rates for 2002
through 2006 calendar years.
CITY OF SANTA CLARITA
Civilian Labor Force, Employment and Unemployment
Annual Averages
2002 2003 2004 2005 2006
Civilian Labor Force
Employment 84,800 84,600 85,300 87,300 88,300
Unemployment 3,600 3,700 3,500 2,900 2,600
Total 88.400 88.300 88.800 21M 90.900
Unemployment 4.1% 4.2% 3.9% 3.2% 2.8%
Rate (a)
(') The unemployment rate is calculated using unrounded data.
Source California Employment Development Department
C-3
F
Largest Employers
Mayor employers within the Santa Clarita Valley are as follows:
SANTA CLARITA VALLEY
Major Employers
Company Product/Service Employees
Six Flags Magic Mountain Amusement Park 3,878
Saugus Union School District Education 2,095
William S. Hart Union High School Education 2,009
District
Princess Cruises
Travel
1,850
U.S. Postal Service
Processing & Distribution
1,707
Center
College of the Canyons
Education
1,411
Henry Mayo Newhall Memorial Hospital
Hospital
1,355
Newhall School District
Education
825
The Master's College
Education
741
Specialty Laboratories
Medical Research &
700
Development
H.R. Textron
Aerospace
688
City of Santa Clarita
Government
606
California Institute of the Arts
Education
510
Arvato Services
Business Services
505
Aerospace Dynamics
Aerospace
437
Fanfare Media Works
Promotions/Direct Advertising
407
Advanced Bionics
Medical Device
375
Pharmavite
Nutritional Supplement
350
Castaic Union School District
Education
350
Target
Retail Store
345
Source First American Title Company's California Economic Forecast, October 2006
�. C-4
Commercial Activity and Sales Tax
The following tables show total taxable transactions and sales tax revenues within the City over
the last five calendar years in which annual data is available.
CITY OF SANTA CLARITA
Taxable Transactions
(Thousands of Dollars)
Year Permits Taxable Transactions
2002
5,458
1,246,643
2003
5,618
2,095,140
2004
5,999
2,290,510
2005
6,336
2,673,395
2006
6,409
2,857,875
Source State Board of Equalization
The following table shows a breakdown of the taxable sales within the City for 2006 calendar
year (the latest calendar year in which information is available).
CITY OF SANTA CLARITA
Taxable Sales
— 2006
Type of Business
Permits
Taxable Transactions
Retail Stores
Apparel Stores
353
$ 120,944,000
General Merchandise Stores
162
419,102,000
Food Stores
78
106,582,000
Eating and Drinking Places
411
267,833,000
Home Furnishings and Appliances
231
78,993,000
Bldg. Material and Farm
Implements
65
215,033,000
Auto Dealers and Auto Supplies
112
639,229,000
Service Stations
40
265,323,000
Other Retail Stores
1,676
288,883,000
Retail Stores Total
3,128
$2,401,919,000
All Other Outlets
3,281
455,956,000
Totals All Stores
6,409
$2,857,875,000
Source State Board of Equalization
There is a geographic area within the City known as the "Santa Clarita Enterprise Zone" that
provides tax incentives to business. The Santa Clanta Enterprise Zone coyers 97% of all commercial,
business, and industrial zoned land within the City. As of its final designation date on July 1, 2007, the
Santa Clarita Enterprise Zone will strengthen the region's 'local economy by providing significant
California state tax advantages to businesses located within the Zone.
C-5
Housing
As of January 1, 2007, the California Department of Finance reported that there were 36,020
single family detached units in the City, 6,938 single family attached units, 13,370 multifamily housing
units and 2,240 mobile home units. The vacancy rates is approximately 3.16%. Single family homes in
the City have values that range from $300,000 to well over $1 million. Rents range from $800 to $2800
per month for one- and two-bedroom apartments, with condominium and townhome rentals ranging
slightly higher.
Construction Activity
The following table shows the valuation of building permits issued in the City for the last five
calendar years in which the data is available.
Median Household Income
The U.S. Census Bureau American FactFinder reports that the median income of households in
the City for 2006 is $75,917 compared to $48,451 for the nation. Ninety percent of the households
received earnings and fourteen percent received retirement income other than Social Security, with
eighteen percent of the households receiving Social Security. These income sources are not mutually
exclusive, with some households receiving income from more than one source.
Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarnta Valley.
Among them are Six Flags Magic Mountain Amusement Park and Gene Autry's Melody Ranch. For
water enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid.
The Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks
County Park and the City's community parks are also available for hiking and picnicking. William S.
Hart Park features a magnificent Spanish colonial mansion museum. Frazier Park and Mountain High are
within a 40 mile drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild, Disney
Studios, Santa Clarita Repertory Theater, as well as the Friendly Valley, Valencia Country Club,
Robinson's Ranch and Vista Valencia golf courses. Santa Clanta residents enjoy the City's distinctive
trail system. There are three County libraries located in the valley.
Financial Statements
The audited combined financial statements of the City are available through links obtained at the
City's website at www.santa-clan*ta.com/cityhall/admin/cafr. The foregoing internet addresses are
included for reference only, and the information on these internet sites are not a part of this Oficial
Statement and are not incorporated by reference into this Official Statement. The audited combined
C-6
CITY OF SANTA CLARITA
Building Permits and Valuations
Year
Residential Permits Residential Value
Non -Residential Value
Total
2002
441
135,731,000
58,085,000
193,816,000
2003
362
117,949,000
37,054,000
155,003,000
2004
864
261,539,000
51,935,000
313,574,000
2005
506
153,499,000
94,480,000
247,979,000
2006
954
83,497,806
144,909,433
228,407,239
Source Economic Sciences Corporation/LA Regional Planning Report
Median Household Income
The U.S. Census Bureau American FactFinder reports that the median income of households in
the City for 2006 is $75,917 compared to $48,451 for the nation. Ninety percent of the households
received earnings and fourteen percent received retirement income other than Social Security, with
eighteen percent of the households receiving Social Security. These income sources are not mutually
exclusive, with some households receiving income from more than one source.
Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarnta Valley.
Among them are Six Flags Magic Mountain Amusement Park and Gene Autry's Melody Ranch. For
water enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid.
The Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks
County Park and the City's community parks are also available for hiking and picnicking. William S.
Hart Park features a magnificent Spanish colonial mansion museum. Frazier Park and Mountain High are
within a 40 mile drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild, Disney
Studios, Santa Clarita Repertory Theater, as well as the Friendly Valley, Valencia Country Club,
Robinson's Ranch and Vista Valencia golf courses. Santa Clanta residents enjoy the City's distinctive
trail system. There are three County libraries located in the valley.
Financial Statements
The audited combined financial statements of the City are available through links obtained at the
City's website at www.santa-clan*ta.com/cityhall/admin/cafr. The foregoing internet addresses are
included for reference only, and the information on these internet sites are not a part of this Oficial
Statement and are not incorporated by reference into this Official Statement. The audited combined
C-6
financial statements of the City are also available upon request. Such request should be directed to the
City Clerk's Office, 23920 Valencia Blvd., Santa Clarita, CA 91355.
City Investment Policy and Portfolio
The City has adopted policies and procedures for the management of the investment of
unexpended funds for the City itself and for other entities of the City, including the Authority, for which
the City provides financial management services. The three basic objectives of the policies and
procedures are: safety of invested funds, maintenance of sufficient liquidity to meet cash flow needs and
attainment of the maximum yield possible consistent with the first two objectives. The most recently
revised Investment Policy for the City was adopted on May 8, 2007. Under the City's Investment Policy
and in accordance with the Government Code, the City may invest in the following types of investments:
bankers acceptances to a maximum term of 180 days; commercial paper to a maximum maturity of 270
days; "A" rated corporate notes; certificates of deposit; obligations of the United States Treasury;
repurchase agreements to a maximum term of 1 year; obligations of the State of California; municipal
bonds; mutual funds; the Local Agency Investment Fund (LAIF) managed by the State Treasurer and the
Los Angeles County Pooled Investment Fund (LACPIF) administered by the Los Angeles County
Treasurer and Tax Collector.
In accordance with the Government Code, the City requires certain collateralization for public
deposits in banks and savings and loans, and has long-established safekeeping and custody procedures.
Estimated investments as of March 31, 2008 in all funds of the City had a weighted average
maturity of _ days and were comprised of the following:
Principal % of
Type Amount Total
Money Market Funds
Treasury Securities
Non -Callable Agencies
Callable Agencies
Commercial Paper
Corporate Bonds
LAIF
LACPIF
100.00%
Source. City of Santa Clarita Finance Department
Retirement Programs
The City contributes to the California Public Employee's Retirement System (PERS) an agent
multiple -employer public employee retirement system that acts as a common investment and
administrative agent for participating public entities within the State of California.
All full-time and part -time -employees are eligible to participate in the PERS. Benefits vest after
5 years of service. Benefits for employees vary based upon final yearly compensation, safety or non -
safety status and age at retirement. PERS also provides death and disability benefits.
City employees contribution rates are 8 percent of monthly earnings. The City currently pays the
employees contribution to PERS for both miscellaneous and safety employees. The City is required to
C-7
contribute remaining amounts necessary to fund the benefits for its members using the actuarial basis
recommended by PERS. The PERS contribution for 2007 was $4,279,569.
As of the latest actuarial valuation, June 30, 2005, the City's unfunded Entry Age Normal
Accrued Liability (AAL) is $8.114 million.
Deferred Compensation Plan
The City offers its employees a deferred compensation plan. Participation is optional, and allows
certain classifications of management to defer a portion of their salaries until future years. The deferred
compensation is not available to employees until death, retirement, termination, disability or certain
unforeseeable emergencies. City participation in contributions to the plans is mandatory. The City is
obligated to contribute amounts ranging from $2,000 to $15,000 per participant per year. During the
2006/07 year, there were 25 participants. The City contributed a total of $75,082 and employees
contributed $51,533. Total plan assets at June 30, 2006 were $1,830,847.
In addition to deferred compensation retirement benefits, the City provides post- retirement health
care benefits to all employees who retire from the City on or after attaining the age of 50 with 5 years
PERS credited service. The City pays the cost of the retirees enrollment including enrollment of family
members in a health benefit plan to a maximum of $913 per month. The City funds these amounts on a
pay-as-you-go basis. For 2006/07 there were 30 eligible participants, for which the City paid $196,181
for medical insurance prermums.
Employee Relations and Collective Bargaining
[[The City has a collective bargaining agreement with the Service Employees International Union
(SEN) Local 347. The contract's term is January 1, 2005 through January 1, 2007. A new contract is
currently under negotiation and is expected to be finalized within the next few months.]]
Risk Management
The City joined the Special Districts Risk Management Authority (SDRMA) in the fall of 2005.
SDRMA is a self insurance risk pool that serves as a not-for-profit public agency to its members.
Through SDRMA, the City currently holds a $500 general liability deductible. All general liability
claims above $500 and up to a limit of $10,000,000 are handled by SDRMA. On June 30, 2007,
$100,000 was accrued by the City for general liability claims that were received prior to the partnership
with SDRMA. While the ultimate losses that occurred prior to SDRMA are dependent on future events,
the City's management believes that the aggregate accrual is adequate to cover such losses. Settled
claims have not exceed any of these coverage amounts in any of the last three fiscal years and there,were
no reductions in the City's insurance coverage during the year ended June 30, 2007.
In addition to general liability, the City maintains individual policies for autos, property, flood,
special events, worker's compensation and earthquake damage where appropriate.
C-8
APPENDIX D
FISCAL CONSULTANT'S REPORT
D-1
APPENDIX E
FORM OF BOND COUNSEL OPINION
[Closing Date]
City of Santa Clarita Redevelopment Agency
23920 Valencia Boulevard
Santa Clarita, California 91355
Opinion of Bond Counsel
with reference to
City of Santa Clarita Redevelopment Agency
Tax Allocation Bonds, Series 2008
(Newhall Redevelopment Project Area)
Ladies and Gentlemen:
In our role as Bond Counsel to the City of Santa Clarita Redevelopment Agency (the "Agency"),
we have examined certified copies of the proceedings taken in connection with the issuance by the
Agency of its $ aggregate principal amount of its Tax Allocation Bonds, Series
2008 (Newhall Redevelopment Project Area) (the "Bonds"). We have also examined supplemental
documents furnished to us and have obtained such certificates and documents from public officials as we
have deemed necessary for the purposes of this opinion. The Bonds are issued under the Community
Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California), as in
existence on the Closing Date (the "Redevelopment Law"), and pursuant to an Indenture, dated as of
June 1, 2008 (the "Indenture"), by and between the Agency and The Bank of New York Trust Company,
N.A., as trustee (the "Trustee"). The Bonds are being issued to finance a portion of the cost of
redevelopment activities within the Project Area. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Indenture.
The Bonds are issued as fully registered bonds in the denomination of $5,000 or any integral
multiple thereof. The Bonds are dated, and bear interest from, the Closing Date. Interest on the Bonds is
payable semiannually on March 1 and September 1 of each year, commencing September 1, 2008.
The Bonds are subject to redemption prior to maturity as provided in the Indenture.
Based upon the foregoing, we are of the opinion that:
1. The Indenture has been duly and validly authorized, executed and delivered by the
Agency and, assuming such Indenture constitutes the legally valid and binding obligation of the Trustee,
constitutes the legally valid and binding obligation of the Agency, enforceable against the Agency in
accordance with its terms, and the Bonds are entitled to the benefits of the Indenture.
E-1
2. The proceedings for the issuance of the Bonds have been taken in accordance with the
laws and Constitution of the State of California, and the Bonds, having been issued in duly authorized
form and executed by the proper officials and delivered to and paid for by the purchasers, constitute legal
and binding special obligations of the Agency enforceable in accordance with their terms.
3. The Bonds are secured by a first pledge of the Tax Revenues and all moneys in the funds
and accounts so specified and provided for in the Indenture.
4. The Internal Revenue Code of 1986 (the "Code"), imposes certain requirements that must
be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain
excluded from the gross income of the owners thereof for federal income tax purposes. Noncompliance
with such requirements could cause the interest on the Bonds to be included in gross income retroactive to
the date of issue of the Bonds. The Agency has covenanted in the Indenture to maintain the exclusion of
interest on the Bonds from the gross income of the owners thereof for federal income tax purposes.
In our opinion, under existing law, interest on the Bonds is exempt from personal income taxes of
the State of California and, assuming compliance with the aforementioned covenant, interest on the Bonds
is excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal
income tax purposes.
We are of the further opinions that under existing statutes, regulations, rulings and court
decisions, the Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of
the Code and, therefore, that interest on the Bonds will not be treated as an item of tax preference for
purposes of computing the alternative minimum tax imposed by section 55 of the Code. The receipt or
accrual of interest on Bonds owned by a corporation may affect the computation of the alternative
minimum taxable income, upon which the alternative minimum tax is imposed, to the extent that such
interest is taken into account in determining the adjusted current earnings of that corporation (75 percent
of the excess, if any, of such adjusted current earnings over the alternative minimum taxable income
being an adjustment to alternative minimum taxable income (determined without regard to such
adjustment or to the alternative tax net operating loss deduction)).
Except as stated in the preceding three paragraphs, we express no opinion as to any federal or
state tax consequences of the ownership or disposition of the Bonds. Furthermore, we express no opinion
as to any federal, state or local tax law consequences with respect to the Bonds, or the interest thereon, if
any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the
advice or approval of other bond counsel.
The opinions expressed in paragraphs (1) and (2) above are qualified to the extent the
enforceability of the Indenture and the Bonds 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
Indenture and the Bonds 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
E-2
opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any
changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a
guarantee of result and are not binding on the Internal Revenue Service; rather, such opinions represent
our legal judgment based upon our review of existing law that we deem relevant to such opinions and in
reliance upon the representations and covenants referenced above.
Very truly yours,
i
E-3
APPENDIX F
FORM OF CONTINUING
DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement') is made and entered into as
of June 1, 2008, by and between the City of Santa Clarita Redevelopment Agency (the "Agency") and
The Bank of New York Trust Company, N.A., as Dissemination Agent (the "Dissemination Agent'), in
connection with the issuance by the Agency of its $ Tax Allocation Bonds, Series 2008
(Newhall Redevelopment Project Area") (the "Bonds"). The Bonds are being issued pursuant to an
Indenture, dated as of June 1,2008 (the "Indenture"), by and between the Issuer and The Bank of New
York Trust Company, N.A., as trustee (the "Trustee"). The Agency and the Dissemination Agent
covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Agency and the Dissemination Agent for the benefit of the Holders and
Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with
the Rule (as defined below).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply
to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has 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 (b) is treated as the owner of any Bonds for
federal income tax purposes.
"Disclosure Representative" shall mean the Treasurer of the Agency or his or her designee, or
such other officer or employee as the Agency shall designate in writing to the Dissemination Agent from
time to time.
"Dissemination Agent" shall mean The Bank of New York Trust Company, N.A., acting in its
capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing
by the Agency and which has filed with the Agency a written acceptance of such designation.
"Listed Event" shall mean any of the events listed in Section 5(a) of tlus Disclosure Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. The National Repositories currently approved by the Securities and
Exchange Commission are set forth on the SEC website located at www.sec.gov/consumer/nrmsir.htm.
"Official Statement" shall mean the Official Statement relating to the Bonds, dated
2008.
"Participating Underwriters" shall mean any or all of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
F-1
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean the State of California.
"State Repository" shall mean any public or private repository or entity designated by the State as
a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange
Commission. As of the date of this Disclosure Agreement, there is no State Repository.
"Trustee" means The Bank of New York Trust Company, N.A., as Trustee with respect to the
Bonds, and any successor thereto.
SECTION 3. Provision of Annual Reports
(a) The Agency shall cause the Dissemination Agent, not later than 240 days after the end of
the Agency's fiscal year (currently ending June 30), commencing with the report for the fiscal year
ending June 30, 2008, to provide to each Repository an Annual Report which is consistent with the
requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may include by reference other
information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial
statements of the Agency may be submitted separately from the balance of the Annual Report and later
than the date required above for the filing of the Annual Report if they are not available by that date. If
the Agency's fiscal year changes, it shall give notice of such change in the same manner as for a Listed
Event under Section 5(c).
(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for
providing the Annual Report to Repositories, the Agency shall provide the Annual Report to the
Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the
Trustee has not received a copy of the Annual Report, the Trustee shall contact the Agency and the
Dissemination Agent to determine if the Agency is in compliance with the first sentence of this subsection
(b). The Agency shall provide a written certification with each Annual Report furnished to the
Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the Annual Report
required to be furnished by it hereunder. The Dissemination Agent and Trustee may conclusively rely
upon such certification of the Agency and shall have no duty or obligation to review such Annual Report.
(c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories
by the date required in subsection (a), the Trustee shall send a notice to each Repository -or to the
Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the form
attached as Exhibit A.
(d) The Dissemination' Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name
and address of each National Repository and the State Repository, if any; and
(ii) if the Dissemination Agent is other than the Agency, file a report with the
Agency certifying that the Annual Report has been provided pursuant to this Disclosure Agreement,
stating the date it was provided and listing all the Repositories to which it was provided.
F-2
(e) Any filing under this Disclosure Agreement may be made solely by transmitting such
filing to the Texas Municipal Advisory Council (the "MAC") as provided at htip•//www.disclosureusa.org
unless the United States Securities and Exchange Commission has withdrawn the interpretative release to
the MAC dated September 7, 2004.
SECTION 5. Content of Annual Report. The Agency's Annual Report shall contain or
incorporate by reference the following:
(a) Financial information including the general purpose financial statements of the
Agency for the preceding Fiscal Year, prepared in conformity with generally accepted accounting
principles as prescribed by the Governmental Accounting Standards Board and the American Institute of
Certified Public Accountants. If audited financial information is not available by the time the Annual
Report is required to be filed pursuant to Section 4(a) hereof, the financial information included in the
Annual Report may be unaudited, and the Agency will provide audited financial information to each
Repository as soon as practical after it has been made available to the Agency.
(b) An update for the last fiscal year of the financial information in "Table 3 — Net
Assessed Valuation for Land Use Category Summary," "Table 4 — Ten Largest Property Taxpayers,"
"Table 5 — Historical Tax Increment Receipts" and an update on "THE REDEVELOPMENT PROJECT
AREA- Assessment Appeals" (to the extent based on actual appeal information and not estimates) located
in the Official Statement.
(c) Any or all of the items listed above may be incorporated by reference from other
documents, including official statements of debt issues of the Agency or related public entities, which
have been submitted to each of the Repositories or to the Securities and Exchange Commission. If the
document incorporated by reference is a final official statement, it must be available from the MSRB.
The Agency shall clearly identify each other document so incorporated by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given,
in a timely manner, to the MSRB, the State Repository, if any, and each Participating Underwriter, notice
of the occurrence of any of the following events with respect to the Bonds, if material:
principal and interest payment delinquencies.
2. non-payment related defaults.
3. modifications to rights of Bondholders.
4. optional, contingent or unscheduled bond calls.
defeasances.
6. rating changes.
7. adverse tax opinions or events affecting the tax-exempt status of the Bonds.
unscheduled draws on the debt service reserves reflecting financial difficulties.
unscheduled draws on the credit enhancements reflecting financial difficulties.
F-3
10. substitution of the creditor liquidity providers or their failure to perform.
11. release, substitution or sale of property securing repayment of the Bonds.
(b) The Trustee shall, within one (1) Business Day of obtaining actual knowledge of the
occurrence of any of the Listed Events, contact the Agency, inform the Agency of the Listed Event and
request that the Agency promptly notify the Dissenunation Agent in writing whether or not to report such
Listed Event pursuant to Subsection(e) of this Section. For the purposes of this Disclosure Agreement
"actual knowledge" means actual knowledge at the corporate trust office of the Trustee by an officer of
the Trustee with responsibility for matters related to the adimnistration of the Indenture.
(c) The Trustee shall, within one (1) Business Day of obtaining actual knowledge of the
occurrence of any of the Listed Events, or as soon as reasonably practicable thereafter, contact the
Disclosure Representative, inform such person of the event, and request that the Agency promptly notify
the Dissemination Agent in writing whether or not to report the event pursuant to subsection (i) and
promptly direct the Trustee whether or not to report such event to the Bondholders. In the absence of
such direction the Trustee shall not report such event unless otherwise required to be reported by the
Trustee to the Bondholders under the Indenture. The Trustee may conclusively rely upon such direction
(or lack thereof). For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of
such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Trustee
with regular responsibility for the administration of matters related to the Indenture. The Trustee shall
have no responsibility to determine the materiality of any of the Listed Events
(d) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, whether
because of a notice from the Dissemination Agent pursuant to subsection (b) 'or otherwise, the Agency
shall as soon as possible determine if such event would be material under applicable federal securities
laws.
(d) If the Agency has determined that knowledge of the occurrence of a Listed Event would
be material under applicable federal securities laws, the Agency shall promptly notify the Dissemination
Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to
subsection (f).
(e) If in response to a request under subsection (b), the Agency determines that the Listed
Event would not be material under applicable federal securities laws, the Agency shall so notify the
Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence
pursuant to subsection (f).
(f) If the Dissemination Agent has been instructed by the Agency to report the occurrence of
a Listed Event, the Dissermnation Agent shall promptly file a notice of such occurrence with the
Repositories. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and
(5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is
given to Holders of affected Bonds pursuant to the Indenture.
SECTION 6. Termination of Reporting Obligation. The Agency's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall
give notice of such ternunation in the same manner as for a Listed Event under Section 5(c).
SECTION 7. Dissemination Agent. The Agency hereby appoints The Bank of New York
Trust Company, N.A. as the initial Dissemination Agent and may, from time to time, discharge, appoint
F-4
or engage any other Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination
Agent. The Dissemination Agent agrees to perform only those duties of the Dissemination Agent
specifically set forth in the Agreement, and no implied duties, covenants or obligations shall be read into
this Agreement against the Dissemination Agent. The Dissemination Agent shall not be responsible in
any manner for the form or content of any notice or report prepared by the Agency pursuant to this
Disclosure Agreement. The Dissemination Agent shall have no duty to prepare any information report
nor shall the Dissermnation Agent be responsible for filing any report not provided to it by the Agency in
a timely manner and in a form suitable for filing. The Dissemination Agent may resign by providing
thirty days written notice to the Agency and the Trustee.
SECTION 8. Amendment, Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Agency may amend this Disclosure Agreement, (and the Trustee and Dissemination
Agent shall agree to any amendment so requested by the Agency), provided, neither the Trustee nor the
Dissermnation Agent shall be obligated to enter into any such amendment that modifies or increases its
duties or obligations hereunder and any provision of this Disclosure Agreement may be waived, provided
that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it may
only be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature or status of an obligated person with respect
to the Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as
well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Beneficial Owners in the same
manner as provided in the Indenture for amendments to the Indenture with the consent of Beneficial
Owners, or (ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially
impair the interests of the Beneficial Owners.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a
narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case
of a change of accounting principles, on the presentation) of financial information or operating data being
presented by the Agency.' In addition, if the amendment relates to the accounting principles to be
followed in preparing financial statements, (i) notice of such change shall be given in the same manner as
for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made
shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the Agency from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the Agency chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
F-5
Disclosure Agreement, the Agency shall have no obligation under this Disclosure Agreement to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the Agency or the Trustee to comply with
any provision of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any
Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding
Bonds, shall but only to the extent funds in an amount satisfactory to the Trustee have been provided to it
or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional
charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of its
attorneys), or any Beneficial Owner of the Bonds may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the Agency or
Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure
Agreement. A default under this Disclosure Agreement by the Agency or the Dissemination Agent shall
not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure
Agreement in the event of any failure of the Agency or the Trustee to comply with this Disclosure
Agreement shall be an action to compel performance. No Bondholder or Beneficial Owner may institute
such action, suit or proceeding to compel performance unless they shall have fust delivered to the Agency
satisfactory written evidence of their status as such, and a written notice of and request to cure such
failure, and the Agency shall have refused to comply therewith within a reasonable time.
SECTION 11. Duties, Immunities and Liabilities of the Trustee and Dissemination Agent.
Article VI of the Indenture pertaining to the Trustee is hereby made applicable to this Disclosure
Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture and
the Trustee and Dissemination Agent shall be entitled to the protections, limitations from liability and
indemnities afforded the Trustee thereunder. The Dissemination Agent shall have only such duties as are
specifically set forth in this Disclosure Agreement, and the Agency agrees to indemnify and save the
Dissemination Agent, and the Trustee and their officers, directors, employees and agents, harmless
against any loss, expense and liabilities which it may incur 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 Dissemination Agent's
or the Trustee's respective negligence or willful misconduct. The Dissemination Agent shall be paid
compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as
amended from time to time and all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the
Trustee shall have no duty or obligation to review any information provided to them hereunder and shall
not be deemed to be acting in any fiduciary capacity for the Agency, the Bondholders, or any other party.
Neither the Trustee or the Dissemination Agent shall have any liability to the Bondholders or any other
party for any monetary damages or financial liability of any kind whatsoever related to or arising from
this Agreement. Any company succeeding to all or substantially all of the Dissemination Agent's
corporate trust business shall be the successor to the Dissemination Agent hereunder without the
execution or filing of any paper or any further act. The obligations of the Agency under this Section shall
survive resignation or removal of the Dissemination Agent and payment of the Bonds.
SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Agency, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners
from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 13. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
F-6
To the Agency: City of Santa Clarita Redevelopment Agency
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Darren P. Hernandez, Treasurer
To the Dissemination Agent: The Bank of New York Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: Corporate Trust Department
Any person may, by written notice to the other persons listed above, designate a different address
or telephone number(s) to which subsequent notices or communications should be sent.
IN WITNESS WHEREOF, the parties hereto have caused this Continuing Disclosure Agreement
to be duly executed and delivered by their respective officers as of the date first above written.
CITY OF SANTA CLARITA
REDEVELOPMENT AGENCY
Darren P. Hernandez, Director of Administrative
Services
THE BANK OF NEW YORK TRUST
COMPANY, N.A.
Authorized Officer
F-7
EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Santa Clarita Redevelopment Agency
Name of Obligated Person: City of Santa Clarita Redevelopment Agency
Name of Issue: $ City of Santa Clarita Redevelopment Agency, Tax
Allocation Bonds, Series 2008 (Newhall Redevelopment Project Area)
Date of Issuance: June _, 2008
NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect to the
above-named Bonds as required by the Continuing Disclosure Agreement executed by the Agency on the
date of issuance of the Bonds. [The Agency anticipates that the Annual Report will be filed
by I
Dated: THE BANK OF NEW YORK TRUST
COMPANY, N.A., on behalf of the City of Santa
Clarita Redevelopment Agency
LE
F-8
Name of Issuer:
Name of Obligated Person
Name of Issue:
Date of Issuance:
Date of Official Statement:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
f
EXHIBIT B
NAME AND CUSIP NUMBERS OF BONDS
City of Santa Clarita Redevelopment Agency
City of Santa Clarita Redevelopment Agency
$ City of Santa Clarita Redevelopment Agency, Tax
Allocation Bonds, Series 2008 (Newhall Redevelopment Project Area)
June _, 2008
'2008
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
CUSIP Number:
F-1
APPENDIX F
BOOK -ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the
accuracy or completeness thereof. The Agency cannot and does 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) Bonds representing ownership interest in or
other confirmation or ownership interest in the Bonds, or (c) prepayment 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 Official
Statement. 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.
General
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 Bond will be issued for each maturity of the Bonds, in the aggregate principal
amount of such maturity, and will be deposited with DTC.
DTC, the world's largest 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 2.2 million
issues of U.S. and non -U.S. equity, 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, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income
Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also
subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange
LLC, and the National Association of Securities Dealers, Inc. 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 Standard & Poor's highest rating: AAA.
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 and www.dtLM. The information found
on such websites is not incorporated herein by reference.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records.' The ownership interest of each actual
purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
G-1
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such .Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings ori behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the Agency (or the Trustee on behalf thereof) as soon. as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights- to
those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to
credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information
from the Agency or 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 nor its
nominee, Trustee, or the Agency, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal, premium, if any, and interest payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the responsibility of the
Agency or Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct
and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to
transfer the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for
physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records
and followed by a book -entry credit of tendered Bonds to the Trustee's DTC account.
G-2
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Agency or Trustee. Under such circumstances, in the event that a
successor depository is not obtained, Bonds are required to be printed and delivered.
The Agency may decide to discontinue use of the system of book -entry transfers through DTC (or
a successor securities depository). Discontinuance of use of the system of book -entry transfers through
DTC may require the approval of DTC participants under DTC's operational arrangements. In that event,
Bonds will be printed and delivered.
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the
accuracy thereof.
Discontinuation of Book -Entry Only System; Payment to Beneficial Owners
In the event that the book -entry system described above is no longer used with respect to the
Bonds, the following provisions will govern the payment, transfer and exchange of the Bonds.
The principal of the Bonds and any premium and interest upon the redemption thereof prior to the
maturity will be payable in lawful money of the United States of America upon presentation and
surrender of the Bonds at the office of the Trustee. Interest on the Bonds will be paid by the Trustee by
check of the Trustee mailed by first class mail on the Interest Payment Date to the Owner at the address of
such Owner as its appears on the Registration Books; provided however, that payment of interest will be
made by wire transfer in immediately available funds to an account in the United States of America to any
Owner of Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish written wire
instructions to the Trustee before the applicable Record Date.
Any Bond may be exchanged for Bonds of any authorized denomination upon presentation and
surrender at the office of the Trustee, together with a request for exchange signed by the registered owner
or by a person legally empowered to do so in a form satisfactory to the Trustee. A Bond may be
transferred only on the Bond registration books upon presentation and surrender of the Bond at such
office of the Trustee together with an assignment executed by the registered owner or by a person legally
empowered to do so in a form satisfactory to the Trustee. Upon exchange or transfer, the Trustee shall
complete, authenticate and deliver a new Bond or Bonds of any authorized denomination or
denominations requested by the owner equal in the aggregate to the unmatured principal amount of the
Bond surrendered and bearing interest at the same rate and maturing on the same date.
Neither the Agency nor the Trustee will be required to exchange or transfer any Bond during the
period established by the Trustee for the selection of Bonds for redemption or the portion of any Bond
which the Trustee has selected for redemption.
G-3
APPENDIX G
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
H-1
H
E
o 0
0 0
O 0
O o
O
O O
o 0
O O
o 0
W
O o
O O
E
o o
O O
a
H
n in
LO w
Q
w
x
U
F
00
o O
00
0 0
O
o 0
o O
00
0 0
00
o O
F
o 0
o o
H
U) In
U) In
CQ
w
Q
Ew '
crn H
w�
oG w
z
ww
O
FU
H
z H
F
H3
a
E
E
H
w
m
[�
0 Q
H
U
W
a
m
E.
FCE
Q
mO
F H
a W
W
H
wz
H
a H
u a
F
az
E W
C]
°u
w
°0
A�
r
>1 h
O
E
x
Hx
U u
F
a
FC
>+
Q
o
O
H
O
a
H
w
a
E H H
F
ri)o 0
n
W o 0
W
a
0
W H r
U
E o 0
U
zorn
Q
H H V
w
O
z
°
a
F
cn F
a
a z
cu
H
W W
0
az
\
U) a
a
F
w0
z
x a
Q
[�
U O
>+
oo]
F a
Q°
W�
a
Ho00
C14
o F
F H
00
O O
0
W q
H E
F F
z
00
mH
F7
00
O F
W
H H
�
H
11)9
0
00
q
ID
I -u
x
oar -
oF<
Eu
ONN
fp fk
rl H H
ao
H
m
H
0
W
H
F
00
0
0
0
O
W
F
Q
a
5/2/08
NOTICE OF INTENTION TO SELL BONDS
(Approximate)
City of Santa Clarita Redevelopment Agency
Tax Allocation Bonds, Series 2008
(Newhall Redevelopment Project Area)
NOTICE IS HEREBY GIVEN that sealed proposals will be received by representatives of
the City of Santa Clarita Redevelopment Agency (the "Agency"), at the offices of C.M. de Crinis
& Co., Inc., 15300 Ventura Boulevard, Suite 404, Sherman Oaks, California 91403, on
June _, 2008
at 10:00 A.M. (Pacific time), for the purchase of $ (approximate) aggregate principal
amount of City of Santa Clarita Redevelopment Agency, Tax Allocation Bonds, Series 2008
(Newhall Redevelopment Project Area) (the 'Bonds"). Bids for less than all of the Bonds will
not be accepted. The Bonds will be dated as of date of closing, and shall be payable as to
interest from their date at the rate or rates to be fixed upon the sale thereof. The Agency has
caused to be prepared an Official Notice of Sale and a Preliminary Official Statement for the
Bonds, copies of which will be furnished on request made to the financial advisor to the
Agency, C.M. de Crinis & Co., Inc., 15300 Ventura Boulevard, Suite 404, Sherman Oaks,
California 91403, Telephone: (818) 385-4900, fax: (818) 385-4904, email: cm@cmdecrinis.com.
The Agency may postpone the date or change the time of sale to any subsequent date or any
other time by providing notification through Thomsons News Service, not later than 1:30 P.M.,
California time, on the business day prior to any announced date for receipt of bids.
/s/Darren P. Hernandez
Treasurer
City of Santa Clarita Redevelopment Agency
Dated: _, 2008
5/2/08
NOTICE OF INTENTION TO SELL BONDS
(Approximate)
City of Santa Clarita Redevelopment Agency
Housing Set -Aside Tax Allocation Bonds, Series 2008
NOTICE IS HEREBY GIVEN that sealed proposals will be received by representatives of
the City of Santa Clarita Redevelopment Agency (the "Agency"), at the offices of C.M. de Crinis
& Co., Inc., 15300 Ventura Boulevard, Suite 404, Sherman Oaks, California 91403, on
,June , 2008
at 10:00 A.M. (Pacific time), for the purchase of $ (approximate) aggregate principal
amount of City of Santa Clarita Redevelopment Agency, Housing Set -Aside Tax Allocation
Bonds, Series 2008 (the "Housing Bonds"). Bids for less than all of the Housing Bonds will not
be accepted. The Housing Bonds will be dated as of date of closing, and shall be payable as to
interest from their date at the rate or rates to be fixed upon the sale thereof. The Agency has
caused to be prepared an Official Notice of Sale and a Preliminary Official Statement for the
Housing Bonds, copies of which will be furnished on request made to the financial advisor to
the Agency, C.M. de Crinis & Co., Inc., 15300 Ventura Boulevard, Suite 404, Sherman Oaks,
California 91403, Telephone: (818) 385-4900, fax: (818) 385-4904, email: cm@cmdecrinis.com.
The Agency may postpone the date or change the time of sale to any subsequent date or any
other time by providing notification through Thomson's News Service, not later than 1:30 P.M.,
California time, on the business day prior to any announced date for receipt of bids.
/s/Darren P. Hernandez
Treasurer
City of Santa Clarita Redevelopment Agency
Dated: _,2008