HomeMy WebLinkAbout2012-09-11 - AGENDA REPORTS - CFD 2002 1 SPECIAL TAX BONDS (2)Agenda Item: ,10
CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS City Manager Approval:
Item to be presented by: Darren Hernandez
DATE: September 11, 2012
SUBJECT: APPROVAL OF REFINANCING OF $17,370,000 COMMUNITY
FACILITIES DISTRICT NO. 2002-1 (VALENCIA TOWN
CENTER) SPECIAL TAX BONDS, 2002 SERIES BY THE
ISSUANCE OF COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER) REFUNDING SPECIAL TAX
BONDS, SERIES 2012
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
City Council, acting as the legislative body of the City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town Center), adopt the following resolution:
Resolution Authorizing the Issuance of Its Special Tax Refunding Bonds, and the
Execution and Delivery of a Fiscal Agent Agreement, A Continuing Disclosure
Certificate, a Bond Purchase Agreement, an Escrow Agreement, and an Official
Statement and Approving a Preliminary Official Statement in Connection
Therewith
BACKGROUND
In 2002, the City of Santa Clarita Community Facilities District No. 2002-I (Valencia Town
Center) issued its $17,370,000 Special Tax Bonds, Series 2002 (the "2002 Bonds") secured by
special taxes on the Valencia Town Center shopping center, managed by Westfield LLC. The
property owner, Valencia Town Center Associates, LP, has been working with the City to refund
the 2002 Bonds for interest rate savings.
In 1992, in order to finance certain public improvements related to the Valencia Town Center,
the City formed the City of Santa Clarita Community Facilities District No. 92-1 over land of the
proposed shopping center and issued special tax bonds in the original principal amount of $20
e
2 o
Aaopted� 5 /
million (the "1992 Bonds"), secured by special taxes, to be paid by the landowners within the
District. On October 8, 2002, the City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) (the "CFD) was formed to replace and restructure the 1992 Bonds. At
that time, the 2002 Bonds were issued, which are outstanding in the principal amount of
$16,650,000.
The 2002 Bonds are limited obligations of the CFD payable solely from the annual levy of the
special tax and are not obligations of the City. The Special Taxes are levied and paid annually by
Westfield on the properties in the Valencia Town Center. All the properties taxed are fully
developed. It is estimated that the value of the property is over 12 times the amount of the
proposed bonds, making the proposed bonds highly desirable. The current low interest rate
environment and certain bond redemption provisions in the 2002 Bonds allow for a current
refunding opportunity without pre -payment premium with annual savings to the landowner,
beginning in Tax Year 2012-2013. The debt service increases annually with a final maturity of
2032. The 2002 Bonds have a remaining average interest of 5.81%. Current interest rates
obtainable by refunding the 2002 Bonds are estimated at 4.50%
Representatives from Valencia Town Center Associates and Westfield, working with City staff,
the City's Financial Advisor, and Bond and Disclosure Counsel, have evaluated the proposed
refunding. At this time, it is proposed to issue refunding special tax bonds (the "2012 Bonds") in
the estimated amount of $17,610,000 to redeem all 2002 Bonds, pay principal and interest on the
2002 Bonds due to the November 15, 2012 call date, fund a reserve account, and pay for issuance
and administrative costs associated with the refunding. The debt structure will remain
unchanged, and the 2012 Bonds will have the same final maturity of 2032 as the outstanding
2002 Bonds. Debt service will be reduced each year. The refunding is estimated to produce a
Net Present Value Savings of over $1.5 million, net of all costs, to the landowner and
commercial tenants of the Valencia Town Center over the remaining term of the 2012 Bonds.
There is no fiscal impact to the City or the CFD, and all costs are included in the refunding.
City Staff, Bond Counsel, and Financial consultants have been working on this refunding
program since May, and it is proposed to sell these bonds by negotiated sale to De La Rosa & Co.
and Piper Jaffray & Co. (the "Underwriters") in order to achieve the lowest interest cost and
highest savings., The City undertook an RFP process prior to the selection of the underwriters.
The Resolution approving the bond issuance, the bond and refunding documents, the Preliminary
Official Statement, and form of bond purchase agreement is presented to the City Council for
approval tonight. The resolution also appoints Fulbright & Jaworski LLP as bond and disclosure
counsel, C.M. de Crinis & Co. as financial advisor, and U.S. Bank National Association as fiscal
agent. If approved, the 2012 Bonds will be sold in the following weeks with a bond closing in
early October. The 2002 Bonds will be redeemed on November 15, 2012.
It is appropriate at this meeting to consider for adoption the resolution authorizing the issuance of
the Refunding Bonds. A Resolution for the City, acting as the legislative body of the CFD, is
attached, which would authorize the issuance of not to exceed $18,500,000 of 2012 Bonds. Final
sizing is to be determined at time of bond sale. The 2012 Refunding Bonds will be sold on a
negotiated basis at a true interest cost of not to exceed 5.15% and underwriter discount of not to
100
exceed 1.25%. The Resolution also approves the various documents in connection with the
issuance of the 2012 Bonds.
General Summary of Securitv: The 2012 Bonds are secured by special taxes levied on the
properties in the CFD and, ultimately, by the properties themselves. Each year, special taxes are
levied against the properties in the CFD as part of the County property tax bill. In the event a
property owner becomes delinquent on its property tax payment, the CFD covenants to initiate
foreclosure proceedings.
Potential investors will look closely at the value of the property underlying the bonds relative to
the special tax lien. Most industry professionals consider a 3:1 value to lien as a standard
minimum for property securing an assessment bond issue. Based on the current assessed values
of properties within the CFD, the aggregate value to lien for these bonds exceeds 12:1.
Fiscal Agent Agreement: Key legal document that lays out the legal structure and terms of the
financing of the 2012. It specifies payment dates, maturity dates of the 2012 Bonds; revenues
and accounts specifically pledged to the repayment of the 2012 Bonds; flow of funds, default and
remedy provisions; defeasance provisions in the event the Bonds are prepaid; and covenants of
the CFD. It is drafted by Bond Counsel and executed by the CFD and U.S. Bank National
Association, as Fiscal Agent.
Escrow Agreement: Document governing the defeasance of the 2012 Bonds and their early
redemption. It is drafted by Bond Counsel and executed by the CFD and Fiscal Agent.
Continuing Disclosure Certificate: This undertaking outlines the updated information related to
the security that the CFD will agree to provide to the bond markets. Disclosure is required
annually and on an exceptional basis for any major "material" event. This document is drafted
by Bond Counsel and executed by CFD.
Official Statement: This document describes the security and discloses potential risks to
prospective investors. It will generally describe the sources of payment for the 2012 Bonds, the
value of the land ultimately securing the 2012 Bonds, economic and demographic characteristics
of the City, and inherent known risk factors associated with the security. It's important that this
document not contain any material misstatements or omissions. The Preliminary Official
Statement (often referred to as the "POS") is distributed by the underwriter to prospective
investors prior to the bond sale so that they can make informed purchase decisions. The POS
should be as close to final as possible with the actual terms of the pricing (interest rates and
principal amounts) left necessarily blank. The Final Official Statement will be prepared shortly
after the bond sale and must be available in time for bond closing. The POS and FOS are drafted
by Bond Counsel, acting as disclosure counsel and executed by the CFD.
13
Bond Purchase Agreement: This contract is executed on the day of the bond sale, specifies the
actual principal amounts, interest rates, and prices at which the 2012 Bonds will be sold. In it,
De La Rosa & Co., on behalf of itself and Piper Jaffray & Co., commit to purchase the 2012
Bonds at closing at the agreed-upon prices and amounts subject to certain closing conditions.
Closing conditions generally relate to the execution and validity of all required documents and
the absence of material changes in the nature of the security. It is drafted by Disclosure Counsel,
reviewed by underwriters' counsel, and executed by the CFD and the underwriters.
More specific details of the financing can be found in the drafts of the documents referenced
above. The documents being recommended for approval are available in the City Clerk's Office.
Adoption of the attached Resolution approves the refinancing of the 2002 Bonds and the
approval of the issuance by the CFD of the 2012 Bonds, and authorizes the CFD to enter into
certain documents relating to the 2012 Bonds.
ALTERNATIVE ACTIONS
1. The City Council may choose not to refinance the 2002 Bonds.
2. Other action as determined by the City Council.
FISCAL IMPACT
None.
ATTACHMENTS
Resolution
Fiscal Agent Agreement available in the City Clerk's Reading File
Escrow Agreement available in the City Clerk's Reading File
Bond Purchase Agreement available in the City Clerk's Reading File
Preliminary Official Statement
2
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
CLARITA, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF THE
CITY OF SANTA CLARITA COMMUNITY FACILITIES DISTRICT
NO. 2002-1 (VALENCIA TOWN CENTER), AUTHORIZING THE ISSUANCE
OF ITS SPECIAL TAX REFUNDING BONDS, AND THE EXECUTION AND
DELIVERY OF A FISCAL AGENT AGREEMENT, A CONTINUING
DISCLOSURE CERTIFICATE, A BOND PURCHASE AGREEMENT, AN
ESCROW AGREEMENT, AND AN OFFICIAL STATEMENT AND
APPROVING A PRELIMINARY OFFICIAL STATEMENT IN
CONNECTION THEREWITH
WHEREAS, on August 27, 2002, the City Council (the "City Council") of the City of
Santa Clarita (the "City") pursuant to Chapter 2.5 of Part 1 of Division 2 of Title 5 (commencing
with Section 53311) of the California Government Code, otherwise known as the "Mello -Roos
Community Facilities Act of 1982" (the "Act"), adopted a resolution declaring its intent to
establish the City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town
Center) (the "CFD"), and to incur bonded indebtedness in the District for the purpose of
financing the optional redemption of the outstanding principal amount of the City of Santa
Clarita Community Facilities District No. 92-1 (Valencia Town Center) Special Tax Bonds,
Series A (the "1992 Bonds"), and the extinguishment of the special tax lien associated with the
City of Santa Clarita Community Facilities District No. 92-1 (Valencia Town Center) (the "1992
CFD"); and
WHEREAS, pursuant to notice given as provided in the Act, a public hearing was held
concerning the formation of the CFD, the levy of the special tax and the establishment of an
appropriations limit therein, and the issuance of bonded indebtedness by the CFD; and
WHEREAS, on October 8, 2002, the City Council, following the closing of the public
hearing, adopted a Resolution establishing the CFD and approving the proposed rate and method
of apportionment of the special tax; and
WHEREAS, a special election was duly and legally held and conducted for the CFD on
the 8th day of October 2002, at which election there was submitted to the qualified voters of the
CFD the combined ballot proposition of levying a special tax, of establishing an appropriations
limit and of incurring bonded indebtedness, such ballot proposition being unanimously approved
by the qualified electors of the CFD; and
WHEREAS, a Notice of Special Tax Lien has been filed and recorded with the office of
the Recorder of the County of Los Angeles with regard to all parcels within the District in the
time and manner required by Section 53328.5 of the Act; and
917
WHEREAS, the City Council has adopted Ordinance No. 02-1-1 on October 22, 2002
providing for the levy of a special tax, in accordance with Section 53340 of the Act; and
WHEREAS, on October 29, 2012, the CFD issued $17,370,000 in aggregate principal
amount of the City Santa Clarita Community Facilities District No. 2002-1 (Valencia Town
Center) Special Tax Bonds (the "2002 Bonds"), of which $16,650,000 remains outstanding; and
WHEREAS, the City Council desires to provide for the issuance of refunding bonds of
the CFD to refund all of the 2002 Bonds and to approve all necessary and proper documents and
transactions in connection therewith.
NOW, THEREFORE, the City Council of the City of Santa Clarita, acting as the
legislative body of the City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center), does hereby resolve, determine, and order as follows:
SECTION 1. Definitions. For purposes of this Resolution, the following capitalized
terms have the indicated meanings:
"Bond Counsel" means Fulbright & Jaworski LLP in its capacity as bond counsel with
respect to the 2012 Bonds.
"City Attorney" means the City Attorney of the City, or his deputy.
"Fiscal Year" means the 12 -month period ending on June 30 of each year, or any other
annual accounting period hereafter selected and designated by the City as its Fiscal Year in
accordance with applicable law.
"Responsible Officer" means any of the Mayor, the City Manager, the Deputy City
Manager of the City, or any designee of the listed officers.
"Special Tax" means, with respect to any parcel within the CFD, the tax authorized to be
levied in accordance with the proceedings of the CFD and an Ordinance of the City authorizing
such levy.
"Special Tax Lien" means the lien established as to each parcel in the CFD by recordation
of the Notice of Special Tax Lien pursuant to Section 53328.5 of the Act.
All capitalized terms not defined herein shall have the meaning assigned to them in the
Fiscal Agent Agreement (as hereinafter defined).
SECTION 2. Issuance of Refunding Bonds. Refunding bonds of the CFD designated
City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Ccnter) Special
Tax Refunding Bonds, Series 2012 (the "2012 Bonds") are hereby authorized to be issued in an
aggregate principal amount of not to exceed $18,500,000. The 2012 Bonds shall be issued upon
the terms and conditions contained in the Fiscal Agent Agreement (hereinafter referred to), which
terms and conditions are by this reference incorporated herein.
SECTION 3. Manner of Sale of the 2012 Bonds. Pursuant to Section 53360.4 of the Act,
the City Council hereby finds and determines that a negotiated sale of the 2012 Bonds would
result in a lower overall cost to the CFD, and the 2012 Bonds shall be sold at a negotiated sale.
SECTION 4. Determinations. The CFD hereby determines that total interest cost to
maturity on the 2012 Bonds plus the principal amount of the 2012 Bonds shall not exceed the
total interest cost to maturity on the 2002 Bonds plus the principal amount of the 2002 Bonds.
The CFD further determines that it would be prudent in the management of its fiscal affairs to
issue the 2012 Bonds.
SECTION 5. Designation of Office to Administer Special Tax. Pursuant to
Section 53340.2 of the Act, the Office of the Deputy City Manager is hereby designated as the
office which is responsible for annually preparing the current roll of Special Tax levy obligations
and for estimating future Special Tax levies.
SECTION 6. Approval of Fiscal Agent Agreement. The CFD hereby approves the Fiscal
Agent Agreement in substantially the form presented to this City Council. Any Responsible
Officer is hereby authorized to execute the Fiscal Agent Agreement by and between the CFD and
U.S. Bank National Association, as fiscal agent, in substantially the form presented to this City
Council, with such revisions, amendments, and completions as shall be approved by any
Responsible Officer, with the advice of Bond Counsel and the City Attorney, such approval to be
conclusively evidenced by the execution and delivery thereof by any Responsible Officer.
SECTION 7. Approval of the Continuing Disclosure Certificate. The CFD hereby
approves the Continuing Disclosure Certificate in substantially the form presented to this City
Council. Any Responsible Officer is hereby authorized to execute the Continuing Disclosure
Certificate in substantially the form presented to this City Council, with such revisions,
amendments, and completions as shall be approved by any Responsible Officer, with the advice
of Bond Counsel and the City Attorney, such approval to be conclusively evidenced by the
execution and delivery thereof by any Responsible Officer.
SECTION 8. Approval of the Preliminary Official Statement and Official Statement.
The form of the Preliminary Official Statement relating to the CFD with respect to the Series
2012 Bonds (the "Preliminary Official Statement") is presented to the City Council at this
meeting, and the Underwriters' distribution thereof to prospective purchasers of 2012 Bonds is
hereby approved. The Preliminary Official Statement, together with such additions thereto and
changes therein as are determined necessary by a Responsible Officer, for and in the name of the
CFD, to make such Preliminary Official Statement final as of its date for purposes of Rule
15c2-12 of the Securities and Exchange Commission ("Rule 15c2-12"), including, but not
limited to, such additions and changes as are necessary to reflect conditions imposed by the
agency rating the 2012 Bonds or to make the information therein on the owners of the property in
the CFD and all other matters accurate and not misleading, and to execute a Certificate (the
"15c2-12 Certificate"), for and in the name of the CFD, to certify the same, are hereby
3
authorized. The preparation of the final Official Statement (the "Official Statement") in the form
of the Preliminary Official Statement, together with such changes as are determined necessary by
a Responsible Officer to make the Official Statement complete and accurate as of its date, is
hereby authorized. The Underwriters are further authorized to distribute the final Official
Statement and any supplement thereto to the purchasers thereof upon its execution on behalf of
the CFD as described above.
SECTION 9. Approval of the Bond Purchase Agreement. The City Council hereby
approves the Bond Purchase Agreement, by and between the CFD and De La Rosa & Co., on
behalf of itself and Piper Jaffray & Co., in substantially the form presented to this City Council.
Any Responsible Officer is hereby authorized jointly to execute the Bond Purchase Agreement,
in substantially the form presented to this City Council, with such revisions, amendments, and
completions as shall be approved by any Responsible Officer, with the advice of Bond Counsel
and City Attorney, such approval to be conclusively evidenced by the execution and delivery
thereof by any Responsible Officer, provided that, the Bond Purchase Agreement shall provide
for a true interest cost not greater than 5.15%, and an underwriter's discount not greater than
1.25% of the principal amount of 2012 Bonds.
SECTION 10. Escrow Agreement. The proposed form of Escrow Deposit and Trust
Agreement relating to the 2002 Bonds by and between the CFD and U.S. Bank National
Association, as escrow agent (the "2002 Escrow Agreement") presented to the City County at
this meeting is hereby approved. A Responsible Officer is hereby authorized and directed, for
and in the name of the CFD, to execute and deliver the 2002 Escrow Agreement in substantially
said forms, with such changes therein as City Attorney and Bond Counsel may require or
approve, such requirement or approval to be conclusively evidenced by the execution thereof.
SECTION 11. Retention of Consultants. The law firm of Fulbright & Jaworski LLP, Los
Angeles, California, is hereby retained as Bond Counsel and Disclosure Counsel in connection
with the issuance of the 2012 Bonds, upon such terms and conditions as shall be approved by the
Deputy City Manager, or his designee. U.S. Bank National Association is hereby appointed as
Fiscal Agent for the 2012 Bonds pursuant to the Fiscal Agent Agreement and upon such
additional terms and conditions as shall be approved by the Deputy City Manager, or his
designee. The firm of C.M. de Crinis & Co., Inc., Glendale, California, is hereby retained as
financial advisor in connection with the issuance of the 2012 Bonds, upon such terms and
conditions as shall be approved by the Deputy City Manager or his designee.
SECTION 12. Official Actions. The Mayor, City Manager, Deputy City Manager, the
City Clerk and all other officers of the City are hereby authorized and directed, for and in the
name and on behalf of the City and the CFD, to do any and all things and take any and all other
actions, including the obtaining of municipal bond insurance and the publication of any notices
necessary or desirable in connection with the sale of the 2012 Bonds and execution and delivery
of any and all certificates, requisitions, agreements, notices, consents, warrants, and other
documents, which they, or any of them, deem necessary or advisable in order to consummate the
lawful issuance and sale of the 2012 Bonds and the consummation of the transactions as
described herein.
SECTION 13, Effectiveness. This Resolution shall take effect immediately upon its
adoption.
PASSED, APPROVED AND ADOPTED this day of , 2012.
MAYOR
ATTEST:
CITY CLERK
DATE:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
I, Armine Chaparyan, Interim 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, acting as the legislative body of the City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town Center) at a regular meeting thereof, held on the day
of , 2012, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
INTERIM CITY CLERK
9
FISCAL AGENT AGREEMENT
Between
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
and
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of October 1, 2012
Relating to
$[principal amount]
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
SPECIAL TAX REFUNDING BONDS
SERIES 2012
521619863
8/29/12
TABLE OF CONTENTS
(continued)
ARTICLE I
DEFINITIONS
Page
SectionI.I.
Definitions........................................................................................................2
18
Section 3.2.
ARTICLE II
19
Section 3.3.
GENERAL AUTHORIZATION AND BOND TERMS
20
Section 2.1.
Amount, Issuance, Purpose and Nature of Bonds ..........................................
11
Section 2.2.
Type and Nature of Bonds.............................................................................
11
Section 2.3.
Equality of Bonds and Pledge of Net Taxes ..................................................
12
Section 2.4.
Description of Bonds; Interest Rates.............................................................
12
Section 2.5.
Place and Form of Payment...........................................................................
13
Section2.6.
Form of Bonds...............................................................................................
14
Section 2.7.
Execution and Authentication........................................................................
14
Section2.8.
Bond Register.................................................................................................
15
Section 2.9.
Registration of Exchange or Transfer............................................................
15
Section 2.10.
Mutilated, Lost, Destroyed or Stolen Bonds ..................................................
16
Section 2.11.
Validity of Bonds...........................................................................................
16
Section 2.12.
Book -Entry System........................................................................................
16
Section 2.13.
Representation Letter.....................................................................................
17
Section 2.14.
Transfers Outside Book -Entry System..........................................................
18
Section 2.15.
Payments to the Nominee..............................................................................
18
Section 2.16.
Initial Depository and Nominee.....................................................................
18
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF REVENUES AND GROSS TAXES
Section 3.1.
Creation of Funds; Application of Proceeds ..................................................
18
Section 3.2.
Deposits to and Disbursements from Special Tax Fund ................................
19
Section 3.3.
Administrative Expense Fund........................................................................
20
Section 3.4.
Interest Account and Principal Account of the Special Tax Fund .................
20
Section 3.5.
Redemption Account of the Special Tax Fund ..............................................
21
Section 3.6.
Reserve Account of the Special Tax Fund .....................................................
22
Section3.7.
Surplus Fund..................................................................................................
25
Section 3.8.
Escrow Fund and the Costs of Issuance Fund ...............................................
26
Section3.9.
Investments ............................................... :.................................................
... 26
ARTICLE IV
REDEMPTION OF BONDS
Section 4.1.
Redemption of Bonds....................................................................................
28
Section 4.2.
Selection of Bonds for Redemption...............................................................
30
Section 4.3.
Notice of Redemption....................................................................................
30
Section 4.4.
Partial Redemption of Bonds.........................................................................
31
Section 4.5.
Effect of Notice and Availability of Redemption Money ..............................
31
ARTICLE V
COVENANTS AND WARRANTY
52161986.3
TABLE OF CONTENTS
(continued)
Page
Section5.1.
Warranty........................................................................................................
32
Section5.2.
Covenants.......................................................................................................
32
Section 7.3.
ARTICLE VI
41
Section 7.4.
AMENDMENTS TO FISCAL AGENT AGREEMENT
41
Section 6.1.
Supplemental Fiscal Agent Agreements or Orders Not Requiring
43
Bondowner Consent ............................................. •.....................................
38
Section 6.2.
Supplemental Fiscal Agent Agreements or Orders Requiring
Section 8.1.
BondownerConsent.......................................................................................
39
Section 6.3.
Notation of Bonds; Delivery of Amended Bonds ..........................................
40
ARTICLE VII
FISCAL AGENT
Section7.1.
Fiscal Agent...................................................................................................
40
Section 7.2.
Removal of Fiscal Agent...............................................................................
41
Section 7.3.
Resignation of Fiscal Agent...........................................................................
41
Section 7.4.
Compensation and Liability of Fiscal Agent .................................................
41
Section 7.5.
Merger or Consolidation................................................................................
43
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1.
Events of Default...........................................................................................
43
Section 8.2.
Remedies of Owners......................................................................................
43
ARTICLE IX
DEFEASANCE
Section 9.1.
Defeasance.....................................................................................................45
ARTICLE X
MISCELLANEOUS
Section 10.1.
Cancellation of Bonds....................................................................................
49
Section 10.2.
Execution of Documents and Proof of Ownership ........................................
49
Section 10.3.
Unclaimed Moneys........................................................................................50
Section 10.4.
Provisions Constitute Contract......................................................................
50
Section10.5.
Future Contracts.............................................................................................
51
Section 10.6.
Further Assurances.........................................................................................
51
Section10.7.
Severability....................................................................................................51
Section10.8.
Notices...........................................................................................................
51
Section 10.9.
General Authorization....................................................................................
51
Section 10.10.
Execution in Counterparts..............................................................................
51
52161986.3 11
FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT, dated as of October 1, 2012, between the City of
Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) (the "District')
and U.S. Bank National Association, a national banking association, as fiscal agent (the "Fiscal
Agent'), governs the terms of the City of Santa Clarita Community Facilities District No. 2002-
1, Special Tax Refunding Bonds (Valencia Town Center), Series 2012, issued in accordance
herewith from time to time.
RECITALS.
WHEREAS, the City Council of the City of Santa Clarita (the "City"), located in Los
Angeles County, California (hereinafter sometimes referred to as the "Governing Body" or the
"legislative body of the District'), has heretofore undertaken proceedings to form the City of
Santa Clarita Community Facilities District No. 92-1 (Valencia Town Center) (the "1992
District") pursuant to the terms and provisions of the Mello -Roos Community Facilities Act of
1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the
State of California (the "Act'); and
WHEREAS, on October 22, 1992, pursuant to the Act and Resolution No. CFD 92-1-4,
as amended on September 22, 1992, the 1992 District issued Special Tax Refunding Bonds (the
"1992 Bonds") in the original principal amount of $20,000,000 secured by special taxes to be
paid by the property owners within the 1992 District for the purpose of financing certain public
improvements; and
WHEREAS, for the purpose of optionally redeeming the 1992 Bonds, the City Council of
the City has undertaken proceedings to form the District pursuant to the terms and provisions of
the Act, and the District has declared the necessity to issue bonds; and
WHEREAS, the property owner of the parcels within the District has approved the levy
of a special tax and the issuance of bonds by the District and the District has authorized the
issuance of bonds in a single series, pursuant to the Act, in an aggregate principal amount not to
exceed $18,500,000; and
WHEREAS, on October 29, 2002, the District refunded the 1992 Bonds through the
issuance of bonds in an aggregate principal amount of $17,370,000 designated as the "City of
Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) Special Tax
Bonds" (the "2002 Bonds"); and
WHEREAS, the District has determined that it would be advantageous to refund the
outstanding 2002 Bonds;
WHEREAS, in order to provide funds to refund the outstanding 2002 Bonds, the District
desires to provide for the issuance of City of Santa Clarita Community Facilities District No.
2002-1 (Valencia Town Center) Special Tax Refunding Bonds" (the "Bonds"), in the aggregate
principal amount of $[principal amount];
52161986.3
WHEREAS, all requirements of the Act for the issuance of the Bonds have been
satisfied;
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and
secured and to secure the payment of the principal thereof, premium, if any, and interest thereon,
the District has authorized the execution and delivery of this Fiscal Agent Agreement; and
WHEREAS, the District has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the District, authenticated and delivered by the
Fiscal Agent and duly issued, the valid, binding and legal special obligations of the District, and
to constitute this Fiscal Agent Agreement a valid and binding agreement for the uses and
purposes herein set forth in accordance with its terms, have been done and taken, and the
execution and delivery of this Fiscal Agent Agreement has been in all respects duly authorized;
NOW, THEREFORE, THIS FISCAL AGENT AGREEMENT WITNESSETH, that in
order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at
any time issued and outstanding under this Fiscal Agent Agreement, 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 in consideration of the premises and of the mutual covenants contained herein and of
the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable
consideration, the receipt of which is hereby acknowledged, the District does hereby covenant
and agree, for the benefit of the Owners of the Bonds which may be issued hereunder from time
to time, as follows:
ARTICLE 1
DEFINITIONS
Section I.I. Definitions. Unless the context requires, the following terms shall have
the following meanings:
"Act" means the Mello -Roos Community Facilities Act of 1982, as amended, Sections
53311 et seq. of the California Government Code.
"Administrative Expense Fund" means the fund by such name created and established
pursuant to Section 3.1 hereof and held by the District.
"Administrative Expense Requirement" means for any Fiscal Year, an amount equal to
$ for Fiscal Year 2012-13, escalating by 3% per each Fiscal Year thereafter.
"Administrative Expenses" means the fees and expenses in any way related to the
administration of the District, including but not limited to the administrative costs with respect to
the levy, calculation and collection of the Special Taxes and the redemption of the Bonds
(including costs associated with foreclosure proceedings or work-outs with property owners); all
attorneys' fees and other costs related thereto; the fees and expenses of the Fiscal Agent
(including any fees or expenses of its counsel); any fees for credit enhancement for the Bonds
52161986.3 2
which are not otherwise paid as Costs of Issuance; any costs and expenses related to complying
with the disclosure provisions of the Act, the Continuing Disclosure Certificates and this Fiscal
Agent Agreement; the costs of the City and the District or their designees related to an appeal of
the Special Tax; any costs of the City and the District (including fees and expenses of counsel) to
defend the first lien on and pledge of the Special Taxes to the payment of the Bonds or otherwise
in respect of litigation relating to the District or the Bonds or with respect to any other
obligations of the District; any amounts required to be rebated to the federal government in order
for the District to comply with Section 5.2(9), including the fees and expenses of its counsel; the
costs of any dissemination agent under the continuing Disclosure Certificates entered into by the
District; an allocable share of the salaries of City staff directly related thereto and a proportionate
amount of City general administrative overhead related thereto; and all other costs and expenses
of the District or the Fiscal Agent incurred in connection with the discharge of their respective
duties hereunder and any other costs otherwise incurred by the City staff on behalf of the
District, including responding to Bondowner inquiries, in order to carry out the purposes of the
District as set forth in the Resolution of Formation and any obligation of the District hereunder.
"Annual Debt Service" means the principal amount of any Outstanding Bonds payable in
a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable
on any Outstanding Bonds in such Bond Year, if the Bonds are retired as scheduled.
"Auditor" means the auditor/tax collector of the County of Los Angeles.
"Authorized Investments" means any of the following which at the time of investment
are legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) Direct obligations of the United States of America (including obligations
issued or held in book -entry form on the books of the Department of the Treasury, and CATS
and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed
by the United States of America ("Direct Obligations").
(2) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are backed by
the full faith and credit of the United States of America (stripped securities are only permitted if
they have been stripped by the agency itself):
U.S. Export -Import Bank ("Eximbank")
Direct obligations or fully guaranteed certificates of beneficial
ownership
Farmers Home Administration ("FmHA")
Certificates of beneficial ownership
Federal Financing Bank
Federal Housing Administration Debentures ("FHA")
52161986.3
General Services Administration
Participation certificates
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
(3) Money market funds registered under the Federal Investment Company
Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by
Standard & Poor's of AAAm-G, AAAm or AAm, and, if rated by Moody's, rated Aaa, Aal or
Aa2 (including those of the Fiscal Agent and its affiliates).
(4) Certificates of deposit secured at all times by collateral described in (1)
and/or (2) above. Such certificates must be issued by commercial banks, savings and loan
associations or mutual savings banks. The collateral must be held by a third party and the
Bondholders must have a perfected first security interest in the collateral.
(5) Certificates of deposit, savings accounts, deposit accounts or money
market deposits which are fully insured by FDIC or which are with a bank rated AA or better by
Standard & Poor's and Aa or better by Moody's (including those of the Fiscal Agent and its
affiliates).
(6) Investment Agreements with any corporation, including banking or
financial institutions, provided that
(a) the long-term debt of the provider of any such investment
agreement is rated, at the time of investment, at least "AA" and "Aa" by the Rating Agency
(without regard to gradations of plus or minus within such category), and
52161986.3 4
(b) any such investment agreement is collateralized with United States
Treasury which at least equal 102% of the principal amount invested thereunder, and
(c) any such agreement shall include a provision to the effect that, in
the event the long-term debt rating of the provider of such agreement is downgraded below "AA-
" or below "Aa" by the applicable Rating Agency, the District has the right to withdraw or cause
the Fiscal Agent to withdraw all funds invested in such agreement and thereafter to invest such
funds pursuant to this Fiscal Agent Agreement.
(7) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's
and "A-1" or better by Standard & Poor's.
(8) Bonds or notes issued by any state or municipality which are rated by
Moody's and Standard & Poor's in one of the two highest rating categories assigned by such
agencies.
(9) Federal funds or bankers acceptances with a maximum term of one year of
any bank which has an unsecured, uninsured or unguaranteed obligation rating of "Prime - 1" or
"A3" or better by Moody's and "A - I" or "A" or better by Standard & Poor's.
(10) Repurchase agreements collateralized by Direct Obligations, GNMAs,
FNMAs or FHLMCs with any registered broker/dealer subject to the Securities Investors'
Protection Corporation jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated "P-1" or
"A3" or better by Moody's, and "A-1" or "A-" by Standard & Poor's; provided:
(a) a master repurchase agreement or specific written repurchase
agreement governs the transaction; and
(b) the securities are held free and clear of any lien by the Fiscal Agent
or an independent third party acting solely as agent ("Agent") for the Fiscal Agent, and such
third party is (i) a Federal Reserve Bank, or (ii) a bank which is a member of the Federal Deposit
Insurance Corporation and which has combined capital, surplus and undivided profits of not less
than $50 million, and the Fiscal Agent shall have received written confirmation from such third
party that it holds such securities, free and clear of any lien, as agent for the Fiscal Agent; and
(c) a perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq.
in such securities is created for the benefit of the Fiscal Agent; and
(d) the repurchase agreement has a term of 180 days or less, and the
Fiscal Agent or the Agent will value the collateral securities no less frequently than weekly and
will liquidate the collateral securities if any deficiency in the required collateral percentage is not
restored within two business days of such valuation; and
(e) the fair market value of the securities in relation to the amount of
the repurchase obligation, including principal and interest, is equal to at least 103%
52161986.3 5
(11) Local Agency Investment Fund ("LAIF") of the State of California.
"Authorized Representative of the District" means the City Manager, Assistant City
Manager, Deputy City Manager or City Clerk, or any other person or persons designated by the
Governing Body of the City and authorized to act on behalf of the City by a written certificate
signed on behalf of the City by the Mayor and containing the specimen signature of each such
person.
"Beneficial Owners" means those Persons for which the Participants have caused the
Depository to hold Book -Entry Bonds.
"Bond Counsel" means an attorney at law or a firm of attorneys selected by the District
of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on
bonds issued by states and their political subdivisions duly admitted to the practice of law before
the highest court of any state of the United States of America or the District of Columbia.
"Bond Register" means the books which the Fiscal Agent shall keep or cause to be kept
on which the registration and transfer of the Bonds shall be recorded.
"Bondowner" or "Owner" means the person or persons in whose name or names any
Bond is registered.
"Bonds" means the District's $[principal amount] Special Tax Refunding Bonds, issued
pursuant to this Fiscal Agent Agreement.
"Bond Year" means the twelve month period commencing on November 16 of each year
and ending on November 15 of the following year, except that the first Bond Year for the Bonds
which shall begin on the Delivery Date and end on the first November 15 which is not more than
12 months after the Delivery Date.
"Book -Entry Bonds" means the Bonds registered in the name of the Depository, or the
Nominee thereof, as the registered owner thereof pursuant to the terms and provisions of Section
2.07.
"Business Day" means a day which is not a Saturday or Sunday or a day of the year on
which banks in New York, New York, Los Angeles, California, or the city where the corporate
trust office of the Fiscal Agent is located, are not required or authorized to remain closed.
"CDIAC" means the California Debt and Investment Advisory Commission of the office
of the State Treasurer of the State of California or any successor agency or bureau thereto.
"Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of
DTC with respect to Book -Entry Bonds.
"Certificate of the District" means a written certificate or warrant request executed by an
Authorized Representative of the District.
"City" means the City of Santa Clarita.
52161956.3
"City Council" means the City Council of the City.
"Code" means the Internal Revenue Code of 1986 and any Regulations, rulings, judicial
decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Service interpreting and construing it.
"Continuing Disclosure Certificates" mean, collectively, the District Continuing
Disclosure Certificate and the Landowner Continuing Disclosure Certificate.
"Costs of Issuance" mean items of expense payable or reimbursable directly or indirectly
by the City, the District or any owner of property within the District and related to the
authorization, sale and issuance of the Bonds, which items of expense shall include, but not be
limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and
recording fees, initial fees and charges of the Fiscal Agent including its first annual
administrative fee, expenses incurred by the City or the District in connection with the issuance
of the Bonds or in connection with the establishment of the District, special tax consultant,
appraiser and escrow agent fees and expenses, legal fees and charges incurred by the City or
District, including bond counsel and disclosure counsel, financial consultants' fees, charges for
execution, transportation and safekeeping of the Bonds and other costs, charges and fees in
connection with the foregoing.
"Costs of Issuance Fund" means the fund by such name created and established pursuant
to Section 3.1 hereof.
"Defeasance Securities" means any of the following: (a) non -callable direct obligations
of the United States of America ("United States Treasury Obligations"), (b) evidences of
ownership of proportionate interests in future interest and principal payments on United States
Treasury Obligations 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 United States Treasury Obligations are not available to
any person claiming through the custodian or to whom the custodian may be obligated, and (c)
pre -refunded municipal obligations rated "AAA" and "Aria" by S&P and Moody's, respectively.
"Delivery Date" means the date on which the Bonds of such issue were issued and
delivered to the initial purchasers thereof.
"Depository" shall mean The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Bonds, or any other securities depository
acting as Depository under Article II hereof.
"DTC" means The Depository Trust Company, a limited -purpose trust company
organized under the laws of the State of New York.
"District" means City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) established pursuant to the Act and the Resolution of Formation.
52161986.3 7
"District Continuing Disclosure Certificate" means the District Continuing Disclosure
Certificate, dated the Delivery Date, as originally executed by the District, and as it may be
amended from time to time in accordance with the terms thereof.
"Escrow Agreement" means that certain Escrow Deposit and Trust Agreement, dated as
of October 1, 2012, by and between the District and U.S. Bank National Association, as fiscal
agent for the 2002 Bonds.
"Escrow Fund" means the fund by such name created and established pursuant to the
Escrow Agreement.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of Section 1273 of the Code) and,
otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in
accordance with applicable regulations under the Code, (ii) the investment is an agreement with
specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated
interest rate (for example, a guaranteed investment contract, a forward supply contract or other
investment agreement) that is acquired in accordance with applicable regulations under the Code,
(iii) the investment is a United States Treasury Security --State and Local Government Series that
is acquired in accordance with applicable regulations of the United States Bureau of public Debt,
or (iv) any commingled investment fund in which the City and related parties do not own more
than a ten percent (10%) beneficial interest therein if the return paid by the fund is without
regard to the source of the investment.
"Fiscal Agent" means U.S. Bank National Association, a national banking association
duly organized and existing under and by virtue of the laws of the United States of America, at
its corporate trust office in Los Angeles, California, and its successors or assigns, or any other
bank or trust company which may at any time be substituted in its place as provided in Sections
7.2 or 7.3 and any successor thereto.
"Fiscal Agent Agreement" means this FiscalAgent Agreement, together with any
Supplemental Fiscal Agent Agreement approved pursuant to Article 6 hereof.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
following June 30.
"Governing Body" means the City Council as the legislative body of the District.
"Gross Taxes" means the amount of all Special Taxes received by the District, together
with the proceeds collected from the sale of property pursuant to the foreclosure provisions of
this Fiscal Agent Agreement for the delinquency of such Special Taxes remaining after the
payment of all the costs related to such foreclosure actions, including, but not limited to, all legal
fees and expenses, court costs, consultant and title insurance fees and expenses.
52161986.3 -
"Independent Financial Consultant" means a financial consultant or special tax consultant
or firm of either such consultants generally recognized to be well qualified in the financial
consulting or special tax consulting field, appointed and paid by the District, who, or each of
whom:
(1) is, in fact, independent and not under the domination of the District;
(2) does not have any substantial interest, direct or indirect, in the District;
and
(3) is not connected with the District as a member, officer or employee of the
District, but who may be regularly retained to make annual or other reports to the District.
"Information Services" means the Electronic Municipal Market Access System (referred
to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at
http://cmma.msrb.org; provided, however, in accordance with then current guidelines of the
Securities and Exchange Commission, Information Services shall mean such other organizations
providing information with respect to called Bonds as the District may designate in a Certificate
of the District delivered to the Fiscal Agent.
"Interest Account" means the account by such name created and established in the
Special Tax Fund pursuant to Section 3.1 hereof.
"Interest Payment Date" means each May 15 and November 15, commencing May 15,
2013; provided, however, that, if any such day is not a Business Day, interest up to the Interest
Payment Date will be paid on the Business Day next succeeding such date.
"Investment Agreement" means one or more agreements for the investment of funds of
the District complying with the criteria therefor as set forth in Subsection (6) of the definition of
Authorized Investments herein.
"Landowner" means any property owner of land in the District responsible in the
aggregate for 10% or more of the annual special taxes levied in the District and subject to
continuing disclosure requirements pursuant to a Landowner Continuing Disclosure Certificate.
"Landowner Continuing Disclosure Certificate" means the Landowner Continuing
Disclosure Certificate, dated the Delivery Date, as originally executed by the Landowner, and as
it may be amended from time to time in accordance with the terms thereof.
"Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year
prior to the final maturity of the Bonds by adding the following for each Bond Year:
(1) the principal amount of all Outstanding Bonds payable in such Bond Year
either at maturity or pursuant to a Sinking Fund Payment; and
(2) the interest payable on the aggregate principal amount of all Bonds
Outstanding in such Bond Year if the Bonds are retired as scheduled.
52161986.3 9
"Moody's" means Moody's Investors Service, its successors and assigns.
"Net Taxes" means Gross Taxes (exclusive of any penalties and interest accruing with
respect to delinquent Special Tax installments) minus an amount equal to the Administrative
Expense Requirement.
"1992 Bonds" means the $20,000,000 City of Santa Clarita Community Facilities District
No. 92-1 (Valencia Town Center) Special Tax Bonds.
"1992 District" means the City of Santa Clarita Community Facilities District No. 92-1
(Valencia Town Center).
"Nominee" shall mean the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.16 hereof.
"Ordinance" means Ordinance No. adopted by the Governing Body on , 2002
authorizing the levy of the Special Taxes within the District, including any amendments thereto.
"Outstanding" or "Outstanding Bonds" means all Bonds theretofore issued by the
District, except:
(1) Bonds theretofore cancelled or surrendered for cancellation in accordance
with Section 10.1 hereof;
(2) Bonds for payment or redemption of which monies shall have been
theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of
such Bonds), provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice
of such redemption shall have been given as provided in this Fiscal Agent Agreement; and
(3) Bonds which have been surrendered to the Fiscal Agent for transfer or
exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to
Section 2.10 hereof.
"Participants" shall mean those broker-dealers, banks and other financial institutions
from time to time for which the Depository holds Bonds as securities depository.
"Person" means natural persons, firms, corporations, partnerships, associations, trusts,
public bodies and other entities.
"Principal Account" means the account by such name in the Special Tax Fund created
and established pursuant to Section 3.1 hereof.
"Principal Office of the Fiscal Agent" means the office of the Fiscal Agent located in Los
Angeles, California or such other office or offices as the Fiscal Agent may designate from time
to time, or the office of any successor Fiscal Agent where it principally conducts its business of
serving as Fiscal Agent under indentures pursuant to which municipal or governmental
obligations are issued; for purposes of transfer, registration, payment and surrender of the Bonds,
52161986.3 10
such term shall mean the corporate trust operations office of the Fiscal Agent in St. Paul,
Minnesota, or such other office designated by the Fiscal Agent.
"Rate and Method" means the rate and method of apportionment of the Special Taxes
approved by the qualified electors of the District.
"Rating Agency" means Moody's and Standard & Poor's, or both, as the context
requires.
"Record Date" means the first day of the month in which an Interest Payment Date
occurs, regardless of whether such day is a Business Day.
"Redemption Account" means the account by such name created and established in the
Special Tax Fund pursuant to Section 3.1 hereof.
"Regulations" means the regulations adopted or proposed by the Department of Treasury
from time to time with respect to obligations issued pursuant to section 103 of the Code.
"Representation Letter" shall mean the Blanket Letter of Representations from the
District to the Depository as described in Section 2.13 hereof.
"Reserve Account" means the account by such name created and established in the
Special Tax Fund pursuant to Section 3.1 hereof.
"Reserve Requirement" means, as of any date of calculation, an amount equal to the
lesser of (a) $ or (b) the lowest of (1) 10% of the original proceeds of the Bonds, less
accrued interest, if any, less original issue discount, if any, plus original issue premium, if any, or
(2) Maximum Annual Debt Service, or (3) 125% of the average Annual Debt Service of the
Outstanding Bonds.
"Resolution of Formation" means Resolution No. CFD 02-1-4 adopted by the City
Council of the City on October 8, 2002, pursuant to which the City formed the District.
"Sinking Fund Payment" means the annual payment to be deposited in the Redemption
Account to redeem a portion of the Term Bonds in accordance with the schedule set forth in this
Fiscal Agent Agreement.
"Six -Month Period" means the period of time beginning on the Delivery Date of each
issue of Bonds, as applicable, and ending six consecutive months thereafter, and each six-month
period thereafter until the latest maturity date of the Bonds (and any obligations that refund an
issue of the Bonds).
"Special Taxes" means the taxes authorized to be levied by the District in accordance
with the Resolution of Formation, the Act and the voter approval obtained at the October 8, 2002
election in the District, including prepayments, and any additional special taxes authorized to be
levied by the District from time to time which are pledged by the District to the repayment of the
Bonds.
52161986.3] 1
"Special Tax Fund" means the fund by such name created and established pursuant to
Section 3.1 hereof.
"Standard & Poor's" means Standard & Poor's, a division of McGraw-Hill, its successors
and assigns.
"Supplemental Fiscal Agent Agreement" means any supplemental fiscal agent agreement
amending or supplementing this Fiscal Agent Agreement.
"Surplus Fund" means the fund by such name created and established pursuant to Section
3.1 hereof.
"Tax Certificate" means the certificate by that name to be executed by the District on a
Delivery Date to establish certain facts and expectations and which contains certain covenants
relevant to compliance with the Code.
"Term Bonds" means the Bonds maturing on November 15, 20 and November 15,
2032.
"Treasurer" means the person who is acting in the capacity as finance director or
administrative services director to the City, currently the Deputy City Manager.
"2002 Bonds" means the $17,370,000 City of Santa Clarita Community Facilities District
No. 2002-1 (Valencia Town Center) Special Tax Bonds, currently outstanding in the principal
amount of $
"Underwriter" means the institution or institutions, if any, with whom the District enters
into a purchase contract for the sale of the Bonds.
"Verification Report" means, with respect to the deemed payment of Bonds pursuant to
clause (3) of Section 9.1, a report of a nationally recognized certified public accountant, or firm
of such accountants, verifying that the Defeasance Securities and cash, if any, deposited in
connection with such deemed payment satisfy the requirements of Section 9.1.
"Written Request of the District" means a request in writing executed by an Authorized
Representative of the District, or written designee, on behalf of the District.
ARTICLE H
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds. Under and pursuant
to the Act, the Bonds in the aggregate principal amount of Dollars
$[principal amount], shall be issued for the purpose of funding an escrow to optionally redeem
the 2002 Bonds, provided that the aggregate principal amount of the Bonds shall not exceed the
total indebtedness presently authorized. The Bonds shall be and are limited obligations of the
District and shall be payable as to the principal thereof and interest thereon and any premiums
52161986.3 12
upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax
Fund.
Section 2.2. Type and Nature of Bonds. Neither the faith and credit nor the taxing
power of the City, the State of California or any political subdivision thereof other than the
District is pledged to the payment of the Bonds. Except for the Net Taxes, no other taxes are
pledged to the payment of the Bonds. The Bonds are not general or special obligations of the
City nor general obligations of the District, but are limited obligations of the District payable
solely from certain amounts deposited by the District in the Special Tax Fund, as more fully
described herein. The District's limited obligation to pay the principal of, premium, if any, and
interest on the Bonds from amounts in the Special Tax Fund is absolute and unconditional, free
of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever.
No Owner of the Bonds may compel the exercise of the taxing power by the District (except as
pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal
of and interest on the Bonds and premiums upon the redemption thereof, if any, are not a debt of
the City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds are not a legal or equitable pledge,
charge, lien, or encumbrance upon any of the District's property, or upon any of its income,
receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund which are,
under the terms of this Fiscal Agent Agreement and the Act, set aside for the payment of the
Bonds, and interest thereon and neither the members of the Governing Body of the District or the
City Council of the City nor any persons executing the Bonds, are liable personally on the
Bonds, by reason of their issuance.
Notwithstanding anything to the contrary contained in this Fiscal Agent Agreement, the
District shall not be required to advance any money derived from any source of income other
than the Net Taxes for the payment of the interest on or the principal of the Bonds, or for the
performance of any covenants contained herein. The District may, however, advance funds for
any such purpose, provided that such funds are derived from a source legally available for such
purpose.
Section 2.3. Equality of Bonds and Pledge of Net Taxes. Pursuant to the Act and
this Fiscal Agent Agreement, the Bonds shall be equally payable from the Net Taxes and other
amounts in the Special Tax Fund without priority for number, date of the Bonds, date of sale,
date of execution, or date of delivery, and the payment of the interest on and principal of the
Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net
Taxes and other amounts in the Special Tax Fund, which are hereby set aside for the payment of
the Bonds. Amounts in the Special Tax Fund shall constitute a trust fund held for the benefit of
the Owners to be applied to the payment of the interest on and principal of the Bonds and so long
as any of the Bonds or interest thereon remain Outstanding shall not be used for any other
purpose, except as permitted by this Fiscal Agent Agreement. Notwithstanding any provision
contained in this Fiscal Agent Agreement to the contrary, Special Taxes deposited in the
Administrative Expense Fund and the Surplus Fund shall no longer be considered to be pledged
to the Bonds, and none of the Surplus Fund or the Administrative Expense Fund shall be
construed as a trust fund held for the benefit of the Owners.
52161986.3 13
Nothing in this Fiscal Agent Agreement or any Supplemental Fiscal Agent Agreement
shall preclude, subject to the limitations contained hereunder, the redemption prior to maturity of
any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding
bonds issued under the Act as the same now exists or as hereafter amended.
Section 2.4. Description of Bonds; Interest Rates. The Bonds shall be issued in fully
registered form in denominations of $5,000 or any integral multiple thereof. The Bonds of each
issue shall be numbered as desired by the Fiscal Agent.
The Bonds shall be designated "CITY OF SANTA CLARITA COMMUNITY
FACILITIES DISTRICT NO. 2002-1 (VALENCIA TOWN CENTER) SPECIAL TAX
REFUNDING BONDS, SERIES 2012." The Bonds shall be dated as of their Delivery Date and
shall mature and be payable on November 15 in the years and in the aggregate principal amounts
and shall be subject to and shall bear interest at the rates set forth in the table below payable on
each Interest Payment Date, commencing May 15, 2013:
Maturity Date
(November 15) Principal Amount Interest Rate
2032
Interest shall be payable on each Bond from the date established in accordance with
Section 2.5 below on each Interest Payment Date thereafter until the principal sum of that Bond
has been paid; provided, however, that if at the maturity date of any Bond (or if the same is
redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds
are available for the payment or redemption thereof in full, in accordance with the terms of this
Fiscal Agent Agreement, such Bonds shall then cease to bear interest. Interest due on the Bonds
shall be calculated on the basis of a 360 -day year comprised of twelve 30 -day months.
Section 2.5. Place and Form of Payment. The Bonds shall be payable both as to
principal and interest, and as to any premiums upon the redemption thereof, in lawful money of
the United States of America. The principal of the Bonds and any premiums due upon the
redemption thereof shall be payable upon presentation and surrender thereof at the Principal
Office of the Fiscal Agent, or at the designated office of any successor Fiscal Agent. Interest on
any Bond shall be payable from the Interest Payment Date next preceding the date of
52161986.3 14
authentication of that Bond, unless (i) such date of authentication is an Interest Payment Date in
which event interest shall be payable from such date of authentication, (ii) the date of
authentication is after a Record Date but prior to the immediately succeeding Interest Payment
Date, in which event interest shall be payable from the Interest Payment Date immediately
succeeding the date of authentication, or (iii) the date of authentication is prior to the close of
business on the first Record Date occurring after the issuance of such Bond, in which event
interest shall be payable from the dated date of such Bond, as applicable; provided, however, that
if at the time of authentication of such Bond, interest is in default, interest on that Bond shall be
payable from the last Interest Payment Date to which the interest has been paid or made available
for payment or, if no interest has been paid or made available for payment on that Bond, interest
on that Bond shall be payable from its dated date. Interest on any Bond shall be paid to the
person whose name shall appear in the Bond Register as the Owner of such Bond as of the close
of business on the Record Date. Such interest shall be paid by check of the Fiscal Agent mailed
on the Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or
her address as it appears on the Bond Register. In addition, upon a request in writing received by
the Fiscal Agent on or before the applicable Record Date from an Owner'of $1,000,000 or more
in principal amount of the Bonds, payment shall be made on the Interest Payment Date by wire
transfer in immediately available funds to an account within the United States designated by such
Owner.
Section 2.6. Form of Bonds. The definitive Bonds may be printed from steel
engraved or lithographic plates or may be typewritten. The Bonds and the certificate of
authentication shall be substantially in the form attached hereto as Exhibit A, which forms are
hereby approved and adopted as the forms of such Bonds and of the certificate of authentication.
Notwithstanding any provision in this Fiscal Agent Agreement to the contrary, the
District may, in its sole discretion, elect to issue the Bonds in book -entry form. Until definitive
Bonds, as applicable, shall be prepared, the District may cause to be executed and delivered in
lieu of such definitive Bonds temporary bonds in typed, printed, lithographed or engraved form
and in fully registered form, 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 District. Until exchanged for definitive Bonds, as applicable, any temporary
bond shall be entitled and subject to the same benefits and provisions of this Fiscal Agent
Agreement as definitive Bonds. If the District issues temporary Bonds, it shall execute and
furnish definitive Bonds, as applicable, without unnecessary delay and thereupon any temporary
Bond may be surrendered to the Fiscal Agent at its office, without expense to the Owner, in
exchange for a definitive Bond of the same issue, maturity, interest rate and principal amount in
any authorized denomination. All temporary Bonds so surrendered shall be cancelled by the
Fiscal Agent and shall not be reissued.
Section 2.7. Execution and Authentication. The Bonds shall be signed on behalf of
the District by the manual or facsimile signature of the Mayor and attested by the manual or
facsimile signature of the City Clerk, or any duly appointed deputy city clerk, in their capacity as
officers of the District. In case any one or more of the officers who shall have signed or sealed
any of the Bonds shall cease to be such officer before the Bonds so signed and sealed have been
authenticated and delivered by the Fiscal Agent (including new Bonds delivered pursuant to the
provisions hereof with reference to the transfer and exchange of Bonds or to lost, stolen,
52161986.3 15
destroyed or mutilated Bonds), such Bonds shall nevertheless be valid and may be authenticated
and delivered as herein provided, and may be issued as if the person who signed or sealed such
Bonds had not ceased to hold such office.
Only the Bonds as shall bear thereon such certificate of authentication in the form set
forth in Exhibit A hereto shall be entitled to any right or benefit under this Fiscal Agent
Agreement, and no Bond shall be valid or obligatory for any purpose until such certificate of
authentication shall have been duly executed by the Fiscal Agent.
Section 2.8. Bond Register. The Fiscal Agent will keep or cause to be kept, at its
office, sufficient books for the registration and transfer of the Bonds which shall upon reasonable
prior notice be open to inspection by the District during all regular business hours, and, subject to
the limitations set forth in Section 2.9 below, upon presentation for such purpose, the Fiscal
Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to
be transferred on said Bond Register, Bonds as herein provided.
The District and the Fiscal Agent may treat the Owner of any Bond whose name appears
on the Bond Register as the absolute Owner of that Bond for any and all purposes, and the
District and the Fiscal Agent shall not be affected by any notice to the contrary. The District and
the Fiscal Agent may rely on the address of the Bondowner as it appears in the Bond Register for
any and all purposes. It shall be the duty of the Bondowner to give written notice to the Fiscal
Agent of any change in the Bondowner's address so that the Bond Register may be revised
accordingly.'
Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set
forth in the following paragraph, the registration of any Bond may, in accordance with its terms,
be transferred upon the Bond Register by the person in whose name it is registered, in person or
by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office
of the Fiscal Agent, accompanied by delivery of written instrument of transfer in a form
approved by the Fiscal Agent and duly executed by the Bondowner or his or her duly authorized
attorney.
Bonds may be exchanged at the office of the Fiscal Agent for a like aggregate principal
amount of Bonds for other authorized denominations of the same maturity and issue. The Fiscal
Agent shall not collect'from the Owner any charge for any new Bond issued upon any exchange
or transfer, but shall require the Bondowner requesting such exchange or transfer to pay any tax
or other governmental charge required to be paid with respect to such exchange or transfer.
Whenever any Bonds shall be surrendered for registration of transfer or exchange, the District
shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, as
applicable, of the same issue and maturity, for a like aggregate principal amount; provided that
the Fiscal Agent shall not be required to register transfers or make exchanges of (i) Bonds for a
period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds
chosen for redemption.
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become
mutilated, the District shall execute, and the Fiscal Agent shall authenticate and deliver, a new
Bond of like tenor, date, issue and maturity in exchange and substitution for the Bond so
52161986.7 16
mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated
Bond so surrendered to the Fiscal Agent shall be cancelled by the Fiscal Agent pursuant to
Section 10.1 hereof. If any Bond shall be lost, destroyed or stolen, evidence of such loss,
destruction or theft may be submitted to the Fiscal Agent and, if such evidence is satisfactory to
the Fiscal Agent and, if any indemnity satisfactory to the District and the Fiscal Agent shall be
given, the District shall execute and the Fiscal Agent shall authenticate and deliver, a new Bond,
as applicable, of like tenor, maturity and issue, numbered and dated as the Fiscal Agent shall
determine in lieu of and in substitution for the Bond so lost, destroyed or stolen. Any Bond
issued in lieu of any Bond alleged to be mutilated, lost, destroyed or stolen, shall be equally and
proportionately entitled to the benefits hereof with all other Bonds issued hereunder. The Fiscal
Agent shall not 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 executed, authenticated
and delivered 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.
Notwithstanding any other provision of this Section, in lieu of delivering a new Bond which has
been mutilated, lost, destroyed or stolen, and which has matured, the Fiscal Agent may make
payment with respect to such Bonds upon receipt of the above-mentioned indemnity.
Section 2.11. Additional Bonds. So long as any of the Bonds remain Outstanding, the
District shall not issue any obligations payable from Net Taxes on a basis senior to or on a parity
with the Bonds. Nothing in this Fiscal Agent Agreement shall prohibit the District from issuing
obligations payable from Net Taxes on a basis subordinate to the Bonds and or from issuing
bonds solely for the purpose of refunding the Bonds.
Section 2.12. Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any defect in any proceedings taken by the District, or
by the invalidity, in whole or in part, of any contracts made by the District in connection
therewith, and the recital contained in the Bonds that the same are issued pursuant to the Act and
other applicable laws of the State shall be conclusive evidence of their validity and of the
regularity of their issuance.
Section 2.13. Book -Entry System. The Bonds shall be initially delivered in the form of
a separate single fully registered Bond (which may be typewritten) for each of the maturities of
the Bonds. Upon initial delivery, the ownership of each such Bond shall be registered in the
registration books kept by the Fiscal Agent in the name of the Nominee as nominee of the
Depository. Unless the District elects to discontinue the use of the book -entry system, all of the
Outstanding Bonds shall be registered in the registration books kept by the Fiscal Agent in the
name of the Nominee.
With respect to Bonds registered in the registration books kept by the Fiscal Agent in the
name of the Nominee, the District and the Fiscal Agent shall have no responsibility or obligation
to any such Participant or to any Person on behalf of which such a Participant holds an interest in
the Bonds. Without limiting the immediately preceding sentence, the District and the Fiscal
Agent 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 the
Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in
the registration books kept by the Fiscal Agent, of any notice with respect to the Bonds,
52161986.3 17
including any notice of redemption, (iii) the selection by the Depository and its Participants of
the beneficial interests in the Bonds to be redeemed in the event the Bonds are redeemed in part,
or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the
registration books kept by the Fiscal Agent, of any amount with respect to principal of, premium,
if any, or interest due with respect to the Bonds. The District and the Fiscal Agent may treat and
consider the Person in whose name each Bond is registered in the registration books kept by the
Fiscal Agent as the holder and absolute owner of such Bond for the purpose of payment of the
principal of, premium, if any, and interest on 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 whatsoever. The Fiscal Agent shall pay all
principal of, premium, if any, and interest due on the Bonds only to or upon the order of the
respective Owner, as shown in the registration books kept by the Fiscal Agent, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy
and discharge fully the District's obligations with respect to payment of the principal, premium,
if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other
than an Owner, as shown in the registration books kept by the Fiscal Agent, shall receive a Bond
evidencing the obligation of the District to make payments of principal, premium, if any, and
interest pursuant to this Fiscal Agent Agreement. Upon delivery by the Depository to the Fiscal
Agent and the District 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 Fiscal Agent Agreement shall refer to such
new nominee of the Depository.
Section 2.14. Representation Letter. In order to qualify the Bonds which the District
elects to register in the name of the Nominee for the Depository's book -entry system, an
authorized representative of the District or the Fiscal Agent is hereby authorized to execute from
time to time and deliver to such Depository the Representation Letter. The execution and
delivery of the Representation Letter shall not in any way limit the provisions of Section 10.2 or
in any other way impose upon the District or the Fiscal Agent any obligation whatsoever with
respect to persons having interests in the Bonds other than the Owners, as shown on the
registration books kept by the Fiscal Agent. The Fiscal Agent agrees to take all action necessary
to continuously comply with all representations made by it in the Representation Letter. In
addition to the execution and delivery of the Representation Letter, the Mayor and any
Authorized Representative of the District are hereby authorized to take any other actions, not
inconsistent with this Fiscal Agent Agreement, to qualify the Bonds for the Depository's book -
entry program.
Section 2.15. Transfers Outside Book -Entry System. In the event (i) the Depository
determines not to continue to act as securities depository for the Bonds, or (ii) the District
determines that the Depository shall no longer so act, then the District will discontinue the book -
entry system with the Depository. If the District fails to identify another qualified securities
depository to replace the Depository then the Bonds so designated shall no longer be restricted to
being registered in the registration books kept by the Fiscal Agent in the name of the Nominee,
but shall be registered in whatever name or names Persons transferring or exchanging Bonds
shall designate, in accordance with the provisions of Section 2.9 hereof.
521e19863 18
Section 2.16. Payments to the Nominee. Notwithstanding any other provisions of this
Fiscal Agent Agreement to the contrary, so long as any Bond is registered in the name of the
Nominee, all payments with respect to principal, premium, if any, and interest due with respect
to such Bond and all notices with respect to such Bond shall be made and given, respectively, as
provided in the Representation Letter or as otherwise instructed by the Depository.
Section 2.17. Initial Depository and Nominee. The initial Depository under this
Article shall be The Depository Trust Company, New York, New York. The initial Nominee
shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF REVENUES AND GROSS TAXES
Section 3.1. Creation of Funds; Application of Proceeds. There are hereby created
and established the following funds and accounts:
(1) The Community Facilities District No. 2002-1 Administrative Expense
Fund (the "Administrative Expense Fund") which shall be held and maintained by the Treasurer.
(2) The Community Facilities District No. 2002-1 Special Tax Fund (the
"Special Tax Fund") (in which there shall be established and created an Interest Account, a
Principal Account, a Redemption Account and a Reserve Account) which shall be held and
maintained by the Fiscal Agent.
(3) The Community Facilities District No. 2002-1 Surplus Fund (the "Surplus
Fund") which shall be held and maintained by the Fiscal Agent.
(4) The Community Facilities District No. 2002-1 Costs of Issuance Fund (the
"Costs of Issuance Fund") which shall be held and maintained by the Fiscal Agent.
The amounts on deposit in the foregoing funds and accounts held by the Fiscal Agent
shall be held in trust. The Fiscal Agent and the Treasurer shall invest and disburse the amounts
in the foregoing funds and accounts in accordance with the provisions of this Article III and shall
disburse investment earnings thereon in accordance with the provisions of Section 3.9 hereof.
Except as required to be segregated into funds and accounts as described herein, money held by
the Fiscal Agent in trust hereunder need not be segregated from other funds except to the extent
required by law.
All proceeds of the sale of the Bonds shall be received on behalf of the District and
deposited and transferred as follows:
(1) $ shall be received by the Fiscal Agent and transferred to the
Escrow Agent for deposit in the Escrow Fund established under the Escrow Agreement for
disbursement in accordance therewith; and
52161986.3 19
(2) $ shall be received by the Fiscal Agent and deposited into
the Costs of Issuance Fund established hereunder for disbursement in accordance with Section
3.8 below; and
(3) $ (which is equal to the initial Reserve Requirement) shall be
received by the Fiscal Agent and deposited into the Reserve Account to be disbursed in
accordance with Section 3.6 below: and
(4) $ shall.be received by the Fiscal Agent and transferred to the
Treasurer for deposit into the Administrative Expense Fund for disbursement in accordance with
Section 3.3 below.
The Fiscal Agent may establish a temporary fund or account in its records to facilitate
and record such transfers and deposits.
Section 3.2. Deposits to and Disbursements from Special Tax Fund. The District
shall, within ten (10) Business Days of receipt of Net Taxes, transfer the Net Taxes to the Fiscal
Agent for deposit in the Special Tax Fund to be held in trust in accordance with the terms of this
Fiscal Agent Agreement. The Fiscal Agent shall transfer the amounts on deposit in the Special
Tax Fund on the dates and in the amounts set forth in the following Sections, in the following
order of priority, to:
(a) The Interest Account of the Special Tax Fund;
(b) The Principal Account of the Special Tax Fund;
(c) The Redemption Account of the Special Tax Fund;
(d) The Reserve Account of the Special Tax Fund; and
(e) The Surplus Fund.
At the maturity of all of the Bonds and, after all principal and interest then due on the
Bonds then Outstanding has been paid or provided for and any amounts owed to the Fiscal Agent
have been paid in full, moneys in the Special Tax Fund and any accounts therein shall be
transferred to the District and may be used by the District for any lawful purpose.
Section 3.3. Administrative Expense Fund. On or before five (5) Business Days
prior to each November 15, commencing November 15, 2013, the Treasurer shall deposit an
amount of Special Taxes equal to the Administrative Expense Requirement into the
Administrative Expense Fund. The Fiscal Agent shall transfer from the Surplus Fund to the
Treasurer for deposit into the Administrative Expense Fund from time to time upon the Written
Request of the District, in accordance with Section 3.7, additional amounts necessary to make
timely payment of Administrative Expenses. Moneys in the Administrative Expense Fund shall
be applied exclusively to pay Administrative Expenses. The Treasurer shall maintain a record of
deposits and disbursements within the Administrative Expense Fund, which record shall be
available for inspection by the public. Annually, the Treasurer shall determine if there exists a
surplus of moneys in the Administrative Expense Fund not needed for the payment of
52161986.3 20
Administrative Expenses, and shall transfer such surplus, if any, to the Fiscal Agent for deposit
in the Surplus Fund to be used in accordance with Section 3.7. Moneys in the Administrative
Expense Fund may be invested in any Authorized Investment,
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds until maturity, other than principal due upon
redemption, shall be paid by the Fiscal Agent from the Principal Account and the Interest
Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of
principal of and interest on the Bonds will be made when due, after making the transfer required
by Section 3.3, at least five (5) Business Days prior to each May 15 and November 15, the Fiscal
Agent shall make the following transfers from the Special Tax Fund first to the Interest Account
and then to the Principal Account; provided, however, that to the extent that deposits have been
made in the Interest Account or the Principal Account from the proceeds of the sale of an issue
of the Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and
provided, further, that, if amounts in the Special Tax Fund are inadequate to make the foregoing
transfers, then any deficiency shall be made up by an immediate transfer from the Reserve
Account:
(1) To the Interest Account, an amount such that the balance in the Interest
Account five (5) Business Days prior to each Interest Payment Date shall be equal to the
installment of interest due on the Bonds on said Interest Payment Date and any installment of
interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest
Account shall be used for the payment of interest on the Bonds as the same become due.
(2) To the Principal Account, an amount such that the balance in the Principal
Account five (5) Business Days prior to November 15 of each year, commencing November 15,
2013, shall at least equal the principal payment due on the Bonds maturing on such November 15
and any principal payment due on a previous November 15 which remains unpaid. Moneys in
the Principal Account shall be used for the payment of the principal of such Bonds as the same
become due at maturity.
Section 3.5. Redemption Account of the Special Tax Fund.
(1) On each November 15 on which a Sinking Fund Payment is due, after the
deposits have been made to the Interest Account and the Principal Account of the Special Tax
Fund as required by Section 3.4 hereof, the Fiscal Agent shall next transfer into the Redemption
Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the
balance in the Redemption Account five (5) Business Days prior to each November 15 equal to
the Sinking Fund Payment due on any Outstanding Bonds on such November 15; provided,
however, that, if amounts in the Special Tax Fund are inadequate to make, the foregoing
transfers, then any deficiency shall be made up by an immediate transfer from the Reserve
Account, if funded, pursuant to Section 3.6 below. Moneys so deposited in the Redemption
Account shall be used and applied by the Fiscal Agent to call and redeem Term Bonds in
accordance with the Sinking Fund Payment schedule set forth in Section 4.1 hereof and in any
Supplemental Fiscal Agent Agreement for such Term Bonds.
52161986.3 21
(2) After making the deposits to the Interest Account and the Principal
Account of the Special Tax Fund pursuant to Section 3.4 above and to the Redemption Account
for Sinking Fund Payments then due pursuant to subparagraph (1) of this Section, and in
accordance with the redemption provisions set forth in Sections 4.1(1) or 4.1(2) hereof, the
Fiscal Agent shall transfer from the Special Tax Fund and deposit in the Redemption Account
moneys available for the purpose and sufficient to pay the interest, the principal and the
premiums, if any, payable on the Bonds called for optional redemption or mandatory redemption
from prepayments; provided, however, that amounts in the Special Tax Fund may be applied to
optionally redeem Bonds only if immediately following such redemption the amount in the
Reserve Account will equal the Reserve Requirement.
(3) Moneys set aside in the Redemption Account shall be used solely for the
purpose of redeeming Bonds and shall be applied on or after the redemption date to the payment
of the principal of and premium, if any, on the Bonds to be redeemed upon presentation and
surrender of such Bonds and in the case of an optional redemption or mandatory redemption
from prepayments to pay the interest thereon; provided, however, that in lieu or partially in lieu
of such call and redemption, moneys deposited in the Redemption Account as set forth above
may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of
Outstanding Bonds may be made by the District at public or private sale as and when and at such
prices as the District may in its discretion determine but only at prices (including brokerage or
other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for
an optional redemption or mandatory redemption from prepayments, the premium applicable at
the next following call date according to the premium schedules established pursuant to Sections
4.1(1) or 4.1(2) hereof. The District shall direct the Fiscal Agent in writing to disburse amounts
from the Redemption Account for such purchase of Bonds. Any accrued interest payable upon
the purchase of Bonds may be paid from the amount reserved in the Interest Account of the
Special Tax Fund for the payment of interest on the next following Interest Payment Date.
Section 3.6. Reserve Account of the Special Tax Fund. There shall be maintained in
the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The
amounts in the Reserve Account shall be applied as follows:
(1) Moneys in the Reserve Account shall be used solely for the purpose of
paying the principal of, including Sinking Fund Payments, and interest on any Bonds when due
in the event that the moneys in the Interest Account and the Principal Account of the Special Tax
Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are
insufficient to make a Sinking Fund Payment when due. If the amounts in the Interest Account,
the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay
the principal of, including Sinking Fund Payments, or interest on any Bonds when due, the Fiscal
Agent shall withdraw from the Reserve Account for deposit in the Interest Account, the Principal
Account or the Redemption Account of the Special Tax Fund, as applicable, moneys necessary
for such purposes.
(2) Whenever moneys are withdrawn from the Reserve Account, after making
the required transfers referred to in Sections 3.4 and 3.5 above, the Fiscal Agent shall transfer to
the Reserve Account from available moneys in the Special Tax Fund, or from any other legally
available funds which the District elects to apply to such purpose, the amount needed to restore
52161936.3 22
the amount of such Reserve Account to the Reserve Requirement. Moneys in the Special Tax
Fund shall be deemed available for transfer to the Reserve Account only if the Fiscal Agent
determines that such amounts will not be needed to make the deposits required to be made to the
Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund. If
amounts in the Special Tax Fund or otherwise transferred to replenish the Reserve Account are
inadequate to restore the Reserve Account to the Reserve Requirement, then the District shall
include the amount necessary fully to restore the Reserve Account to the Reserve Requirement in
the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates.
(3) In connection with any redemption of the Bonds under Section 4.1(1) or
(2), or a partial defeasance of the Bonds in accordance with Section 9.1 hereof, amounts in the
Reserve Account may be applied to such redemption or partial defeasance so long as the amount
on deposit in the Reserve Account following such redemption or partial defeasance equals the
Reserve Requirement. To the extent that the Reserve Account is at the Reserve Requirement as
of the first day of the final Bond Year for the Bonds, amounts in the Reserve Account may be
applied to pay the principal of and interest due on the Bonds in the final Bond Year. Moneys in
the Reserve Account in excess of the Reserve Requirement not transferred in accordance with
the preceding provisions of this paragraph shall be withdrawn from the Reserve Account on the
fifth (5`h) Business Day before each May 15 and November 15 and transferred to the Interest
Account of the Special Tax Fund.
Section 3.7. Surplus Fund. After making the transfers required by Sections 3.4, 3.5
and 3.6 hereof, as soon as practicable after each November 15, and in any event prior to the next
succeeding November 15, the Fiscal Agent shall transfer all remaining amounts in the Special
Tax Fund to the Surplus Fund, other than amounts in the Special Tax Fund which the District
directs the Fiscal Agent by Written Request of the District to retain because the District has
included such funds as being available in the Special Tax Fund in calculating the amount of the
levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(2) hereof. Moneys deposited
in the Surplus Fund shall be transferred by the Fiscal Agent from time to time upon the Written
Request of the District, (i) to the Administrative Expense Fund to pay Administrative Expenses
to the extent that the amounts on deposit in the Administrative Expense Fund are insufficient to
pay Administrative Expenses, (ii) to the Interest Account, the Principal Account or the
Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund
Payments, premium, if any, and interest on the Bonds when due in the event that moneys in the
Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor, (iii)
to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement,
and (iv) to the District to be expended for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds. In the
event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to
pay debt service on any Outstanding Bonds, upon the written direction of the District, the Fiscal
Agent will segregate such amount into a separate subaccount and the moneys on deposit in such
subaccount of the Surplus Fund shall be invested in Authorized Investments the interest on
which is excludable from gross income under Section 103 of the Code (other than bonds the
interest on which is a tax preference item for purposes of computing the alternative minimum tax
of individuals and corporations under the Code) or in Authorized Investments at a yield not in
excess of the yield on the issue of Bonds to which such amounts are to be applied, unless, in the
52161996.3 23
opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion
from gross income for federal income tax purposes of interest on the Bonds which were issued
on a tax-exempt basis for federal income tax purposes.
Section 3.8. Escrow Fund and the Costs of Issuance Fund.
(1) The moneys in the Escrow Fund shall be applied by the Escrow Agent as
provided in the Escrow Agreement to optionally redeem the 2002 Bonds. Any moneys
remaining in the Escrow Fund following redemption of the 2002 Bonds and payments of all
amounts under the Escrow Agreement shall be transferred to the Special Tax Fund.
(2) The moneys in the Costs of Issuance Fund shall be applied exclusively to
pay the Costs of Issuance. Amounts for Costs of Issuance shall be disbursed by the Fiscal Agent
from the Costs of Issuance Fund designated therefor in a requisition signed by an Authorized
Representative of the District, substantially in the form of Exhibit B hereto, which must be
submitted in connection with each requested disbursement.
(3) Upon receipt of a Certificate of the District that all or a specified portion
of the amount remaining in the Costs of Issuance Fund is no longer needed to pay Costs of
Issuance, but not later than February 15, 2013, the Fiscal Agent shall transfer all or such
specified portion of the moneys remaining on deposit in the Costs of Issuance Fund to the
Special Tax Fund and the Costs of Issuance Fund shall be closed.
Section 3.9. Investments. Moneys in any fund or account created or established by
this Fiscal Agent Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent
in Authorized Investments, as directed pursuant to a Written Request of the District filed with the
Fiscal Agent at least two (2) Business Days, in advance of the making of such investments. In
the absence of any such Written Request of the District, the Fiscal Agent shall invest any such
moneys in Authorized Investments described in clause (3) of the definition thereof to the extent
practicable which by their terms mature prior to the date on which such moneys are required to
be paid out hereunder, or are held uninvested. The Treasurer shall make note of any investment
of funds hereunder in excess of the yield on the Bonds, so that appropriate actions can be taken
to assure compliance with Section 5.2 (9) hereof.
Moneys in any fund or account created or established by this Fiscal Agent Agreement
and held by the Treasurer shall be invested by the Treasurer in Authorized Investments, which in
any event by their terms mature prior to the date on which such moneys are required to be paid
out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed
to be part of such fund or account, subject, however, to the requirements of this Fiscal Agent
Agreement for transfer of interest earnings and profits resulting from investment of amounts in
funds and accounts. Whenever in this Fiscal Agent Agreement any moneys are required to be
transferred by the District to the Fiscal Agent, such transfer may be accomplished by transferring
a like amount of Authorized Permitted Investments.
The Fiscal Agent or an affiliate or the Treasurer may act as principal or agent in the
acquisition or disposition of any investment and shall be entitled to its customary fee therefor.
Neither the Fiscal Agent nor the Treasurer shall incur any liability for losses arising from any
52161986.3 24
investments made pursuant to this Section. For purposes of determining the amount on deposit
in any fund or account held hereunder, all Authorized Investments or investments credited to
such fund or account shall be valued at the cost thereof (excluding accrued interest and
brokerage commissions, if any).
Except as otherwise provided in the next sentence, all investments of amounts deposited
in any fund, or account created by or pursuant to this Fiscal Agent Agreement, or otherwise
containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be
acquired, disposed of, and valued (as of the date that valuation is required by this Fiscal Agent
Agreement or the Code) at Fair Market Value. Notwithstanding the previous sentence,
investments in funds or accounts (or portions thereof) that are subject to a yield restriction under
the applicable provisions of the Code shall be valued at their present value (within the meaning
of section 148 of the Code). The Fiscal Agent shall not be liable for verification of the
application of such sections of the Code.
Investments in any and all funds and accounts may be commingled in a separate fund or
funds for purposes of making, holding and disposing of investments, notwithstanding provisions
herein for transfer to or holding in or to the credit of particular funds or accounts of amounts
received or held by the Fiscal Agent or the Treasurer hereunder, provided that the Fiscal Agent
or the Treasurer, as applicable, shall at all times account for such investments strictly in
accordance with the funds and accounts to which they are credited and otherwise as provided in
this Fiscal Agent Agreement.
The Fiscal Agent or the Treasurer, as applicable, shall sell at the highest price reasonably
obtainable, or present for redemption, any investment security whenever it shall be necessary to
provide moneys to meet any required payment, transfer, withdrawal or disbursement from the
fund or account to which such investment security is credited and neither the Fiscal Agent nor
the Treasurer shall be liable or responsible for any loss resulting from the acquisition or
disposition of such investment security in accordance herewith.
The District acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the District the right to receive brokerage
confirmations of security transactions as they occur, the District specifically waives receipt of
such confirmations to the extent permitted by law. The Fiscal Agent will furnish the District
periodic cash transaction statements which shall include detail for all investment transactions
made by the Fiscal Agent hereunder.
Section 3.10. Limited Obligation. The District's obligations hereunder are limited
obligations of the District and are payable solely from and secured solely by the Net Taxes and
the amounts in the Special Tax Fund.
Section 3.11. Liability of District. The District shall not incur any responsibility in
respect of the Bonds or this Fiscal Agent Agreement other than in connection with the duties or
obligations explicitly herein or in the Bonds assigned to or imposed upon it. The District shall
not be liable in connection with the performance of its duties hereunder, except for its own
negligence or willful default. The District shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal
52161986.3 25
Agent herein or of any of the documents executed by the Fiscal Agent in connection with the
Bonds, or as to the existence of a default or event of default thereunder.
In the absence of bad faith, the District, including the Treasurer, 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 District and conforming to the requirements of this Fiscal
Agent Agreement. The District, including the Treasurer, shall not be liable for any error of
judgment made in good faith unless it shall be proved that it was negligent in ascertaining the
pertinent facts.
No provision of this Fiscal Agent Agreement shall require the District to expend or risk
its own general funds or otherwise incur any financial liability (other than with respect to the
Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The District may rely and shall be protected in acting or refraining from acting upon any
notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party
or proper parties. The District may consult with counsel, who may be the City Attorney, 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 by it hereunder in good
faith and in accordance therewith.
The District 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 his title thereto satisfactorily
established, if disputed.
Whenever in the administration of its duties under this Fiscal Agent Agreement the
District 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 willful misconduct on the part of the District, be
deemed to be conclusively proved and established by a certificate of the Fiscal Agent, and such
certificate shall be full warranty to the District for any action taken or suffered under the
provisions of this Fiscal Agent Agreement or any Supplemental Agreement upon the faith
thereof, but in its discretion the District may, in lieu thereof, accept other evidence of such matter
or may require such additional evidence as to it may seem reasonable.
Section 3.12. Employment of Agents by District or the City. In order to perform their
respective duties and obligations hereunder, the City, the District and/or the Treasurer may
employ such persons or entities as they deem necessary or advisable. The City, the District
and/or the Treasurer shall not be liable for any of the acts or omissions of such persons or entities
employed by them in good faith hereunder, and shall be entitled to rely, and shall be fully
protected in doing so, upon the opinions, calculations, determinations and directions of such
persons or entities.
52161986.3 26
ARTICLE IV
REDEMPTION OF BONDS
Section 4.1. Redemption of Bonds.
(1) Optional Redemption. Subject to the limitations set forth below, the
Bonds maturing on or after November 15, 2021 may be redeemed, at the option of the District
from any source of funds on any date prior to maturity on or after November 15, 2020, in whole,
or in part in denominations of $5,000 or any integral multiple thereof and in the order of maturity
selected by the District and by lot within a maturity, at the following redemption prices,
expressed as a percentage of the principal amount to be redeemed, together with accrued interest
to the date of redemption:
Redemption Periods Redemption Prices
November 15, 2020 through November 14, 2021 102%
November 15, 2021 through November 14, 2022 101
November 15, 2022 and thereafter 100
In the event the District elects to redeem Bonds as provided above, the District shall give
a Written Request of the District to the Fiscal Agent of its election to so redeem, the redemption
date and the principal amount of the Bonds to be redeemed. The notice to the Fiscal Agent shall
be given for the convenience of the Fiscal Agent at least 60 but no more than 90 days prior to the
redemption date, or such shorter period as shall be acceptable to the Fiscal Agent in the sole
determination of the Fiscal Agent.
(2) Mandatory Redemption from Special Tax Prepayments. The Bonds are
subject to mandatory redemption on any Interest Payment Date, from and to the extent of any
prepayment of Special Taxes, in whole or in part in denominations of $5,000 or any integral
multiple thereof and in the order of maturity selected by the District and by lot within a maturity.
Such mandatory redemption of the Bonds will be at the following redemption prices (expressed
as a percentages of the principal amount of the Bonds or portions thereof to be redeemed)
together with accrued interest thereon to the date fixed for redemption:
Redemption Period
Redemption Price
Any May 15 or November 15, prior to November 14, 2020
103%
November 15, 2020 or May 15, 2021
102
November 15, 2021 or May 15, 2022
101
Any May 15 or November 15 on or after November 15, 2022
100
In connection with such redemption, the District may also apply amounts in the Reserve
Account which will be in excess of the Reserve Requirement as a result of such Special Tax
prepayment to redeem Bonds as set forth above.
52161986.3 27
(3) Mandatory Sinking Fund Redemption. The Bonds maturing on
November 15, 20 shall be called before maturity and redeemed, from the Sinking Fund
Payments that have been deposited into the Redemption Account, on November 15, 20 , and on
each November 15 thereafter prior to maturity, in accordance with the schedule of Sinking Fund
Payments set forth below. The Bonds so called for redemption shall be selected by the Fiscal
Agent by lot and shall be redeemed at a redemption price for each redeemed Bond equal to the
principal amount thereof, plus accrued interest to the redemption date, without premium, as
follows:
Redemption Date
(November 15) Principal Amount
(maturity)
The Bonds maturing on November 15, 2032 shall be called before maturity and
redeemed, from the Sinking Fund Payments that have been deposited into the Redemption
Account, on November 15, 20 , and on each November 15 thereafter prior to maturity, in
accordance with the schedule of Sinking Fund Payments set forth below. The Bonds so called
for redemption shall be selected by the Fiscal Agent by lot and shall be redeemed at a
redemption price for each redeemed Bond equal to the principal amount thereof, plus accrued
interest to the redemption date, without premium, as follows:
Redemption Date
(November 15) Principal Amount
(maturity)
If during the Fiscal Year immediately preceding one of the redemption dates specified in
(3) above the District purchases Term Bonds at least 45 days prior to the redemption date, the
District shall notify the Fiscal Agent by Written Request of the District as to the principal
amount purchased and the amount of Bonds so purchased shall be credited at the time of
purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking
Fund Payment for the applicable maturity of the Term Bonds.. All Term Bonds purchased
pursuant to this subsection shall be cancelled pursuant to Section 10.1 hereof.
52161986.3 28
In the event of a partial redemption of the Term Bonds pursuant to Section 4.1(1) or (2)
above, each of the remaining Sinking Fund Payments for such Term Bonds, as described above,
will be reduced, as nearly as practicable, on a pro rata basis.
Section 4.2. Selection of Bonds for Redemption. If less than all of the Bonds
Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000
to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof. In
selecting portions of such Bonds for redemption, the Fiscal Agent shall treat such Bonds as
representing that number of Bonds of $5,000 denominations which is obtained by dividing the
principal amount of such Bonds to be redeemed in part by $5,000. The Fiscal Agent shall
promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds are due for redemption under
Section 4.1 above, the Fiscal Agent shall give notice, in the name of the District, of the
redemption of such Bonds; provided, however, that a notice of a redemption to be made from
other than from Sinking Fund Payments shall be conditioned on there being on deposit on the
redemption date sufficient money to pay the redemption price of the Bonds to be redeemed.
Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond numbers and
the maturity date or dates of the Bonds selected for redemption, except that where all of the
Bonds of a maturity or all of an issue are subject to redemption, or all the Bonds of one maturity,
are to be redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed
for redemption and surrender of the Bonds to be redeemed; (c) state the redemption price; (d)
state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be
redeemed only in part, state the portion of such Bond which is to be redeemed; (f) state the date
of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being
redeemed; and (h) state any other descriptive information needed to identify accurately the
Bonds being redeemed as shall be specified by the Fiscal Agent. Such notice shall further state
that on the date fixed for redemption, there shall become due and payable on each Bond, or
portion thereof called for redemption, the principal thereof, together with any premium, and
interest accrued to the redemption date, and that from and after such date, interest thereon shall
cease to accrue and be payable. At least 30 days but no more than 60 days prior to the
redemption date, the Fiscal Agent shall mail a copy of such notice, by first class mail, postage
prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, to
the original purchaser of any Bonds. The actual receipt by the Owner of any Bond or the
original purchaser of any Bond of notice of such redemption shall not be a condition precedent to
redemption, and neither the failure to receive nor any defect in such notice shall affect the
validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the
redemption date. A certificate by the Fiscal Agent that notice of such redemption has been given
as herein provided shall be conclusive as against all parties and the Owner shall not be entitled to
show that he or she failed to receive notice of such redemption.
The Fiscal Agent may issue a conditional notice of optional redemption to the Owners in
the same manner as provided above. Such conditional notice may be rescinded, redemption may
be canceled and none of such Bonds shall be redeemed in the event sufficient funds have not
been deposited with the Fiscal Agent on the redemption date.
521619863 29
In addition to the foregoing notice, further notice shall be given by the Fiscal Agent as set
out below, but no defect in said further notice nor any failure to give all or any portion of such
further notice shall in any manner defeat the effectiveness of a call for redemption if notice
thereof is given as above prescribed.
Each further notice of redemption shall be sent on or before the date notice of redemption
is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or
certified mail or overnight delivery service to the registered securities depositories then in the
business of holding substantial amounts of obligations of types comprising the Bonds as shall be
specified by the Fiscal Agent to the Fiscal Agent and to the Information Services.
Upon the payment of the redemption price of any Bonds being redeemed, each check or
other transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP
number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such
check or other transfer.
Section 4.4. Partial Redemption of Bonds. Upon surrender of any Bond to be
redeemed in part only, the District shall execute and the Fiscal Agent shall authenticate and
deliver to the Bondowner, at the expense of the District, a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the Bonds
surrendered, with the same interest rate and the same maturity.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary
for the redemption having been made available for that purpose and being available therefor on
the date fixed for such redemption:
(1) The Bonds, or portions thereof, designated for redemption shall, on the
date fixed for redemption, become due and payable at the redemption price thereof as provided
in this Fiscal Agent Agreement, anything in this Fiscal Agent Agreement or in the Bonds to the
contrary notwithstanding;
(2) Upon presentation and surrender thereof at the Principal Office of the
Fiscal Agent, the redemption price of such Bonds shall be paid to the Owners thereof;
(3) As of the redemption date the Bonds, or portions thereof so designated for
redemption shall be deemed to be no longer Outstanding and such Bonds, or portions thereof,
shall cease to bear further interest; and
(4) As of the date fixed for redemption no Owner of any of the Bonds, or
portions thereof so designated for redemption shall be entitled to any of the benefits of this Fiscal
Agent Agreement, or to any other rights, except with respect to payment of the redemption price
and interest accrued to the redemption date from the amounts so made available.
52161986.3 30
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds issued hereunder are
Outstanding and unpaid, the District makes the following covenants with the Bondowners under
the provisions of the Act and this Fiscal Agent Agreement (to be performed by the District or its
proper officers, agents or employees), which covenants are necessary and desirable to secure the
Bonds and tend to make them more marketable; provided, however, that said covenants do not
require the District to expend any funds or moneys other than the Special Taxes and other
amounts deposited to the Special Tax Fund:
(1) Punctual Payment; Against Encumbrances. The District hereby covenants
that it will receive all Net Taxes in trust and will immediately deposit such amounts with the
Fiscal Agent, and the District shall have no beneficial right or interest in the amounts so
deposited except as provided by this Fiscal Agent Agreement. All such Net Taxes shall be
disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be
accounted for separately and apart from all other money, funds, accounts or other resources of
the District.
The District covenants that it will duly and punctually pay or cause to be paid the
principal of and interest on every Bond issued hereunder, together with the premium, if any,
thereon on the date, at the place and in the manner set forth in the Bonds and in accordance with
this Fiscal Agent Agreement to the extent that Net Taxes are available therefor, and that the
payments into the Funds and Accounts created hereunder will be made, all in strict conformity
with the terms of the Bonds, and this Fiscal Agent Agreement, and that it will faithfully observe
and perform all of the conditions, covenants and requirements of this Fiscal Agent Agreement
and of the Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge upon
any of the Net Taxes except as provided in this Fiscal Agent Agreement, and will not issue any
obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with
the Bonds. Nothing herein shall prevent the District from issuing or incurring indebtedness
which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of
Net Taxes to repay the Bonds, or which is for the purpose of refunding the Bonds.
(2) Levy of Special Tax. Continuing in Fiscal Year 2012-2013 and so long as
any Bonds issued under this Fiscal Agent Agreement are Outstanding, the Governing Body of
the District hereby covenants to levy the Special Tax in an amount sufficient, together with other
amounts on deposit in the Administrative Expense Fund and the Special Tax Fund and available
for such purpose, to pay (1) the principal of and interest on the Bonds when due, (2) the
Administrative Expenses, and (3) any amounts required to replenish the Reserve Account of the
Special Tax Fund to the Reserve Requirement.
52161986.3 31
(3) Collection of Special Taxes. The District shall comply with all
requirements of the Act so as to assure the timely collection of Special Taxes, including without
limitation, the enforcement of delinquent Special Taxes.
The Treasurer shall effect the levy of the Special Taxes each Fiscal Year on the parcels
within the District in accordance with the Ordinance, such that the computation of the levy is
complete before the final date on which the Auditor will accept the transmission of the Special
Tax amounts for the parcels within the District for inclusion on the next secured tax roll. Upon
the completion of the computation of the amounts of the levy, the Treasurer shall prepare or
cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to
include the levy of the Special Taxes on the next secured tax roll. The Special Taxes so levied
shall be payable and be collected in the same manner and at the same time and in the same
installments as the general taxes on real property are payable, and have the same priority,
become delinquent at the same time and in the same proportionate amounts and bear the same
proportionate penalties and interest after delinquency as do the general taxes on real property,
unless otherwise provided by the District.
In the event that the Treasurer determines to levy all or a portion of the Special Taxes by
means of direct billing of the property owners of the parcels within the District, the Treasurer
shall, not less than forty-five (45) days prior to each Interest Payment Date, send bills to the
owners of such real property located within the District subject to the levy of the Special Taxes
for Special Taxes in an aggregate amount necessary to meet the financial obligations of the
District due on the next Interest Payment Date, said bills to specify that the amounts so levied
shall be due and payable not less than thirty (30) days prior to such Interest Payment Date and
shall be delinquent if not paid when due.
In any event, the Treasurer shall fix and levy the amount of Special Taxes within the
District required (i) for the payment of principal of and interest on any outstanding Bonds of the
District becoming due and payable during the ensuing year (taking into consideration anticipated
delinquencies), and (ii) to pay the Administrative Expenses during such year, all in accordance
with the Rate and Method and the Ordinance. The Special Taxes so levied shall not exceed the
authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.
The Treasurer is hereby authorized to employ consultants to assist in computing the levy
of the Special Taxes hereunder and any reconciliation of amounts levied to amounts received.
The fees and expenses of such consultants and the costs and expenses of the Treasurer (including
a charge for City or District staff time) in conducting its 'duties hereunder shall be an
Administrative Expense hereunder.
(4) Commence Foreclosure Proceedings. The District hereby covenants for
the benefit of the Owners of the Bonds that it (i) will commence judicial foreclosure proceedings
against all parcels owned by a property owner where the aggregate delinquent Special Taxes on
such parcels'is greater than $25,000 not later than ninety (90) days following the date in which
such Special Taxes were due and (ii) will commence judicial foreclosure proceedings against all
parcels with delinquent Special Taxes not later than ninety (90) days following the date in which
such Special Taxes were due where it receives Special Taxes in an amount which is less than
95% of the total Special Tax due from properties within the District, and (iii) will diligently
52161986.3 32
pursue such foreclosure proceedings until the delinquent Special Taxes are paid. The District
may, but is not obligated to, advance funds from any source of legally available funds in order to
maintain the Reserve.Account of the Special Tax Fund at the Reserve Requirement.
The District covenants that it will deposit the proceeds of any foreclosure which
constitute Net Taxes in the Special Tax Fund.
(5) Payment of Claims. The District 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
Net Taxes or; other funds in the Special Tax Fund, or which might impair the security of the
Bonds then Outstanding; provided that nothing herein contained shall require the District to
make any such payments so long as the District in good faith shall contest the validity of any
such claims.
(6) Books and Accounts. The District will keep proper books of records and
accounts, separate from all other records and accounts of the District, in which complete and
correct entries shall be, made of all transactions relating to the levy of the Special Tax and the
deposits to the Special Tax Fund. Such books of records and accounts shall at all times during
business hours be subject to the inspection of the Fiscal Agent or of the Owners of the Bonds
then Outstanding or their representatives authorized in writing.
(7) State Reporting. If at any time the Fiscal Agent fails to pay principal or
interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the
Reserve Account to pay principal of or interest on the Bonds, the Fiscal Agent shall notify the
District in writing of such failure or withdrawal, and the District shall notify CDIAC of such
failure or withdrawal within ten days of the failure to make such payment or the date of such
withdrawal.
(8) Annual Reports to the CDIAC. Not later than October 30 of each year,
commencing October 30, 2012 and continuing until the October 30 following the final maturity
of the Bonds, the District shall supply to CDIAC the information required to be provided thereto
pursuant to Section 53359.5(b) of the Act. Such information shall be made available to any
Owner upon written request to the District accompanied by a fee determined by the District to
pay the costs of the District in connection therewith. The District shall in no event be liable to
any Owner or any other person or entity in connection with any error in any such information.
(9) Tax Covenants.
(a) Special Definitions. When used in this subsection, 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.
52161986.3 33
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax
Regulations (referring to sales, investment and transferred proceeds), and any replacement
proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nonpurpose Investment" means any investment property, as defined in section 148(b) of
the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry out
the governmental purposes of that series of Bonds.
"Prior Issue" means collectively, the 1992 Bonds and the 2002 Bonds.
"Rebate Amount", has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Tax Regulations" means the United States Treasury Regulations promulgated pursuant
to sections 103 and 141 through 150 of the Code, or section 103 of the 1954 Code, as applicable.
"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 District 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 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 Fiscal Agent 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 Bond from the gross income of the owner
thereof for federal income tax purposes, the District shall comply with each of the specific
covenants in this subsection.
(c) Private Use and Private Payments. Except as would not cause any
Bond to become a "private activity bond" within the meaning of section 141 of the Code and the
Tax Regulations, the District shall take all actions necessary to assure that the District at all times
prior to the final cancellation of the last of the Bonds to be retired:
(i) exclusively owns, operates and possesses all property the
acquisition, construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the 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
52161986.3 34
(ii) does not directly or indirectly impose or accept any charge
or other payment by any person or entity (other than a state or local government) who is treated
as using any Gross Proceeds of the 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 Bond to become
a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations
and rulings thereunder, the District shall not use or permit the use of Gross Proceeds of the
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 the
Bonds to become "arbitrage bonds" within the meaning of section 148 of the Code and the Tax
Regulations and rulings thereunder, the District shall not (and shall not permit any person to), at
any time prior to the final cancellation of the last 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 Bonds within the meaning of said section 148.
(t) Not Federally Guaranteed. Except to the extent permitted by
section 149(b) of the Code and the Tax Regulations and rulings thereunder, the District shall take
or omit to take (and shall not permit any person to take or omit to take) any action that would
cause any Bond to be "federally guaranteed" within the meaning of section 149(b) of the Code
and the Tax Regulations and rulings thereunder.
(g) Information Report. The District shall timely file any information
required by section 149(e) of the Code with respect to 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:
(i) The District 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 Bond is discharged.
However, to the extent permitted by law, the District may commingle (and may allow the
District to commingle) Gross Proceeds of Bonds with its other monies, provided that it
52161986.3 35
separately accounts for each receipt and expenditure of Gross Proceeds and the obligations
acquired therewith.
(ii) Not less frequently than each Computation Date, the
District 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 District shall maintain a copy of
the calculation with its official transcript of proceedings relating to the issuance of the Bonds
until six years after the final Computation Date.
(iii) In order to assure the excludability pursuant to 3(a) of the
Code of the interest on the Bonds from the gross income of the owners thereof for federal
income tax purposes, the District shall pay to the United States the amount that when added to
the future value of previous rebate payments made for the 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 District 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 District. Notwithstanding the foregoing, and provided that the District takes all
steps available to it to cause the provision of such amounts, the monetary obligation of the
District under this paragraph (3) shall be limited to amounts provided to it for such purpose by
the District.
(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 District shall not
and shall not permit any person to, at any time prior to the final cancellation of the last of the
Bonds to be retired, enter into any transaction that reduces the amount required to be paid to the
United States pursuant to paragraph (h) of this subsection 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 Yields on the Bonds not been relevant to either party.
0) Bonds Not Hedge Bonds.
(i) The District represents that none of the Prior Issue nor the
Bonds is or will become a "hedge bond" within the meaning of section 149(g) of the Code.
(ii) Without limitation of paragraph (i) above: the District
believes (upon appropriate investigation) (A) that on the date of issuance of the Prior Issue the
District reasonably expected that at least 85% of the spendable proceeds of the Prior Issue would
be'expended within the three-year period commencing on such date of issuance, and (B) no more
than 50% of the proceeds of the Prior Issue were invested in Nonpurpose Investments having a
substantially guaranteed yield for a period of four years or more.
(k) Elections. The District hereby directs and authorizes any District
representative to make elections permitted or required pursuant to the provisions of the Code or
52161986.3 36
the Tax Regulations, as such representative (after consultation with Bond Counsel) deems
necessary or appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or
similar or other appropriate certificate, form or document.
(1) Closing Certificate. The District agrees to execute and deliver in
connection with the issuance of the 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 Bonds
from the gross income of the owners thereof for federal income tax purposes, which
representations and covenants are incorporated as though expressly set forth herein.
(10) Reduction of Maximum Special Taxes. The District hereby finds and
determines that, historically, delinquencies in the payment of special taxes authorized pursuant to
the Act in community facilities districts in Souther California have from time to time been at
levels requiring the levy of special taxes at the maximum authorized rates in order to make
timely payment of principal of and interest on the outstanding indebtedness of such community
facilities districts. For this reason, the District hereby determines that a reduction in the
maximum Special Tax rates authorized to be levied on parcels in the District below the levels
provided in this Section 5.2(10) would interfere with the timely retirement of the Bonds. The
District determines it to be necessary in order to preserve the security for the Bonds to covenant,
and, to the maximum extent that the law permits it to do so, the District hereby does covenant,
that it shall not initiate proceedings to reduce the maximum Special Tax rates for the District,
unless, in connection therewith, (i) the District receives a certificate from one or more
Independent Financial Consultants which, when taken together, certify that, on the basis of the
parcels of land and improvements existing in the District immediately following the proposed
reduction, (A) the maximum amount of the Special Tax which may be levied on then existing
Class 2 Property (as defined in the Rate and Method of Apportionment of Special Taxes then in
effect in the District) in each Bond Year for any Bonds Outstanding will equal at least 110% of
the sum of the estimated Administrative Expenses and gross debt service in that Bond Year on
all Bonds to remain Outstanding after the reduction is approved, and (B) [value -to -lien ratio test]
have been met, and (ii) the District hereby finds that any reduction made under such conditions
will not adversely affect the interests of the Owners of the Bonds. For purposes of estimating
Administrative Expenses for the foregoing calculation, the Independent Financial Consultant
shall compute the Administrative Expenses for the then current Fiscal Year and escalate that
amount by three percent (3%) in each subsequent Fiscal Year.
(11) Covenants to Defend. The District hereby covenants that in the event that
any initiative is adopted by the qualified electors in the District which purports to reduce the
maximum Special Tax below the levels specified in Section 5.2(7) above or to limit the power of
the District to levy the Special Taxes for the purposes set forth in Section 5.2(2) above, it will
commence and pursue legal action in order to preserve its ability to comply with such covenants.
(12) Limitation on Right to Tender Bonds. The District hereby covenants that
it will not adopt any policy pursuant to Section 53341.1 of the Act permitting the tender of
Bonds to the District in full payment or partial payment of any Special Taxes unless the District
receives a report of an Independent Consultant that doing so will not adversely affect the security
of the Bonds.
52161986.3 37
(13) Continuing Disclosure. The District hereby covenants to comply with the
term of the Continuing Disclosure Certificate executed by it with respect to the Bonds.
(14) Extension of Time for Payment. In order to prevent any accumulation of
claims for interest after maturity, the District shall not, directly or indirectly, extend or consent to
the extension of the time for the payment of any claim for interest on any of the Bonds and shall
not, directly or indirectly, be a party to the approval of any such arrangement 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 District, such claim for interest so
extended or funded shall not be entitled, in case of default hereunder, to the benefits of this
Fiscal Agent Agreement, 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 so extended or
funded. Nothing in this section shall be deemed to limit the right of the District to issue bonds
for the purpose of refunding any outstanding Bonds, and such issuance shall not be deemed to
constitute an extension of maturity of the Bonds.
(15) Reserve Account Replenishment. The District hereby covenants that to
the extent there is a draw upon the Reserve Account as a result of a delinquency in the collection
of Special Taxes, the District shall cause the Treasurer to effect the next annual levy of Special
Taxes in an amount sufficient to replenish such delinquency and in addition to amounts that
would be levied if there were no such delinquency; provided, however, the amount of Special
Taxes levied shall not exceed the maximum permitted by the Ordinance and the Rate and
Method.
(16) Further Assurances. The District shall adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably necessary
or proper to carry out the intention or to facilitate the performance of this Fiscal Agent
Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits
provided in this Fiscal Agent Agreement.
ARTICLE VI
AMENDMENTS TO FISCAL AGENT AGREEMENT
Section 6.1. Supplemental Fiscal Agent Agreements or Orders Not Requiring
Bondowner Consent. The District may from time to time, and at any time, without notice to or
consent of any of the Bondowners, adopt Supplemental Fiscal Agent Agreements for any of the
following purposes:
(1) to cure any ambiguity, to correct or supplement any provisions herein
which may be inconsistent with any other provision herein, or to make any other provision with
respect to matters or questions arising under this Fiscal Agent Agreement or in any additional
resolution or order, provided that such action is not materially adverse to the interests of the
Bondowners;
(2) to add to the covenants and agreements of and the limitations and the
restrictions upon the District contained in this Fiscal Agent Agreement, other covenants,
521619863 38
agreements, limitations and restrictions to be observed by the District which are not contrary to
or inconsistent with this Fiscal Agent Agreement as theretofore in effect or which further secure
Bond payments;
(3) to modify, amend or supplement this Fiscal Agent Agreement 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, or to comply with the Code or regulations issued
thereunder, 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 then Outstanding; or
(4) to modify, alter or amend the rate and method of apportionment of the
Special Taxes in any manner so long as such changes do not reduce the maximum Special Taxes
that may be levied in each year on property within the District to an amount which is less than
that permitted under Section 5.2(10) hereof; or
(5) to modify, alter, amend or supplement this Fiscal Agent Agreement in any
other respect which is not materially adverse to the Bondowners.
Section 6.2. Supplemental Fiscal Agent Agreements or Orders Requiring
Bondowner Consent. Exclusive of the Supplemental Fiscal Agent Agreements described in
Section 6. 1, the Owners of not less than a majority in aggregate principal amount of the Bonds
Outstanding shall have the right to consent to and approve the adoption by the District of such
Supplemental Fiscal Agent Agreements as shall be deemed necessary or desirable by the District
for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained in this Fiscal Agent Agreement; provided,
however, that nothing herein shall permit, or be construed as permitting, (a) an extension of the
maturity date of the principal, or the payment date of interest on, any Bond, (b) a reduction in the
principal amount of, or redemption premium on, any Bond or the rate of interest thereon, (c) a
preference or priority of any Bond over any other Bond, or (d) a reduction in the aggregate
principal amount of the Bonds the Owners of which are required to consent to such
Supplemental Fiscal Agent Agreement, without the consent of the Owners of all Bonds then
Outstanding.
If at any time the District shall desire to adopt a Supplemental Fiscal Agent Agreement,
which pursuant to the terms of this Section shall require the consent of the Bondowners, the
District shall so notify the Fiscal Agent and shall deliver to the Fiscal Agent a copy of the
proposed Supplemental Fiscal Agent Agreement. The Fiscal Agent shall, at the expense of the
District, cause notice of the proposed Supplemental Fiscal Agent Agreement to be mailed, by
first class mail, postage prepaid, to all Bondowners at their addresses as they appear in the Bond
Register. Such notice shall briefly set forth the nature of the proposed Supplemental Fiscal
Agent Agreement and shall state that a copy thereof is on file at the office of the Fiscal Agent for
inspection by all Bondowners. The failure of any Bondowners to receive such notice shall not
affect the validity of such Supplemental Fiscal Agent Agreement when consented to and
approved by the Owners of not less than a majority in aggregate principal amount of the Bonds
Outstanding as required by this Section. Whenever at any time within one year after the date of
the first mailing of such notice, the Fiscal Agent shall receive an instrument or instruments
52161986.3 39
purporting to be executed by the Owners of a majority in aggregate principal amount of the
Bonds Outstanding, which instrument or instruments shall refer to the proposed Supplemental
Fiscal Agent Agreement described in such notice, and shall specifically consent to and approve
the adoption thereof by the District substantially in the form of the copy referred to in such
notice as on file with the Fiscal Agent, such proposed Supplemental Fiscal Agent Agreement,
when duly adopted by the District, shall thereafter become a part of the proceedings for the
issuance of the Bonds. In determining whether the Owners of a majority of the aggregate
principal amount of the Bonds have consented to the adoption of any Supplemental Fiscal Agent
Agreement, Bonds which are owned by the District or by any person directly or indirectly
controlling or controlled by or under the direct or indirect common control with the District shall
be disregarded and shall be treated as though they were not Outstanding for the purpdse of any
such determination.
Upon the adoption of any Supplemental Fiscal Agent Agreement and the receipt of
consent to any such Supplemental Fiscal Agent Agreement from the Owners of not less than a
majority in aggregate principal amount of the Outstanding Bonds in instances where such
consent is required pursuant to the provisions of this section, this Fiscal Agent Agreement shall
be, and shall be deemed to be, modified and amended in accordance therewith, and the respective
rights, duties and obligations under this Fiscal Agent Agreement of the District and all Owners of
Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder, subject in
all respects to such modifications and amendments.
Section 6.3. Notation of Bonds; Delivery of Amended Bonds. After the effective
date of any action taken as hereinabove provided, the District may determine that the Bonds
Bonds may bear a notation, by endorsement in form approved by the District, as to such action,
and in that case upon demand of the Owner of any Outstanding Bond at such effective date and
presentation of his Bond for the purpose at the office of the Fiscal Agent or at such additional
offices as the Fiscal Agent may select and designate for that purpose, a suitable notation as to
such action shall be made on such Bonds. If the District shall so determine, new Bonds so
modified as, in the opinion of the District, shall be necessary to conform to such action shall be
prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond at
such effective date such new Bonds shall be exchanged at the office of the Fiscal Agent or at
such additional offices as the Fiscal Agent may select and designate for that purpose, without
cost to each Owner of Outstanding Bonds, upon surrender of such Outstanding Bonds.
ARTICLE VII
FISCAL AGENT
Section 7.1. Fiscal Agent. U.S. Bank National Association is hereby appointed Fiscal
Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and
only such duties, as are specifically set forth in this Fiscal Agent Agreement, and no implied
covenants or obligations shall be read into this Fiscal Agent Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it
may be consolidated or any company resulting from any merger, conversion or consolidation to
which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or
52161986.3 40
substantially all of its corporate trust business, provided such company shall be eligible under the
following paragraph of this Section, shall be the successor to such Fiscal Agent without the
execution or filing of any paper or any further act, anything herein to the contrary
notwithstanding.
So long as there is no Event of Default hereunder, the District may remove the Fiscal
Agent initially appointed, and any successor thereto, and may appoint a successor or successors
thereto, but any such successor shall be a bank or trust company having a combined capital
(exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and
subject to supervision or examination by federal or state authority. If such bank or trust
company publishes a report of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority above referred to, then for the purposes of this
Section 8. 1, combined capital and surplus of such bank or trust company shall be deemed to be
its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the District and by
giving to the Owners notice by mail of such resignation. Upon receiving notice of such
resignation, the District shall promptly appoint a successor Fiscal Agent by an instrument in
writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance
of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section 7.1 within forty-five (45) days after the Fiscal Agent shall have given
to the District written notice or after a vacancy in the office of the Fiscal Agent shall have
occurred by reason of its inability to act, the Fiscal Agent or any Bond Owner may apply to any
court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon,
after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
Any successor Fiscal Agent appointed under this Fiscal Agent Agreement shall signify its
acceptance of such appointment by executing and delivering to the District and to its predecessor
Fiscal Agent a written acceptance thereof, and thereupon such successor Fiscal Agent, without
any further act, deed or conveyance, shall become vested with all the moneys, estates, properties,
rights, powers, trusts, duties and obligations of such predecessor Fiscal Agent, with like effect as
if originally named Fiscal Agent herein; but, nevertheless at the Written Request of the District
or the request of the successor Fiscal Agent, such predecessor Fiscal Agent shall execute and
deliver any and all instruments of conveyance or further assurance and do such other things as
may reasonably be required for more fully and certainly vesting in and confirming to such
successor Fiscal Agent all the right, title and interest of such predecessor Fiscal Agent in and to
any property held by it under this Fiscal Agent Agreement and shall pay over, transfer, assign
and deliver to the successor Fiscal Agent any money or other property subject to the trusts and
conditions herein set forth. Upon acceptance of appointment by a successor Fiscal Agent as
provided in this subsection, the successor Fiscal Agent shall, within 15 days after such
acceptance, mail, by first class mail postage prepaid, a notice of the succession of such Fiscal
Agent to the trusts hereunder to the Owners at the addresses shown on the Bond Register.
Any trust company, national banking association or bank into which the Fiscal Agent
may be merged or converted or with which it may be consolidated or any trust company, national
52161986.3 41
banking association or bank resulting from any merger, conversion or consolidation to which it
shall be a party or any trust company, national banking association or bank to which the Fiscal
Agent may sell or transfer all or substantially all of its corporate trust business, provided such
trust company, national banking association or bank shall be eligible under this Section, shall be
the successor to such Fiscal Agent, without the execution or filing of any paper or any further
act, anything herein to the contrary notwithstanding.
Section 7.2. Liability of Fiscal Agent. The recitals of facts, covenants and agreements
herein and in the Bonds contained shall be taken as statements, covenants and agreements of the
District, and the Fiscal Agent assumes no responsibility for the correctness of the same, nor
makes any representations as to the validity or sufficiency of this Fiscal Agent Agreement or of
the Bonds, nor shall incur any responsibility in respect thereof, other than in connection with the
duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent
shall not be liable in connection with the performance of its duties hereunder, except for its own
negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any
information, statement or recital in any offering memorandum or other disclosure material
prepared or distributed with respect to the issuance of the Bonds.
In the absence of bad faith, the Fiscal Agent 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 Fiscal Agent and conforming to the procedural requirements of this Fiscal Agent
Agreement; but in the case of any such certificates or opinions by which any provision hereof are
specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to
examine the same to determine whether or not they conform to the procedural requirements of
this Fiscal Agent Agreement. Except as provided above in this paragraph, the Fiscal Agent shall
be protected and shall incur no liability in acting or proceeding, or in not acting or not
proceeding, in good faith, reasonably and in accordance with the terms of this Fiscal Agent
Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement,
affidavit, or other paper or document which it shall in good faith reasonably believe to be
genuine and to have been adopted or signed by the proper person or to have been prepared and
furnished pursuant to any provision of this Fiscal Agent Agreement, and the Fiscal Agent shall
not be under any duty to make any investigation or inquiry as to any statements contained or
matters referred to in any such instrument.
The Fiscal Agent shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements of the City or the District
herein or of any of the documents executed by the City or the District in connection with the
Bonds, or as to the existence of a default or event of default thereunder.
The Fiscal Agent shall not be liable for any error of judgment made in good faith by a
responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining
the pertinent facts.
No provision of this Fiscal Agent Agreement shall require the Fiscal Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for
52161986.3 42
believing that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers
vested in it by this Fiscal Agent Agreement at the request or direction of any of the Owners
pursuant to this Fiscal Agent Agreement unless such Owners shall have offered to the Fiscal
Agent reasonable security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have
if it were not the Fiscal Agent.
All indemnifications and releases from liability granted to the Fiscal Agent hereunder
shall extend to the directors, officers and employees of the Fiscal Agent.
Section 7.3. Information. The Fiscal Agent shall provide to the District such
information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent
hereunder as the District shall reasonably request, including but not limited to quarterly
statements reporting funds held and transactions by the Fiscal Agent.
Section 7.4. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected
in acting or refraining from acting upon any notice, resolution, request, consent, order,
certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or proper parties. The Fiscal Agent may
consult with counsel, who may be counsel to the District, 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 by it hereunder in good faith and in accordance therewith.
The Fiscal Agent 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 his title thereto
satisfactorily established, if disputed.
Whenever in the administration of its duties under this Fiscal Agent Agreement the Fiscal
Agent 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 willful misconduct on the part of the Fiscal
Agent, be deemed to be conclusively proved and established by a certificate of the District, and
such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under
the provisions of this Fiscal Agent Agreement or any Supplemental Agreement upon the faith
thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such
matter or may require such additional evidence as to it may seem reasonable.
Section 7.5. Compensation, Indemnification. The District shall pay to the Fiscal
Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under
this Fiscal Agent Agreement, and also all reasonable expenses, charges, counsel fees and other
disbursements, including those of their attorneys, agents and employees, incurred in and about
the performance of their powers and duties under this Fiscal Agent Agreement, but the Fiscal
Agent shall not have a lien therefor on any funds at any time held by it under this Fiscal Agent
52161986.3 43
Agreement. The District further agrees, to the extent permitted by applicable law, to indemnify
and save the Fiscal Agent, its officers, employees, directors and agents harmless against any
liabilities which it may incur in the exercise and performance of its powers and duties hereunder
which are not due to its negligence or willful misconduct. The obligation of the District under
this Section shall survive resignation or removal of the Fiscal Agent under this Fiscal Agent
Agreement and payment of the Bonds and discharge of this Fiscal Agent Agreement, but any
monetary obligation of the District arising under this Section shall be limited solely to amounts
on deposit in the Administrative Expense Fund.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall
constitute an "event of default":
(1) Default 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;
(2) Default in the due and punctual payment of the interest on any Bond when
and as the same shall become due and payable; or
(3) Except as described in (1) or (2), default shall be made by the District in
the observance of any of the agreements, conditions or covenants on its part contained in this
Fiscal Agent Agreement, the Bonds, and such default shall have continued for a period of 30
days after the District shall have been given notice in writing of such default by the Fiscal Agent
or the Owners of 25% in aggregate principal amount of the Outstanding Bonds.
The District agrees to give notice to the Fiscal Agent immediately upon the occurrence of
an event of default under (1) or (2) above and within 30 days of the District's knowledge of an
event of default under (3) above. The Fiscal Agent shall not be deemed to have knowledge of
any event of default described in Section 8.1(3) unless a responsible officer shall have actual
knowledge thereof or the Fiscal Agent shall have received written notice at the Principal Office
of the Fiscal Agent.
Section 8.2. Remedies of Owners. Following the occurrence of an event of default,
any Owner shall have the right for the equal benefit and protection of all Owners similarly
situated:
(1) By mandamus or other suit or proceeding at law or in equity to enforce its
rights against the District and any of the members, officers and employees of the District, and to
compel the District or any such members, officers or employees to perform and carry out their
duties under the Act and their agreements with the Owners as provided in this Fiscal Agent
Agreement;
(2) By suit in equity to enjoin any actions or things which are unlawful or
violate the rights of the Owners; or
521619863 44
(3) By a suit in equity to require the District and its members, officers and
employees to account as the fiscal agent of an express trust.
Nothing in this Article or in any other provision of this Fiscal Agent Agreement, the
Bonds shall affect or impair the obligation of the District, which is absolute and unconditional, to
pay the interest on and principal of the Bonds to the respective Owners thereof at the respective
dates of maturity, as herein provided, out of the Net Taxes and other amounts 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 this Fiscal Agent Agreement.
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 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 Act 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 District 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.
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 Act or any other law.
In case the moneys held by the Fiscal Agent after an event of default pursuant to Section
8.1(1) or (2) shall be insufficient to pay in full the whole amount so owing and unpaid upon the
Outstanding Bonds, then all available amounts shall be applied to the payment of such principal
and interest without preference or priority of principal over interest, or interest over principal, or
of any installment of interest over any other installment of interest, ratably to the aggregate of
such principal and interest.
ARTICLE IX
DEFEASANCE
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond the interest due thereon and the
principal thereof, at the times and in the manner stipulated in this Fiscal Agent Agreement, then
the Owner of such Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as
set forth below, all covenants, agreements and other obligations of the District to the Owner of
such Bond under this Fiscal Agent Agreement shall thereupon cease, terminate and become void
52161986.3 45
and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds pursuant
to this Section, the Fiscal Agent shall execute and deliver to the District all such instruments as
may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent shall pay over
or deliver to the District's general fund all money or securities held by it pursuant to this Fiscal
Agent Agreement which are not required for the payment of the principal of, premium, if any,
and interest due on such Bonds.
Any Outstanding Bond shall be deemed to have been paid within the meaning expressed
in the first paragraph of this Section if such Bond is paid in any one or more of the following
ways:
(1) by paying or causing to be paid the principal of, premium, if any, and
interest on such Bond, as and when the same become due and payable;
(2) by depositing with the Fiscal Agent, in trust, at or before maturity, money
which, together with the amounts then on deposit in the Special Tax Fund and available for such
purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond, as
and when the same shall become due and payable; or
(3) by depositing with the Fiscal Agent, in trust, noncallable Defeasance
Securities, in which the District may lawfully invest its money, in such an amount as will be
sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special
Tax Fund and available for such purpose, together with the interest to accrue thereon, to pay and
discharge the principal of, premium, if any, and interest on such Bond, as and when the same
shall become due and payable;
then, at the election of the District, and notwithstanding that any Outstanding Bonds shall
not have been surrendered for payment, all obligations of the District under this Fiscal Agent
Agreement with respect to such Bond shall cease and terminate, except for the obligation of the
Fiscal Agent to pay or cause to be paid to the Owners of any such Bond not so surrendered and
paid, all sums due thereon and except for the covenants of the District contained in Section
5.2(9). Notice of such election shall be filed with the Fiscal Agent not less than ten days prior to
the proposed defeasance date, or such shorter period of time as may be acceptable to the Fiscal
Agent in the sole determination of the Fiscal Agent. In connection with a defeasance under (3)
above, there shall be provided to the District a Verification Report from an independent
nationally recognized certified public accountant stating its opinion as to the sufficiency of the
moneys or securities deposited with the Fiscal Agent or the escrow bank to pay and discharge the
principal of, premium, if any, and interest on all Outstanding Bonds to be defeased in accordance
with this Section, as and when the same shall become due and payable, and an opinion of Bond
Counsel (which may rely upon the opinion of the certified public accountant) to the effect that
the Bonds being defeased have been legally defeased in accordance with this Fiscal Agent
Agreement. If a forward supply contract is employed in connection with an advance refunding
to be effected under (3) above, (i) such Verification Report shall expressly state that the
adequacy of the amounts deposited with the bank under (3) above to accomplish the refunding
relies solely on the initial escrowed investments and the maturity principal thereof and interest
income thereon and does not assume performance under or compliance with the forward supply
contract, and (ii) the applicable escrow agreement executed to effect an advance refunding in
52161986.3 46
accordance with (3) above shall provide that, in the event of any discrepancy or difference
between the terms of the forward supply contract and the escrow agreement, the terms of the
escrow agreement shall be controlling.
Upon a defeasance, the Fiscal Agent, upon request of the District, shall release the rights
of the Owners of such Bonds which have been defeased under this Fiscal Agent Agreement and
execute and deliver to the District all such instruments as may be desirable to evidence such
release, discharge and satisfaction. to the case of a defeasance hereunder of all Outstanding
Bonds, the Fiscal Agent shall pay over or deliver to the District any funds held by the Fiscal
Agent at the time of a defeasance, which are not required for the purpose of paying and
discharging the principal of or interest on the Bonds when due. The Fiscal Agent shall, at the
written direction of the District, mail, first class, postage prepaid, a notice to the Bondowners
whose Bonds have been defeased, in the form directed by the District, stating that the defeasance
has occurred.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent for
payment upon maturity or for redemption shall be upon payment therefor, and any Bond
purchased by the District as authorized herein and delivered to the Fiscal Agent for such purpose
shall be, cancelled forthwith and shall not be reissued. The Fiscal Agent shall destroy such
Bonds, as provided by law, and, upon request of the District, furnish to the District a certificate
of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request,
direction, consent, revocation of consent, or other instrument in writing required or permitted by
this Fiscal Agent Agreement to be signed or executed by Bondowners may be in any number of
concurrent instruments of similar tenor may be signed or executed by such Owners in person or
by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust
company or other depository for such Bonds. Proof of the execution of any such instrument, or
of any instrument appointing any such attorney, and of the ownership of Bonds shall be
sufficient for the purposes of this Fiscal Agent Agreement (except as otherwise herein provided),
if made in the following manner:
(1) The fact and date of the execution by any Owner or his or her attorney of
any such instrument and of any instrument appointing any such attorney, may be proved by a
signature guarantee of any bank or trust company located within the United States of America.
Where any such instrument is executed by an officer of a corporation or association or a member
of a partnership on behalf of such corporation, association or partnership, such signature
guarantee shall also constitute sufficient proof of his Authority.
(2) As to any Bond, the person in whose name the same shall be registered in
the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes,
and payment of or on account of the principal of any such Bond, and the interest thereon, shall be
made only to or upon the order of the registered Owner thereof or his or her legal representative.
52161986.3 47
All such payments shall be valid and effectual to satisfy and discharge the liability upon such
Bond and the interest thereon to the extent of the sum or sums to be paid. Neither the District
nor the Fiscal Agent shall be affected by any notice to the contrary.
Nothing contained in this Fiscal Agent Agreement shall be construed as limiting the
Fiscal Agent or the District to such proof, it being intended that the Fiscal Agent or the District
may accept any other evidence of the matters herein stated which the Fiscal Agent or the District
may deem sufficient. Any request or consent of the Owner of any Bond shall bind every future
Owner of the same Bond in respect of anything done or suffered to be done by the Fiscal Agent
or the District in pursuance of such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Fiscal Agent Agreement to the
contrary notwithstanding, any money held by the Fiscal Agent in trust for the payment and
discharge of any of the Outstanding Bonds which remain unclaimed for a period ending at the
earlier of two Business Days prior to the date such funds would escheat to the State or two years
after the date when such Outstanding Bonds have become due and payable, if such money was
held by the Fiscal Agent at such date, or for a period ending at the earlier of two Business Days
prior to the date such funds would escheat to the State or two years after the date of deposit of
such money if deposited with the Fiscal Agent after the date when such Outstanding Bonds
become due and payable, shall be repaid by the Fiscal Agent to the District, as its absolute
property and free from trust, and the Fiscal Agent shall thereupon be released and discharged
with respect thereto and the Owners shall look only to the District for the payment of such
Outstanding Bonds; provided, however, that, before being required to make any such payment to
the District, the Fiscal Agent at the written request of the District or the Fiscal Agent shall, at the
expense of the District, cause to be mailed by first-class mail, postage prepaid, to the registered
Owners of such Outstanding Bonds at their addresses as they appear on the registration books of
the Fiscal Agent a notice that said money remains unclaimed and that, after a date named in said
notice, which date shall not be less than 30 days after the date of the mailing of such notice, the
balance of such money then unclaimed will be returned to the District. The Fiscal Agent shall
not be liable to the District or any Owner for interest on uninvested funds held by it for the
payment and discharge of the principal, premium or interest on any of the Bonds to any Owner.
Section 10.4. Provisions Constitute Contract. The provisions of this Fiscal Agent
Agreement shall constitute a contract between the District and the Bondowners and the
provisions hereof shall be construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined
adversely to the Bondowners or the Fiscal Agent, then the District, the Fiscal Agent and the
Bondowners shall be restored to their former positions, rights and remedies as if such suit, action
or proceeding had not been brought or taken.
After the issuance and delivery of the Bonds this Fiscal Agent Agreement shall be
irrepealable, but shall be subject to modifications to the extent and in the manner provided in this
Fiscal Agent Agreement, but to no greater extent and in no other manner.
52161986.3 48
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict
or prohibit the District from making contracts or creating bonded or other indebtedness payable
from a pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable
from the general fund of the District or from taxes or any source other than the Net Taxes and
other amounts pledged hereunder.
Section 10.6. Severability. If any covenant, agreement or provision, or any portion
thereof, contained in this Fiscal Agent Agreement, or the application thereof to any person or
circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this
Fiscal Agent Agreement and the application of any such covenant, agreement or provision, or
portion thereof, to other persons or circumstances, shall be deemed severable and shall not be
affected thereby, and this Fiscal Agent Agreement, the Bonds issued pursuant hereto shall
remain valid and the Bondowners shall retain all valid rights and benefits accorded to them under
the laws of the State of California.
Section 10.7. Notices. Any notices required to be given to the District with respect to
the Bonds or this Fiscal Agent Agreement shall be mailed, first class, postage prepaid, or
personally delivered to the Treasurer, City of Santa Clarita, 23920 Valencia Boulevard, Suite
300, Santa Clarita, California 91355, and all notices to the Fiscal Agent in its capacity as Fiscal
Agent shall be mailed, first class, postage prepaid, or personally delivered to the Fiscal Agent,
U.S. Bank National Association, 633 West Fifth Street, 24h Floor, Los Angeles, California
90071, Attention: Global Corporate Trust Services.
Section 10.8. General Authorization. The Treasurer and the City Clerk are hereby
respectively authorized to do and perform from time to time any and all acts and things
consistent with this Fiscal Agent Agreement necessary or appropriate to carry the same into
effect.
Section 10.9. Execution in Counterparts. This Fiscal Agent Agreement may be
executed in any number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original; and all such counterparts shall together constitute but one and the same
instrument.
52161986.3 49
IN WITNESS WHEREOF, the CITY OF SANTA CLARITA, acting as the legislative
body of CITY OF SANTA CLARITA COMMUNITY FACILITIES DISTRICT NO. 2002-1
(Valencia Town Center), has caused this Fiscal Agent Agreement to be signed by its Mayor and
attested to by City Clerk and U.S. Bank National Association, in token of its acceptance of the
duties of the Fiscal Agent created hereunder, has caused this Fiscal Agent Agreement to be
signed in its corporate name by its officer identified below, all as of the day and year first above
written.
[SEAL] CITY OF SANTA CLARITA COMMUNITY
FACILITIES DISTRICT NO. 2002-1
(Valencia Town Center)
ma
ATTEST:
City Clerk of the City of Santa Clarita, acting
in its capacity as the legislative body of City of
Santa Clarita Community Facilities District
No. 2002-1 (Valencia Town Center)
Mayor of the City of Santa Clarita, acting
in its capacity as the legislative body of
City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town
Center)
U.S. BANK NATIONAL ASSOCIATION, as
Fiscal Agent
By:
Its:
52161986.3
Authorized Officer
IM
EXHIBIT A
FORM OF SPECIAL TAX REFUNDING BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
SPECIAL TAX REFUNDING BOND
SERIES 2012
INTEREST RATE MATURITY DATE
% November 15,
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
DATED DATE
September
2012
CUSIP NO.
AND NO/ 100 DOLLARS
CITY OF SANTA CLARITA COMMUNITY FACILITIES DISTRICT NO. 2002-1
(Valencia Town Center) (the "District') situated in the County of Los Angeles, State of
California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held
under the Fiscal Agent Agreement (as hereinafter defined), to the Registered Owner named
above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto
as hereinafter provided, the Principal Amount set forth above, and to pay interest on such
Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the
date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in
which event interest shall be payable from such date of authentication, (ii) the date of
authentication is after a Record Date (as hereinafter defined) but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest
Payment Date immediately succeeding the date of authentication, or (iii) the date of
authentication is prior to the close of business on the first Record Date in which event interest
shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the
time of authentication of this Bond interest is in default, interest on this Bond shall be payable
from the last Interest Payment Date to which the interest has been paid or made available for
payment or, if no interest has been paid or made available for payment, interest on this Bond
shall be payable from the Dated Date set forth above. Interest will be paid semiannually on May
15 and November 15 of each year (each, an "Interest Payment Date"), commencing May 15,
52161986.3 A-1
2013, at the interest Rate set forth above, until the Principal Amount hereof is paid or made
available for payment.
The principal of and premium, if any, on this Bond are payable to the Registered Owner
hereof in lawful money of the United States of America upon presentation and surrender of this
Bond at the Principal Office of U.S. Bank National Association, a national banking association
(the "Fiscal Agent") in Los Angeles, California. Interest on this Bond shall be paid by check of
the Fiscal Agent mailed by first class mail, postage prepaid, or in certain circumstances described
in the Fiscal Agent Agreement by wire transfer to an account within the United States, to the
Registered Owner hereof as of the close of business on the first day of the month in which the
Interest Payment Date occurs (the "Record Date") at such Registered Owner's address as it
appears on the registration books maintained by the Fiscal Agent. Interest due on the Bonds
shall be calculated on a basis of a 360 -day year comprised of twelve 30 -day months.
This Bond is one of a duly authorized issue of "City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center) Special Tax Refunding Bonds" (the
"Bonds") issued in the aggregate principal amount of $[principal amount] pursuant to the Mello -
Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the
California Government Code (the "Act") for the purpose of financing the acquisition of certain
capital facilities, funding a reserve account, paying capitalized interest and paying certain costs
related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions
thereof are provided for by a resolution adopted by the City Council of the City of Santa Clarita,
acting in its capacity as the legislative body of the District (the "Governing Body") on September
_, 2012 and a Fiscal Agent Agreement dated as of October 1, 2012 (the "Fiscal Agent
Agreement"), between the District and the Fiscal Agent, and this reference incorporates the
Fiscal Agent Agreement herein, and by acceptance hereof the Registered Owner of this Bond
assents to said terms and conditions. The Fiscal Agent Agreement is executed under and this
Bond is issued under, and both are to be construed in accordance with, the laws of the State of
California.
Any amounts for the payment hereof shall be limited to the Net Taxes pledged and
collected or foreclosure proceeds received following a default in payment of the Special Taxes
and other amounts deposited to the Special Tax Fund established under the Fiscal Agent
Agreement. The District has covenanted for the benefit of the owners of the Bonds that under
certain circumstances described in the Fiscal Agent Agreement it will commence and diligently
pursue to completion appropriate foreclosure proceedings in the event of delinquencies of
Special Tax installments levied for payment of principal and interest on the Bonds.
Subject to the further limitations set forth in the Fiscal Agent Agreement, the Bond
maturing on or after November 15, 20 may be redeemed, at the option of the District from any
source of funds, on any date prior to maturity on or after November 15, 20 , in whole, or in part
in denominations of $5,000 or any integral multiple thereof and in the order of maturity selected
by the District and by lot within a maturity, at the following redemption prices, expressed as a
percentage of the principal amount thereof, together with accrued interest to the date of
redemption:
Redemption Period
52161986.3 A-2
Redemption Price
November 15, 20 through November 14, 20 102%
November 15, 20 through November 14, 20 101%
November 15, 20 and thereafter 100%
The Bonds are subject to mandatory redemption on any Interest Payment Date, from and
to the extent of any prepayment of Special Taxes, in whole or in part in denominations of $5,000
or any integral multiple thereof and in the order of maturity selected by the District and by lot
within a maturity. Such mandatory redemption of the Bonds will be at the following redemption
prices (expressed as a percentages of the principal amount of the Bonds or portions thereof to be
redeemed) together with accrued interest thereon to the date fixed for redemption:
Redemption Period Redemption Price
Any November 15 or May 15, prior to November 14, 20_ 103%
November 15, 20 or May 15, 20 102%
November 15, 20 or May 15, 20_ 101%
Any May 15 or November 15 on or after November 15, 20_ 100%
(1) The Term Bonds maturing on November 15, 20 are subject to
mandatory sinking fund redemption prior to maturity commencing on November 15, 20 in
part, by lot, from Sinking Fund Payments at a price equal to the principal amount thereof,
without premium, together with accrued interest to the date of redemption, as follows:
Redemption Date
(November 15) Principal Amount
(maturity)
The Term Bonds maturing on November 15, 2032 are subject to mandatory sinking fund
redemption prior to maturity commencing on November 15, 20 in part, by lot, from Sinking
Fund Payments at a price equal to the principal amount thereof, without premium, together with
accrued interest to the date of redemption, as follows:
Redemption Date
(November 15) Principal Amount
521619863 A-3
(maturity)
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than 30 nor more than 60 days prior to the redemption date by
first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a
failure of the Registered Owner hereof to receive such notice nor any defect therein will affect
the validity of the proceedings for redemption. All Bonds or portions thereof so called for
redemption will cease to accrue interest on the specified redemption date; provided that funds for
the redemption are on deposit with the Fiscal Agent on the redemption date. Thereafter, the
registered owners of such Bonds shall have no rights except to receive payment of the
redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both
principal and interest, and the District and the Fiscal Agent may treat the Registered Owner
hereof as the absolute owner for all purposes and shall not be affected by any notice to the
contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any
integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds
of other authorized denominations of the same issue and maturity, all as more fully set forth in
the Fiscal Agent Agreement. This Bond is transferable by the Registered Owner hereof, in
person or by his attorney duly authorized in writing, at the Principal Office of the Fiscal Agent in
Los Angeles, California, but only in the manner, subject to the limitations and upon payment of
the charges provided in the Fiscal Agent Agreement, upon surrender and cancellation of this
Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations
for the same aggregate principal amount of the same issue and maturity will be issued to the
transferee in exchange therefor.
The Fiscal Agent shall not be required to register transfers or make exchanges of (i) any
Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii)
any Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may
be amended at any time, and in certain cases without notice to or the consent of the registered
owners, to the extent and upon the terms provided in the Fiscal Agent Agreement.
The Fiscal Agent Agreement contains provisions permitting the District to make
provision for the payment of the interest on, and the principal and premium, if any, of the Bonds
so that such Bonds shall no longer be deemed to be outstanding under the terms of the Fiscal
Agent Agreement.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF SANTA
CLARITA (THE "CITY") OR OF THE DISTRICT FOR WHICH THE CITY OR THE
DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED,
GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED
52161986.3 A-4
HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE
FROM THE PORTION OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED
UNDER THE FISCAL AGENT AGREEMENT BUT ARE NOT A DEBT OF THE CITY, THE
STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR
RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Fiscal
Agent.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be 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
District, does not exceed any debt limit prescribed by the laws or Constitution of the State of
California.
52161936.3 A-5
IN WITNESS WHEREOF, City of Santa Clarita Community Facilities District No. 2002-
1 (Valencia Town Center) has caused this Bond to be dated as of the Dated Date, to be signed on
behalf of the District by the Mayor of the City of Santa Clarita, acting as the legislative body of
the City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) by
his manual signature and attested by the manual signature of the City Clerk and has caused the
seal of the City to be reproduced hereon.
[SEAL]
ATTEST:
City Clerk of the City of Santa Clarita, acting
as the legislative body of City of Santa Clarita
Community Facilities District No. 2002-1
(Valencia Town Center)
Dated:
Mayor of the City of Santa Clarita , acting
as the legislative body of City of Santa
Clarita Community Facilities District No.
2002-1 (Valencia Town Center)
[FORM OF FISCAL AGENT'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within -defined Fiscal Agent Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Fiscal Agent
By:
Its:
52161986.3 A-6
Authorized Signatory
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
(Name, Address, and Tax Identification or Social Security Number of Assignee)
the within -mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
attorney,
to transfer the same on the registration books of the Fiscal Agent with full power of substitution
in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an Note: The signature(s) on this Assignment
eligible guarantor institution. must correspond with the names as written on
the face of -the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
52161996.3 A -i
EXHIBIT B
REQUISITION NO. I
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
SPECIAL TAX REFUNDING BONDS
SERIES 2012
REQUISITION FOR DISBURSEMENT OF COSTS OF ISSUANCE
U.S. Bank National Association is hereby requested to pay from the Community
Facilities District No. 2002-1 Cost of Issuance Fund, established by the Fiscal Agent Agreement
dated as of October 1, 2012, between the Fiscal Agent and City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center), for payment of authorized Costs of
Issuance.
The amount is due and payable under purchase order, contract or other authorization and
has not formed the basis of any prior request for payment. The conditions to the release of this
amount from the Community Facilities District No. 2002-1 Costs of Issuance Fund are satisfied.
Dated:
CITY OF SANTA CLARITA COMMUNITY
FACILITIES DISTRICT NO. 2002-1
(Valencia Town Center)
in
Authorized Representative
52161986.3 B-1
ESCROW DEPOSIT AND TRUST AGREEMENT
Dated as of October 1, 2012
by and between
CITY OF SANTA CLARITA COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
and
U.S. BANK NATIONAL ASSOCIATION
as Escrow Agent and Prior Bonds Fiscal Agent
Relating to the Refunding of:
$17,370,000 outstanding principal amount of
City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) Special Tax Bonds
escrow agreenrent.DOCX
8/29/12
ESCROW DEPOSIT AND TRUST AGREEMENT
This ESCROW DEPOSIT AND TRUST AGREEMENT, dated as of October 1,
2012, by and between CITY OF SANTA CLARITA COMMUNITY FACILITIES DISTRICT
NO. 2002-1 (VALENCIA TOWN CENTER) (the "District") and U.S. BANK NATIONAL
ASSOCIATION, a national banking association duly organized and existing under the laws of
the United States of America, as Escrow Agent and as Prior Bonds Fiscal Agent (the "Escrow
Agent");
WITNESSETH:
WHEREAS, the District has previously issued bonds for the District pursuant to
that Fiscal Agent Agreement, dated as of October 1, 2002 (the "Prior Bonds Fiscal Agent
Agreement'), by and between the District and the Escrow Agent as Prior Bonds Fiscal Agent,
designated "City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town
Center), Special Tax Bonds" (the "Prior Bonds") in the total aggregate principal amount of
$17,370,000, of which $16,650,000 remains outstanding; and
WHEREAS, the City Council has determined that it is in the best interests of the
City and the owners of property within the District that the Prior Bonds be defeased, refunded
and redeemed, and that bonds be issued pursuant to the Act for that purpose; and
WHEREAS, the District has authorized the issuance of bonds pursuant to a
Fiscal Agent Agreement, dated as of October 1, 2012 (the "Fiscal Agent Agreement"), by and
between the District and U.S. Bank National Association, as fiscal agent, to issue its bonds to be
designated the "City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town
Center) Special Tax Refunding Bonds, Series 2012" (the "Refunding Bonds") to finance, among
other things, the redemption of the Prior Bonds; and
WHEREAS, the Prior Bonds Fiscal Agent Agreement provides that the Prior
Bonds maturing on or after November 15, 2013 are subject to optional redemption on
November 15, 2012 at a redemption price of 100% plus accrued interest; and
NOW, THEREFORE, in consideration of the mutual premises contained herein
and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. As used herein, the following terms shall have the following meanings:
"Closing Date" means October , 2012.
"Code" means the Internal Revenue Code of 1986.
escrow agreement.DOCX
"Escrow Agent" means U.S. Bank National Association, and its successors and
assigns, and any other corporation or institution that may at any time be substituted in its place as
provided in Section 14 hereof.
"Escrow Fund" means the Escrow Fund established and held by the Escrow
Agent pursuant to Section 3 hereof.
"Escrow Requirements" means an amount sufficient to pay principal of and
interest on the Prior Bonds as such payments become due and payable and to pay the redemption
price (including accrued interest and the premium set forth in the Prior Bonds Fiscal Agent
Agreement) on the $ principal amount of Prior Bonds which will remain outstanding
and be redeemed on the Redemption Date, as set forth in Exhibit A attached hereto.
"Escrow Securities" means Investment Securities deposited in the Escrow Fund
pursuant to Section 5 hereof.
"Investment Securities" means Government Obligations as defined in the Prior
Bonds Fiscal Agent Agreement.
"Redemption Date" means November 15, 2012.
"Verification Agent" means Barthe & Wahrman, PA, Bloomington, Minnesota.
"Verification Report" means the report prepared by the Verification Agent and
attached hereto as Exhibit A.
SECTION 2. The District hereby appoints U.S. Bank National Association, the Prior
Bonds Fiscal Agent, as Escrow Agent under this Agreement for the benefit of the holders of the
Prior Bonds. The Escrow Agent hereby accepts the duties and obligations of Escrow Agent
under this Agreement and agrees that the irrevocable instructions to the Escrow Agent herein
provided are in a form satisfactory to it. The applicable and necessary provisions of the Prior
Bonds Fiscal Agent Agreement, including particularly the redemption provisions thereof, are
incorporated herein by reference. Reference herein to, or citation herein of, any provisions of the
Prior Bonds Fiscal Agent Agreement shall be deemed to incorporate the same as a part hereof in
the same manner and with the same effect as if the same were fully set forth herein.
SECTION 3. Pursuant to this Agreement, there is created to be held by the Escrow
Agent a special and irrevocable trust fund designated the "Escrow Fund," to be held by the
Escrow Agent separate and apart from all other funds and accounts, and used only for the
purposes and in the manner provided in this Agreement.
SECTION 4. The District herewith deposits, or causes to be deposited, with the Escrow
Agent into the Escrow Fund, to be held in irrevocable trust by the Escrow Agent and to be
applied solely as provided in this Agreement, from the proceeds of the Refunding Bonds and
other funds the sum of $ , as follows:
(i) from the proceeds of the Refunding Bonds, the sum of $ ;
and,
escrow agreement.DOCX 2
(ii) from the Prior Bonds , the sum of $ ; and,
(iii) from the Prior Bonds Reserve Account, the sum of $
SECTION 5. The Escrow Agent acknowledges receipt of the moneys described in
Section 4. The Escrow Agent agrees immediately to invest $ of such amounts in the
Investment Securities set forth in Exhibit B hereto, and to deposit such Escrow Securities in the
Escrow Fund and to retain the amount of $ in cash in the Escrow Fund.
The Escrow Agent shall not have the power to sell, transfer, request the
redemption of or otherwise dispose of some or all of the Escrow Securities in the Escrow Fund
or to substitute other Investment Securities therefor.
SECTION 6. As the principal of the Escrow Securities shall mature and be paid, and the
investment income and earnings thereon are paid, the Escrow Agent shall not reinvest such
moneys except as may be required pursuant to Exhibit B hereto. Such amounts shall be applied
by the Escrow Agent to the payment of the Escrow Requirements for the equal and ratable
benefit of the holders of the Prior Bonds.
SECTION 7. The District has caused schedules to be prepared relating to the sufficiency
of the cash on deposit and anticipated receipts from the Escrow Securities listed in Exhibit B to
pay the Escrow Requirements.
SECTION 8. The District irrevocably instructs the Escrow Agent to transfer on
November 15, 2012 from the Escrow Fund to the Prior Bonds Fiscal Agent for deposit in the
Interest Account and the Serial Bond Payment Account of the Bond Payment Fund held under
the Prior Bonds Fiscal Agent Agreement an amount sufficient to pay the principal of and interest
on the Prior Bonds on such date. Furthermore, the District irrevocably instructs the Escrow
Agent to transfer from the Escrow Fund to the Prior Bonds Fiscal Agent for deposit in the Bond
Redemption Fund held under the Prior Bonds Fiscal Agent Agreement an amount sufficient for
the payment of the principal amount plus redemption premium on the Prior Bonds maturing on
and after November 15, 2013. The District irrevocably instructs the Prior Bonds Fiscal Agent
under the Prior Bonds Fiscal Agent Agreement to mail a notice of redemption of the Prior
Bonds, in the aggregate principal amount of $ to be redeemed on November 15,
2012, in substantially the form set forth in Exhibit C hereto, as provided in the Prior Bonds
Fiscal Agent Agreement, and hereby confirms the mailing thereof prior to the execution of this
Agreement. Any funds remaining in the Escrow Fund following termination of this Agreement
shall be applied as provided in Section 18.,
SECTION 9. The District hereby directs and the Escrow Agent hereby agrees that the
Escrow Agent will take all the actions required to be taken by it hereunder, in order to effectuate
this Agreement. The liability of the Escrow Agent for the payment of the Escrow Requirements
shall be limited to the application, in accordance with this Agreement, of the principal amount of
the Escrow Securities and the interest earnings thereon available for such purposes in the Escrow
Fund.
SECTION 10. The District represents that, concurrently with the initial deposit of the
uninvested funds and Escrow Securities set forth in Section 5 hereof, the Prior Bond Fiscal
escrow agreenrent.DOCX - 3
Agent Agreement shall be deemed defeased and the Owners of the Prior Bonds shall have no
farther claim on the Special Taxes, other than the amounts in the Escrow Fund.
SECTION 11. The trust hereby created shall be irrevocable and the holders of the Prior
Bonds shall have an express lien limited to all moneys and Escrow Securities in the Escrow
Fund, including the interest earnings thereon, until paid out, used and applied in accordance with
this Agreement.
SECTION 12. This Agreement is made pursuant to and in furtherance of the Prior
Bonds Fiscal Agent Agreement and for the benefit of the District and the holders from time to
time of the Prior Bonds and it shall not be repealed, revoked, altered, amended or supplemented
without the written consent of all such holders and the written consent of the Escrow Agent and
the District; provided, however, that the District and the Escrow Agent may, without the consent
of, or notice to, such holders enter into such amendments or supplements as shall not be
inconsistent with the terms and provisions of this Agreement, for any one or more of the
following purposes:
(a) to cure an ambiguity or formal defect or omission in this Agreement;
(b) to grant to, or confer upon, the Escrow Agent for the benefit of the holders
of the Prior Bonds, any additional rights, remedies, powers or authority that may lawfully be
granted to, or conferred upon, such holders or the Escrow Agent; and
(c) to transfer to the Escrow Agent and make subject to this Agreement
additional funds, securities or properties.
The Escrow Agent and Prior Bonds Fiscal Agent shall be entitled to conclusively
rely upon the Verification Report and an unqualified opinion of nationally recognized bond
counsel with respect to compliance with this Section, including the extent, if any, to which any
change, modification or addition affects the rights of the holders of the Prior Bonds, or that any
instrument executed hereunder complies with the conditions and provisions of this Section.
SECTION 13. In consideration of the services rendered by the Escrow Agent under this
Agreement, the District agrees to and shall pay to the Escrow Agent its fees, plus expenses,
including all reasonable expenses, charges, counsel fees and other disbursements incurred by it
or by its attorneys, agents and employees in and about the performance of their powers and
duties hereunder, and the Escrow Agent shall have no lien whatsoever upon any of the moneys
or Escrow Securities in the Escrow Fund for the payment of such proper fees and expenses.
SECTION 14. The Escrow Agent at the time acting hereunder may at any time resign
and be discharged from the trusts hereby created by giving not less than 60 days' written notice
to the District and the Prior Bonds Fiscal Agent, specifying the date when such resignation will
take effect, but no such resignation shall take effect unless a successor Escrow Agent shall have
been appointed by the holders of the Prior Bonds or by the District as hereinafter provided and
such successor Escrow Agent shall have accepted such appointment, in which event such
resignation shall take effect immediately upon the appointment and acceptance of a successor
Escrow Agent.
escrow agreemencDOCX
The Escrow Agent may be removed at any time by an instrument or concurrent
instruments in writing, delivered to the Escrow Agent, the District and the Prior Bonds Fiscal
Agent and signed by the holders of a majority in principal amount of the Prior Bonds.
In the event the Escrow Agent hereunder shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable
of acting hereunder, or in the case the Escrow Agent shall be taken under the control of any
public officer or officers, or of a receiver appointed by a court, a successor Escrow Agent may be
appointed by the holders of a majority in principal amount of the Prior Bonds, by an instrument
or concurrent instruments in writing, signed by such holders, or by their attorneys in fact, duly
authorized in writing; provided, nevertheless, that in any such event, the District shall appoint a
temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be appointed
by the holders of a majority in principal amount of the Prior Bonds, and any such temporary
Escrow Agent so appointed by the District shall immediately and without further act be
superseded by the Escrow Agent so appointed by such holders.
In the event that no appointment of a successor Escrow Agent or a temporary
successor Escrow Agent shall have been made by such holders or the District pursuant to the
foregoing provisions of this Section within 60 days after written notice of the removal or
resignation of the Escrow Agent has been given to the District, the holder of any of the Prior
Bonds or any retiring Escrow Agent may apply to any court of competent jurisdiction for the
appointment of a successor Escrow Agent, and such court may thereupon, after such notice, if
any, as it shall deem proper, appoint a successor Escrow Agent.
No successor Escrow Agent shall be appointed unless such successor Escrow
Agent shall be a corporation or institution with trust powers organized under the laws of the
United States of America or any state, and shall have at the time of appointment capital and
surplus of not less than $50,000,000. For purpose of this Section 14, a corporation or institution
with trust powers organized under the laws of the United States of America or any state shall be
deemed to have combined capital and surplus of at least $50,000,000 if it has a combined capital
surplus of at least $20,000,000 and is a wholly-owned subsidiary of a corporation having a
combined capital and surplus of at least $50,000,000.
Every successor Escrow Agent appointed hereunder shall execute, acknowledge
and deliver to its predecessor and to the District, an instrument in writing accepting such
appointment hereunder and thereupon such successor Escrow Agent without any further act,
deed or conveyance, shall become fully vested with all the estates, properties, rights, immunities,
powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless,
on the written request of such successor Escrow Agent or the District execute and deliver an
instrument transferring to such successor Escrow Agent all the estates, properties, rights,
immunities, powers, trusts, duties and obligations of such predecessor hereunder; and every
predecessor Escrow Agent shall deliver all securities and moneys held by it to its successor.
Should any transfer, assignment or instrument in writing from the District be required by any
successor Escrow Agent for more fully and certainly vesting in such successor Escrow Agent the
estates, properties rights, immunities, powers, trusts, duties and obligations hereby vested or
intended to be vested in the predecessor Escrow Agent, any such transfer, assignment and
instrument in writing shall, on request, be executed, acknowledged and delivered by the District.
escrow agreement.DOCX 5
Any corporation or association into which the Escrow Agent, or any successor to
it in the trusts created by this Agreement, may be merged or converted or with which it or any
successor to it may be consolidated, or any corporation resulting from any merger, conversion,
consolidation or reorganization to which the Escrow Agent or any successor to it shall be a party
or any successor to a substantial portion of the Escrow Agent's corporate trust business, shall, if
it meets the qualifications set forth in the fifth paragraph of this Section and if it is otherwise
satisfactory to the District, be the successor Escrow Agent under this Agreement without the
execution or filing of any paper or any other act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 15. The Escrow Agent shall have no power or duty to invest any funds held
under this Agreement except as provided in Sections 5 and 6 hereof. The Escrow Agent shall
have no power or duty to transfer or otherwise dispose of the moneys held hereunder except as
provided in this Agreement.
SECTION 16. To the extent permitted by law, the District hereby assumes liability for,
and hereby agrees (whether or not any of the transactions contemplated hereby are
consummated) to indemnify, protect, save and keep harmless the Escrow Agent and its
successors, assigns, agents, employees and servants, from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements
(including reasonable legal fees and disbursements) of whatsoever kind and nature which may be
imposed on, incurred by, or asserted against, the Escrow Agent at any time (whether or not also
indemnified against the same by the District or any other person under any other agreement or
instrument, but without double indemnity) in any way relating to or arising out of the execution,
delivery and performance of this Agreement, the establishment hereunder of the Escrow Fund,
the acceptance of the funds and securities deposited therein, the purchase of any securities to be
purchased pursuant thereto, the retention of such securities or the proceeds thereof and any
payment, transfer or other application of moneys or securities by the Escrow Agent in
accordance with the provisions of this Agreement. The District shall not be required to
indemnify the Escrow Agent against the Escrow Agent's own negligence or willful misconduct
or the negligence or willful misconduct of the Escrow Agent's successors, assigns, agents and
employees or the material breach by the Escrow Agent of the terms of this Agreement. In no
event shall the District or the Escrow Agent be liable to any person by reason of the transactions
contemplated hereby other than to each other as set forth in this Section. The indemnities
contained in this Section shall survive the termination of this Agreement and the resignation and
removal of the Escrow Agent.
SECTION 17. The recitals of fact contained in the "Whereas" clauses herein shall be
taken as the statements of the District, and the Escrow Agent assumes no responsibility for the
correctness thereof. The Escrow Agent makes no representation as to the sufficiency of the
securities to be purchased pursuant hereto and any uninvested moneys to accomplish the
redemption of the Prior Bonds pursuant to the Prior Bonds Fiscal Agent Agreement or to the
validity of this Agreement as to the District and, except as otherwise provided herein, the Escrow
Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in
connection with the performance of its duties under this Agreement except for its own
negligence or willful misconduct, and the duties and obligations of the Escrow Agent shall be
determined by the express provisions of this Agreement. Anything in this Agreement
escrow agreement.DOCX 6
notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of such loss or damage and regardless of the form of
action. The Escrow Agent may consult with counsel, who may or may not be counsel to the
District, and in reliance upon the written opinion of such counsel shall have full and complete
authorization and protection in respect of any action taken, suffered or omitted by it in good faith
in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a
matter be proved or established prior to taking, suffering, or omitting any action under this
Agreement, such matter (except the matters set forth herein as specifically requiring a certificate
of a nationally recognized firm of independent certified public accountants or an opinion of
nationally recognized bond counsel) may be deemed to be conclusively established by a written
certification of the District. Whenever the Escrow Agent shall deem it necessary or desirable
that a matter specifically requiring a certificate of a nationally recognized firm of independent
certified public accountants or an opinion of nationally recognized bond counsel be proved or
established prior to taking, suffering, or omitting any such action, such matter may be established
only by such a certificate or such an opinion. The Escrow Agent shall incur no liability for
losses arising from any investment made pursuant to this Agreement.
No provision of this Agreement shall require the Escrow Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance or exercise of any of
its duties hereunder, or in the exercise of its rights or powers.
SECTION 18. This Agreement shall terminate upon payment of the redemption price of
all of the outstanding Prior Bonds on November 15, 2012 in the amount set forth in Section 8 of
this Agreement. Upon such termination, all moneys remaining in the Escrow Fund after
payment of all fees and expenses of the Escrow Agent shall be released from the trust under this
Agreement and transferred to the Fiscal Agent for the Refunding Bonds for deposit in the
[Interest Account of the Special Tax Fund].
SECTION 19. This Agreement is made in the State of California under the Constitution
and laws of the State of California and is to so be construed.
SECTION 20. If any one or more of the covenants or agreements provided in this
Agreement on the part of the District or the Escrow Agent to be performed should be determined
by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be
deemed and construed to be severable from the remaining covenants and agreements herein
contained and shall in no way affect the validity of the remaining provisions of this Agreement.
All the covenants, promises and agreements in this Agreement contained by or on
behalf of the District or by or on behalf of the Escrow Agent shall bind and inure to the benefit of
their respective successors and assigns, whether so expressed or not.
SECTION 21. This Agreement may be executed in several counterparts, all or any of
which shall be regarded for all purposes as one original and shall constitute and be but one and
the same instrument.
escrow agreement.DOCX 7
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed by their duly authorized officers as of the date first -above written.
CITY OF SANTA CLARITA COMMUNITY
FACILITIES DISTRICT NO. 2002-1 (VALENCIA
TOWN CENTER)
By
Mayor of the City of Santa Clarita, on behalf of the
City of Santa Clarita Community Facilities District
No. 2002-1 (Valencia Town Center)
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent and Prior Bonds Fiscal Agent
Im
escrow agreemenLDOCx
Authorized Officer
Exhibit A
Verification Report
escrow agreement.DOCX A-1
Exhibit B
Schedule of Escrow Securities
Principal Amount Security Maturity Date Purchase Price Rate
escrow agreement.DOCX C-1
Exhibit C
Form of Notice of Redemption
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002
(VALENCIA TOWN CENTER)
SPECIAL TAX BONDS
NOTICE IS HEREBY GIVEN to the owners of the bonds listed below (the
`Bonds"), issued pursuant to Fiscal Agent Agreement, dated as of October 1, 2002 (the "Fiscal
Agent Agreement'), by and between the City of Santa Clarita Community Facilities District No.
2002 (Valencia Town Center) (the "District'), and U.S. Bank National Association (the
"Trustee"), that the Bonds identified below have been called for redemption on November 15,
2012 (the "Redemption Date"), pursuant to the provisions of the Fiscal Agent Agreement,
The Bonds called for redemption have the maturity date, principal amount,
CUSIP Number and redemption price as set forth below:
Maturity Principal Redemption
7vember 15) Amount CUSIP Price
Owners of the Bonds should surrender said Bonds on the redemption date at the
following address:
By Mail, Hand or Overnight:
U.S. Bank National Association
Corporate Trust Operations
Any questions may be directed to:
U. S. Bank National Association
Corporate Trust Department
Telephone:
escrow aereementDOCX C-1
IMPORTANT NOTICE. Under the provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001 (the "Act'), U.S. Bank National Association, as fiscal agent
(the "Fiscal Agent'), may be obligated to withhold 28% of the redemption price from any Bond
holder who has failed to furnish the Fiscal Agent with a valid taxpayer identification number and
a certification that such Bond holder is not subject to backup withholding under the Act. Bond
holders who wish to avoid the application of these provisions should submit a completed Form
W-9 when presenting their Bonds. If you have any questions, please call U.S. Bank National
Association at
Neither the District or the Fiscal Agent shall be held responsible for the selection
or use of the CUSIP number, nor is any representation made as to its correctness indicated in this
Notice of Redemption. It is included solely for convenience of the owners of the Bonds.
Failure to receive this Notice of Redemption or any immaterial defect contained
herein shall not affect the sufficiency of the redemption proceedings as provided in the Fiscal
Agent Agreement.
Dated: September,2012
U.S. BANK NATIONAL ASSOCIATION
as Fiscal Agent
escrow agreement.DOCS C-2
8/29/12
$[principal amount]
City of Santa Clarita
Community Facilities District No. 2002-1
(Valencia Town Center) Special Tax Refunding Bonds
Series 2012
Bond Purchase Agreement
October , 2012
City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center)
23920 Valencia Boulevard
Santa Clarita, California 91355
Ladies and Gentlemen:
The undersigned, (the "Underwriter"), acting not as a fiduciary
or agent for you but on behalf of itself, offers to enter into this Bond Purchase Agreement (this
"Purchase Agreement") with the City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) (the "District"), which upon acceptance will be binding upon the
Underwriter, and the District. This offer is made subject to the District's and the District's
acceptance by the execution of this Purchase Agreement and their delivery of an executed copy
of this Purchase Agreement to the Underwriter prior to 11:59 p.m., California Time, on the date
hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice
delivered to the District at any time prior to the acceptance hereof by the District. All capitalized
terms used herein, which are not otherwise defined, shall have the meaning provided for such
terms in the Fiscal Agent Agreement (as hereinafter defined).
Purchase and Issuance of the Bonds.
(a) Upon the terms and conditions and upon the basis of the representations,
warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the
District, and the District hereby agrees to sell and deliver to the Underwriter, $[principal amount]
aggregate principal amount of its Community Facilities District No. 2002-1 (Valencia Town
Center), Special Tax Refunding Bonds, Series 2012 (the "Bonds"). The Bonds shall be dated
October _, 2012, and shall mature on November 15 in the years shown on Exhibit A hereto,
shall bear interest at the rates shown on Exhibit A hereto and shall be subject to mandatory
redemption from sinking fund payments, in the amounts and on the dates shown in the Fiscal
Agent Agreement. Interest on the Bonds shall be payable each May 15 and November 15 to
maturity or earlier redemption of the Bonds, beginning May 15, 2013.
(b) The District acknowledges and agrees that: (i) the purchase and sale of the
Bonds pursuant to this Purchase Agreement is an arms -length commercial transaction between
the District and the Underwriter; (ii) in connection therewith and with the discussions,
undertakings and procedures leading up to the consummation of such transaction, the
Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor
(as defined in Section 15B of The Securities Exchange Act of 1934, as amended); (iii) the
Underwriter has not assumed an advisory or fiduciary responsibility in favor of the District with
respect to the offering contemplated hereby or the discussions, undertakings and procedures
leading thereto (irrespective of whether the Underwriter has provided other services or is
currently providing other services for the District on other matters); and (iv) the District has
consulted their own legal, financial and other advisors to the extent they have deemed
appropriate.
(c) The purchase price for the Bonds shall be an amount equal to $[purchase
price] (being the aggregate principal amount thereof ($[principal amount].00), less an
underwriter's discount of $[underwriter's discount], plus/less a net original issue
premium/discount of $[premium/discount]).
(d) The Bonds shall be substantially in the form described in and, shall be
issued and secured under the provisions of the Fiscal Agent Agreement.
(e) On September 2012, the City adopted its Resolution No. (the
"Bond Resolution") and authorized the issuance and delivery of the Bonds pursuant to the laws
of the State of California, including the provisions of the Mello -Roos Community Facilities
District Act of 1982, constituting Chapter 2.5, Part 1, Division 2, Title 5 of the Government
Code of the State of California (the (the "Act"), and Fiscal Agent Agreement, dated as of
October 1, 2012 (the "Fiscal Agent Agreement"), between, the District and U.S. Bank National
Association, as fiscal agent (the "Fiscal Agent"), authorizing the issuance of the Bonds.
(f) The Bonds are being issued for the purpose of (a) refinancing the
District's previously issued Special Tax Bonds, currently outstanding in an aggregate principal
amount of $16,650,000 (the "Prior Bonds"), (b) funding a reserve fund for the Bonds, and (c)
paying the costs of issuance for the Bonds. The Bonds are secured by Net Special Tax Revenues
(as defined in the Fiscal Agent Agreement) levied within the District.
(g) A portion of the proceeds of the Bonds will be deposited to an escrow
fund under an Escrow Agreement, dated as of October 1, 2012 (the "Escrow Agreement"), by
and between the Community Facilities District and the Fiscal Agent as prior fiscal agent and as
escrow bank (the "Escrow Bank").
(h) The District approved the use and electronic distribution by the
Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds
dated September , 2012, in connection with the public offering of the Bonds (the
"Preliminary Official Statement"). The District has deemed final the Preliminary Official
Statement as of the date thereof for purposes of Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934 ("Rule 15c2-12"), except for information permitted to be omitted
therefrom in accordance with paragraph (b)(1) of Rule 15c2-12.
2
(i) The Underwriter agrees to offer all the Bonds to the public initially at the
prices (or yields) set forth on the inside cover page of the Official Statement of the District
pertaining to the Bonds (as defined below). Subsequent to the initial public offering of the
Bonds, the Underwriter reserves the right to change the public offering prices (or yields) as it
deems necessary in connection with the marketing of the Bonds. The Bonds may be offered and
sold to certain dealers at prices lower than such initial public offering prices. "Public Offering"
shall include an offering to a representative number of institutional investors or registered
investment companies, regardless of the number of such investors to which the Bonds are sold.
0) The District hereby agrees to deliver or cause to be delivered to the
Underwriter, not later than the earlier of: (i) the business day preceding the Closing (as defined
herein); or (ii) the seventh (7th) business day following the date of this Purchase Agreement: (A)
the form of the final Official Statement relating to the Bonds in "designated electronic format"
(as defined in Municipal Securities Rule Making Board ("MSF -B") Rule G-32; and (B) copies of
the final Official Statement relating to the Bonds, dated the date hereof, in the form of the
Preliminary Official Statement, with such changes thereto, as may be approved by the District,
Fulbright & Jaworski, L.L.P., Los Angeles, California, as Bond Counsel and Disclosure Counsel
(herein referred to as "Bond Counsel") (including the appendices thereto and any amendments or
supplements as have been approved by the District, Disclosure Counsel and Bond Counsel (the
"Official Statement'), in such quantity as the Underwriter shall reasonably request. The District
hereby approves of the distribution and use by the Underwriter of the Official Statement in
connection with the offer and sale of the Bonds. The Preliminary Official Statement and/or the
Official Statement may be delivered in printed and/or electronic form to the extent permitted by
applicable rules of the MSRB and as may be agreed by the District and the Underwriter. If the
Official Statement is prepared for distribution in electronic form, the District hereby confirms
that it does not object to distributions of the Official Statement in electronic form. The District
further authorizes the Underwriter to use and distribute, in connection with the offering of the
Bonds this Purchase Agreement and all other documents, certificates and statements furnished by
or on behalf of the District to the Underwriter in connection with the transactions contemplated
by this Purchase Agreement. In order to enable the Underwriter to comply with Rule 15c2-12,
the District will execute a Continuing Disclosure Agreement, dated the date of Closing (defined
below) (the "Continuing Disclosure Agreement'), by and between the District and the Fiscal
Agent.
(k) Except as the Underwriter and the District may otherwise agree, in
consideration of the Underwriter purchasing the Bonds, the District will (i) deliver to the
Underwriter, at the offices of Bond Counsel, in Los Angeles, California, or at such other location
as may be mutually agreed upon by the Underwriter and the District, the documents hereinafter
mentioned and the District will deliver through the facilities of The Depository Trust Company
("DTC") in New York, New York, for credit to the account of the Underwriter, the Bonds, in
definitive form, duly executed by the District and authenticated by the Trustee in the manner
provided for in the Indenture at 8:00 a.m. California time, on October , 2012 (the "Closing
Date"), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as
set forth in paragraph (c) of this Section, in immediately available funds (such delivery and
payment being herein referred to as the "Closing"). The Bonds shall be made available to the
Underwriter for inspection not later than two Business Days prior to the Closing Date. The
Bonds shall be in fully registered book -entry form (which may be typewritten) and shall be
3
registered in the name of Cede & Co., as nominee of DTC. CUSIP identification numbers shall
be printed on 'the Bonds, but the failure to print such number on any Bond or any error with
respect thereto shall not constitute cause for a failure or refusal by the Underwriter to accept
delivery of, or pay for, the Bonds in accordance with the terms of this Purchase Agreement. All
expenses in relation to the printing of CUSIP numbers on said Bonds and the CUSIP Service
Bureau charge for the assignment of said numbers shall be paid for by the District from Bond
proceeds.
(1) Herein, the Fiscal Agent Agreement, this Bond Purchase Agreement, the
Escrow Agreement, and the Continuing Disclosure Agreement are referred to as the "Basic
Documents."
2. Representations, Warranties and Agreements of the District. The District
represents, warrants and agrees as follows:
(a) The District is a community facilities district duly organized and validly
existing under the laws of the State of California.
(b) The District has full legal right, power and authority (i) to enter into the
Basic Documents, (ii) to sell, issue and deliver the Bonds to the Underwriter as provided
herein; and (iii) to carry out and consummate the transactions on its part contemplated by
the Basic Documents and the Official Statement.
(c) By all necessary official action, the District has duly authorized and
approved the Basic Documents, has duly authorized and approved the Preliminary
Official Statement and the Official Statement, has duly authorized and approved the
execution and delivery of, and the performance by the District of the obligations in
connection with the issuance of the Bonds on its part contained in the Bonds and the
Basic Documents, and the consummation by it of all other transactions contemplated by
the Basic Documents in connection with the issuance of the Bonds.
(d) To the best of its knowledge, the District is not in any material respect in
breach of or default under any applicable constitutional provision, law or administrative
regulation of any state or of the United States, or any agency or instrumentality of either,
or any applicable judgment or decree, or any loan agreement, indenture, bond, note,
resolution, agreement (including, without limitation, the Fiscal Agent Agreement) or
other instrument to which the District is a party which breach or default has or may have
an adverse effect on the ability of the District to perform its obligations under the Fiscal
Agent Agreement, and no event has occurred and is continuing which with the passage of
time or the giving of notice, or both, would constitute such a default or event of default
under any such instrument; and the execution and delivery of the Bonds and the Basic
Documents, and compliance with the provisions on the District's part contained therein,
will not conflict in any material way with or constitute a material breach of or a material
default under any constitutional provision, law, administrative regulation, judgment,
decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument
to which the District is a party nor will any such execution, delivery, adoption or
compliance result in the creation or imposition of any lien, charge or other security
M
interest or encumbrance of any nature whatsoever upon any of the property or assets of
the District or under the terms of any such law, regulation or instrument, except as
provided by the Bonds and the Fiscal Agent Agreement.
(e) To the best of its knowledge, all authorizations, approvals, licenses,
permits, consents and orders of any governmental authority, legislative body, board,
agency or commission having jurisdiction of the matter which are required for the due
authorization by, or which would constitute a condition precedent to or the absence of
which would materially adversely affect the due performance by, the District of its
obligations in connection with the issuance of the Bonds under the Basic Documents
have been duly obtained, except for such approvals, consents and orders as may be
required under the Blue Sky or securities laws of any state in connection with the offering
and sale of the Bonds; except as described in or contemplated by the Official Statement,
all authorizations, approvals, licenses, permits, consents and orders of any governmental
authority, board, agency or commission having jurisdiction of the matters which are
required for the due authorization by, or which would constitute a condition precedent to
or the absence of which would materially adversely affect the due performance by, the
District of its obligations under the Fiscal Agent Agreement have been duly obtained.
(I) The Fiscal Agent Agreement and the Bonds when issued will conform to
the descriptions thereof contained in the Official Statement under the captions
"INTRODUCTION" and "THE BONDS," "SECURITY FOR THE BONDS," and
"APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS."
(g) The Bonds, when issued, authenticated and delivered in accordance with
the Fiscal Agent Agreement, and sold to the Underwriter as provided herein, will be
validly issued and outstanding obligations of the District, entitled to the benefits of the
Fiscal Agent Agreement, and upon such issuance and delivery, the Fiscal Agent
Agreement will provide, for the benefit of the owners from time to time of the Bonds, the
legally valid and binding pledge of and lien and security interest it purports to create.
(h) As of the date hereof, there is no action, suit, proceeding, inquiry or
investigation, notice of which has been served on the District, at law or in equity before
or by any court, government agency, public board or body, pending or to the best
knowledge of the officer of the District executing this Bond Purchase Agreement,
threatened against the District, affecting the existence of the District or the titles of its
officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin
the sale, issuance or delivery of the Bonds, or the pledge and lien on the Net Special Tax
Revenues pursuant to the Fiscal Agent Agreement, or contesting or affecting as to the
District the validity or enforceability of the Act, the Bonds or the Basic Documents, or
contesting the tax-exempt status of interest on the Bonds, or contesting the completeness
or accuracy of the Preliminary Official Statement or the Official Statement, or the
execution and delivery or adoption by the District of the Basic Documents, or in any way
contesting or challenging the consummation of the transactions contemplated hereby or
thereby; nor, to the best knowledge of the District, is there any basis for any such action,
suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or
5
finding would materially adversely affect the authorization, execution, delivery or
performance by the District of the Basic Documents.
(i) The District will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriter as the Underwriter may
reasonably request in order (x) to qualify the Bonds for offer and sale under the Blue Sky
or other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriter may designate (y) to determine the eligibility of the Bonds for
investment under the laws of such states and other jurisdictions, and will use its best
efforts to continue such qualifications in effect so long as required for the distribution of
the Bonds; provided, however, that the District shall not be required to execute a general
or special consent to service of process or qualify to do business in connection with any
such qualification or determination in any jurisdiction, provided, that the Underwriter
shall bear all costs in connection with the Community Facilities District's action under
(x) and (y) herein, and (z) assure or maintain the tax-exempt status of the interest on the
Bonds.
0) As of the date thereof, the Preliminary Official Statement does not, except
for the omission of certain information permitted to be omitted in accordance with Rule
15c2-12, contain any untrue statement of a material fact with respect to the District or
omit to state a material fact necessary to make the statements therein with respect to the
District, in light of the circumstances under which they were made, not misleading.
(k) At the time of the District's acceptance hereof, and (unless an event occurs
of the nature described in paragraph (m) of this Section 2) at all times subsequent thereto
up to and including the date of the Closing; the Official Statement does not and will not
contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that these representations and warranties of the
District shall apply only to the information contained in the Official Statement relating to
the District.
(1) If the Official Statement is supplemented or amended pursuant to
paragraph (m) of this Section 2, at the time of each supplement or amendment thereto and
(unless subsequently again supplemented or amended pursuant to such paragraph) at all
times subsequent thereto up to and including the date of the Closing, the Official
Statement as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that these representations and warranties of the District shall apply only to the
information contained in the Official Statement relating to the District.
(m) If between the date of this Bond Purchase Agreement and that date which
is 25 days after the end of the underwriting period (as determined in accordance with
Section 9 hereof) any event known to the District shall occur affecting the District which
might adversely affect the marketability of the Bonds or the market prices thereof, or
which might cause the Official Statement, as then supplemented or amended, to contain
any untrue statement of a material fact or to omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were made,
not misleading, the District shall notify the Underwriter thereof, and if in the opinion of
the Underwriter such event requires the preparation and publication of a supplement or
amendment to the Official Statement, the District will at its expense prepare and furnish
to the Underwriter a reasonable number of copies of such supplement to, or amendment
of, the Official Statement in a form and in a manner approved by the Underwriter.
(n) The District will refrain from taking any action, or permitting any action
to be taken, with regard to which the District may exercise control, that results in the loss
of the tax-exempt status of the interest on the Bonds.
(o) Within the previous five years, the District has not failed to comply in all
material respects with any prior undertaking made by it pursuant to Rule 15c2-12.
(p) Any certificate signed by any officer of the District and delivered to the
Underwriter pursuant to the Fiscal Agent Agreement, this Bond Purchase Agreement or
any document contemplated thereby shall be deemed a representation and warranty by
the District to the Underwriter as to the statements made therein.
(q) The District will cause the proceeds from the sale of the Bonds to be paid
to the Fiscal Agent for the purposes specified in the Fiscal Agent Agreement and the
Official Statement. So long as any of the Bonds are outstanding and except as may be
authorized by the Fiscal Agent Agreement, the District will not issue or sell any bonds or
other obligations, other than the Bonds sold thereby, the interest on and premium, if any,
or principal of which will be payable from the payments to be made under the Fiscal
Agent Agreement.
(r) The District shall honor all other covenants on its part contained in the
Fiscal Agent Agreement which are incorporated herein and made a part of this Bond
Purchase Agreement.
(s) At or prior to the Closing, the District shall have duly authorized, executed
and delivered the Continuing Disclosure Agreement which shall comply with the
provisions of Rule 15c2 -12(b)(5) and shall be substantially in the form appended to the
Official Statement as Appendix E.
3. Closing Conditions. The Underwriter has entered into this Bond Purchase
Agreement in reliance upon the representations and warranties of the District contained herein,
and in reliance upon the representations and warranties to be contained in the documents and
instruments to be delivered at the Closing and upon the performance by the District of its
obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly,
the Underwriter's obligations under this Bond Purchase Agreement to purchase, to accept
delivery of and to pay for the Bonds shall be conditioned upon the performance by the District of
its obligations to be performed hereunder and under such documents and instruments at or prior
to the Closing, and shall also be subject to the following additional conditions:
7
(a) The representations and warranties of the District contained herein shall be
true, complete and correct on the date hereof and on and as of the date of the Closing, as
if made on the date of the Closing;
(b) At the time of the Closing, the Fiscal Agent Agreement shall be in full
force and effect in accordance with its terms and shall not have been amended, modified
or supplemented and the Official Statement shall not have been supplemented or
amended, except in any such case as may have been agreed to by the Underwriter;
(c) At the time of the Closing, all necessary official action of the District and
of the other parties thereto relating to the Basic Documents shall have been taken and the
Basic Documents shall be in full force and effect and shall not have been amended,
modified or supplemented in any material respect;
(d) Subsequent to the date hereof, there shall not have occurred any change in
or affecting particularly the District, or the Bonds as the foregoing matters are described
in the Official Statement, which in the reasonable opinion of the Underwriter materially
impairs the investment quality of the Bonds;
(e) At or prior to the Closing, the Underwriter shall have received copies of
each of the following documents:
(1) The Official Statement and each supplement or amendment, if any,
thereto, executed by a designated officer of the District;
(2) A copy of the Fiscal Agent Agreement, executed by the District
and the Fiscal Agent;
(3) A copy of the Escrow Agreement, executed by the District and the
Escrow Agent;
(4) A copy of the Continuing Disclosure Agreement, executed by the
District and the Fiscal Agent;
(5) A copy of this Bond Purchase Agreement, executed by the District
and the Underwriter;
(6) Certificates of the District with respect to the matters described in
Sections 2 and in paragraphs (a), (b), (c) and (d) of.this Section 3;
(7) An opinion (the "Final Approving Legal Opinion"), dated the date
of the Closing and addressed to the District, of Fulbright & Jaworski L.L.P., Bond
Counsel for the District, substantially in the form set forth in Appendix A to the
Official Statement;
(8) A supplemental opinion, dated the date of the Closing and
addressed to the Underwriter, of Fulbright & Jaworski L.L.P., Bond Counsel for
the District, in substantially the form attached hereto as Exhibit B;
(9) Opinions, dated the date of the Closing and addressed to the
District and the Underwriter, of the City Attorney of the City, as general counsel
for the District, in substantially the form attached hereto as Exhibit C;
(10) Reliance letters, dated the date of the Closing and addressed to the
Underwriter and the Fiscal Agent, respectively, of Fulbright & Jaworski L.L.P.,
Bond Counsel for the District, regarding the final approving opinion;
(11) An opinion, dated the date of the Closing and addressed to the
District and the Underwriter, of Fulbright & Jaworski L.L.P., as Disclosure
Counsel, in substantially the form attached hereto as Exhibit D;
(12) A defeasance opinion relating to the Prior Bonds, dated the date of
the Closing and addressed to the District and Escrow Agent, of Fulbright &
Jaworski L.L.P., Bond Counsel for the District, in form and substance satisfactory
to the Underwriter;
(13) Transcripts of all proceedings relating to the authorization and
issuance of the Bonds certified by the City Clerk or a Deputy City Clerk of the
City;
(14) An opinion of counsel to the Fiscal Agent, as Fiscal Agent, Prior
Fiscal Agent and Escrow Bank, to the effect that:
(i) Due Organization and Existence - the Fiscal Agent has
been duly organized and is validly existing and in good standing, with full
corporate power to undertake the trust duties and obligations under the
Fiscal Agent Agreement, the Continuing Disclosure Agreement and the
Escrow Agreement;
(ii) Corporate Action - the Fiscal Agent has duly authorized,
executed and delivered the Fiscal Agent Agreement, the Continuing
Disclosure Agreement and the Escrow Agreement, and by all proper
corporate action has authorized the acceptance of the duties and
obligations of the Fiscal Agent, Prior Fiscal Agent and Escrow Bank under
the Fiscal Agent Agreement, the Continuing Disclosure Agreement and
the Escrow Agreement and to authorize in such capacity the authentication
and delivery of the Bonds;
(iii) Due Authorization, Execution and Delivery - assuming due
authorization, execution and delivery by the District, the Fiscal Agent
Agreement, the Continuing Disclosure Agreement and the Escrow
Agreement are the valid, legal and binding agreements of the Fiscal
Agent, enforceable in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights in general and by general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law);
W,
(iv) Consents - exclusive of federal or state securities laws and
regulations, to the best of such counsel's knowledge after reasonable
inquiry and investigation, other than routine filings required to be made
with governmental agencies in order to preserve the Fiscal Agent's, Prior
Fiscal Agent's and Escrow Bank's authority to perform a trust business
(all of which routine Flings such counsel believes, after reasonable inquiry
and investigation, to have been made), no consent, approval, authorization
or other action by any governmental or regulatory authority having
jurisdiction over the Fiscal Agent is or will be required for the
authentication by the Fiscal Agent of the Fiscal Agent Agreement,
Continuing Disclosure Agreement or Escrow Agreement or the execution
and delivery of the Bonds.
(15) The general resolution of the Fiscal Agent authorizing the
execution and delivery of certain documents by certain officers of the Fiscal
Agent, which resolution authorizes the execution and delivery of the Fiscal Agent
Agreement, Continuing Disclosure Agreement and the Escrow Agreement;
(16) A certificate of the Fiscal Agent, as Fiscal Agent, Prior Fiscal
Agent and Escrow Bank, dated the date of Closing, certifying that, subject to the
limitations provided herein, the Fiscal Agent represents and warrants and agrees
with the Underwriter that as of the date of Closing:
(i) Due Organization and Existence - the Fiscal Agent is duly
organized and existing as a national banking association in good standing
under the laws of the United States of America having the full power and
authority to enter into and perform its duties under the Fiscal Agent
Agreement, Continuing Disclosure Agreement and Escrow Agreement and
to authenticate and deliver the Bonds to the Underwriter pursuant to the
terms of the Fiscal Agent Agreement, Continuing Disclosure Agreement
and Escrow Agreement;
(ii) No Conflict - to the best of the knowledge of the Fiscal
Agent, after due investigation, the execution and delivery by the Fiscal
Agent of the Fiscal Agent Agreement, Continuing Disclosure Agreement
and Escrow Agreement and the authentication and delivery by the Fiscal
Agent of the Bonds, and compliance with the terms thereof will not, in any
material respect, conflict with, or result in a violation or breach of, or
constitute a default under, any loan agreement, indenture, bond, note,
resolution or any other agreement or instrument to which the Fiscal Agent
is a party or by which it is bound, or any law or any rule, regulation, order
or decree of any court or governmental agency or body having jurisdiction
over the Fiscal Agent or any of its activities or properties, or result in the
creation or imposition of any lien, charge or other security interest or
encumbrance of any nature whatsoever upon any of the property or assets
of the Fiscal Agent.
10
(iii) No Litigation - to the best of the knowledge of the Fiscal
Agent, no litigation has been served upon the Fiscal Agent to restrain or
enjoin the Fiscal Agent's, Prior Fiscal Agent's and Escrow Bank's
participation in, or in any way contesting the powers of the Fiscal Agent
with respect to, the transactions contemplated by the Fiscal Agent
Agreement, the Continuing Disclosure Agreement and the Escrow
Agreement;
(17) Executed copies of the Continuing Disclosure Agreements
substantially in the forms presented in Appendix E to the Official Statement;
(18) A copy of the Verification Report prepared by Barthe & Wahrman
PA, Bloomington, Minnesota, and dated October _, 2012;
(19) A certificate from Willdan Financial Services ("Special Tax
Consultant") to the effect that (i) the Special Tax if applied in accordance with the
terms as set forth in the Rate and Method of Apportionment for City of Santa
Clarita Community Facilities District No. 2002-1 (Valencia Town Center) (the
"Special Tax Formula"), after deducting Administrative Expenses, will annually
yield sufficient revenue to make timely payments of debt service on the Bonds,
provided that information and other data supplied by the District, the Underwriter
or any of their agents, which has been relied upon by the Special Tax Consultant
is true and correct, (ii) the Special Tax, if collected in the maximum amounts
permitted pursuant to the Special Tax Formula on the Closing Date, would
generate at least 110% of the maximum debt service payable with respect to the
Bonds payable from such Special Tax during each fiscal year, based on a debt
service schedule supplied by the Financial Advisor and relied upon by the Special
Tax Consultant, (iii) the information supplied by such firm for use in the sections
of the Official Statement captioned "APPENDIX C — RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX" is true and correct as of the date of the
Official Statement and as of the Closing Date, and (iv) the description of the
Special Tax Formula contained in the sections of the Official Statement captioned
"SECURITY FOR THE BONDS — Special Taxes" and "THE DISTRICT —
Special Tax Rates" is correctly presented in all material respects;
(20) A certificate of C.M. de Crinis & Co., Inc., Glendale, California
(the "Financial Advisor"), in form and substance satisfactory to the District and
the Underwriter, dated the Closing Date, to the effect that to the best of the
Financial Advisor's knowledge, the Official Statement does not contain any
untrue or misleading statement of a material fact and does not fail to state a
material fact required to be stated therein, or necessary in order to make the
information contained therein, not misleading; and
(21) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the date of the Closing, of the District's
representations and warranties contained herein and of the statements and
I1
information contained in the Official Statement and the due performance or
satisfaction by the District on or prior to the date of the Closing of all the
agreements then to be performed and conditions then to be satisfied by it.
All the opinions, letters, certificates, instruments and other documents mentioned above
or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the
provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel and
the Underwriter. The opinions and other documents presented as exhibits to this Bond Purchase
Agreement or as Appendices to the Official Statement shall be deemed satisfactory provided
they are substantially in the forms attached as exhibits to this Bond Purchase Agreement or as
Appendices to the Official Statement.
If the District shall be unable to satisfy the conditions to the obligations of the
Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Bond
Purchase Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of
and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase
Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the
District shall be under any further obligation hereunder.
4. Termination. The Underwriter shall have the right to terminate the
Underwriter's obligations under this Bond Purchase Agreement to purchase, to accept delivery
of and to pay for the Bonds by notifying the District, in writing, of its election to do so, if, after
the execution hereof and prior to the Closing, the market price or marketability, at the offering
price set forth on the inside cover page of the Official Statement, of the Bonds shall have been
materially adversely affected, by reason of any of the following:
(a) Legislation introduced in or enacted (or resolution passed) by the
Congress of the United States of America or recommended to the Congress by the President of
the United States, the Department of the Treasury, the Internal Revenue Service, or any member
of Congress, or favorably reported for passage to either House of Congress by any committee of
such House to which such legislation had been referred for consideration, or a decision rendered
by a court established under Article III of the Constitution of the United States of America or by
the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or
proposed), press release or other form of notice issued or made by or on behalf of the Treasury
Department of the United States of America or the Internal Revenue Service, with the purpose or
effect, directly or indirectly, of imposing federal income taxation upon such interest as would be
received by any owners of the Bonds;
(b) Legislation introduced in or enacted (or resolution passed) by the
Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an
order, ruling, regulation (final, temporary or proposed), press release or other form of notice
issued or made by or on behalf of the Securities and Exchange Commission, or any other
governmental agency having jurisdiction of the subject matter, to the effect that obligations of
the general character of the Bonds, including any or all underlying arrangements, are not exempt
from registration under or other requirements of the Securities Act of 1933, as amended, or that
the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the
Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of
12
the general character of the Bonds, including any or all underlying arrangements, as
contemplated hereby or by the Official Statement or otherwise is or would be in violation of the
federal securities laws as amended and then in effect;
(c) A general suspension of trading in securities on the New York Stock
Exchange, or a general banking moratorium declared by Federal, State of New York or State of
California officials authorized to do so;
(d) The introduction, proposal or enactment of any amendment to the Federal
or California Constitution or any action by any Federal or California court, legislative body,
regulatory body or other District materially adversely affecting the tax status of the District, their
property, income, securities (or interest thereon) or the validity or enforceability of the District
Documents or the Bonds;
(e) Any event occurring, or information becoming known which, in the
judgment of the Underwriter, makes untrue in any material respect any statement or information
contained in the Preliminary Official Statement or in the Official Statement, or has the effect that
the Preliminary Official Statement or the Official Statement contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading;
(f) There shall have occurred any outbreak of hostilities or other local,
national or international calamity or crisis, the effect of which on the financial markets of the
United States of America, in the reasonable judgment of the Underwriter, is such as to materially
and adversely affect (A) the market price or the marketability of the Bonds, or (B) the ability of
the Underwriter to enforce contracts for the sale of the Bonds; or
(g) The commencement of any action, suit or proceeding described in
Paragraph 2(g) hereof which, in the judgment of the Underwriter, materially adversely affects the
market price of the Bonds.
If this Bond Purchase Agreement shall be terminated pursuant to Section 3 or this
Section 4, or if the purchase provided for herein is not consummated because any condition to
the Underwriter's obligation hereunder is not satisfied or because of any refusal, inability or
failure on the part of the District to comply with any of the terms or to fulfill any of the
conditions of this Bond Purchase Agreement, or if for any reason the District shall be unable to
perform all of their obligations under this Bond Purchase Agreement, the District shall not be
liable to the Underwriter for damages on account of loss of anticipated profits arising out of the
transactions covered by this Bond Purchase Agreement.
5. Payment of Costs and Expenses. (a) All costs and expenses incident to the sale
and delivery of the Bonds to the Underwriter, including, but not limited to: (i) the fees and
expenses of the District and its Counsel, Disclosure Counsel, and other consultants; (ii) the fees
and expenses of Bond Counsel; (iii) all costs and expenses incurred in connection with the
preparation and printing of the Bonds; (iv) all expenses in connection with the preparation,
printing, distribution and delivery of the Preliminary Official Statement, the Official Statement
13
and any amendment or supplement thereto; (v) California Municipal Statistics fees, and (vi) the
fees and expenses of the Fiscal Agent and its counsel shall be payable by the District from the
proceeds of the Bonds.
(b) The Underwriter shall pay (i) all advertising expenses in connection with
the public offering of the Bonds and all other expenses incurred by it in connection with its
public offering and distribution of the Bonds, including the fees and expenses of its legal
counsel, and (ii) any CUSIP Bureau, CDIAC, The Depository Trust Company, MSRB,'
California Public Securities Association and Public Securities Association fees related to the
Bonds.
6. Representations, Warranties and Agreements to Survive Delivery. The
representations, warranties, indemnities, agreements and other statements of the District and the
Underwriter or their officers or partners set forth in, or made pursuant to, this Bond Purchase
Agreement will remain operative and in full force and effect regardless of any investigation
made by or on behalf of the District or the Underwriter or any controlling person and will
survive delivery of and payment for the Bonds.
7. Notices. Any notice or other communication to be given under this Bond
Purchase Agreement may be given by delivering the same in writing:
To the District:
City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town Center)
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Finance Director
To the Underwriter: [Underwriter],
Attention:
8. Parties in Interest. This Bond Purchase Agreement is made solely for the
benefit of the District and the Underwriter (including the successors or assigns of the
Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
All of the District's representations, warranties and agreements contained in this Bond Purchase
Agreement shall remain operative and in full force and effect, regardless of: (i) any
investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the
Bonds pursuant to this Bond Purchase Agreement; and (iii) any termination of this Bond
Purchase Agreement.
9. Determination of End of the Underwriting Period. For purposes of this Bond
Purchase Agreement, the End of the Underwriting Period for the Bonds shall mean the earlier of
(a) the day of the Closing unless the District have been notified in writing by the Underwriter, on
or prior to the day of the Closing, that the "end of the underwriting period" for the Bonds for all
purposes of Rule 15c2-12 of the Securities and Exchange Commission promulgated under the
14
Securities Exchange Act of 1934 (the "Rule") will not occur on the day of the Closing, or (b) the
date on which notice is given to the District by the Underwriter in accordance with the following
sentence. In the event that the Underwriter has given notice to the District pursuant to clause (a)
above that the "end of the underwriting period" for the Bonds will not occur on the day of the
Closing, the Underwriter agrees to notify the District in writing as soon as practicable following
the "end of the underwriting period" for the Bonds for all purposes of the Rule.
10. Effectiveness. This Bond Purchase Agreement shall become effective upon the
execution of the acceptance by the designee of the District and shall be valid and enforceable at
the time of such acceptance.
11. Headings. The headings of the sections of this Bond Purchase Agreement are
inserted for convenience only and shall not be deemed to be a part hereof.
12. Governing Law. This Bond Purchase Agreement shall be construed in
accordance with the laws of the State of California.
13. Counterparts. This Bond Purchase Agreement may be executed in any number
of counterparts.
15
8/29/12
If the foregoing is in accordance with your understanding of the Bond Purchase
Agreement please sign and return to us the enclosed duplicate copies hereof, whereupon it will
become a binding agreement between the Community Facilities District and the Underwriter in
accordance with its terms.
Very truly yours,
LN
Accepted:
This -th day of September, 2012
CITY OF SANTA CLARITA COMMUNITY
FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
Finance Director
Time of execution:
Exhibit A
$[principal amount]
City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) Special Tax Refunding Bonds, Series 2012
Maturity Date Principal
(November 15) Amount Coupon Yield Price
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
ISI
Exhibit B
Supplemental Opinion of Fulbright & Jaworski L.L.P.
Addressed to the Underwriter
$[principal amount]
City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) Special Tax Refunding Bonds, Series 2012
[Closing Date]
[Underwriter]
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town Center), is a community facilities district duly organized
and validly existing under the laws of the State of California (the "Community Facilities
District"), in connection with the issuance of $[principal amount] aggregate principal amount of
its Community Facilities District No. 2002-1 (Valencia Town Center), Special Tax Refunding
Bonds, Series 2012 (the "Bonds").
The Bonds are being issued by the Community Facilities District pursuant to the laws of
the State of California including the provisions of the Mello -Roos Community Facilities District
Act of 1982, constituting Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the
State of California (the (the "Act"), and an Fiscal Agent Agreement, dated as of October 1, 2012
(the "Fiscal Agent Agreement"), between the Community Facilities District and U.S. Bank
National Association, as fiscal agent (the "Fiscal Agent"), for the purpose, among other things,
of refinancing the Community Facilities District's previously issued Special Tax Bonds, Series
1998 (the "Prior Bonds"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Fiscal Agent Agreement.
As Bond Counsel, we have examined copies certified to us as being true and complete
copies of the proceedings of the Community Facilities District in connection with the issuance of
the Bonds. We have also examined such certificates of officers of the City of Santa Clarita (the
"City"), the Community Facilities District and others as we have considered necessary for the
purposes of this opinion.
This opinion is limited to matters governed by the laws of the State of California and
Federal securities laws of the United States, and we assume no responsibility with respect to the
applicability or effect of laws of any other jurisdiction.
RE
Based upon the foregoing, it is our opinion that:
1. The Bond Purchase Agreement and Continuing Disclosure Agreement constitute
the legal, valid and binding obligations of the Community Facilities District, enforceable in
accordance with their terms, except to the extent that enforceability is subject to bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditors' rights.
2. The Fiscal Agent Agreement is exempt from qualification as an indenture
pursuant to the Trust Fiscal Agent Agreement Act of 1939, as amended.
3. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as
amended.
4. As of the date of the Official Statement, dated September _, 2012, relating to the
Bonds, the information contained in the Official Statement under the captions
"INTRODUCTION," "THE BONDS," "SECURITY FOR THE BONDS," "LEGAL MATTERS
- Tax Matters" and "APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS,"
insofar as such statements expressly summarize certain provisions of the Bonds and the Fiscal
Agent Agreement is accurate in all material respects.
We are furnishing you this opinion letter at the request of the Community Facilities
District solely for your benefit as the Underwriter of the Bonds, and it is not to be used,
circulated, quoted or otherwise referred to for any other purpose, nor is it to be referred to in
whole or in part in the Official Statement relating to the Bonds or any other document, except
that it may be included in, and reference may be made to it in any list of, the closing documents
pertaining to the delivery of the Bonds.
Respectfully submitted,
Exhibit C
Opinion of City Attorney
Addressed to the Community Facilities District and the Underwriter
$[principal amount]
City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) Special Tax Refunding Bonds, Series 2012
[Closing Date]
City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center)
23920 Valencia Boulevard
Santa Clarita, California 91355
[Underwriter]
Ladies and Gentlemen
I am the City Attorney of the City of Santa Clarita (the "City") and have acted as general
counsel for the City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town
Center) (the "Community Facilities District') in connection with the issuance and delivery of the
captioned Special Tax Refunding Bonds (the "Bonds"). This opinion letter is being furnished to
you at the request of the Community Facilities District and in satisfaction of the requirements of
paragraph 7(t)(9) of the Bond Purchase Agreement (the "Bond Purchase Agreement'), between
the Community Facilities District and [Underwriter] (the "Underwriter"), relating to the purchase
and sale of the Bonds. The acceptance of this opinion letter by you conclusively operates as your
acknowledgement that this opinion letter addresses all of the specific legal issues that are to be
dealt with in my opinions set forth herein. Capitalized terms used but not defined herein has the
meanings given to them in the Fiscal Agent Agreement.
In rendering the opinions set forth herein, I have examined and relied upon originals or
copies of the following:
1. Resolution No. adopted by the City Council of the City, acting as the
legislative body of the Community Facilities District on August _, 2012 authorizing issuance of
the Bonds (the "Resolution").
2. The Bond Purchase Agreement.
C-1
3. The Fiscal Agent Agreement, dated as of October 1, 2012 by and between the
Community Facilities District and U.S. Bank National Association, as fiscal agent (the "Fiscal
Agent Agreement').
4. The Escrow Agreement, dated as of October 1, 2012 (the "Escrow Agreement')
by and between the Community Facilities District and the Fiscal Agent as Prior Fiscal Agent and
Escrow Bank.
5. The Continuing Disclosure Certificate, dated October _, 2012 (the "Continuing
Disclosure Agreement') by and between the Community Facilities District and the Fiscal Agent
as dissemination agent.
The items listed in numbers 2 through 5 above are referred to herein, collectively, as the
Basic Documents.
Except as otherwise stated herein, in expressing the opinions set forth below, I have
examined and relied upon such other documents and records as I have deemed necessary, and as
to questions of fact material to my opinions, I have relied upon representations of the
Community Facilities District contained in the Basic Documents and in the certified proceedings
and other certifications of public officials and others furnished in connection with the closing of
the subject transaction, without undertaking to verify the same by independent investigation.
I have assumed without investigation (i) the authenticity and completeness of all
documents and other writings submitted to or reviewed by me as originals and the conformity in
all respects to originals of all documents and other writings submitted to or reviewed by me as
copies or reproductions of originals (ii) the genuineness of all signatures to all such documents
and other writings, and (iii) that all such documents and other writings have been duly
authorized, executed and delivered by the parties to such documents and other writings.
Whenever a statement herein is qualified by "to my knowledge," it shall be deemed to
indicate that, during the course of my representation of the Community Facilities District
whether in connection with this transaction or otherwise, no information that would give me
current actual knowledge of the inaccuracy of such statement has come to my attention. I have
not, however, undertaken any independent investigation to determine the accuracy of such
statements, and any limited inquiry undertaken by me during the preparation of this opinion
letter should not be regarded as such investigation. No inference as to my knowledge of any
matters bearing upon the accuracy of any such statements should be drawn from the fact of my
representation of the Community Facilities District.
My opinions set forth herein do not extend to, and I express no opinions herein with
respect to, any laws other than the laws of the State of California, but exclusive of the tax and
securities laws, rules and regulations of the State of California and the laws of the State of
California relating to debt limitations and restrictions applicable to public entities.
that:
On the basis of, and subject to and in reliance upon, the foregoing, I am of the opinion
C-2
(i) The Community Facilities District is a community facilities district duly
organized and existing under the laws of the State of California.
(ii) The Resolution was duly adopted at a meeting of the City Council of the City at
which a quorum was present, and the Resolution has not been modified and is in full force and
effect as of the date hereof.
(iii) By all necessary official action, the Community Facilities District has duly
authorized and adopted the Basic Documents, and approved the execution and delivery of, and
the performance by the Community Facilities District of the obligations on its part contained
therein. The Basic Documents have been duly executed and delivered by the Community
Facilities District.
(iv) To my knowledge, the Community Facilities District is not in breach of or in
default under any applicable court or administrative decree or order, or under any material loan
agreement, note, resolution, indenture, contract, agreement or other instrument to which the
Community Facilities District is a party or is otherwise subject or bound, a consequence of which
could be to materially and adversely affect the ability of the Community Facilities District to
perform its obligations under the Bonds and the Basic Documents.
(v) To my knowledge, no action, suit, proceeding, inquiry or investigation, at law or
in equity, before or by any court, regulatory agency, public board or body, is pending against the
Community Facilities District with respect to which the Community Facilities District has been
served with process or is threatened against the Community Facilities District which questions
the existence of the Community Facilities District or the titles of its Council members or officers
to their respective offices or seeks to restrainor to enjoin the issuance, sale or delivery of the
Bonds, the application of the proceeds thereof, or the collection or application of the Special
Taxes, or any pledge thereof under the Fiscal Agent Agreement, or contesting the validity or
enforceability of the Bonds or the Basic Documents.
This opinion letter is rendered solely for your benefit in connection with the subject
transaction and may not be relied upon or used, or its benefit claimed, by any other person or
entity, or for any other purpose, without my prior written consent, except that information copies
may be included in any closing document transcript relating to the Bonds. I bring to your
attention the fact that my legal opinions are an expression of professional judgment and are not a
guarantee of a result. My engagement with respect to the Bonds has terminated as of the date
hereof, and I disclaim any obligation to update this letter. This letter is not intended to, and may
not, be relied upon by owners of the Bonds.
Respectfully submitted,
C-3
Exhibit D
Opinion of Fulbright & Jaworski L.L.P., Disclosure Counsel
$[principal amount]
City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) Special Tax Refunding Bonds, Series 2012
[Closing Date]
City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center)
23920 Valencia Boulevard
Santa Clarita, California 91355
[Underwriter]
Ladies and Gentlemen:
We have acted as Disclosure Counsel to the City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town Center) (the "Issuer") with respect to the issuance of the
captioned bonds (the "Bonds"). The Bonds are being issued pursuant to the laws of the State of
California including the provisions of the Mello -Roos Community Facilities District Act of
1982, constituting Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of
California (the (the "Act"). The Bonds shall be issued and secured pursuant to an Fiscal Agent
Agreement, dated as of October 1, 2012 (the "Fiscal Agent Agreement"), between the
Community Facilities District and U.S. Bank National Association, as fiscal agent (the "Fiscal
Agent"), for the purpose, among other things, of refinancing the Community Facilities District's
previously issued Special Tax Bonds (the "Prior Bonds"). The Bonds are more fully described in
the Official Statement of the Issuer dated September _, 2012 (the "Official Statement"). The
Bonds are being purchased pursuant to the provisions of a Bond Purchase Agreement (the "Bond
Purchase Agreement") dated . September _, 2012, by and between [Underwriter] (the
"Underwriter"), and the Issuer. Capitalized terms not otherwise defined herein shall have the
meaning ascribed thereto in the Official Statement.
In rendering this opinion, we have reviewed such records, documents, certificates and
opinions, and made such other investigations of law and fact as we have deemed necessary or
appropriate.
D-1
With respect to the matters covered by the approving opinion rendered by us as Bond
Counsel to the District ("Bond Counsel'), dated the date hereof, you have received a letter from
Bond Counsel allowing you to rely on such opinion.
This letter is limited to matters governed by the federal securities law of the United
States, and we assume no responsibility with respect to the applicability or effect of the laws of
any other jurisdiction.
In our capacity as Disclosure Counsel to the Issuer, we have rendered certain legal advice
and assistance to you in connection with the preparation of the Official Statement. Rendering
such legal advice and assistance involved, among other things, discussions and inquiries
concerning various legal matters, review of certain records, documents and proceedings, and
participation in conferences with, among others, your representatives and representatives of the
City of Santa Clarita, Bond Counsel, the Community Facilities District, your counsel, if any, and
other consultants at which conferences the contents of the Official Statement and related matters
were discussed. On the basis of the information made available to us in the course of the
foregoing (but without having undertaken to determine or verify independently, or assuming any
responsibility for, the accuracy, completeness or fairness of any of the statements contained in
the Official Statement), no facts have come to the attention of the personnel in our firm directly
involved in rendering legal advice and assistance in connection with the preparation of the
Official Statement which cause us to believe that the Official Statement as of its date (excluding
therefrom financial, engineering and statistical data; forecasts, projections, estimates,
assumptions and expressions of opinions; statements relating to the treatment of the Bonds or the
interest, discount or premium related thereto for tax purposes under the law of any jurisdiction;
and the statements contained in the Official Statement under the caption "LEGAL MATTERS -
Tax Matters," and in Appendices A, C, and D thereto, as to all of which we express no view)
contained any untrue statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
During the period from the date of the Official Statement to the date of this opinion,
except for our review of the certificates and opinions regarding the Official Statement delivered
on the date hereof, we have not undertaken any procedures or taken any actions which were
intended or likely to elicit information concerning the accuracy, completeness or fairness of any
of the statements contained in the Official Statement.
We are furnishing this opinion to the Issuer and the Underwriter, as Disclosure Counsel
to the Issuer, pursuant to the Bond Purchase Agreement, solely for your benefit as Issuer and
Underwriter, respectively, of the Bonds. This opinion is rendered in connection with the
transaction described herein, and may not be relied upon by you for any other purpose. This
opinion shall not extend to, and may not be used, circulated, quoted, referred to, or relied upon
by, any other person, firm, corporation or other entity without our prior written consent. Our
engagement with respect to this matter terminates upon the delivery of this opinion to you at the
time of the closing relating to the Bonds, and we have no obligation to update this opinion.
Very truly yours,
D-2
'EL
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C.
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9/5/12
PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER _, 2012
NEW ISSUE - BOOK -ENTRY ONLY NO RATING
In the opinion ofFulbright & Jaworski L.LP_, Los Angeles, California, Bond Counsel, under existing law, and assuming compliance with
the tax covenants described herein, interest on the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986from
the gross income of the owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the federal
alternative minimum tax. (/t is also the opinion of Bond Counsel that under existing law interest on the Bonds is exempt from personal
income taxes of the State of California. See"CONCLUDING INFORMA TION—Tax Exemption " herein.
STATE OF CALIFORNIA COUNTY OF LOS ANGELES
f
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
SPECIAL TAX REFUNDING BONDS
SERIES 2012
Dated: Date of Delivery
Due: November 15, as shown on the inside front cover
This cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the
entire Official Statement to obtain information essential to the making of an informed investment decision. Investment in the Bonds (as
defined herein) involves risks. See "SPECIAL RISK FACTORS" herein for a discussion of special risk factors that should be considered
in evaluating the investment quality of the Bonds.
The City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) Special Tax Refunding Bonds (the
"Bonds") are being issued and delivered to (i) fund an escrow to optionally redeem all outstanding City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center) Special Tax Bonds, (ii) fund a reserve fund for the Bonds, and (iii) pay the costs of
issuing the Bonds. See "THE REFINANCING PLAN - Estimated Uses of Funds" herein.. The Bonds are authorized pursuant to the
Mello -Roos Community Facilities Act of 1982, as amended, and pursuant to a Fiscal Agent Agreement, dated as of October 1, 2012 (the
"Fiscal Agent Agreement"), between the City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) (the
"District") and U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent"). The Bonds are limited obligations of the District
payable solely from Net Taxes (as defined herein) derived from annual Special Taxes (as defined herein) to be levied on taxable land
within the District and from certain other funds pledged under the Fiscal Agent Agreement, all as further described herein. The Special
Taxes are to be levied according to the Rate and Method of Apportionment of Special Tax approved by the City Council of the City of
Santa Clarita (the "City") and the qualified electors within the District. See "THE RATE AND METHOD OF APPORTIONMENT OF
SPECIAL TAX" herein. The City Council of the City is the legislative body of the District.
Interest on the Bonds will be payable on May 15, 2013, and semiannually thereafter on each November 15 and May 15. Individual
purchases may be made in principal amounts of $5,000 or any integral multiple thereof and will be in book -entry form only. The Bonds are
issuable in fully registered form and when issued will be registered in the time of Cede & Co., as nominee of The Depository "frust
Company, New York, New York ("DTC").
Neither the faith and credit nor the taxing power of the District (except as pledged in the Fiscal Agent Agreement), lite City, the County of
Los Angeles, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Net Taxes,
no other revenues or taxes are pledged to the payment of the Bonds. The Bonds are not general or special obligations of the City nor
general obligations of the District, but are limited obligations of the District payable solely from Net Taxes and amounts held under the
Fiscal Agent Agreement as more fully described herein.
The Bonds are subject to optional redemption, mandatory redemption from prepayments, and mandatory sinking fund redemption prior to
maturity as set forth herein. See "THE BONDS — Redemption" herein.
THE PURCHASE OF THE BONDS INVOLVES CERTAIN RISKS. THE BONDS ARE NOT SUITABLE INVESTMENTS FOR
ALL TYPES OF INVESTORS. SEE THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK
FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO
THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS. THE
BONDS ARE NOT RATED BY ANY RATING AGENCY.
The Bonds are offered when, as and if issued, subject to the approval as to their legality by Fulbright & Jaworski L.L.P., Bond Counsel.
Certain legal matters will be passed on for the District by Fu/bright & Jaworski L.L.P., Disclosure Counsel, for the District and the City by
Burke, Williams and Sorensen, LLP, as City Attorney, for the Underwriters by Nossaman LLP, and for the Landowner by its counsel.
. It is anticipated that the Bonds will be available for delivery in book-entryform on or about October , 2012.
Dated: September, 2012
Preliminary, subject to change.
[Underwriters logo]
MATURITY SCHEDULE
Serial Bonds
Base CUSIP No.
Maturity Date Principal Interest Reoffering
November 15 Amount Rate Yield
% Term Bonds due November 15, 20_, Yield
CUSIP
Suffix
% CUSIP No.
CUSIP® Copyright 2012. American Bankers' Association. CUSIP® data herein is provided by Standard & Poor's
CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a
database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP® numbers are
provided for convenience of reference only. The Authority and the Underwriter do not guarantee the accuracy of
the CUSIP® data herein.
CITY COUNCIL
OF THE CITY OF SANTA CLARITA, CALIFORNIA
Legislative Body of the
CITY OF SANTA CLARITA COMMUNITY FACILITIES DISTRICT NO. 2002-1
Frank Ferry, Mayor
Bob Kellar, Mayor Pro Tem
TimBen Boydston, Council Member
Marsha McLean, Council Member
Laurene Weste, Council Member
CITY OFFICIALS
Kenneth R. Pulskamp, City Manager
Kenneth Striplin, Assistant City Manager
Darren Hernandez, Deputy City Manager
Joseph M. Montes, City Attorney
Armine Chaparyan, Interim City Clerk
PROFESSIONAL SERVICES
BOND & DISCLOSURE COUNSEL
Fulbright & Jaworski L.L.P.
Los Angeles, California
FINANCIAL ADVISOR
C.M. de Crinis & Co., Inc.
Glendale, California
FISCAL AGENT
U.S. Bank National Association
Los Angeles, California
SPECIAL TAX CONSULTANT
Willdan Financial Services
Temecula, California
VERIFICATION AGENT
Barthe & Wahrman, PA
Bloomington, Minnesota
TABLE OF CONTENTS
Paee
INTRODUCTION
TheCity .........................................
The Community Facilities District
PropertyOwnership..........................................................................................................................2
PropertyValues................................................................................................................................2
Authority for Issuance of the Bonds.................................................................................................2
Purposeof the Bonds........................................................................................................................2
Security and Sources of Payment for the Bonds..............................................................................2
Descriptionof the Bonds..................................................................................................................3
TaxExemption.................................................................................................................................3
Professionals Involved in the Offering.............................................................................................3
Offering and Delivery of the Bonds. ....... ........................................................................................
3
Bondowners' Risks..........................................................................................................................4
ContinuingDisclosure......................................................................................................................4
OtherInformation.............................................................................................................................4
THEBONDS.................................................................................................................................................5
Authorityfor Issuance......................................................................................................................5
Purposeof the Bonds........................................................................................................................5
Descriptionof the Bonds..................................................................................................................5
Redemption......................................................................................................................................7
RedemptionProvisions....................................................................................................................8
NoParity Bonds...............................................................................................................................8
Sources and Uses of Proceeds........................................................................................................10
DebtService Schedule...................................................................................................................10
SECURITY FOR THE BONDS.................................................................................................................12
General...........................................................................................................................................12
TheSpecial Taxes..........................................................................................................................12
SpecialTax Fund............................................................................................................................13
Administrative Expense Fund........................................................................................................15
Covenant for Superior Court Foreclosure......................................................................................15
Valueto Lien Ratio........................................................................................................................16
No Obligation of the City Upon Delinquency................................................................................16
Other Indebtedness and Obligations. ..............................................................................................
16
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX......................................................16
Summaryof Rate and Method.......................................................................................................16
Projected Special Tax Coverage....................................................................................................17
VALUETO LIEN RATIOS........................................................................................................................19
DIRECT AND OVERLAPPING DEBT AND OTHER OBLIGATIONS.................................................19
THEDISTRICT..........................................................................................................................................22
Location..........................................................................................................................................24
Statusof Development...................................................................................................................24
i
AssessedValues.:...........................................................................................................................28
Valueto Lien Ratios.......................................................................................................................29
Delinquencies.................................................................................................................................29
THELANDOWNER..................................................................................................................................30
TheLandowner..............................................................................................................................30
SPECIALRISK FACTORS........................................................................................................................3
Levy and Collection of Special Taxes............................................................................................31
Depletion of Reserve Account.......................................................................................................31
Foreclosure and Sale Proceedings..................................................................................................32
Concentration of Property Ownership............................................................................................32
Factors Affecting Parcel Values and Aggregate Values................................................................32
Other Possible Claims Upon the Value of a Taxed Parcel.............................................................34
EconomicUncertainty....................................................................................................................35
Hazardous Substances....................................................................................................................35
Bankruptcy Proceedings.................................................................................................................35
Payment of Special Tax Not a Personal Obligation of the Owners...............................................36
No City Obligation to Pay Debt Service........................................................................................36
No Acceleration Provision.............................................................................................................37
Limitations on Remedies................................................................................................................37
DistrictFormation..........................................................................................................................37
Proposition218..............................................................................................................................37
Impact of FDIC Interests and Other Federal Agencies..................................................................39
IRS Audit of Tax -Exempt Bond Issues..........................................................................................39
Ballot Initiatives and Legislative Measures...................................................................................40
LimitedSecondary Market ................................................ .............................................................
40
Disclosure to Future Landbuyers...................................................................................................40
Lossof Tax Exemption..................................................................................................................40
CONCLUDING INFORMATION..............................................................................................................40
Absence of Material Litigation......................................................................................................40
TaxExemption...............................................................................................................................40
Approvalof Legality.....................................................................!................................................43
No General Obligation of City or District......................................................................................43
Verifications of Mathematical Computations.. ..............................................................................
43
TheFinancial Advisor....................................................................................................................43
NoRatings on the Bonds................................................................................................................44
ContinuingDisclosure....................................................................................................................44
Underwriting..................................................................................................................................44
Miscellaneous.................................................................................................................................44
APPENDIX A — INFORMATION REGARDING CITY OF SANTA CLARITA ............................
A -I
APPENDIX B FORM OF BOND COUNSEL'S OPINION............................................................B-1
APPENDIX C — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS..........................................0-1
APPENDIX D — RATE AND METHOD OF APPORTIONMENT
OFSPECIAL TAX..................................................................................................
D-1
APPENDIX E — BOOK -ENTRY ONLY SYSTEM............................................................................
E-1
APPENDIX F — FORMS OF CONTINUING DISCLOSURE CERTIFICATES ..............................
F-1
ii
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Ofjrcial Statement This Official Statement is submitted in connection with the offer and sale of the Bonds
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official
Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. This Official Statement contains statements which, to the extent they are not recitations of
historical fact, 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. In this respect, such forward-looking statements are
generally identified by the use of words "estimate," "project," "plan," "budget," "anticipate," "expect," "intend," or
"believe" or the negative thereof or other variations thereon or comparable terminology.
The achievement of certain results or other expectations contained in such forward-looking statements involves
known or unknown risks, uncertainties and other factors which may cause actual results, performance or
achievements to be significantly different than those expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to, uncertainties relating to economic conditions, the effect
of changes in the amounts and timing of receipt of revenues, the availability and sufficiency of Net Taxes, change in
circumstances adversely affecting the projected use of proceeds, and risks involving pertinent court decisions. The
District 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. Potential investors
are cautioned that such statements are only predictions and that actual events or results may differ materially. In
evaluating such statements, potential investors should specifically consider the various factors which could cause
actual events or results to differ materially from those indicated by such forward-looking statements.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the District or the City to
give any information or to make any representations in connection with the offer or sale of the Bonds other than
those contained herein and if given or made, such other information or representation must not be relied upon as
having been authorized by the District or the City, the Financial Advisor or the Underwriters. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or
sale.
Involvement of Underwriters. The Underwriters have provided the following statement for inclusion in this Official
Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as a
part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of
this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
The information and expressions of opinions herein are subject to change without notice and neither delivery of this
Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the District or the City or any other entity described or referenced herein since the
date hereof. All summaries of the documents referred to in this Official Statement are made subject to the provisions
of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
Stabilization of Prices. In connection with this offering, the Underwriters may overallot or effect transactions which
stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open
market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters may offer and sell the
Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside front cover
page hereof and said public offering prices may be changed from time to time by the Underwriters.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN
RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH
ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE.
iii
REGIONAL LOCATION MAP
City of Santa Clarita
vi
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
SPECIAL TAX REFUNDING BONDS
INTRODUCTION
This Introduction is not a summary of this Official Statement. It is only a brief description of and
guide to, and is qualified by, more complete and detailed information contained in the entire Oficial
Statement, including the cover page and appendices hereto, and the documents summarized or described
herein. A fill review should be made of the entire Oficial Statement. The offering of the Bonds to
potential investors is made only by means of the entire Official Statement.
All capitalized terms used herein and not otherwise defined have the meanings set forth in
APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" or in APPENDIX D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
This Official Statement, which includes the cover page, table of contents and appendices hereto,
is provided to furnish information in connection with the sale, issuance and delivery of City of Santa
Clarita Community Facilities District No. 2002-1 (Valencia Town Center) Special Tax Refunding Bonds
in the principal amount of $ * (the `Bonds").
The following is a brief description of certain information concerning the Bonds, the City and the
District. A more complete description of such information and additional information that may affect
decisions to invest in the Bonds is contained throughout this Official Statement which should be read in
its entirety. Attached hereto as Appendix C is a brief summary of the principal legal documents. All
references herein to any document are qualified by the terms of such document in its entirety.
The City
The City of Santa Clarita (the "City") is located in the Santa Clarita Valley in northern Los
Angeles County, approximately 35 miles northwest of downtown Los Angeles. The City encompasses
over 54 square miles and has a current estimated population of 177,600. For general demographic
information regarding the City see APPENDIX A — "INFORMATION RELATING TO CITY OF
SANTA CLARITA."
The Community Facilities District
The City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) (the
"Community Facilities District" or the "District") was formed and established by the City pursuant to the
Mello -Roos Community Facilities Act of 1982, as amended (the "Act'), following a public hearing and a
landowner election at which the qualified electors of the District, by more than a two-thirds majority vote,
approved the levy of a special tax (the "Special Tax") pursuant to a Rate and Method of Apportionment of
Special Tax (the "Rate and Method") and authorized the Community Facilities District to issue bonds in
an amount equal to its first and only bond series, not to exceed $18,500,000. In 2002, the District issued
its $17,370,000 Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) Special
Preliminary, subject to change.
Tax Bonds (the "2002 Bonds"). Following the issuance of the 2002 Bonds, the District had no authorized
but unissued bonds.
The District includes 45.938 acres of taxable land. The land is zoned for, and is in use as, a
super -regional retail shopping center, known as the Westfield Valencia Town Center ( (the "Valencia
Town Center"). THE VALENCIA TOWN CENTER ALSO INCLUDES LANDS NOT WITHIN THE
DISTRICT. See "THE DISTRICT" herein.
Property Ownership
Title to all of the parcels of land within the District is vested in Valencia Town Center Venture,
LP, a Delaware limited partnership (the "Landowner"). THE PARCELS WITHIN THE DISTRICT
COMPRISE ONLY A PORTION OF THE VALENCIA TOWN CENTER. The Landowner's indirect
owner has two general partners, one of which is a subsidiary of Westfield America Limited Partnership,
and three limited partners. See "THE LANDOWNER" herein.
Property Values
The City has relied on the assessed valuations of the County Assessor used for the purposes of
general taxes for the valuations for all of the property within the District presented in this Official
Statement. See "SPECIAL RISK FACTORS" and "THE DISTRICT - Assessed Values."
Authority for Issuance of the Bonds
The Bonds are issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended,
and a Fiscal Agent Agreement dated as of October 1, 2012 (the "Fiscal Agent Agreement") by and
between the District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). See "THE
BONDS — Authority for Issuance" herein.
Purpose of the Bonds
The Bonds are being issued for the purpose of (i) refunding the District's outstanding bonds by
funding an escrow to optionally redeem all outstanding 2002 Bonds on November 15, 2012, (ii) funding a
reserve account for the Bonds, and (iii) paying certain costs associated with the foregoing and with the
issuance of the Bonds. See "THE BONDS — Purpose of Issue" and "THE BONDS — Sources and
Uses of Proceeds" herein.
Security and Sources of Payment for the Bonds
The Bonds are limited obligations of the District payable solely from and secured by a pledge of
the Net Taxes and other amounts in the Special Tax Fund.
Net Taxes are defined in the Fiscal Agent Agreement to mean Gross Taxes (exclusive of certain
penalties and interest) minus an amount equal to the Administrative Expense Requirement. Gross Taxes
are defined to mean all Special Taxes received by the District, together with net foreclosure proceeds, if
any.
The Special Tax Fund, created by the Fiscal Agent Agreement, is held by the Fiscal Agent in
trust. Pursuant to the Fiscal Agent Agreement, the District shall transfer the Net Taxes, within ten (10)
Business Days of receipt, to the Fiscal Agent for deposit in the Special Tax Fund.
Neither the faith and credit nor the taxing power of the District (except as pledged in the
Fiscal Agent Agreement), the City, the County, the State of California or any political subdivision
thereof is pledged to the payment of the Bonds. Except for the Net Taxes, no other revenues or
taxes are pledged to the payment of the Bonds. The Bonds are not general or special obligations of
the City nor general obligations of the District, but are limited obligations of the District payable
solely from Net Taxes and amounts held under the Fiscal Agent Agreement as more fully described
herein.
See "SECURITY FOR THE BONDS" herein.
Description of the Bonds
Registration Transfers and Exchanges. The Bonds will be issued in fully registered form and
will be registered initially in the name of Cede & Co., as nominee of The Depository Trust Company,
New York, New York ("DTC"). DTC will act as securities depository for the Bonds. See "THE
BONDS — Description of the Bonds" herein.
Denominations. The Bonds will be issued in denominations of $5,000 or any integral multiple
thereof.
Payments. Interest on the Bonds is payable on May 15, 2013, and semiannually thereafter on
each November 15 and May 15. So long as DTC, or Cede & Co. as its nominee, is the registered owner
of the Bonds, principal and interest payments on the Bonds will be made directly to DTC. See "THE
BONDS — Description of the Bonds" herein.
Redemption. The Bonds are subject to optional and mandatory redemption as described under
"THE BONDS — Redemption Provisions" herein.
Tax Exemption
Assuming compliance with certain covenants and provisions of the Internal Revenue Code of
1986, as amended, in the opinion of Bond Counsel, interest on the Bonds will not be includable in gross
income for federal income tax purposes although it may be includable in the calculation for certain taxes.
Also in the opinion of Bond Counsel, interest on the Bonds will be exempt from State of California
personal income taxes. See "CONCLUDING INFORMATION — Tax Exemption" herein.
Professionals Involved in the Offering
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 to the District. Fulbright &
Jaworski L.L.P., is also Disclosure Counsel to the District. C.M. de Crinis & Co., Inc., Glendale,
California, is Financial Advisor to the District. Nossaman LLP, Los Angeles, California is counsel to the
Underwriters. U.S. Bank National Association, Los Angeles, California, will act as the Fiscal Agent.
Fulbright & Jaworski L.L.P., C.M. de Crinis & Co., Inc., and U.S. Bank National Association, will
receive compensation from the District contingent upon the sale and delivery of the Bonds.
Offering and Delivery of the Bonds
The Bonds are offered when, as and if issued, subject to approval as to their legality by Bond
Counsel. It is anticipated that the Bonds in book -entry form will be available for delivery on or about
October 12012.
Bondowners' Risks
. The Bonds are limited obligations of the District and payable only from Net Taxes and other
amounts in the Special Tax Fund. The District has no obligation to pay debt service on the Bonds other
than from the Net Taxes and other amounts in the Special Tax Fund.
Ownership of all of the lands within the Community Facilities District is wholly owned by
Valencia Town Center Venture, LP. Timely payment of interest and principal will depend on the
continuing ability and willingness of the owner of the lands.to pay Special Taxes when due.
For all property in the District, the County -determined assessed valuation is provided as an
estimate for purposes of valuation. The assessor's value may not accurately reflect the fair market value
of the land and improvements which may be higher or lower than the County Assessor's value. The City
has not undertaken to obtain an appraisal of the property within the District.
Neither the faith and credit nor the taxing power of the District (except as pledged in the Fiscal
Agent Agreement), the City, the County, the State of California or any political subdivision thereof is
pledged to the payment of the Bonds. Except for the Net Taxes, no other revenues or taxes are pledged to
the payment of the Bonds. The Bonds are not general or special obligations of the City nor general
obligations of the District, but are limited obligations of the District payable solely from Net Taxes and
amounts held under the Fiscal Agent Agreement as more fully described herein.
See "SPECIAL RISK FACTORS" herein for a discussion of the risk factors that should be
considered, in addition to the other matters set forth herein, in considering the investment quality of the
Bonds.
Continuing Disclosure
In order to assist the Underwriters in complying with 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, the District and Valencia Town Center Venture, LP, the owner of all of the
lands within the District, have covenanted to provide certain financial information and operating data and
notices of certain material events relating to the Community Facilities District. See "CONCLUDING
INFORMATION — Continuing Disclosure" herein.
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject
to change.
Copies of documents referred to herein, including the complete Appraisal, and information
concerning the Bonds are available from the Treasurer, City of Santa Clarita, 23920 Valencia Boulevard,
Suite 300, Santa Clarita, California 91355; telephone (661) 255-4925. The City or the Community
Facilities District may impose a charge for copying, mailing and handling.
THE BONDS
Authority for Issuance
The District was formed and bonded indebtedness was authorized pursuant to the Mello -Roos
Community Facilities Act of 1982, as amended (the "Act'), pursuant to proceedings taken by the City
Council of the City and at a special election held on October 8, 2002 in the District. Bonded indebtedness
was authorized in the amount equal to the first and only series of bonds not to exceed $18,500,000. The
2002 Bonds were issued in the principal amount of $17,370,000. Under the provisions of the Act, since
there were fewer than 12 registered voters residing within the District at the time of the election, the
qualified landowner voter was entitled to cast one vote for each acre or portion of an acre of land owned
within the District. The landowner who comprised the qualified voter in the District voted to incur the
bonded indebtedness and to approve, for the purpose of repaying the indebtedness, the annual levy of
Special Taxes to be collected within the District.
The Bonds constitute refunding bonds for the 2002 Bonds and are authorized and issued pursuant
to the Act and the Fiscal Agent Agreement. Section 53362.7 of the Act provides that the total authorized
amount of the bonded indebtedness of a district is not reduced by the principal amount of any refunding
bonds issued to refund any or all outstanding bonds of the district.
Purpose of the Bonds
The Bonds are being issued to fund an escrow to redeem on November 15, 2012, all the 2002
Bonds, currently outstanding in the principal amount of $16,650,000. The 2002 Bonds were issued on
October 15, 2002 to refund all outstanding Community Facilities District No. 92-1 (Valencia Town
Center) Special Tax Bonds, Series A (the "1992 Bonds"). The 1992 Bonds were issued to fund the
acquisition of certain public improvements including bridge improvements, storm drain improvements,
road improvements, traffic signals, pedestrian walkways, fire station facilities and related soils, geologic
and survey work necessary to develop the Valencia Town Center.
Proceeds of the Bonds will also fund (i) the Reserve Account, and (ii) the Costs of Issuance Fund.
See "Sources and Uses of Proceeds" below.
Description of the Bonds
The Bonds will' be dated as of their Delivery Date, and interest thereon will be payable
semi-annually on May 15 and November 15 of each year, commencing on May 15, 2013 (each an
"Interest Payment Date"), until their respective stated maturity dates or prior redemption. The principal
of the Bonds will be payable on November 15, in the years and principal amounts set forth on the inside
cover page hereof, unless redeemed prior to their respective stated maturity dates.
Interest on the Bonds
Each Bond is to bear interest from the Interest Payment Date next preceding the date of
authentication thereof unless (i) it is authenticated_ on an Interest Payment Date, in which event it will bear
interest from such Interest Payment Date; (ii) it is authenticated after the first day of the month containing
an Interest Payment Date (the "Record Date") and before such Interest Payment Date, in which event it
will bear interest from such Interest Payment Date; or (iii) such Bond is authenticated on or prior to
May 1, 2013, in which event interest thereon will be payable from its dated date.
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General Book -Entry Provisions
The Bonds will be issued as fully registered Bonds and, when issued, will be registered in the
name of CEDE & CO., as nominee of The Depository Trust Company, New York, New York ("DTC').
DTC will act as securities depository of the Bonds. Individual purchasers of the Bonds (the "Beneficial
Owners") will not receive certificates representing the Bonds purchased. So long as CEDE & CO., as
nominee of DTC, is the registered owner of the Bonds, references herein to the Owners will mean CEDE
& CO. (or such other nominee), as the "Owner" of the Bonds, and will not mean the Beneficial Owners of
the Bonds. Individual purchases of the Bonds will be made in book -entry form only, in the principal
amount of $5,000 or any integral multiple thereof. Principal and interest are payable directly to DTC.
Upon receipt of payments of principal and interest, DTC will in turn remit such principal and interest to
the DTC Participants (as such term is defined in APPENDIX E — "BOOK -ENTRY ONLY SYSTEM")
for subsequent disbursement to the Beneficial Owners of the Bonds.
DTC may discontinue providing its services as securities depository with respect to the Bonds at
any time by giving reasonable notice to the District or the Fiscal Agent, or the District may discontinue
the services of DTC. Under such circumstances, in the event that a successor securities depository is not
obtained, Bond certificates are required to be printed and delivered.
Replacement Bonds
In the event (i) DTC determines not to continue to act as securities depository for the Bonds, or
(ii) DTC shall no longer so act and gives notice to the Fiscal Agent of such determination or (iii) the
District so determines, then the District will discontinue the book -entry system with DTC. If the District
fails to identify another qualified securities depository, the Bonds will no longer be restricted to being
registered in the name of CEDE & CO., as nominee of DTC, but shall be registered in whatever name or
names as are provided to the Fiscal Agent and the Fiscal Agent will deliver definitive Bonds to the
Owners thereof.
The Bonds may be transferred only upon the books kept for the registration of the Bonds or
exchanged upon the surrender thereof to the Fiscal Agent, together with an assignment duly executed by
the Owner or his attorney or legal representative, in form satisfactory to the Fiscal Agent. All such Bonds
will be surrendered to the Fiscal Agent and canceled by the Fiscal Agent pursuant to the Fiscal Agent
Agreement.
Upon any such registration or transfer, a new Bond or Bonds will be authenticated and delivered
in exchange for such transferred Bond in accordance with the provisions of the Fiscal Agent Agreement.
The Fiscal Agent may make a charge to the Owner for any such exchange or registration or transfer of
Bonds sufficient to pay any tax or other governmental charge required to be paid with respect to any such
exchange or registration of transfer. Neither the District nor the Fiscal Agent will be required to register
the transfer of or exchange of any Bond during the 15 days immediately preceding the date on which
Bonds are to be selected for redemption.
New Bonds delivered upon any transfer or exchange will be valid obligations of the District,
evidencing the same obligations as the Bonds surrendered, will be secured by the Fiscal Agent Agreement
and will be entitled to all of the security and benefits thereof to the same extent as the Bonds surrendered.
The District and the Fiscal Agent may deem and regard the Owner of any Bond as the absolute
owner of such Bond for the purpose of receiving any payment on such Bond and for all other purposes of
the Fiscal Agent Agreement, whether such Bond is overdue or not, and neither the District nor the Fiscal
Agent will be affected by any notice to the contrary. The principal of the Bonds and any premiums due
upon the redemption thereof will be payable upon presentation and surrender thereof at the Principal
Office of the Fiscal Agent or at the designated office of any successor Fiscal Agent. Interest on any Bond
will be paid by check of the Fiscal Agent mailed on the Interest Payment Date by first class mail, postage
prepaid, to the person whose name shall appear in the Bond Register as the Owner thereof at his or her
address as it appears on the Bond Register. All such payments will be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid.
Redemption
Optional Redemption
The Bonds maturing on or after November 15, 20 may be redeemed prior to their respective
stated maturity dates at the option of the District, on any date prior to maturity on or after November 15,
20 , in whole, or in part in denominations of $5,000 or any integral multiple thereof in the order of
maturity selected by the District and by lot within a maturity, at the following prices expressed as
percentages of the principal amount to be redeemed, plus accrued interest to the date of redemption:
Redemption Periods Redemption Prices
November 15, 20
through November 14, 20
November 15, 20
through November 14, 20
November 15, 20
and thereafter
In order to exercise its option to redeem the Bonds, the District will deliver to the Fiscal Agent at
least 60 days prior to the redemption date, or such shorter period of time as shall be acceptable to the
Fiscal Agent, a written request indicating the redemption date and the principal amount of the Bonds to be
redeemed.
Mandatory Redemption from Prepayments
All Bonds are subject to redemption prior to their respective stated maturity dates from proceeds
of prepayments of Special Taxes, on any Interest Payment Date, in whole, or in part in denominations of
$5,000 or any integral multiple thereof in the order of maturity selected by the District and by lot within a
maturity, at a redemption price as set forth below (expressed as a percentage of the principal amount of
the Bonds to be redeemed), together with accrued interest thereon to the date fixed for redemption.
Redemption Periods Redemption Prices
Any May 15 or November 15 on or prior to
November 14, 20
November 15, 20_ or May 15, 20_
November 15, 20_ or May 15, 20
Any May 15 or November 15 on or after
November 15, 20
Mandatory Sinking Fund Redemption
The Bonds scheduled to mature on November 15, 20_ (the "20_ Term Bonds") are subject to
mandatory sinking fund redemption prior to maturity, without premium, at a redemption price equal to the
principal amount thereof, plus accrued interest to the date of redemption. The 20 Term Bonds to be
redeemed are to be selected by the Fiscal Agent by lot. The 20 Term Bonds shall be redeemed in the
principal amounts and years as shown in the following redemption schedule:
Redemption Date Principal
(November 15) Amount
(maturity)
In the event of optional redemption or mandatory redemption from prepayments of Special Taxes
of the 20_ Term Bonds as described above, the amount of mandatory sinking fund redemptions shown in
the above schedules shall be reduced pro rata in each year.
Redemption Provisions
Notice
Notice of redemption, containing the information required by the Fiscal Agent Agreement, will
be mailed by the Fiscal Agent to Owners at least 30 days but not more than 60 days prior to the date fixed
for redemption. The Fiscal Agent must also give notice of redemption to the registered securities
depositories then in the business of holding substantial amounts of obligations of types comprising the
Bonds and to the Information Services.
The Fiscal Agent may issue a conditional notice of optional redemption to the Owners in the
same manner as provided above. Such conditional notice may be rescinded, redemption may be canceled
and none of such Bonds will be redeemed in the event sufficient funds have not been deposited with the
Fiscal Agent on the redemption date.
Effect of Redemption
If notice of redemption has been given substantially as provided in the Fiscal Agent Agreement,
and if the amount necessary for the redemption of the Bonds, or portions thereof called for redemption, is
available on the date set for redemption, then the Bonds or portions thereof designated for redemption
shall become due and payable on the date fixed for redemption. Upon and after the date fixed for
redemption, the Bonds so fixed for redemption will no longer be deemed outstanding and will cease to
accrue interest from and after such redemption date. The actual receipt of such notice of redemption by
the Owner of any Bond is not a condition precedent to redemption, and failure to receive such notice will
not affect the validity of the proceedings for redemption of such Bonds or the cessation of interest
thereon.
No Parity Bonds
The District covenants in the Fiscal Agent Agreement it will not issue bonds or other evidences of
indebtedness payable from the Net Taxes and other amounts deposited in the Special Tax Fund which are
secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding
Bonds.
REFUNDING PLAN
On September 11, 2012, the City Council of the City (the "City Council"), acting as the
legislative body of the District, in order to achieve certain savings for the property owners within the
District authorized the refunding of the 2002 Bonds by the issuance of the Bonds. Proceeds from the sale
of the Bonds, together with certain other amounts available from accounts related to the 2002 Bonds, will
be used to (i) refund the 2002 Bonds, (ii) fund a reserve account for the Bonds, and (iii) pay certain costs
associated with the foregoing and with the issuance of the Bonds.
The 2002 Bonds were issued on October 15, 2002 to refund all outstanding Community Facilities
District No. 92-1 (Valencia Town Center) Special Tax Bonds, Series A (the "1992 Bonds"). The 1992
Bonds were issued to fund the acquisition of certain public improvements including bridge
improvements, storm drain improvements, road improvements, traffic signals, pedestrian walkways, fire
station facilities and related soils, geologic and survey work necessary to develop the Valencia Town
Center.
Proceeds of the sale of the Bonds, together with additional funds from the 2002 Bonds, in an
amount sufficient to pay upon maturity or refund the 2002 Bonds will be deposited in an irrevocable
escrow fund (the "Escrow Fund") established by the District with U.S. Bank National Association (the
"Escrow Agent"), pursuant to an Escrow Agreement, dated as of October 1, 2012, by and between the
Escrow Agent and the District. Amounts so deposited, which will be invested in Federal Securities and
will be verified by Barthe & Wahrman PA, Bloomington , Minnesota (the "Verification Agent"), to be
sufficient to pay the redemption price of the 2002 Bonds upon their optional redemption on November 15,
2012. Assuming the accuracy of the Verification Agent's computations, as a result of the deposit and
application of funds as provided in the escrow account, the 2002 Bonds will be defeased and all
obligations thereunder discharged. The monies held under the Escrow Agreement are pledged to the
payment of the 2002 Bonds to be paid upon the maturity or redemption thereof and neither the principal
of nor the interest thereon will be available for the payment of the Bonds.
Sources and Uses of Proceeds
The Bond proceeds and available funds of the 2002 Bonds will be applied as follows:
Sources of Proceeds
Principal Amount of Bonds
2002 Bonds Available Funds
Plus/Less: Original Issue Premium/Discount
Less: Underwriters' Discount
Total Proceeds
Uses of Proceeds
Transfer to Escrow Agent for deposit in the Escrow Fund('l
Deposit in Reserve Account(2)
Deposit in Costs of Issuance Fund(')
Total Uses
(i) To be applied to redemption of the 2002 Bonds as of November 15, 2012. Bond
proceeds and not special taxes will be used to fund the November 15, 2012 debt service
payment on the 2002 Bonds.
(2) The deposit to the Reserve Account is in the amount of the Reserve Requirement which
is defined in the Fiscal Agent Agreement to mean, as of any date of calculation, an
amount equal to the lesser of (a) $ or (b) the lowest of (1) 10% of the
original proceeds of the Bonds, less accrued interest, if any, less original issue discount,
if any, plus original issue premium, if any, or (2) Maximum Annual Debt Service, or (3)
125% of the average Annual Debt Service of the Bonds.
(3) Includes fees of Bond Counsel, Disclosure Counsel, Financial Advisor, Fiscal Agent,
Special Tax Consultant, Verification Agent and costs of printing and delivering the
Official Statement and other costs associated with the issuance of the Bonds.
Debt Service Schedule
The following is the debt service schedule for the Bonds, assuming no redemptions other than
mandatory sinking fund redemptions.
10
DEBT SERVICE SCHEDULE
Year Ending
November 15 Principal Interest Total
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
TOTAL
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SECURITY FOR THE BONDS
General
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT
(EXCEPT AS PLEDGED IN THE FISCAL AGENT AGREEMENT), THE CITY, THE COUNTY, THE
STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE
PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER REVENUES OR
TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL
OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT,
BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES
AND AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY
DESCRIBED HEREIN.
The Bonds are secured by a pledge of Net Taxes and the other amounts in the Special Tax Fund.
Net Taxes means Gross Taxes (exclusive of any penalties and interest accruing with respect to delinquent
Special Tax installments) minus an amount equal to the Administrative Expense Requirement. Gross
Taxes means the amount of all Special Taxes received by the District, together with the proceeds
collected from the sale of property pursuant to the foreclosure provision of the Fiscal Agent Agreement
for the delinquency of such Special Taxes remaining after the payment of all the costs related to such
foreclosure actions, including, but not limited to, all legal fees and expenses, court costs, consultant and
title insurance fees and expenses. The Administrative Expense Requirement is defined to mean for any
Fiscal Year an amount equal to $_ for Fiscal Year 2012-13 escalating by three percent per each Fiscal
Year thereafter.
Special Taxes means the taxes authorized to be levied by the District in accordance with the
Resolution of Formation, the Act and the voter approval obtained at the October 8, 2002 election in the
District and any additional special taxes authorized to be levied by the District from time to time which
are pledged by the District to the repayment of the Bonds.
In the event that delinquencies occur in the receipt of the Special Taxes within the District
in any fiscal year, the District may increase its Special Tax levy in the following fiscal year up to the
maximum amount permitted under the Rate and Method. Although the Special Tax levy may be
increased, Special Taxes resulting from the increased levy will not become available to cure any
delinquencies until actually collected. In addition, an increase in the Special Tax levy may
adversely affect the ability or willingness of property owners to pay their Special Taxes. See
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" herein for a description of
the District's procedures for levying Special Taxes, and "SPECIAL RISK FACTORS" herein.
OWNERSHIP OF THE BONDS IS SUBJECT TO A SIGNIFICANT DEGREE OF RISK.
POTENTIAL INVESTORS ARE ADVISED TO CAREFULLY READ THE SECTION OF THIS
OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS."
The Special Taxes
The Special Taxes are to be apportioned, levied and collected according to the Rate and Method.
See "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" herein.
Beginning in Fiscal Year 2012-2013 and so long as any Bonds issued under the Fiscal Agent
Agreement are Outstanding, the District has covenanted to levy the Special Tax in an amount sufficient,
together with other amounts on deposit in the Special Tax Fund and the Administrative Expense Fund and
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available for such purposes, to pay (i) the principal of and interest on the Bonds when due, (ii) the
Administrative Expenses, and (iii) any amounts required to replenish the Reserve Account of the Special
Tax Fund to the Reserve Requirement. Subject to the maximum Special Tax rates, the Rate and Method
is formulated to result in the levy each year of an amount sufficient to pay principal, premium, if any, and
interest when due, to replenish the Reserve Account and to pay related administrative expenses.
However, see "SPECIAL RISK FACTORS" for a discussion of certain factors affecting the actual
timely collection of such Special Tax levies.
The District may collect the Special Taxes on the regular property tax bills issued by the
Treasurer and Tax Collector of Los Angeles County or, alternatively, at the discretion of the City Council,
the District may separately bill and collect the Special Taxes from each record owner of land. The
District has heretofore collected the special taxes securing the 2002 Bonds by separate bills issued by the
District until 2009 and thereafter has collected the Special Taxes on the regular property tax bills issued
by the County, and currently intends to continue the practice of collection on the property tax bills with
respect to the Special Taxes.
Special Tax Fund
Pursuant to the Fiscal Agent Agreement, there is established a Community Facilities District No.
2002-1 Special Tax Fund (the "Special Tax Fund") to be held and maintained by the Fiscal Agent. In the
Special Tax Fund there is further established and created an Interest Account, a Principal Account, a
Redemption Account and a Reserve Account.
The amounts on deposit in the foregoing funds and accounts will be held by the Fiscal Agent in
trust and the Fiscal Agent will invest and disburse the amounts in such funds and accounts in accordance
with the provisions of the Fiscal Agent Agreement and will disburse investment earnings thereon in
accordance with the provisions of the Fiscal Agent Agreement.
The District will, within ten (10) Business Days of receipt of Net Taxes, transfer the Net Taxes to
the Fiscal Agent for deposit in the Special Tax Fund in accordance with the terms of the Fiscal Agent
Agreement to be held in trust. The Fiscal Agent will transfer the amounts on deposit in the Special Tax
Fund on the dates and in the amounts set forth in the Fiscal Agent Agreement, in the following order of
priority, to:
1. The Interest Account of the Special Tax Fund;
2. The Principal Account of the Special Tax Fund;
3. The Redemption Account of the Special Tax Fund;
4. The Reserve Account of the Special Tax Fund; and
5. The Surplus Fund.
Interest Account and Principal Account of the Special Tax Fund.
The principal of and interest due on the Bonds until maturity, other than principal due upon
redemption, will be paid by the Fiscal Agent from the Principal Account and the Interest Account of the
Special Tax Fund, respectively. At least five Business Days prior to each May 15 and November 15, the
Fiscal Agent will make the following transfers from the Special Tax Fund first to the Interest Account and
then to the Principal Account; provided, however, that to the extent that deposits have been made in the
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Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, or
otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if
amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall
be made up by an immediate transfer from the Reserve Account:
(i) To the Interest Account, an amount such that the balance in the Interest Account five
Business Days prior to each Interest Payment Date will be equal to the installment of interest due on the
Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment
Date which remains unpaid. Moneys in the Interest Account shall be used for the payment of interest on
the Bonds as the same become due;
(ii) To the Principal Account, an amount such that the balance in the Principal Account five
Business Days prior to November 15 of each year, commencing November 15, 2013, shall at least equal
the principal payment due on the Bonds maturing on such November 15 and any principal payment due
on a previous November 15 which remains unpaid. Moneys in the Principal Account will be used for the
payment of the principal of such Bonds as the same become due at maturity.
Redemption Account of the Special Tax Fund.
On each November 15 on which a Sinking Fund Payment is due, after the deposits have been
made to the Interest Account and the Principal Account of the Special Tax Fund, the Fiscal Agent will
next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the
amount needed to make the balance in the Redemption Account five Business Days prior to each
November 15 equal to the Sinking Fund Payment due on any Outstanding Bonds on such November 15;
provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing
transfers, then any deficiency will be made up by an immediate transfer from the Reserve Account.
Moneys so deposited in the Redemption Account will be used and applied by the Fiscal Agent to call and
redeem Term Bonds in accordance with the Sinking Fund Payment schedule set forth in the Fiscal Agent
Agreement for such Term Bonds.
After making the deposits to the Interest Account and the Principal Account and to the
Redemption Account for Sinking Fund Payments then due, and in accordance with the provisions for
optional redemption or mandatory redemption from prepayments pursuant to the Fiscal Agent Agreement,
the Fiscal Agent shall transfer from the Special Tax Fund and deposit in the Redemption Account moneys
available for such purposes and sufficient to pay the interest, the principal and the premiums, if any,
payable on the Bonds called for optional redemption or mandatory redemption from prepayments;
provided, however, that amounts in the Special Tax Fund may be applied to optionally redeem Bonds
only if immediately following such redemption the amount in the Reserve Account will equal the Reserve
Requirement.
Reserve Account of the Special Tax Fund.
Moneys in the Reserve Account shall be used solely for the purpose of paying the principal of,
including Sinking Fund Payments, and interest on any Bonds when due in the event that the moneys in
the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or
moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund
Payment when due. If the amounts in the Interest Account, the Principal Account or the Redemption
Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund
Payments, or interest on any Bonds when due, the Fiscal Agent will withdraw from the Reserve Account
for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax
Fund, as applicable, moneys necessary for such purposes.
14
Whenever moneys are withdrawn from the Reserve Account, after making the required transfers
under the Fiscal Agent Agreement, the Fiscal Agent will transfer to the Reserve Account from available
moneys in the Special Tax Fund, or from any other legally available funds which the District elects to
apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve
Requirement. Moneys in the Special Tax Fund will be deemed available for transfer to the Reserve
Account only if the Fiscal Agent determines that such amounts will not be needed to make the deposits
required to be made to the Interest Account, the Principal Account or the Redemption Account of the
Special Tax Fund. If amounts in the Special Tax Fund or otherwise transferred to replenish the Reserve
Account are inadequate to restore the Reserve Account to the Reserve Requirement, then the District will
include the amount necessary fully to restore the Reserve Account to the Reserve Requirement in the next
annual Special Tax levy to the extent of the maximum permitted Special Tax rates.
The District may, but is not obligated to, advance funds from any source of legally available
funds in order to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement.
Anything to the contrary in the Fiscal Agent Agreement notwithstanding, the District may, at any
time, substitute an Alternate Reserve Account Security for cash in the Reserve Account subject to the
requirements of the Fiscal Agent Agreement.
Administrative Expense Fund
On or before five Business Days prior to each November 15, commencing November 15, 2013,
the Treasurer shall deposit an amount of Special Taxes equal to the Administrative Expense Requirement
into the Administrative Expense Fund. Moneys in the Administrative Expense Fund shall be applied
exclusively to pay Administrative Expenses. The Treasurer shall maintain a record of deposits and
disbursements within the Administrative Expense Fund, which record shall be available for inspection by
the public.
Covenant for Superior Court Foreclosure
In the event of a delinquency in the payment of any installment of Special Taxes, the District is
authorized by the Act to order institution of an action in the Superior Courts of the State to foreclose any
lien therefor. In such action, the real property subject to the Special Taxes may be sold at a judicial
foreclosure sale. The ability of the District to foreclose the lien of delinquent unpaid Special Taxes may
be limited in certain instances and may require .prior consent of the property owner in the event the
property is owned by or in receivership of the Federal Deposit Insurance Corporation (the "FDIC") or
other similar federal agencies. Such judicial foreclosure proceedings are not mandatory. However, in the
Fiscal Agent Agreement, the District has covenanted for the benefit of the Owners of the Bonds that it (i)
will commence judicial foreclosure proceedings against all parcels owned by a property owner where the
aggregate delinquent Special Taxes on such parcels is greater than $25,000 by not later than 90 days
following the date on which such Special Taxes were due and (ii) will commence judicial foreclosure
proceedings against all parcels with delinquent Special Taxes not later than 90 days following the date on
which such Special Taxes were due where it receives Special Taxes in an amount which is less than 95%
of the total Special Taxes due and (iii) will diligently pursue such foreclosure proceedings until the
delinquent Special Taxes are paid.
There could be a default or a delay in payments to the owners of the Bonds pending prosecution
of foreclosure proceedings and receipt by the District of foreclosure sale proceeds, if any, and subsequent
transfer of those proceeds constituting Gross Taxes to the Special Tax Fund.
15
Under the Act, the City has the power to use a foreclosure judgment to purchase the subject
property by credit bid at foreclosure sale, in which event the City would have no obligation to pay such
credit bid for 24 months.
Value to Lien Ratio
The Bonds are secured by Net Taxes which may include amounts realized upon foreclosure sale
of delinquent parcels. Therefore, the ability of the District to meet debt service on the Bonds may depend
on the ability of delinquent parcels to generate sufficient proceeds upon foreclosure sale to pay delinquent
Special Taxes. The assessed value of the parcels within the District is $239,218,324, as of January 1,
2012, which is 14.07 times the aggregate principal amount of Bonds issued and 11.60' times the
aggregate total direct and overlapping debt within the District, including the Bonds. See "VALUE TO
LIEN RATIOS" and "DIRECT AND OVERLAPPING DEBT AND OTHER OBLIGATIONS"
herein.
No Obligation of the City Upon Delinquency
The City is under no obligation to transfer any funds of the City into the Special Tax Fund or any
other funds or accounts under the Fiscal Agent_Agreement for the payment of the principal of or interest
on the Bonds if a delinquency occurs in the payment of any Special Taxes.
Other Indebtedness and Obligations
The properties in the District are subject to other existing authorized indebtedness payable from
taxes and assessments that may be levied. Existing authorized indebtedness is shown in Table 3 under
"DIRECT AND OVERLAPPING DEBT AND OTHER OBLIGATIONS" herein.
Also shown under "DIRECT AND OVERLAPPING DEBT AND OTHER
OBLIGATIONS," in Table 4, are current ongoing taxes, assessments, fees and charges collected on the
Los Angeles County tax roll which apply to the properties in the District.
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
Summary of Rate and Method
The Rate and Method of Apportionment of Special Taxes (the "Rate and Method') is appended
hereto in its entirety as APPENDIX D. The following is only a summary of certain provisions of the Rate
and Method and does not purport to be complete. For a comprehensive understanding of the Rate and
Method, it must be read in its entirety.
The Rate and Method classifies properties within the District into three classifications: "Class 1
Property," "Class 2 Property," and "Exempt Property." Class 1 Property means all property within the
District which is not exempt from the Special Tax, except Assessor's Parcel 2861-058-024 or its
successors (which currently constitutes a 15.682 -acre portion of Assessor Parcel 2861-058-081), which is
classified as Class 2 Property. Exempt Property means property owned by the State of California or
federal or local public agencies.
Preliminary, subject to change.
In
The Rate and Method establishes a Maximum Special Tax for each Class I and Class 2 Property.
For fiscal year 2012-13, the Maximum Special Tax for each Class 1 Property is $32,916.51 per acre and
the Maximum Special Tax for the sole Class 2 Property is $254,645.94 per acre. The Maximum Special
Tax for each class of property shall continue to increase at an annual rate of 2%.
Pursuant to the Rate and Method, commencing with fiscal year 2002-03 and for each following
fiscal year, the City Council shall determine the Special Tax Requirement and levy the Special Tax as
follows until the amount of the levy equals the Special Tax Requirement:
First: The Special Tax shall be levied in equal percentages on each Class I Property and on
each Class 2 Property, up to the Maximum Special Tax for Class I Property and up to 14.85% of the
Maximum Special Tax on Class 2 Property (the "First Step"); and
Second: If additional Special Taxes are needed, the Special Tax shall be increased on Class 2
Property up to the Maximum Special Tax for Class 2 Property (the "Backup Step").
The Rate and Method provides that the Special Tax will be collected in the same manner and at
the same time as ad valorem property taxes, or alternatively, at the discretion of the City Council, the
District may separately bill and collect the Special Tax from each property owner of record.
The Rate and Method also includes provisions for, and the calculation processes for, the
prepayment of the Special Tax, in full or in part, on each property.
Projected Special Tax Coverage
Under the Rate and Method, the Maximum Special Tax Rates for the bond year ending
November 15, 2013 are $32,916.51 per acre for Class 1 property and $32,925.48 for First Step and
$221,720.46 for Backup Step per acre for Class 2 property. The amount of special tax that could be
levied under the First Step for all Class 1 and Class 2 Property for bond year 2013 is $1,512,180. An
additional $1,298,909 of special tax could be levied for bond year 2013 if the Backup Step was utilized.
This calculation of the Annual Special Tax levy is based on the parcel acreages shown in the following
table. The parcels and their related acreage within the District are shown in Table 1, as well as the
maximum and annual Special Tax levy for each parcel within the District for bond year ending November
15,2013.
17
TABLE
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
CLASSIFICATION OF PARCELS
& 2013 BOND YEAR MAXIMUM/ANNUAL SPECIAL TAX LEVY
CLASS 1 PROPERTY
2013 Bond Year Maximum Assigned Special Tax Rate: $32.916.50 per acre
Approx.
Number Maximum Annual Adjusted
Assessor's of Assigned Special Tax Special
Parcel No. Acreage Current Use Tenants Special Tax (4) Levy (4) Tax Levy (4)
2861-058-071
0.844
Mall Shops/Parking
$ 27,784.82
$ 22,931.31
2861-058-072
4.810
Mall Shops/Parking
158,328.40
130,671.29
2861-058-073h1
15.682
Parking
516,196.65
426,026.44
2861-058-076
1.184
Parking n/a
38,973.14
32,165.24
2861-058-077
6.700
Parking n/a
220,540.59
182,016.14
2861-058-08112l
7.520
Mall Shops
247,532.13
204,292.74
2861-058-084
2.050
Mall Shops/Parking
67,478.84
55,691.50
2861-058-085
0.328
Mall Shops Parking
10,796.61
8,910.64
Subtotal 39.118 $1,287,631.19 $1,062,705.30
CLASS 2 PROPERTY
2013 Bond Year Maximum Assigned Special Tax Rate
First Step: $32,925.48 per acre
Backup Step: $221.720.45 per acre
2861-058-081131 6.820 Mall Shops $ 224,551,.83 $ 185,326.68
TOTAL 45.938 $1,512,183.01 $1,248,031.98
I. Previously, multiple parcels were merged into Parcel 2861-058-073, some of which lie outside the boundaries of the District.
Total acreage for Parcel 2861-058-073 is 26.370. Only 15.682 acres have been assigned within the District and are subject to
Special Tax.
2. Previously, multiple parcels were merged into Parcel 2861-058-081, which currently consists of 7.52 acres of Class 1 property
and 6.82 acres of Class 2 property.
3. Only First Step is shown (14.85% of Backup Step Maximum Special Tax of $221,720.46 per acre). Backup Step has not been
necessary in past calculations.
4. For bond year ending November 15, 2013. Levy made in fiscal year 2012-13.
Sources. Willdnn Financial Services and Landowner.
The District's Special Tax Consultant and the Underwriters have prepared the following table
which displays projected debt service coverage assuming the levy of the Maximum Special Tax under the
First Step of the Rate and Method for each remaining bond year and further assuming deductions of the
Administrative Expense Requirement for each period.
18
TABLE 2
DIRECT AND OVERLAPPING DEBT AND OTHER OBLIGATIONS
Local agencies providing public services which have issued general obligation bond and other
types of indebtedness overlap the Community Facilities District. Direct and overlapping bonded
indebtedness is shown in the following table compiled by California Municipal Statistics, Inc. of Oakland,
California. The Community Facilities District has not independently verified the information in the table
and makes no representations as to completeness or accuracy.
W"
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
PROJECTED DEBT SERVICE COVERAGE
Estimated
Period
Maximum Special Tax
Administrative
Estimated
Bond Year
Debt
Ending
Revenues Under First Step
Expense
Net Tax
Debt
Service
November 15
of Rate And Method')
Requirement
Revenues (2)
Service (3)
Coverage
2013
$1,512,183
$ 9,916
$1,502,267
$1,109,094
1.35
2014
1,542,427
10,214
1,532,213
1,133,831
1.35
2015
1,573,275
10,520
1,562,755
1,156,981
1.35
2016
1,604,741
10,836
1,593,905
1,184,081
1.35
2017
1,636,836
11,161
1,625,675
1,210,281
1.34
2018
1,669,572
11,496
1,658,076
1,234,681
1.34
2019
1,702,964
11,841
1,691,123
1,262,281
1.34
2020
1,737,023
12,196
1,724, 827
1,282,881
1.34
2021
1,771,763
12,562
1,759,201
1,316,681
1.34
2022
1,807,199
12,938
1,794,261
1,338,081
1.34
2023
1,843,343
13,327
1,830,016
1,367,481
1.34
2024
1,880,210
13,726
1,866,484
1,396,231
1.34
2025
1,917,814
14,138
1,903,676
1,426,550
1.33
2026
1,956,170
14,562
1,941,608
1,458,150
1.33
2027
1,995,293
14,999
1,980,294
1,491,950
1.33
2028
2,035,199
15,449
2,019,750
1,522,750
1.33
2029
2,075,903
15,913
2,059,990
1,553,750
1.33
2030
2,117,421
16,390
2,101,031
1,585,250
1.33
2031
2,159,770
16,882
2,142,888
1,617,000
1.33
2032
2,202,965
17,388
2,185,577
1,653,750
1.32
1. Based on Maximum Special Tax Revenues available under the First Step of the Rate and Method.
Additional Special Tax
Revenues are available under the Backup Step
of the Rate and Method from Class 2
Property in the
amount of
approximately
$1,298,909 in the Bond Year ending November 15, 2013.
Such amount shall escalate annually
by 2.0%.
2. Based on Maximum Special Tax Revenues under
the First Step of the Rate and Method less
the estimated Administrative
Expense Requirement.
3. Preliminary,
subject to change.
Sources: Willdan
Financial Services and Underwriters.
DIRECT AND OVERLAPPING DEBT AND OTHER OBLIGATIONS
Local agencies providing public services which have issued general obligation bond and other
types of indebtedness overlap the Community Facilities District. Direct and overlapping bonded
indebtedness is shown in the following table compiled by California Municipal Statistics, Inc. of Oakland,
California. The Community Facilities District has not independently verified the information in the table
and makes no representations as to completeness or accuracy.
W"
TABLE 3
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
DIRECT AND OVERLAPPING DEBT STATEMENT
2012-13 Local Secured Assessed Valuation: $239,218,324
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable (1)
Los Angeles County Flood Control District Revenue Bonds 0.022%
Santa Clarita Community College District General Obligation Bonds 0.689
William S. Hart Union High School District General Obligation Bonds 0.689
Saugus Union School District General Obligation Bonds 1.678
City of Santa Clarita Community Facilities District No. 2002-1 100.
City of Santa Clarita Open Space and Parkland District Assessment District 0.266
Los Angeles County Regional Park and Open Space Assessment District 0.010
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT
Los Angeles County General Fund Obligations
0.025%
Los Angeles County Superintendent of Schools Certificates of Participation
0.025
Santa Clarita Community College District General Fund Obligations
0.696
William S. Hart Union High School District Certificates of Participation
0.696
Saugus Union School District Certificates of Participation
1.680
City of Santa Clarita Certificates of Participation
1.122
Los Angeles County Sanitation District No. 32 Authority
0.765
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
Less: Los Angeles County General Fund Obligations Supported by Landfill Revenues
TOTAL NET OVERLAPPING GENERAL FUND DEBT
GROSS COMBINED TOTAL DEBT
NET COMBINED TOTAL DEBT
Debt 9/1/12
$ 8,326
1,190,161
1,558,381
729,797
16,650,000 (2)
41,216
16.763
$20,194,644
$ 361,791
2,594
137,591
41,760
473,760
270,795
231330
$1,519,621
4.175
$1,515,446
$21,714,265 (3)
$21,710,090
(1) Based on 2011-12 ratios
(2) Excludes issue to be sold.
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and
non -bonded capital lease obligations.
Ratios to 2012-13 Assessed Valuation
Direct Debt ($16,650,000)..................................................................6.96%
Total Direct and Overlapping Tax and Assessment Debt.....................8.44%
Gross Combined Total Debt.................................................................9.08%
Net Combined Total Debt....................................................................9.08%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/12: $0
Source.: California Municipal Statistics, Inc.
20
The Total Direct and Overlapping Debt shown in Table 3 above is $20,194,644 which includes
the $16,650,000 outstanding principal amount of the 2002 Bonds to be redeemed. Substituting the
principal amount of the Bonds for the 2002 Bonds to be redeemed would result in a Direct and
Overlapping Debt of $22,044,644. The resulting all inclusive value to debt ratio is 11.60 to 1.
The following table illustrates the line items of taxes, assessments, charges and fees collected on
the Los Angeles County tax roll against Assessor's Parcel No. 2861-058-081 for fiscal year 2011-12. The
County's assessed value for this parcel in fiscal year 2011-12 was $166,596,477 and for 2012-13 is
$170,984,405.
TABLE 4
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
REPRESENTATIVE FISCAL YEAR 2011-12 TAX BILLO
ASSESSOR'S PARCEL NO. 2861-058-081
AGENCY RATE AMOUNT
General Tax Lew
All Agencies 1.000000 $1,665,964.77
Voted Indebtedness
Special Water .070600 117,617.11
Community College .022987 38,295.53
High Schools .032320 53,843.96
Elementary Schools .038479 64,104.66
Direct Assessments
Los Angeles County Vector Control
$ 7.25
Los Angeles County Flood Control District
6,144.59
Los Angeles County Consolidated Sewer Maintenance
1,215.00
Los Angeles County Sanitation District No. 32
127,748.70
Trauma/Emergency Services
23,386.78
Los Angeles County Regional Park and Open Space District
2,988.43
City of Santa Clarita Comm. Facilities District 2002-1
364,491.95
Lighting District Annexation #1
9,841.24
City -of Santa Clarita Open Space Preservation District
1,247.58
City of Santa Clarita NPDES (Storm Water Utility)
4,551.12
18 -Town Center/Trney
15,858.03
2008 Medians
5,152.93
Los Angeles County Fire Department
4,976.43
Total Taxes Due
2.507.436.09
.Source. Los Angeles County Treasurer and Tax Collector
Preliminary, subject to change.
21
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23
THE DISTRICT
Location
The District is located thirty miles north of Los Angeles, in the community of Valencia within the
City. The Westfield Valencia Town Center (the "Valencia Town Center"), a super -regional shopping
center, is a two-level regional shopping center bordered by Magic Mountain Parkway, McBean Parkway
and Valencia Boulevard. Each of these major regional arteries exits directly from Interstate 5, and all
three converge upon the site of the Valencia Town Center, which is approximately one mile east of
Interstate 5. The Valencia Town Center is connected to nearby residential neighborhoods by Valencia's
paseo walkway system. Paseos include walkways and bridges which extend over the surrounding
thoroughfares to allow residents to avoid traffic and street crossings. These paseos enable nearby
residents to access the Valencia Town Center easily by walking or biking.
Status of Development
The following information regarding the status of development of the Valencia Town Center has
been provided by the Landowner. This information has been included because it is considered relevant to
an informed evaluation of the Bonds and the District. The City and the District make no representation
as to the accuracy or completeness of such information, nor have the City and the District undertaken to
veri or update such information, although they have reviewed such information in conformity with their
obligations under federal securities laws. The following information should not be construed to suggest
that the Bonds, or the Special Taxes that will be used to pay the Bonds, are recourse obligations of the
Landowner.
The District contains 45.938 acres of taxable land subject to the Special Tax. The District does
not include all of the Valencia Town Center, which was originally developed in 1992 and expanded in
1998 and again in 2010. The Valencia Town Center encompasses approximately 75 acres. Importantly,
the District does not include the parcels leased to the three anchor tenants in the Valencia Town Center on
approximately 8 acres, or approximately acres of land to the north with parcels currently leased to
Edwards Theaters and several restaurants and approximately acres to the south with parcels
currently leased to various shops and restaurants. The three anchor tenants — all of whom have occupied
their respective parcels since 1992 — are Macy's (formerly The May Company), Sears and J. C. Penney.
[The eight parcels within the District include 342,260 square feet of gross leasable area,
containing approximately retail stores, and _ restaurants or retail food establishments and
approximately and parking spaces.]
The Valencia Town Center combines three integrated areas: an enclosed retail zone, an outdoor
district, and an entertainment and dining promenade. In November 2010, the Valencia Town Center held
the grand opening of the Shops at the Patios located on parcels within the District. This $130 million
investment included new open-air shops integrating forty (40) boutiques and restaurants within an
intimate upscale setting. The Shops at the Patios contains green landscapes, outdoor verandas, fountains,
koi ponds, fire pits, organic materials, natural stone, and sleek seating. Selected retailers added in the
$130 million renovation include [Abercrombie & Fitch, Edwards Theatres, Chico's, Guess, Hollister Co.,
J.Jill, Pottery Barn, Talbot's and White House/Black Market].
24
The Valencia Town Center currently has approximately 1,160,000 sq. R. of retail space, with over
220 stores and restaurants. In addition to the three anchor stores, JC Penney, Sears and Macy's, the
Valencia Town Center contains specialty shops including Bath & Body Works, The Disney Store,
Talbots, Ann Taylor, Brookstone, Pottery Barn and many more. Restaurants include Johnny Rockets,
Maru Sushi, Red Robin, Souplantation, Rosie's BBQ & Grillery, Sisley Italian Kitchen and TGI Friday's.
The Edwards Valencia Grand Palace Stadium Theatres are also a part of the Valencia Town Center.
25
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24201 West Ualencia',Bo'ulevarcJ
�Valenefa, California,
TABLE 6
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
LESSEES OF 5,000 OR MORE SQUARE FEET
(1) Lease renewal to 1/31/15 currently being negotiated
(2) Lease renewal to 1/31/14 currently being negotiated
Source: Landowner.
27
Leased Space
Lease
Lessee
(Square Footage)
Expiration Date
The Gap
13,532
01/31/14
Pottery Barn
10,196
01/31/17
Wokcano
9,108
01/31/21
Forever 21
8,887
01/31/19
Victoria's Secret
8,520
01/31/15
Banana Republic
8,218
01/31/13(')
Express and Express Men
8,000
01/31/14
Lucille's Smokehouse Bar-B-Que
7,686
01/31/28
Red Robin Restaurant
7,608
05/31/16
TGI Fridays
7,596
11/30/13
The Lazy Dog Cafe
7,500
01/31/20
Abercrombie & Fitch
7,380
07/31/13
Apple
6,953
01/31/22
New York & Company
6,700
01/31/15
Lane Bryant
61453
01/31/16
Charlotte Russe
6,331
01/31/14
Hollister
6,069
01/31/13
Williams Sonoma
6,000
01/31/23
Sisley Italian Kitchen
5,567
01/31/14
Foreign Exchange
5,504
01/31/21
Ann Taylor Loft
5,500
01/31/15
American Eagle Outfitters
5,443
07/31/12 (2)
Sephora
5,331
01/31/21
The Buckle
5,238
01/31/17
Armed Forces Recruitment
5,147
12/03/16
Guess?
5,030
10/31/13
(1) Lease renewal to 1/31/15 currently being negotiated
(2) Lease renewal to 1/31/14 currently being negotiated
Source: Landowner.
27
Assessed Values
General. For all property in the District, the County -determined assessed valuation is provided
as an estimate for purposes of valuation. The County assessed valuation is derived from the Fiscal Year
2012/13 County Assessor's assessed valuation of land and improvements. The County's assessed
valuation of land and improvements is based on the base year assessed value (which may or may not be
reflective of the fair market value of the land and improvements) increased by a maximum of 2% a year
each year thereafter, as allowed under Article XIIIA of the Constitution of the State of California. Values
may also be decreased if inflation is negative (for example, the inflation factor for Fiscal Year 2010/11
was -0.237%). See "SPECIAL RISK FACTORS - Property Values - Article XIIIA" and "- Reduction in
Inflationary Rate." Therefore, the assessor's value typically does not accurately reflect the fair market
value of the land and improvements which may be higher or lower than the County Assessor's value.
Further, due to timing, the Assessor's value may not reflect the most recent sale price of a parcel. The fair
market value can only be established through the sale of the property or an appraisal of the property
within the District. The City has not undertaken to obtain an appraisal of the property within the District.
Assessed Value Base Year Appeals and Proposition 8 Reductions. Further, property owners in
the District may appeal the County Assessor's value, and if successful, such appeals may result in a
lowering of assessed values in future years. Proposition 8 provides for the assessment of real property at
the lesser of its originally determined (base year) full cash value compounded annually by the inflation
factor, or its full cash value as of the lien date, taking into account reductions in value due to damage,
destruction, obsolescence or other factors causing a decline in market value. Reductions based on
Proposition 8 do not establish new base year values, and the property may be reassessed as of the
following lien date up to the lower of the then -current fair market value or the factored base year value.
The property owner with the District has, from time -to -time, appealed the property tax values
assigned to the property. As of August 2012, the District is aware of two base year appeals that were not
withdrawn or denied since the formation of the District. [In 2009, the assessed value was reduced from
$145,300,000 to $137,560,000 for a base year appeal related to property rights acquired in 2004. In 2010,
the assessed value was reduced from $221,991,630 to $203,507,630 for a base year appeal related to
property rights acquired in 2005.]
Additionally, the District is aware that in 2011, the Landowner filed Proposition 8 appeals on all
eight parcels within the District because the Landowner estimated that the market value as of the
January 1, 2011 lien date was lower than the assessed value. Final resolution is expected to occur in
2013. The Landowner anticipates filing Proposition 8 appeals for 2012 on all eight parcels within the
District because the Landowner estimates that the market value as of the January 1, 2012 lien date is
lower than the assessed value. Final resolution is expected to occur in 2014.
[Note: backup material shows 2 parcels appealed and withdrawn for 2003 in 2009, 8 denials and
2 grants for reduction for 2004 occurring in 2010 (-$1,980,000 and -$13,770,000), and all parcels
appealed and being withdrawn for 2005 through 2009 [occurring in 2008 (2005), in 2010 (2006), in 2010
(2007) in hoth 2009 and 2010 (2008) and in 2010 (2009]. No appeals were filed for 2010. Prop 8
appeals were filed on all parcels for 2011 and are pending].
While the assessed value may be reduced by the County Assessor if appeals are successful or as a
result of Proposition 8, the assessed value has no bearing on the calculation of the Special Taxes, only on
the calculation of ad valorem taxes. The District cannot guarantee that reductions in assessed value will
not occur in future years. Investors must recognize the uncertainties with respect to the assessed values of
the parcels within the District, since the Bonds are secured by the Special Taxes levied on such parcels.
28
See "SPECIAL RISK FACTORS — Factors Affecting Parcel Values and Aggregate Values." Table
No. 7 presents the historical assessed value of the District.
TABLE 7
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
HISTORICAL ASSESSED VALUE
Fiscal Year
Land
Improvements
Total
2008-09
$177,728,328
2009-10
193,163,860
2010-11
58,840,902
150,164,629
209,005,531
2011-12
52,385,188
181,107,295
233,492,483
2012-13
53,432,888
185,785,436
239,218,324
Sources: Los Angeles County Assessor
Value to Lien Ratios
According to the County Assessor's Office, the aggregate assessed valuation of land and
improvements of property within the District is $239,218,324 for fiscal year 2012-13. Based on a
principal amount of Bonds of $17,000,000`, the aggregate value -to -lien ratio based on District
indebtedness is 14.07 to 1. The ratio including overlapping assessment and other liens on property in the
District is 11.60`. See "Direct and Overlapping Debt" herein.
Delinquencies
The District reports no delinquencies for any parcels within the District since the formation of the
District. The District has covenanted to commence foreclosure proceedings when Special Tax
delinquencies exceed prescribed limitations (see "SECURITY FOR THE BONDS — Covenant for
Superior Court Foreclosure"). No later than December 1 each year, the District will commence
foreclosure proceedings against any parcel with a delinquency exceeding $25,000. In 2009, the District
switched collection methods from direct handbill procedure to the County tax roll process. Bond
proceeds will be used to fund the November 15, 2012, debt service payment on the 2002 Bonds to correct
a levy process error that stemmed from the use of a fiscal year instead of a bond year basis for calculating
the annual Special Tax. Commencing with the current levy, annual Special Taxes are calculated using a
bond year basis.
Preliminary, subject to change.
29
THE LANDOWNER
The following information regarding ownership ofproperty within the District has been provided
by the Landowner. This information has been included because it is considered relevant to an informed
evaluation of the Bonds and development in the District. No representation is made by the City or the
District as to the accuracy or adequacy of such information. The following information should not be
construed to suggest that the Bonds, or the Special Taxes that will be used to pay the Bonds, are recourse
obligations of the Landowner.
The Landowner
Valencia Town Center Venture, LP, a Delaware limited partnership (the "Landowner"), was and
continues to be the developer of the Valencia Town Center, a super -regional shopping center (the
"Valencia Town Center"). The Landowner's predecessor -in -interest was formed on January 1, 1991, to
develop, construct, and operate the Valencia Town Center. The original managing general partner of the
Landowner's predecessor -in -interest was Newhall Land and Farming Company ("Newhall"), a public
company specializing in the development of the master -planned community of Valencia. The current
landowner is an affiliate of Westfield America, Inc., Urban Shopping Centers LP, and LNR CPI VTC
Mall, LLC. The sole owner of the parcels subject to Special Taxes is the Landowner.
The Landowner has an agreement with Westfield Property Management LLC, to manage and
lease the Valencia Town Center. The Landowner spent approximately $4.2 million and $3.3 million for
the years ended December 31, 2011 and 2010, respectively, for expansion, redevelopment and related
work on the Valencia Town Center. Additionally, the Landowner spent $7.5 million and $660,000 for
constriction related costs for the years ended December 31, 2011 and 2010, respectively.
According to the Landowner's latest Annual Report (the "Annual Report") for the year ended
December 31, 2011, the Landowner's mortgage and other debt totals approximately $235 million,
including the outstanding 2002 Bonds, and its net investment in real estate totals approximately $287
million.
The Landowner is part of the Westfield Group, which has interests in and operates one of the
world's largest shopping center portfolios. The global portfolio has 111 high quality regional shopping
centers in Australia, New Zealand, the United States, the United Kingdom and Brazil valued at A$61
billion, with approximately 23,400 retailers in 10 million square meters of retail space. Westfield first
entered the U.S. in 1977 when it purchased a single shopping center on the east coast. Since then, the
company has expanded its U.S. presence through a series of transactions including single -center and
portfolio acquisitions and center redevelopments. Westfield has interests in fifty-five (55) centers in
major metropolitan areas across the U.S. Westfield has multi -center clusters of branded regional and
super -regional malls in key markets such as northern California, Chicago, southern Florida, Los Angeles,
New Jersey, New York, San Diego and suburban Washington, D.C. The U.S. shopping center portfolio
encompasses approximately 63 million square feet of retail space in 12 states, which it leases to nearly
9,000 specialty retailers. Westfield is a vertically integrated shopping center group. It manages all aspects
of shopping center development, from design and construction through to leasing, management and
marketing. Westfield Group is listed on the Australian Securities Exchange (ASX Code: WDC).
30
SPECIAL RISK FACTORS
This Special Risk Factors section of the Official Statement does not summarize the Official
Statement. Rather it supplements other sections in order to provide the Bondowners with a practical
perspective on the material risks of the investment. Necessarily, the discussion of risks is neither
comprehensive nor definitive. It is based largely upon typical experience with special tax bonds issued in
other situations pursuant to the Mello -Roos Community Facilities Act of 1982, as amended.
Levy and Collection of Special Taxes
Debt service on the Bonds is payable from the proceeds of the Special Tax levied annually and
collected at the same time and in the same manner as property taxes, or, alternatively at the option of the
City Council, collected by separate billings to each owner of record of properties subject to the Special
Taxes. The annual levy is subject to a maximum tax rate according to the Rate and Method. The levy
cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy
and collection of the Special Taxes, together with other available funds, will not be sufficient to pay debt
service on the Bonds. Other funds, which if available may reduce the amount required to be levied at a
maximum tax rate, include funds derived from the payment of delinquent Special Taxes and funds
derived from the tax sale or foreclosure and sale of parcels which are delinquent in payment of Special
Taxes.
The Special Tax levied in any particular tax year on a taxed parcel is based upon the debt service
on the Bonds to be paid from the levy, Reserve Account replenishment requirements, if any, and
administrative expenses related to the Special Tax and to the Bonds and to the application of the Rate and
Method. In addition to annual variations of the debt service on the Bonds and differing administrative
expenses, the following are some of the factors which might cause the Special Tax on any particular
parcel to vary from the expected Special Tax:
(a) reduction in the number of taxed parcels, for such reasons as acquisition of taxed parcels
by a government and failure of the government to pay the Special Tax upon a claim of exemption,
thereby resulting in an increased tax burden on the remaining parcels; and
(b) failure of owners of taxed parcels to pay the Special Tax and delays in the collection of or
inability to collect the tax by tax sale or foreclosure and sale of the delinquent parcels, thereby
resulting in an increased tax burden on the remaining parcels.
Depletion of Reserve Account
A Reserve Account has been established from proceeds of the sale of the Bonds in the amount of
the Reserve Requirement. Moneys in the Reserve Account may be used to pay debt service on the Bonds
in the event the proceeds of the levy and collection of the Special Tax are insufficient. If funds in the
Reserve Account are used to pay debt service, the funds can be replenished from the proceeds of the levy
and collection of the Special Tax that are in excess of the amount required for debt service. However, no
replenishment from the proceeds of a Special Tax levy can occur as long as the proceeds of the annual
Special Tax levied at maximum rates, together with other available funds, remain insufficient to pay debt
service. Thus, it is possible that the Reserve Account will be depleted by its use to pay debt service and
will not be replenished by the levy of a Special Tax.
The Reserve Account may be invested, and to the extent that retention of such earnings will not
result in the interest on the Bonds becoming subject to federal income taxation, the investment earnings
may be deposited in the Reserve Account, thereby increasing the balance. Nevertheless, there is no
31
assurance that the amount in the Reserve Account will, at any particular time, be sufficient to pay debt
service on the Bonds. Father, there is no assurance that the Reserve Account will be fully replenished.
Foreclosure and Sale Proceedings
The District is obligated under certain conditions to institute foreclosure and sale proceedings
against parcels delinquent in payment of the Special Tax, and may do so in other circumstances even if
not so obligated. Foreclosure proceedings are instituted by the bringing of an action in the Superior Court
of the county in which the parcel lies, naming the owner and other interested persons as defendants.
Upon judgment of foreclosure, the parcel may be offered for sale at a minimum price. As provided in the
Act, the minimum price will be sufficient to pay the delinquent Special Tax for the collection of which
the foreclosure action is instituted and interest, penalties, costs, fees and other charges in the judgment.
For a summary of this and related provisions of the Fiscal Agent Agreement with respect to foreclosure
proceedings, see "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure."
Failure to receive proceeds from the foreclosure and sale of a particular parcel sufficient to pay or
reimburse the delinquent Special Tax may result in an ultimate loss to owners of Bonds.
Concentration of Property Ownership
All of the land within the District subject to the Special Tax, as measured by the application of
the Maximum Special Tax, is currently owned by Valencia Town Center Venture, LP. Until and unless
future land transfers occur, the timely payment of the Bonds depends on the willingness and ability of the
one owner to pay the Special Tax when due. This lack of diversity in the obligation to pay Special Taxes
presents risk to Bondowners. Failure of the owners of the property within the District to pay the annual
Special Taxes when due could result in the rapid and total depletion of the Reserve Account prior to
replenishment from the resale of property upon a foreclosure or otherwise. In that event, there could be a
default in payments of the principal of and interest on the Bonds. See "THE RATE AND METHOD
OF APPORTIONMENT OF SPECIAL TAX" herein.
Neither the Landowner nor any tenant of the Valencia Town Center has any obligation to (i) pay
or cause the payment of the principal of or interest or redemption premium on the Bonds, or (ii) provide
any continuing disclosure information other than as expressly set forth in the Continuing Disclosure
Certificate to be executed by the Landowner in connection with the issuance of the Bonds. Failure of one
or more tenants in the Valencia Town Center to pay their respective lease payments when due could
adversely affect the Landowner's ability or willingness to pay the annual Special Taxes when due, which
could result in a default in the payment of the principal of or interest on the Bonds as described in the
preceding paragraph.
Factors Affecting Parcel Values and Aggregate Values
The value of the taxable land within the District is a critical factor in determining the investment
quality of the Bonds. The section of this Official Statement entitled "VALUE TO LIEN RATIOS"
discusses the assessed value of the taxed parcels. If there is a default in the payment of the Special Tax,
the District's only remedy is to commence foreclosure proceedings on the taxable property in an attempt
to obtain funds to pay the delinquent Special Tax. Further, reductions in assessed value indicating a
decline in market value (as described below) may affect the willingness or ability of taxpayers to pay their
Special Tax payment prior to delinquency.
32
Assessed Value. The District has relied on the assessed valuations of the County Assessor used
for the purposes of general taxes for the valuations for all of the property within the District presented in
this Official Statement.
Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California
voters approved Proposition 13 which added Article XIIIA to the California Constitution. This
amendment imposed certain limitations on taxes that may be levied against real property to 1% of the full
cash value of the property, adjusted annually for inflation at a rate not exceeding 2% annually. Full cash
value is determined as of the 1975/76 assessment year, upon change in ownership (acquisition) or when
newly constructed. Article XIIIA has subsequently been amended to permit reduction of the "full cash
value" base in the event of declining property values caused by substantial damage, destruction or other
factors, and to provide that there would be no increase in the "full cash value" base in the event of
reconstruction of property damaged or destroyed in a disaster and in other special circumstances.
Reduction in In ationary Rate. The annual inflationary adjustment, while limited to 2%, is
determined annually and may not exceed the percentage change in the California Consumer Price Index
(CCPI). Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2%
limitation several times and was a negative adjustment in Fiscal Year 2010/11.
Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real
property at the lesser of its originally determined (base year) full cash value compounded annually by the
inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to
damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based
on Proposition 8 do not establish new base year values, and the property may be reassessed as of the
following lien date up to the lower of the then -current fair market value or the factored base year value.
While the assessed value may be reduced by the County Assessor as a result of Proposition 8, the
assessed value has no bearing on the calculation of the Special Taxes, only on the calculation of ad
valorem taxes. The District cannot guarantee that reductions in assessed value will not occur in future
years. Currently all eight parcels have appeals filed for 2011 and are expected to have appeals filed for
2012.
Value -to -Lien. Value -to -lien ratios have traditionally been used in land -secured bond issues as a
measure of the "collateral' supporting the willingness of property owners to pay their special taxes and
assessments (and, in effect, their general property taxes as well). The value -to -lien ratio is mathematically
a fraction, the numerator of which is the value of the property (usually a market value as determined by an
appraiser) and the denominator of which is the "lien" of the assessments or special taxes. A value -to -lien
ratio should not, however, be viewed as a guarantee of credit -worthiness. Land values are more volatile in
the early stages of a development, and are especially sensitive to economic cycles. A downturn of the
economy may depress land values and hence the value -to -lien ratios, by increasing risk to investors and
lenders. Further, the value -to -lien ratio cited for a bond issue is an average, and does not include private
debt, such as a mortgage. Individual parcels in a community facilities district may fall above or below the
average, sometimes even below a 1:1 ratio. (With a ratio below 1:1, the land is worth less than the debt on
it). Although judicial foreclosure proceedings can be initiated rapidly, the process can take several years
to complete, and the bankruptcy courts may impede the foreclosure action. Finally, local agencies may
form overlapping community facilities districts or assessment districts. They typically do not coordinate
their bond issuances. Debt issuance by another entity can dilute value -to -lien ratios.
Prospective purchasers of the Bonds should not assume that the land could be sold for its original
sales price or its fair market value at a foreclosure sale for delinquent Special Taxes. In particular, the
values of individual properties in the District will vary in some cases significantly. The actual value of the
land is subject to future events. The future value of the land can be expected to fluctuate due to many
33
different, not fully predictable, real estate related investment risk factors, including, but not limited to:
general tax law changes related to real estate, changes in competition, general area employment base
changes, population changes, changes in real estate related interest rates affecting general purchasing
power, advertising, changes in allowed zoning uses and density, natural disasters such as floods,
earthquakes, fires and landslides, and similar factors.
Geologic,Topographic and Climatic Conditions. Other additional factors which may affect the
value of the taxed parcels include, without limitation:
(a) geologic conditions such as earthquakes;
(b) topographic conditions such as earth movements and floods; and
(c) climatic conditions such as droughts and destructive storms.
Some of these factors were taken into account, to a limited extent, in the designs of the
improvements financed by the 1992 Bonds and of other infrastructure and public improvements the
designs of which were approved by the City.
The City, in common with much of "coastal" California, lies within Seismic Zone 4 as specified
in the Uniform Building Code which, as modified, is incorporated into the California Building Code,
Title 24 of the California Code of Regulations. Seismic Zone 4 is a high risk area.
The Uniform Building Code as modified and incorporated into the California Building Code
requires that some of these factors be taken into account, to a limited extent, in the design of private
improvements to the taxed parcels. Some of these factors may be taken into account, to a limited extent,
in the design of other infrastructure and public improvements neither designed nor subject to design
approval by the City.
Changes in Law. Other events which may affect the value of taxed parcels include changes in the
law or application of the law. Such changes may include, without limitation, the following:
(a) local growth control measures;
(b) local utility connection moratoriums; or
(c) local application of statewide tax and governmental spending limit measures.
Other Possible Claims Upon the Value of a Taxed Parcel
While the Special Tax is secured by the taxed parcels, the security only extends to the value
thereof that is not subject to priority and parity liens and similar claims.
A table in the section herein captioned "DIRECT AND OVERLAPPING DEBT AND
OTHER OBLIGATIONS" displays the presently outstanding amount of governmental obligations (with
stated exclusions) the tax or assessment for which is or may become an obligation of one or more of the
taxed parcels. Additional amounts of general obligation bonds may be issued, the tax for which, if and
when issued, may become an obligation of one or more of the parcels within the District. Further, other
governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or
charge for which may become an obligation of one or more of such parcels and may be secured by a lien
on a parity with the lien of the Special Tax securing the Bonds.
34
In general, as long as the Special Tax is collected on the County tax roll, the Special Tax and all
other taxes, assessments and charges also collected on the tax roll are on a parity. Questions of priority
become significant when collection of one or more of the taxes, assessments or charges is sought by some
other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of
Special Taxes securing the Bonds, the Special Tax will be subordinate only to existing prior governmental
liens, if any. Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be
on a parity with the other taxes, assessments and charges. Although the Special Taxes will generally have
priority over non-governmental liens on a taxed parcel, regardless of whether the nongovernmental liens
were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of
bankruptcy.
While governmental taxes, assessments and charges are a common claim against the value of a
parcel within the District, other less common claims may be relevant. One of the most serious in terms of
the potential reduction in the value that may be realized to pay the Special Tax is a claim with regard to a
hazardous substance. See "Hazardous Substances" herein.
Economic Uncertainty
The Bonds are being issued at a time of economic uncertainty and volatility. According to the
California Employment Development Department, unemployment rates have dropped slightly to
approximately 7.3% for the City through July 2012 (not seasonally adjusted), as compared to 7.6% for
calendar year 2011, and 11.9% through July 2012 (not seasonally adjusted) for Los Angeles County as
compared to 12.3% for calendar year 2011. The District cannot predict how long these conditions will last
or whether to what extent they may affect the ability of property owners to pay Special Taxes or the
marketability of the Bonds.
Hazardous Substances
While governmental taxes, assessments, and charges are a common claim against the value of a
taxed parcel, other less common claims may be relevant. One of the most serious in terms of the potential
reduction in the value that may be realized to pay the Special Tax is a claim with regard to hazardous
substances. In general, the owners and operators of parcels within the District may be required by law to
remedy conditions of the parcels related to the releases or threatened releases of hazardous substances.
The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known and widely
applicable of these laws, but California laws with regard to hazardous substances are also stringent and
similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substances
condition of a property whether or not the owner (or operator) has anything to do with creating or
handling the hazardous substance. The effect, therefore, should any parcel within the District be affected
by a hazardous substance, would be to reduce the marketability and value of the parcel by the costs of
remedying the condition, because the owner is obligated to remedy the condition. Further, such liabilities
may arise not simply from the existence of a hazardous substance but from the method of handling it. All
of these possibilities could significantly affect the financial and legal ability of a property owner with
respect to the affected parcel or other parcels, as well as the value of the property that is realizable upon a
delinquency and foreclosure.
Bankruptcy Proceedings
The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent
unpaid tax may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or
by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be
35
delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal
opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the
application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished,
bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure
proceedings and could result in the possibility of delinquent Special Tax installments not being paid in
full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and
interest on the Bonds. As a result, sufficient moneys would not be available in the Reserve Account to
make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of
and interest on the Bonds on a timely basis.
In addition, potential investors should be aware that judicial foreclosure proceedings are not
summary remedies and can be subject to significant procedural and other delays caused by crowded court
calendars and other factors beyond control of the District or the City. Potential investors should assume
that, under current conditions, it is estimated that a judicial foreclosure of the lien of Special Taxes will
take up to two or three years from initiation to the lien foreclosure sale. At a Special Tax lien foreclosure
sale, each parcel will be sold for not less than the "minimum bid amount" which is equal to the sum of all
delinquent Special Tax installments, penalties and interest thereon, costs of collection (including
reasonable attorney's fees), post judgment interest and costs of sale. Each parcel is sold at foreclosure for
the amounts secured by the Special Tax lien on such parcel and multiple parcels may not be aggregated in
a single "bulk" foreclosure sale. If any parcel fails to obtain a "minimum bid," the District may, but is not
obligated to, seek superior court approval to sell such parcel at an amount less than the minimum bid.
Such superior court approval requires the consent of the owners of 75% of the aggregate principal amount
of the Outstanding Bonds.
Delays and uncertainties in the Special Tax lien foreclosure process create significant risks for
Bondholders. High rates of special tax payment delinquencies which continue during the pendency of
protracted Special Tax lien foreclosure proceedings, could result in the rapid, total depletion of the
Reserve Account prior to replenishment from the resale of property upon foreclosure. In that event, there
could be a default in payment of the principal of, and interest on, the Bonds.
Payment of Special Tax Not a Personal Obligation of the Owners
The owners of taxed parcels are not personally obligated to pay the Special Tax. Rather, the
Special Tax is an obligation only of the taxed parcels. If the value of a taxed parcel is not sufficient to
fully secure the Special Tax, the City has no recourse against the owner of the taxed parcel under the laws
by which the Special Tax has been levied and the Bonds have been issued.
No City Obligation to Pay Debt Service
The City has no obligation to pay debt service on the Bonds in the event Special Tax collections
are insufficient or delinquent, nor is the City obligated to advance funds to pay such debt service. The
resources of the District for the payment of debt service on the Special Tax Bonds are limited to available
Net Taxes and funds pledged under the Fiscal Agent Agreement.
Owners of Bonds may not rely upon the District or the City to advance funds to pay debt service
on the Bonds if proceeds of the Special Tax levied at the maximum rate, collection of delinquent Special
Taxes, and tax sale and foreclosure and sale proceedings of delinquent parcels do not raise sufficient
funds.
36
No Acceleration Provision
There is no provision allowing for the acceleration of the Bonds in the event of a payment default
or other default under the terms of the Bonds or the Fiscal Agent Agreement.
Limitations on Remedies
Remedies available to the Owners may be limited by a variety of factors and may be inadequate
to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status
of the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Fiscal
Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally
the enforcement of creditor's rights, by equitable principles and by the exercise of judicial discretion.
Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant or duty
under the Fiscal Agent Agreement. The lack of availability of certain remedies or the limitation of
remedies may entail risks of delay, limitation or modification of the rights of the Owners.
Enforceability of the rights and remedies of the Owners, and the obligations incurred by the
District, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor's rights
generally, now or hereafter in effect, equity principles which may limit the specific enforcement under
State law of certain remedies, the exercise by the United States of America of the powers delegated to it
by the Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police
powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a
significant and legitimate public purpose and the limitations on remedies against public entities in the
State. See "SPECIAL RISK FACTORS — Bankruptcy Proceedings."
District Formation
California voters approved an amendment ("Article XIIIA") to the California Constitution on
June 6, 1978. Section 4 of Article XIIIA, requires a vote of two-thirds of the qualified electorate to
impose "special taxes," or any additional ad valorem, sales or transaction taxes on real property. At an
election held pursuant to the Act, more than two-thirds of the qualified electors within the District,
consisting of the landowners within the boundaries of the District, authorized the District to incur bonded
indebtedness to finance facilities and approved the Rate and Method. The Supreme Court of the State of
California has not yet decided whether landowner elections (as opposed to resident elections) satisfy
requirements of Section 4 of Article X111A, nor has the Supreme Court decided whether the special taxes
of a community facilities district constitute a "special tax" for purposes of Article XIIIA. Section 53341
of the Act requires that any action or proceeding to attack, review, set aside, void or annul the levy of a
special tax or an increase in a special tax pursuant to the Act shall be commenced within 30 days after the
special tax is approved by the voters. No such action has been filed with respect to the Special Taxes.
Proposition 218
Under the California Constitution, the power of initiative is reserved to the voters for the purpose
of enacting statutes and constitutional amendments. Any such initiative may affect the collection of fees,
taxes and other types of revenue by local agencies such as the District. Subject to overriding federal
constitutional principles, such collection may be materially and adversely affected by voter -approved
initiatives, possibly to the extent of creating cash flow problems in the payment of outstanding obligations
such as the Bonds.
37
Proposition 218 - Voter Approval for Local Government Taxes - Limitation on Fees,
Assessments, and Charges - Initiative Constitutional Amendment ("Proposition 218"), added Articles
XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations
on the imposition of new or increased taxes, assessments and property -related fees and charges.
Proposition 218 states that all taxes imposed by local governments shall be deemed to be either general
taxes or special taxes. No local government may impose, extend or increase any general tax unless and
until such tax is submitted to the electorate and approved by a majority vote. No local government may
impose, extend or increase any special tax unless and until such tax is submitted to the electorate and
approved by a two-thirds vote. Proposition 218 also provides that no tax, assessment, fee or charge shall
be assessed by any agency upon any parcel of property or upon any person as an incident of property
ownership except: (i) the ad valorem property tax imposed pursuant to Article XIII and Article XIIIA of
the California Constitution, (ii) any special tax receiving a two-thirds vote pursuant to the California
Constitution, and (iii) assessments, fees and charges for property related services as provided in
Proposition 218. Proposition 218 then goes on to add voter requirements for assessments and fees and
charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and
refuse collection services. In addition, all assessments and fees and charges imposed as an incident of
property ownership, including sewer, water, and refuse collection services, are subjected to various
additional procedures, such as hearings and stricter and more individualized benefit requirements and
findings.
Proposition 218 also provides that the constitutional initiative power shall not be prohibited or
otherwise limited in matters of reducing or repealing any local taxes, assessments, fees and charges. This
provision with respect to the initiative power is not limited to taxes imposed on or after November 6,
1996, the effective date of Proposition 218. However, on July 1, 1997, a bill was signed into law by the
Governor of the State enacting Government Code 5854, which states:
Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5,
1996 general election, shall not be construed to mean that any owner or beneficial owner
of a�municipal security, purchased before or after that date, assumes the risk of, or in any
way consents to, any action by initiative measure that constitutes an impairment of
contractual rights protection by Section 10 of Article I of the United States Constitution.
As a result, although no court has yet considered the relationship between Section 5854 and
Article XIIIC, it is likely that Proposition 218 has not conferred on the voters the power to repeal or
reduce the Special Taxes if such reduction would interfere with the timely retirement of the Bonds.
The Special Taxes and the issuance of the Bonds were each authorized by not less than a two-
thirds vote of the landowners within the District who constituted the qualified electors of the District at
the time of such voted authorization. The Special Taxes levied against the parcels within the District and
the authority to issue bonds were authorized subsequent to the passage of Proposition 218.
The District has covenanted in the Indenture that it will not initiate proceedings under the Act to
modify the Rate and Method if such modification would adversely affect the security for the Bonds. If an
initiative is adopted that purports to modify the Rate and Method in a manner that would adversely affect
the security for the Bonds, the District will, to the extent permitted by law, commence and pursue
reasonable legal actions to prevent the modification of the Rate and Method in a manner that would
adversely affect the security for the Bonds.
Like its antecedents, Proposition 218 is likely to undergo both judicial and legislative scrutiny
before its impact on the District and its obligations can be determined. Certain provisions of Proposition
38
218 may be examined by the courts for their constitutionality under both State and federal constitutional
law. The District is not able to predict the outcome of any such examination.
The foregoing discussion of Proposition 218 should not be considered an exhaustive or
authoritative treatment of the issues. The District does not expect to be in a position to control the
consideration or disposition of these issues and cannot predict the timing or outcome of any judicial or
legislative activity in this regard. Interim rulings, final decisions, legislative proposals and legislative
enactments may all affect the impact of Proposition 218 on the Bonds as well as the market for the Bonds.
Legislative and court calendar delays and other factors may prolong any uncertainty regarding the effects
of Proposition 218.
Impact of FDIC Interests and Other Federal Agencies
The ability of the District to collect interest and penalties specified by State law and to foreclose
against properties having delinquent Special Tax installments may be limited in certain respects with
regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"), the Drug
Enforcement Agency, the Internal Revenue Service or other similar federal governmental agencies has or
obtains an interest. The FDIC would obtain such an interest by taking over a financial institution which
has made a loan which is secured by property within the District.
The FDIC has adopted a policy statement regarding the payment of state and local real property
taxes (the "Policy Statement") which provides that the FDIC intends to pay valid real property taxes,
interest and penalties, in accordance with state law, on property which at the time of the tax levy is owned
by a financial institution in an FDIC receivership, unless abandonment of the FDIC interest is determined
to be appropriate. However, the Policy Statement is unclear as to whether the FDIC considers special
taxes such as the Special Taxes to be "real property taxes" which it intends to pay. Furthermore, the
Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, it will
not permit its lien to be foreclosed by a taxing authority without its specific consent, and that it will not
pay or recognize liens for any penalties, fines, or similar claims imposed for the non-payment of taxes.
The District is unable to predict what effect the application of the Policy Statement would have in
the event of a delinquency on a parcel within the District in which the FDIC has or obtains an interest,
although prohibiting the lien of the FDIC to be foreclosed at a judicial foreclosure sale would likely
reduce or eliminate the persons willing to purchase a parcel at a foreclosure sale. Such an outcome could
cause a draw on the Reserve Fund and perhaps, ultimately, a default in payment on the Bonds. The
District expresses no view concerning the likelihood that the risks described above will materialize while
the Bonds are outstanding. The various legal opinions to be delivered concurrently with the delivery of
the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability
of the various legal instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar
laws affecting the rights of creditors generally.
IRS Audit of Tax -Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt
bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for
audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be
affected as a result of such an audit of the Bonds (or by an audit of similar bonds).
39
Ballot Initiatives and Legislative Measures
Proposition 218 was adopted pursuant to a measure qualified for the ballot pursuant to
California's constitutional initiative process and the State Legislature has in the past enacted legislation
which has altered the spending limitations or established minimum funding provisions for particular
activities. From time to time, other initiative measures could be adopted by California voters or legislation
enacted by the State Legislature. The adoption of any such initiative or enactment of legislation might
place limitations on the ability of the State, the City or local districts to increase revenues or to increase
appropriations or on the ability of a property owner to complete the development of the property.
Limited Secondary Market
As stated herein, investment in the Bonds poses certain economic risks which may not be
appropriate for certain investors, and only persons with substantial financial resources who understand the
risk of investment in the Bonds should consider such investment. There can be no guarantee that there
will be a secondary market for purchase or sale of the Bonds or, if a secondary market exists, that the
Bonds can or could be sold for any particular price. No application has been made for a credit rating for
the Bonds, and it is not known whether a credit rating could be secured either now or in the future for the
Bonds.
Disclosure to Future Landbuyers
The District has recorded a Notice of Special Tax Lien in the office of the County Recorder of
Los Angeles County. While title insurance and search companies normally refer to such notices in title
reports, there can be no guarantee that such reference will be made or, if made, that a prospective
purchaser or lender will consider such Special Tax obligation in the purchase of land or the lending of
money thereon. Failure to disclose the existence of the Special Tax may affect the willingness and ability
of future landowners within the District to pay the Special Tax when due.
Loss of Tax Exemption
As discussed under the caption "CONCLUDING INFORMATION — Tax Exemption" herein,
interest on the Bonds could become includable in gross income for purposes of federal income taxation
retroactive to the date the Bonds were issued, as a result of acts or omissions of the District in violation of
its covenants in the Fiscal Agent Agreement. Should such an event of taxability occur, the Bonds are not
subject to acceleration or special redemption and will remain outstanding until maturity or until redeemed
under the redemption provisions contained in the Fiscal Agent Agreement.
CONCLUDING INFORMATION
Absence of Material Litigation
To the best knowledge of the officers of the City, there is no controversy or litigation now
pending against the City or the District, or threatened, restraining or enjoining the issuance, sale,
execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds.
Tax Exemption
The Internal Revenue Code of 1986 (the "Code") imposes certain requirements that must be met
subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded
40
pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax
purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in
the gross income of the owners thereof for federal income tax purposes retroactive to the date of issuance
of that series of the Bonds. The District has covenanted in the Fiscal Agent Agreement to maintain the
exclusion of the interest on the Bonds from the gross income of the owners thereof for federal income tax
purposes.
In the opinion of 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, 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. Bond Counsel is of the further
opinion that the Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of
the Code and, therefore, the interest on the Bonds is not treated as an item of tax preference for purposes
of computing the alternative minimum tax imposed by section 55 of the Code; however, the receipt or
accrual of interest on the Bonds owned by a corporation may affect the computation of its alternative
minimum taxable income. A corporation's alternative minimum taxable income is the basis on which the
alternative minimum tax imposed by section 55 of the Code will be computed.
Pursuant to the Fiscal Agent Agreement and in the Tax Certificate Pertaining to Arbitrage and
Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, delivered by
District in connection with the issuance of the Bonds, the District has made representations relevant to the
determination of, and has made certain additional covenants regarding or affecting, the exclusion of
interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. In
reaching its opinions set forth in the preceding paragraph, Bond Counsel will assume the accuracy of such
representations and the present and future compliance by the Issuer with such covenants. Except as set
forth in the preceding paragraph, Bond Counsel will express no opinion as to any federal or state tax
consequence of the receipt of interest on, or the ownership or disposition of, the Bonds. Furthermore,
Bond Counsel will express no opinion as to any federal, state or local tax law consequence with respect to
the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the proceeds thereof
predicated or permitted upon the advice or approval of other counsel.
A copy of the form of opinion of Bond Counsel relating to the Bonds is included in Appendix B.
Bond Counsel's opinion is not a guarantee of a result, but represents their legal judgment based
upon their review of existing statutes, regulations, published rulings and court decisions and the
covenants of the District 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 Issuer 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 District may have different or conflicting interests from the owners of the
Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and liquidity
of the Bonds during the pendency of the audit, regardless of the ultimate outcome.
To the extent that a purchaser of a Bond acquires that Bond at a price in excess of its "stated
redemption price at maturity" within the meaning of section 1273(a)(2) of the Code, such excess
constitutes ".bond premium" under the Code. Section 171 of the Code, and the Treasury Regulations
promulgated thereunder, provide generally that bond premium on a tax-exempt obligation must be
amortized over the remaining term of the obligation (or a shorter .period in the case of certain callable
obligations); the amount of premium so amortized will reduce the owner's basis in such obligation for
41
federal income tax purposes, but such amortized premium will not be deductible for federal income tax
purposes. Such reduction in basis will increase the amount of any gain (or decrease the amount of any
loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of the
obligation. The amount of premium that is amortizable each year by a purchaser is determined by using
such purchaser's yield to maturity. The rate and timing of the amortization of the bond premium and the
corresponding basis reduction may result in an owner realizing a taxable gain when its Bond is sold or
disposed of for an amount equal to or in some circumstances even less than the original cost of the Bond
to the owner. Purchasers of Bonds at a price that includes bond premium should consult their 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 Bonds.
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the
initial offering price to the public of the Bonds of that maturity is "original issue discount." Original issue
discount accruing on a Bond is treated as interest for federal income tax purposes and is excluded from
the gross income of the owner thereof for federal income tax purposes, and is exempt from California
personal income tax, to the same extent as would be stated interest on that Bond. Original issue discount
on any Bond purchased at such initial offering price and pursuant to such initial offering will accrue on a
semiannual basis over the term of the Bond on the basis of a constant yield method and, within each
semiannual period, will accrue on a ratable daily basis. The amount of original issue discount on such a
Bond accruing during each period is added to the adjusted basis of such Bond to determine taxable gain
upon disposition (including sale, redemption or payment on maturity) of such Bond. The Code includes
certain provisions relating to the accrual of original issue discount in the case of purchasers of Bonds who
purchase such Bonds other than at the initial offering price and pursuant to the initial offering. Purchasers
of Bonds of a maturity having original issue discount should consult their own tax advisors with respect
to the tax consequences of ownership of Bonds with original issue discount.
Although Bond Counsel is of the opinion that interest on the Bonds is exempt from California
personal income tax and that interest on the Bonds is excluded from the gross income of the owners
thereof for federal income tax purposes, 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 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 cavy the
Bonds and the Code contains additional limitations on interest deductions applicable to financial
institutions that own tax-exempt obligations (such as the Bonds), (ii) with respect to insurance companies
subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for
loss reserves by 15% of the sum of certain items, including interest on the Bonds, (iii) interest on the
Bonds earned by certain foreign corporations doing business in the United States could be subject to a
branch profits tax imposed by section 884 of the Code, (iv) passive investment income, including interest
on the Bonds, may be subject to federal income taxation under section 1375 of the Code for 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 S corporation is passive investment income, (v) section 86 of the Code
requires recipients of certain Social Security and certain Railroad Retirement benefits to take into
account, in determining the taxability of such benefits, receipts or accruals of interest on the 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 has not undertaken to advise in the
future whether any events occurring 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 pending or future legislation, or amendments to the Code, if enacted into law, or any proposed
legislation or amendments to the Code, will not contain provisions that could directly or indirectly reduce
!N
the benefit of the exemption of interest on the Bonds from personal income taxation by the State of
California or of the exclusion of the interest on the Bonds from the gross income of the owners thereof for
federal income tax purposes.
Existing law may change to reduce or eliminate the benefit to beneficial owners of the exclusion
of interest on the Bonds from gross income for federal income tax purposes. Any proposed legislation or
administrative action, whether or not taken, could also affect the value and marketability of the Bonds.
Prospective purchasers of the Bonds should consult with their own tax advisors with respect to any
proposed or future changes in tax law.
Approval of Legality
Legal matters incident to the issuance of the Bonds are subject to the approving opinion of Bond
Counsel. A copy of the form of the opinion of Bond Counsel is included as APPENDIX B — "FORM
OF BOND COUNSEL'S OPINION" hereto. Copies of such opinion will be available at the time of
delivery of the Bonds. Fees payable to Bond Counsel are contingent on the successful sale and delivery
of the Bonds.
The statements of law and legal conclusions set forth in this Official Statement under the
headings "THE BONDS" and "SECURITY FOR
Counsel. Bond Counsel's engagement is limited to
authorization of the Bonds and to rendering an opinion
from gross income of interest on the Bonds from
Exemption" above.
No General Obligation of City or District
THE BONDS" have been reviewed by Bond
a review of the legal procedures required for the
as to the validity of the Bonds and the exclusion
Federal and State income taxation. See "Tax
The Bonds are not general obligations of the City or the District, but are limited obligations of the
District payable solely from the Net Taxes and certain amounts held under the Fiscal Agent Agreement.
Any tax for the payment of the Bonds shall be limited to the Special Taxes to be collected within the
jurisdiction of the District.
Verifications of Mathematical Computations
Barthe & Wahrman, PA, will verify from the information provided to them the mathematical
accuracy as of the date of the closing on the Bonds of (1) the computations contained in the provided
schedules to detennine that the cash deposits listed in the schedules prepared by the Financial Advisor, to
be held in escrow, will be sufficient to pay, when due, the principal, redemption premium and interest
requirements of the 2002 Bonds, and (2) the computation of yield on the Bonds contained in the provided
schedules used by Bond Counsel in its determination that the interest with respect to the Bonds is exempt
from federal taxation. Barthe & Wahrman, PA, will express no opinion on the assumptions provided to.
them, nor as to the exemption from taxation of the interest with respect to the Bonds.
The Financial Advisor
The material contained in this Official Statement was prepared by the District with the assistance
of the Financial Advisor, who advised the District as to the financial structure and certain other financial
matters relating to the Bonds. The information set forth herein has been obtained from sources which are
believed to be reliable, but such information is not guaranteed by the Financial Advisor as to accuracy or
completeness, nor has it been independently verified. Fees paid to the Financial Advisor are contingent
upon the sale and delivery of the Bonds.
43
No Ratings on the Bonds
The District has not made, and does not contemplate making, any application for a rating on the
Bonds. No such rating should be assumed based upon any other District rating that may be obtained.
Prospective purchasers of the Bonds are required to make independent determinations as to the credit
quality of the Bonds and their appropriateness as an investment. Should a Bondowner elect to sell a Bond
prior to maturity, no representations or assurances can be made that a market will have been established
or maintained for the purchase and sale of the Bonds. The Underwriters assume no obligation to establish
or maintain such a market and is not obligated to repurchase any of the Bonds at the request of the owner
thereof.
Continuing Disclosure
The District and the Landowner have each covenanted for the benefit of the holders and
beneficial owners of the Bonds to provide certain financial information and data relating to the District
each year (each, the "Annual Report"), and to provide notices of the occurrence of certain enumerated
events, if material. The Annual Reports will be filed with each Nationally Recognized Municipal
Securities Information Repository and with the State Repository, if any. The notices of material events
will be filed with the Municipal Securities Rulemaking Board. The specific nature of the information to
be contained in the Annual Reports or the notices of material events is set forth in APPENDIX F —
"FORMS OF CONTINUING DISCLOSURE CERTIFICATES." These covenants have been made
in order to assist the Underwriters in complying with S.E.C. Rule 15c2 -12(b)(5).
Since the effective date of the continuing disclosure requirements under S.E.C.
Rule 15c2 -12(b)(5), there has been no instance in which the Community Facilities District and/or the
Landowner have failed to comply in all material respects with any previous undertakings with regard to
said rule.
Underwriting
The Bonds are being purchased by (the "Underwriters") at a purchase price
equal to the par amount of the Bonds being issued less an Underwriters' discount equal to, $
pursuant to a bond purchase agreement between the District and the Underwriters (the "Purchase
Agreement"). The Purchase Agreement provides that the Underwriters will purchase all of the Bonds if
any are purchased, the obligation to make such purchase, if made, being subject to certain terms and
conditions set forth in the Purchase Agreement, the approval of certain legal matters and certain other
conditions.
The Underwriters may offer and sell Bonds to certain dealers and others at a price other than the
offering price. The offering price may be changed from time to time by the Underwriters.
Miscellaneous
All of the preceding summaries of the Fiscal Agent Agreement, other applicable legislation,
agreements and other documents are made subject to the provisions of such documents 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 City for further information in connection therewith.
This Official Statement does not constitute a contract with the purchasers of the Bonds.
44
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 the Mayor of the City has been duly
authorized by the City on behalf of the City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center).
016 290309
CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(VALENCIA TOWN CENTER)
City Manager of the City of Santa Clarita, California
acting on behalf of the City of Santa Clarita Community
Facilities District No. 2002-1 (Valencia Town Center)
45
APPENDIX B
FORM OF BOND COUNSEL'S OPINION
A-1
APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
ME
APPENDIX D
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
C-1
APPENDIX E
BOOK -ENTRY ONLY SYSTEM
The information in this Appendix E concerning The Depository Trust Company ("DTC'), New
York, New York, and DTC's book -entry system has been obtained from DTC and the District takes no
responsibility for the completeness or accuracy thereof. The District 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) certificates
representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c)
redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the
Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect
Participants will act in the mariner described in this Appendix. The current "Rules" applicable to DTC
are on file with the Securities and Exchange Commission and the current 'Procedures" of DTC to be
followed in dealing with DTC Participants are on file with DTC.
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the
Bonds. The Bonds will be issued as fully -registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully -registered Bond certificate will be issued for each maturity of the Bonds, each in the
aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited -purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money
market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with
DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other
securities transactions in deposited securities, through electronic computerized book -entry transfers and
pledges between Direct Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for
DTC, National Securities Clearing Corporation and Fixed hicome Clearing Corporation, all of which are
registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC
system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks,
trust companies, and clearing corporations that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's
rating of "AA+." The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtce.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
IIm
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Bonds, such
as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the District 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 District or the Fiscal Agent, on payable date in accordance with their respective holdings shown
on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of such Participant and not of
DTC, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in
effect from time to time. Principal, premium (if any), and interest payments with respect to the Bonds to
Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the District or the Fiscal Agent, disbursement of such payments to Direct Participants
will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be
the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the District or the Fiscal Agent. Under such circumstances, in the event
that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
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The District may decide to discontinue use of the system of book -entry -only transfers through
DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered
in accordance with the provisions of the Fiscal Agent Agreement.
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the District and the Underwriters believe to be reliable, but the District and the
Underwriters take no responsibility for the accuracy thereof.
Discontinuance of DTC Services
In the event that (a) DTC determines not to continue to act as securities depository for the Bonds,
or (b) the District determines that DTC shall no longer act and delivers a written certificate to the Fiscal
Agent to that effect, then the District will discontinue the Book -Entry System with DTC for the Bonds. If
the District determines to replace DTC with another qualified securities depository, the District will
prepare or direct the preparation of a new single separate, fully -registered Bond for each maturity of the
Bonds registered in the name of such successor or substitute securities depository as are not inconsistent
with the terms of the Fiscal Agent Agreement. If the District fails to identify another qualified securities
depository to replace the incumbent securities depository for the Bonds, then the Bonds shall no longer be
restricted to being registered in the Bond registration books in the name of the incumbent securities
depository or its nominee, but shall be registered in whatever name or names the incumbent securities
depository or its nominee transferring or exchanging the Bonds shall designate.
In the event that the Book -Entry System is discontinued, the following provisions would also
apply: (i) the Bonds will be made available in physical form, (ii) principal of, and redemption premiums if
any, on the Bonds will be payable upon surrender thereof at the trust office of the Fiscal Agent identified
in the Fiscal Agent Agreement, and (iii) the' Bonds will be transferable and exchangeable as provided in
the Fiscal Agent Agreement.
The District or the Fiscal Agent do not have any responsibility or obligation to DTC Participants,
to the persons for whom they act as nominees, to Beneficial Owners, or to any other person who is not
shown on the registration books as being an owner of the Bonds, with respect to (i) the accuracy of any
records maintained by DTC or any DTC Participants; (ii) the payment by DTC or any DTC Participant
of any amount in respect of the principal of, redemption price of or interest on the Bonds; (iii) the
delivery of any notice which is permitted or required to be given to registered owners under the Fiscal
Agent Agreement; (iv) the selection by DTC or any DTC Participant of any person to receive payment in
the event of a partial redemption of the Bonds; (v) any consent given or other action taken by DTC as
registered owner; or (vi) any other matter arising with respect to the Bonds or the Fiscal Agent
Agreement. The District or the Fiscal Agent cannot and do not give any assurances that DTC, DTC
Participants or others will distribute payments of principal of or interest on the Bonds paid to DTC or its
nominee, as the registered owner, or any notices to the Beneficial Owners or that they will do so on a
timely basis or will serve and act in a manner described in this Official Statement. The District or the
Fiscal Agent are not responsible or liable for the failure of DTC or any DTC Participant to make any
payment or give any notice to a Beneficial Owner in respect to the Bonds or any error or delay relating
thereto.
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APPENDIX F
FORMS OF CONTINUING DISCLOSURE CERTIFICATES
LANDOWNER CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by
Valencia Town Center Venture LP, a Delaware limited partnership (the "Landowner") in connection with
the issuance of $ aggregate principal amount of the City of Santa Clarita Community Facilities
District No. 2002-1 (Valencia Town Center) Special Tax Refunding Bonds, Series 2012 (the "Bonds").
The Bonds are being issued under the Fiscal Agent Agreement, dated as of October 1, 2012 (the "Fiscal
Agent Agreement"), by and between the City of Santa Clarita Community Facilities District No. 2002-1
(Valencia Town Center) (the "District) and U.S. Bank National Association. The Landowner covenants
and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed
and delivered by the Landowner for the benefit of the Owners and pursuant to the provisions of the Rule
(as defined herein).
Section 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement,
which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this
Section, the following capitalized terms shall have the following meanings:
"Affiliate" of another Person' means (a) a Person directly or indirectly owning, controlling, or
holding with power to vote, five percent (5%) or more of the outstanding voting securities of such other
Person, (b) any Person whose outstanding voting securities of five percent (5%) or more are directly or
indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any Person directly
or indirectly controlling , controlled by, or under common control with, such other Person; for purposes
hereof, control means the power to exercise a controlling influence over the management or policies of a
Person, unless such power is solely the result of an official position with such Person.
"Annual Report" shall mean any Annual Report or its addendum provided by the Landowner or
Major Owner, as applicable, pursuant to, and as described in, Sections 3 and 4 of this Disclosure
Certificate.
"Assumption Agreement" means an undertaking of a Major Owner, or an Affiliate thereof, for
the benefit of the holders and beneficial owners of the Bonds containing terms substantially similar to this
Disclosure Certificate (as modified for such Major Owner's development and financing plans with respect
to the Property), whereby such Major Owner or Affiliate agrees to provide annual reports and notices of
significant events, setting forth the information described in sections 4 and 5 hereof, respectively, with
respect to the portion of the property in the District owned by such Major Owner and its Affiliates and, at
the option of the Landowner or such Major Owner, agrees to indemnify the Dissemination Agent pursuant
to a provision substantially in the form of Section I I hereof.
"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.
F-1
"Disclosure Representative" shall mean the of the
Landowner or his or her designee, or such other officer or employee as the Landowner shall designate in
writing to the Dissemination Agent from time to time.
"Dissemination Agent" shall mean U.S. Bank National Association, acting in its capacity as
dissemination agent hereunder, or any successor dissemination agent designated in writing by the District
and which has filed with the Landowner a written acceptance of such designation.
"District" shall mean City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center).
"Event of Bankruptcy" means, with respect to a Person, that such Person files a petition or
institutes a proceeding under any act or acts, state or federal, dealing with or relating to the subject or
subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or
as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such Person asks or seeks
or prays to be adjudicated a bankrupt, or is to be discharged from any or all of such Person's debts or
obligations, or offers to such Person's creditors to effect a composition or extension of time to pay such
Person's debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a
readjustment of such Person's debts, or for any other similar relief, or if any such petition or any such
proceedings of the same or similar kind or character is filed or instituted or taken against such Person, or
if a receiver of the business or of the property or assets of such Person is appointed by any court, or if
such Person makes a general assignment for the benefit of such Person's creditors.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
"Major Owner" shall mean an owner (including all Affiliates of such owner) of land in the
District responsible in the aggregate for 20% or more of the annual Special Taxes levied in the District.
"MSRB" shall mean the Municipal Securities Rulemaking Board established pursuant to Section
15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the
Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated
by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through
the Electronic Municipal Marketplace Access (EMMA) website of the MSRB, currently located at
hIU2. /lemma. nzsrb. org.
"Owner" shall mean the person in whose name any Bonds shall be registered.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
"Person" means an individual, a corporation, a partnership, a limited liability company, an
association, a joint stock company, a trust, any unincorporated organization or a government or political
subdivision thereof.
"Property" means, at the time of inquiry, all real property then -owned by Landowner or Major
Owner within the District.
"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.
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"Special Taxes" shall mean the special taxes to be levied within the District pursuant to the Fiscal
Agent Agreement.
Section 3. Provision of Annual Reports.
(a) Until this Disclosure Certificate terminates in accordance with Section 7 below, the
Landowner shall, or upon written request shall cause the Dissemination Agent to, not later than six
months after the end of the Landowner's Fiscal Year, commencing with the report for the Fiscal Year
which first ends after the date of issuance of the Bonds, provide to the MSRB an Annual Report which is
consistent with the requirements of Section 4 of this Disclosure Certificate, with a copy to the District and
the Fiscal Agent. Not later than fifteen (15) Business Days prior to said date, the Landowner shall
provide the Annual Report to the Dissemination Agent. The Landowner shall provide a written
certification with each Annual Report furnished to the Dissemination Agent, the District and the Fiscal
Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the
Landowner hereunder. The Dissemination Agent, the District and the Fiscal Agent may conclusively rely
upon such certification of the Landowner, and shall have no duty or obligation to review such Annual
Report. 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
Certificate; provided that any audited financial statements of the Landowner (if audited financial
statements are being provided) 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 not available by that date. If the
Landowner'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)If the Dissemination Agent is unable to verify that an Annual Report has been provided
to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a notice to the
MSRB in substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall, to the extent information is known to it, file a report with
the District and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the
Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided.
Section 4. Content of Annual Reports. The Landowner's Annual Report shall contain or
incorporate by reference the following:
(1) Financial statements prepared in accordance with generally accepted accounting
principles for the Landowner, or, in the event that no such statements are
prepared for the Landowner, such annual financial statements as are so prepared.
(2) A table displaying a list of current tenants of the Valencia Town Center leasing
5,000 or more square feet, the number of square feet leased by each such tenant
and the expiration date of each applicable lease, in substantially the form of
Table 6 in the Official Statement for the Bonds dated September _, 2012.
(3) A statement describing the current long-term tenant occupancy rate or rates and
the current temporary tenant occupancy rate or rates within the Valencia Town
Center.
(4) A statement describing any assessment appeals filed or assessment appeal
resolutions relating to the Property that have not been previously disclosed.
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(5) A description of any sales of the Landowner's Property including the
identification of each buyer and identification of the Property so sold.
(6) Any material change in the structure or ownership of the Landowner.
(7) The assumption of any obligation by a property owner pursuant to Section 6.
In addition to any of the information expressly required to be provided as described above, the
Landowner shall provide such further information, if any, as may be necessary to make the specifically
required statements, in the light of the circumstances under which they are made, not misleading.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the Landowner or related public entities, that have been
submitted to each of the MSRB or the Securities and Exchange Commission. If the document included
by reference is a final official statement, it must be available from the MSRB. The Landowner shall
clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Landowner shall give, or cause to be
given, notice of the occurrence of any of the following events, if material:
(1) failure to pay any real property taxes (including any special taxes, assessments,
fees or charges) levied within the District;
(2) material damage to or destruction of any structures on the Landowner's Property;
(3) default by the Landowner on any loan secured by the Landowner's Property;
(4) the occurrence of an Event of Bankruptcy with respect to the Landowner, or any
Affiliate of the Landowner.
(5) change of or loss of anchor tenants in the Valencia Town Center; and
(6) reduction in tenancy occupancy rate to less than seventy five percent (75%).
(b) Whenever Disclosure Representative obtains knowledge of the occurrence of a Listed
Event, the Disclosure Representative shall as soon as possible determine if such event would be material
under applicable federal securities laws.
(c) If the Disclosure Representative has determined that knowledge of the occurrence of a
Listed Event would be material under applicable federal securities laws, the Disclosure Representative
shall, within ten (10) Business Days of obtaining actual knowledge of the occurrence of a Listed Event, or
as soon as reasonably practicable thereafter, promptly notify the Dissemination Agent in writing. Such
notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d).
(d) If the Dissemination Agent has been instructed by the Disclosure Representative to report
the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the
MSRB.
F-4
Section 6. Duration of Reporting Obligation. All of the Landowner's obligations hereunder shall
commence on such date as property owned by the Landowner is responsible for payment of 20% or more
of the Special Taxes and shall terminate (except as provided in Section 11) upon the earlier to occur of (i)
the legal defeasance, prior redemption or payment in full of all the Bonds, (ii) so long as the Bonds are
outstanding, at such time as property owned by the Landowner is no longer responsible for payment of
20% or more of the Special Taxes actually levied or (iii) the date on which all Special Taxes are paid or
prepaid in full. Upon the occurrence of any such termination or suspension prior to the final maturity of
the Bonds, the Landowner shall give notice of such termination or suspension in the same manner as for a
Listed Event under Section 5.
If a portion of the Property is conveyed to a Person that, upon such conveyance, will be a Major
Owner, the obligations of Landowner hereunder with respect to such property owned by such Major
Owner and its Affiliates shall be assumed by such Major Owner or by an Affiliate thereof and the
Property Owner obligations hereunder will be terminated. In order to effect such an assumption, such
Major Owner or Affiliate shall enter into an Assumption Agreement. The Landowner shall provide a
copy of the executed Assumption Agreement to the District and shall not be relieved of its obligations
with respect to such property until such a Major Owner or Affiliate has entered into the Assumption
Agreement.
Section 7. Dissemination Agent. The Landowner may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.
The Dissemination Agent shall not be responsible in any manner for the content of any notice or report
prepared by the Landowner pursuant to this Disclosure Agreement. The initial Dissemination Agent shall
be U.S. Bank National Association. The Dissemination Agent may resign by providing thirty days
written notice to the Landowner and the District. 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 Landowner in a timely manner and in a form suitable for filing.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Landowner may amend this Disclosure Certificate (and the Dissemination Agent shall
agree to any amendment so requested by the Landowner) provided, 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 Certificate may be waived, provided that the following conditions
are satisfied:
(1) 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;
(2) 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
(3) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same
manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent
Agreement with the consent of Owners, or (ii) does not, in the opinion of nationally
recognized bond counsel, materially impair the interests of the Owners or Beneficial
Owners of the Bonds.
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In the event of any amendment or waiver of a provision of this Disclosure Certificate, the
Landowner 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 Landowner.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the Landowner from disseminating any other information, using the means of dissemination set
forth in this Disclosure Certificate 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 Certificate. If the Landowner 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 Certificate, the Landowner shall have no obligation under this Disclosure Certificate to
update such information or include it in any future Annual Report or notice of occurrence of a Listed
Event.
Section 10. Filings with the MSRB. All financial information, operating data, financial
statements, notices, and other documents provided to the MSRB in accordance with this Disclosure
Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied
by identifying information as prescribed by the MSRB.
Section 11. Default. In the event of a failure of the Landowner or the Dissemination Agent to
comply with any provision of this Disclosure Certificate, the Dissemination Agent may, and, at the
request of the Owners of at least 25% of the aggregate principal amount of the outstanding Bonds, shall
(but only to the extent funds in any amount satisfactory to the Dissemination Agent have been provided to
it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional
charges whatsoever related thereto, including without limitation, fees and expenses of its attorneys), or
any Owner may, take such actions as may be necessary and appropriate, including seeking mandate or
specific performance by court order, to cause the Landowner to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default
under the Fiscal Agent Agreement and the sole remedy under this Disclosure Certificate in the event of
any failure of the Landowner or the Dissemination Agent to comply with this Disclosure Certificate shall
be an action to compel performance.
Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
District, the Landowner, the Participating Underwriter and Owners, from time to time of the Bonds, and
shall create no rights in any other person or entity.
Dated: 2012
VALENCIA TOWN CENTER VENTURE LP, a
Delaware limited partnership
Title:
F-6
The undersigned hereby agrees to act as
Dissemination Agent pursuant to the -foregoing
Continuing Disclosure Certificate—Landowner
U.S. BANK NATIONAL ASSOCIATION
m
Its:
F-7
EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: Valencia Town Center Venture LP
Name of Bond Issue: City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center) Special Tax Refunding Bonds, Series 2012
Date of Issuance: October , 2012
NOTICE IS HEREBY GIVEN that the Landowner has not provided an Annual Report with
respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated October
2012, with respect to the Bonds. [The Landowner anticipates that the Annual Report will be filed by
.]
Dated:
cc: District
Dissemination Agent,
on behalf of the Landowner
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ISSUER CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by
the City of Santa Clarita Community Facilities District No. 2002-1 (Valencia Town Center) (the
"District") in connection with the issuance of $ aggregate principal amount of the District's
Special Tax Refunding Bonds, Series 2012 (the "Bonds"). The Bonds are being issued under the Fiscal
Agent Agreement, dated as of October 1, 2012 (the "Fiscal Agent Agreement"), by and between the
District and U.S. Bank National Association. The District covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed
and delivered by the District for the benefit of the Owners and pursuant to the provisions of the Rule (as
defined herein).
Section 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement
Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report or any addendum thereto provided by the
District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
"Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly,
to make investment decisions concerning ownership of any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries).
"Disclosure Representative" shall mean the Deputy City Manager of the City or his or her
designee, or such other officer or employee as the City shall designate in writing to the Fiscal Agent and
the Dissemination Agent from time to time.
"Dissemination Agent" shall mean U.S. Bank National Association, or any successor
Dissemination Agent designated in writing by the District and which has filed with the District a written
acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
"MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity
designated under the Rule as the repository for filings made pursuant to the Rule. Until otherwise
designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be
made through the Electronic Municipal Marketplace Access (EMMA) website of the MSRB, currently
located at htW.Ilcmnaa.msrb.org.
"Owner" shall mean the person in whose name any Bonds shall be registered.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
"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.
F-1
Section 3. Provision of Annual Reports.
(a) The District shall, or shall cause the Dissemination Agent to, not later than January 15 of
each year, commencing January 15, 2013, provide to the MSRB and the Participating Underwriter an
Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. 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 Certificate.
(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for
providing the Annual Report to the MSRB, the District shall provide the Annual Report to the
Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). If by
such date, the Fiscal Agent has not received a copy of the Annual Report, the Fiscal Agent shall notify the
District and the Dissemination Agent of such failure to receive the Annual Report. The District shall
provide a written certification with each Annual Report furnished to the Dissemination Agent and the
Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished
by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such
certification of the District and shall have no duty or obligation to review such Annual Report.
(c) If the Fiscal Agent is unable to verify that an Annual Report has been provided to the
MSRB by the date required in subsection (a), the Fiscal Agent shall send a notice to the MSRB in
substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall, to the extent information is known to it, file a report with
the District and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the
Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided.
Section 4. Content of Annual Reports. The District's Annual Report shall contain or include by
reference the following (unless otherwise stated, such information shall be as of the end of the most recent
Fiscal Year):
The audited financial statements of the City, prepared in accordance with generally
accepted accounting principles in effect from time to time. If the City's audited financial
statements are not available by the time the Annual Report is required to be filed pursuant
to Section 3(a), the Annual Report shall contain unaudited financial statements in a
format similar to the financial statements contained in the Official Statement, and the
audited financial statements shall be filed in the same manner as the Annual Report when
they become available.
2. Principal amount of Bonds outstanding.
3. Balance in the Reserve Account for the Bonds.
4. Land ownership summary listing property owners as such property owners are shown on
the last equalized assessment roll of the Los Angeles County Assessor.
5. Total assessed valuation (per the Los Angeles County Assessor's records) of all parcels
currently subject to the Special Tax showing the total assessed valuation for all land and
the total assessed valuation for all improvements for the then current Fiscal Year.
6. The actual amount of the Special Tax levy and the maximum amount that can be levied
pursuant to the rate and method of apportionment for the then current Bond Year.
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Concerning delinquent parcels:
• number of parcels delinquent in payment of Special Tax,
• amount of total delinquency and as a percentage of total Special Tax levy, and
• status of actions on covenants to pursue foreclosure proceedings upon delinquent
properties.
8. Identity of any delinquent tax payer obligated for more than 10% of the annual Special
Tax levy and:
• assessed value of applicable properties, and
• summary of results of foreclosure sales, if available.
Significant amendments to land use entitlements for property in the District.
10. A summary of any prepayments of the Special Tax for the most recent year.
Any or all of the items listed above may be included by specific reference to other documents, including
official statements of debt issues of the City or related public entities, which are available to the public on
the MSRB's Internet Website or filed with the SEC.
Section 5. Reporting of Significant Events.
(a) The District shall give or cause to be given, notice of the occurrence of any of the
following events with respect to the Bonds not later than ten (10) business days after the occurrence of the
event:
1. Principal and interest payment delinquencies;
2. Unscheduled draws on debt service reserves reflecting financial difficulties;
3. Unscheduled draws on credit enhancements reflecting financial difficulties;
4. Substitution of credit or liquidity providers, or their failure to perform;
5. Issuance by the Internal Revenue Service of proposed or final determination of
taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);
6. Tender offers;
7. Defeasances;
8. Rating changes; or
9. Bankruptcy, insolvency, receivership or similar event of the obligated person.
For the purposes of the event identified in subparagraph (9), the event is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an
obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state
or federal law in which a court or governmental District has assumed jurisdiction over substantially all of
the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the
existing governmental body and officials or officers in possession but subject to the supervision and
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orders of a court or governmental District, or the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental District having supervision or jurisdiction over
substantially all of the assets or business of the obligated person.
(b) The District shall give, or cause to be given, notice of the occurrence of any of the
following events with respect to the Bonds, if material, not later than ten business days after the
occurrence of the event:
1. Unless described in paragraph 5(a)(5), adverse tax opinions or other material
notices or determinations by the Internal Revenue Service with respect to the tax
status of the Bonds or other material events affecting the tax status of the Bonds;
2. Modifications to rights of Owners;
3. Optional, unscheduled or contingent Bond calls;
4. Release, substitution, or sale of property securing repayment of the Bonds;
5. Non-payment related defaults;
6. The consummation of a merger, consolidation, or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the obligated
person, other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms; or
7. Appointment of a successor or additional fiscal agent or the change of name of a
fiscal agent.
(c) Whenever the District obtains knowledge of the occurrence of a Listed Event described
Section 5(b), the District shall determine if such event would be material under applicable federal
securities laws.
(d) If the District learns of the occurrence of a Listed Event described in Section 5(a), or
determines that knowledge of a Listed Event described in Section 5(b) would be material under applicable
federal securities laws, the District shall within ten (10) business days of occurrence file a notice of such
occurrence with the MSRB in electronic format, accompanied by such identifying information as is
prescribed by the MSRB. Notwithstanding the foregoing, notice of the Listed Event described in
subsections (a)(7) or (b)(3) need not be given under this subsection any earlier than the notice (if any) of
the underlying event is given to the Owner of the affected Bonds pursuant to the Fiscal Agent.
(e) If the Dissemination Agent has been instructed by the District to report the occurrence of
a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB.
Notwithstanding the foregoing:
(i) Notice of the occurrence of a Listed Event described in subsections
(a)(1), (4) or (5) shall be given by the Dissemination Agent unless the District gives the
Dissemination Agent affirmative instructions not to disclose such occurrence; and
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(ii) 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 Owners of the affected Bonds pursuant to the Fiscal Agent.
Section 5. Termination of Reporting Obligation. The District's obligations under this Disclosure
Certificate shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds.
Section 6. Dissemination Agent. The District may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If
at any time there is no designated Dissemination Agent appointed by the District, or if the Dissemination
Agent so appointed is unwilling or unable to perform the duties of the Dissemination Agent hereunder,
the District shall be the Dissemination Agent and undertake or assume its obligations hereunder.
Section 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the District may amend this Disclosure Certificate (and the Dissemination Agent shall agree
to any amendment requested by the District, provided the Dissemination Agent shall not be obligated to
enter into any amendment increasing or affecting its duties or obligations), and any provision of this
Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of counsel
expert in federal securities law, acceptable to the District and the Dissemination Agent, if any, to the
effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate
the Rule if such amendment or waiver had been effective on the date hereof but taking into account any
subsequent change in or official interpretation of the Rule.
Section 8. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the District from disseminating any other information, using the means of dissemination set forth
in this Disclosure Certificate 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 Certificate. If the District 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
Certificate, the District shall have no obligation under this Disclosure Certificate to update such
information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 9. Filings with the MSRB. All financial information, operating data, financial
statements, notices, and other documents provided to the MSRB in accordance with this Disclosure
Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied
by identifying information as prescribed by the MSRB.
Section 10. Default. In the event of a failure of the District or the Dissemination Agent to
comply with any provision of this Disclosure Certificate, the Dissemination Agent may, and, at the
request of the Owners of at least 25% of the aggregate principal amount of the outstanding Bonds, shall
(but only to the extent funds in any amount satisfactory to the Dissemination Agent have been provided to
it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional
charges whatsoever related thereto, including without limitation, fees and expenses of its attorneys), or
any Owner may, take such actions as may be necessary and appropriate, including seeking mandate or
specific performance by court order, to cause the District to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default
under the Fiscal Agent Agreement and the sole remedy under this Disclosure Certificate in the event of
any failure of the District or the Dissemination Agent to comply with this Disclosure Certificate shall be
an action to compel performance.
Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
District, the Landowner, the Participating Underwriter and Owners, from time to time of the Bonds, and
shall create no rights in any other person or entity.
Dated: 2012
The undersigned hereby agrees to act as
Dissemination Agent pursuant to the foregoing
Continuing Disclosure Certificate—District
U.S. BANK NATIONAL ASSOCIATION
LN
Its:
CITY OF SANTA CLARITA COMMUNITY
FACILITIES DISTRICT NO. 2002-1 (VALENCIA
TOWN CENTER
IN
Title:
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NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: ' City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center)
Name of Bond Issue: City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center) Special Tax Refunding Bonds, Series 2012
Date of Issuance: October 2012
NOTICE IS 14EREBY GIVEN that the District has not provided an Annual Report with respect
to the above-named Bonds as required by the Continuing Disclosure Certificate, dated October_, 2012,
with respect to the Bonds. [The District anticipates that the Annual Report will be filed by
Dated:
Dissemination Agent,
on behalf of the District
cc: District
52162493.6
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