HomeMy WebLinkAboutDUE DILIGENCE REVIEW - DISTRIBUTED AT THE MEETINGSUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
Independent Accountants' Report on Applying Agreed -Upon Procedures
On the Tustin Community Redevelopment Agency's
And
The Successor Agency to the Tustin Community Redevelopment Agency's
All Other Funds
Pursuant to California Health and Safety Code Section 34179.5
SUCCESSOR AGENCY TO THE TUSTKN COMMUNITY REDEVELOPMENT AGENCY
AGREED-UPON PROCEDURES RELATED TO ALL OTHER FUNDS
Table of Contents
Page
Independent Accountants' Report on Appl iug Procedures
Related toAll Other Funds
Attachment y\- Agreed-Upon Procedures and Findings Related to All Other Funds 2
SUPPORTING SCHEDULES AND EXHIBITS:
Schedule 1 - Listinxo[ Assets Transferred 0a Successor Agency
as of February 1, 2012
Schedule - Trmnyfe,xhodhcCiryofTusthm
Schedule 3 - Truosfermtotbel[uotin Housing Authority
Schedule 4 - Reconciliation of Financial Transactions for the Periods Ended
June 30,20lV, June 30,2O|l, January 1,20|2 and June 3O"20|2
Schedule 5- Listing nf Assets oonf June 3O,2O|Z
Schedule 6- Unspent Bond Proceeds
Schedule 7- Listing ofNnn|iquidAssets
Schedule 0- Calculation of Cash Balances for Retention (R(]pS ))
Schedule 9- Schedule of Cash Balances for Retention to Meet Enforceable
L)hligu1ioom in Fiscal Year 2012-2013 (ROPS 2)
Schedule |0- Summary of Balance Available for Allocation toAffected
Taxing Agencies
Exhibit |-|990 Tax Allocation Refunding Bond Documents
Exhibit 2-2U1UMC/\S Tax Allocation Bond Documents
Independent Accountants' Report on Applying
Agreed -Upon Procedures Related to All Other Funds
Oversight Board of the Successor Agency
to the Tustin Community Redevelopment Agency
Tustin, California
We have performed the minimum required agreed -upon procedures (AUP) enumerated in
Attachment A, which were agreed to by the California Department of Finance, the California State
Controller's Office, the Orange County Auditor - Controller, and the Successor Agency to the Tustin
Community Redevelopment Agency (Successor Agency), (collectively, the Specified Parties), solely
to assist you in meeting the statutory requirements of Health and Safety Code Section 34179.5 related
to all other funds except for the Low and Moderate Income Housing Fund (All Other Funds) of the
former Tustin Community Redevelopment Agency and the Successor Agency. Management of the
Successor Agency is responsible for meeting the statutory requirements of Health and Safety Code
Section 34179.5 related to All Other Funds. This agreed -upon procedures engagement was conducted
in accordance with attestation standards established by the American Institute of Certified Public
Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified
in the report. Consequently, we make no representation regarding the sufficiency of the procedures
described below, either for the purpose for which this report has been requested or for any other
purpose.
The scope of this engagement was limited to performing the agreed -upon procedures as set forth in
Attachment A. Attachment A also identifies the findings noted as a result of the procedures
performed.
We were not engaged to and did not conduct an audit, the objective of which would be the expression
of an opinion on whether the Successor Agency has met the statutory requirements of Health and
Safety Code Section 34179.5 related to All Other Funds. Accordingly, we do not express such an
opinion. Had we performed additional procedures, other matters might have come to our attention that
would have been reported to you.
This report is intended solely for the information and use of the Oversight Board and management of
the Successor Agency to the Tustin Community Redevelopment Agency, the California Department of
Finance, the California State Controller's Office, and the Orange County Auditor - Controller, and is not
intended to be, and should not be, used by anyone other than these specified parties.
Irvine, California
December 11, 1.012
88 i Michelle Drive, Suite 30f, 1, lr\ ine, t-_1 92600 - `[ d: � 11.9) 8,13`0 • l <ax: ' 1=x.9; 8.'893
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
Procedure:
Obtain from the Successor Agency a listing of all assets that were transferred from All Other
Funds of the former redevelopment agency to the Successor Agency on February 1, 2012. Agree
the amounts on this listing to account balances established in the accounting records of the
Successor Agency. Identify in the Agreed -Upon Procedures (AUP) report the amount of the
assets transferred to the Successor Agency as of that date.
Finding:
We agreed the amounts listed on Schedule 1 to the Successor Agency's accounting records
without exceptions. The former redevelopment agency transferred $86,728,559 in assets from All
Other Funds to the Successor Agency as detailed in Schedule 1.
2A. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from All Other Funds of the former redevelopment agency to the city that formed
the redevelopment agency for the period from January 1, 2011 through January 31, 2012. For
each transfer, the Successor Agency should describe the purpose of the transfer and describe in
what sense the transfer was required by one of the Agency's enforceable obligations or other
legal requirements. Provide this listing as an attachment to the AUP report.
Finding:
This procedure is not applicable as the former redevelopment agency did not make any transfers
other than payments for goods and services to the City of Tustin from All Other Funds during the
period from January 1, 2011 through January 31, 2012.
2B. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from All Other Funds of the Successor Agency to the city that formed the
redevelopment agency for the period from February 1, 2012 through June 30, 2012. For each
transfer, the Successor Agency should describe the purpose of the transfer and describe in what
sense the transfer was required by one of the Agency's enforceable obligations or other legal
requirements. Provide this listing as an attachment to the AUP report.
Finding:
Transfers from All Other Funds of the Successor Agency other than payments for goods and
services to the City of Tustin for the period from February 1, 2012 through June 30, 2012 are
shown in Schedule 2.
N
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
2C. Procedure:
For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required the transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
Finding:
Schedule 2 shows the details for the enforceable obligation or other legal requirement supporting
the transfers.
3A. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from All Other Funds of the former redevelopment agency to any other public
agency or to private parties for the period from January 1, 2011 through January 31, 2012. For
each transfer, the Successor Agency should describe the purpose of the transfer and describe in
what sense the transfer was required by one of the Agency's enforceable obligations or other
legal requirements. Provide this listing as an attachment to the AUP report.
Finding:
This procedure is not applicable as the former redevelopment agency did not make any transfers
to other public agencies or private parties other than payments for goods and services from All
Other Funds during the period from January 1, 2011 through January 31, 2012.
3B. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from All Other Funds of the Successor Agency to any other public agency or to
private parties for the period from February 1, 2012 through June 30, 2012. For each transfer, the
Successor Agency should describe the purpose of the transfer and described in what sense the
transfer was required by one of the Agency's enforceable obligations or other legal requirements.
Provide this listing as an attachment to the AUP report.
Finding:
Transfers from All Other Funds of the Successor Agency other than payments for goods and
services to the Tustin Housing Authority for the period from February 1, 2012 through
June 30, 2012 are shown in Schedule 3.
3
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
3C. Procedure:
For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required the transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
Finding:
Schedule 3 shows the details for the enforceable obligation or other legal requirement supporting
the transfers.
4. Procedure:
Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment
Agency and the Successor Agency for the fiscal periods ended June 30, 2010, June 30, 2011,
January 31, 2012 and June-3 0, 2012. Ascertain that for each period presented, the total of
revenues, expenditures and transfers account fully for the changes in equity from the previous
fiscal period. Compare amounts for the fiscal period ended June 30, 2010 to the state controller's
report filed for the Redevelopment Agency for that period. Compare the amounts for the other
fiscal periods presented to the account balances in the accounting records or other supporting
schedules.
Finding:
A reconciliation of the financial transactions of the Redevelopment Agency and the Successor
Agency for the fiscal periods ended June 30, 2010, June 30, 2011, January 31, 2012 and
June 30, 2012 is presented in Schedule 4.
Procedure:
Obtain from the Successor Agency a listing of all assets from All Other Funds as of
June 30, 2012. Agree the assets on the listing to the accounting records of the Successor Agency.
Finding:
As of June 30, 2012, the Successor Agency's total assets related to All Other Funds of the former
redevelopment agency amounted to $79,700,695 as shown in Schedule 5.
6. Procedure:
Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that were
restricted for the following purposes:
• unspent bond proceeds,
• grant proceeds and program income restricted by third parties, and
• other assets with legal restrictions.
4
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
6A. Procedure - Unspent Bond Proceeds:
Obtain the Successor Agency's computation of the restricted balances and trace individual
components of this computation to related account balances in the accounting records, or to other
supporting documentation. Obtain the legal document that sets forth the restriction pertaining to
these balances. We agreed the par amount of the bonds, the original issue premium, underwriter's
discount, bond insurance premium, cost of issuance and deposits to the escrow fund to the
Official Statement prepared on the issuance of the bonds. We agreed disbursements over $50,000
to supporting documents. We agreed the reserve balances at June 30, 2012 to a Statement of
Assets held by trustees (BNY Mellon Trust and US Bank). We agreed other balances at
June 30, 2012 to Successor Agency's accounting records.
Finding:
As of June 30, 2012, the Successor Agency had $38,445,842 in unspent bond proceeds as
detailed in Schedule 6.
6B. Procedure - Grant Proceeds and Program Income Restricted by Third Parties:
Obtain the Successor Agency's computation of the restricted balances and trace individual
components of this computation to related account balances in the accounting records, or to other
supporting documentation. Obtain a copy of the grant agreement that sets forth the restriction
pertaining to these balances.
Finding:
This procedure is not applicable as the Successor Agency's assets related to All Other Funds of
the former redevelopment agency did not have grant proceeds and program income restricted by
third parties as of June 30, 2012.
6C. Procedure - Other Assets Considered to be Legally Restricted:
Obtain the Successor Agency's computation of the restricted balances and trace individual
components of this computation to related account balances in the accounting records or other
supporting documentation. We obtained the legal document that sets forth the restriction
pertaining to these balances.
Finding:
This procedure is not applicable as the Successor Agency's assets related to All Other Funds did
not have other assets considered to be legally restricted as of June 30, 2012.
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
7. Procedure:
Obtain from the Successor Agency a listing of assets of All Other Funds of the former
redevelopment agency as of June 30, 2012 that are not liquid or otherwise available for
distribution and ascertain if the values are listed at either purchase cost or market value as
recently estimated by the Successor Agency. For assets listed at purchased cost, trace the amount
to a previously audited financial statement or other accounting records of the Successor Agency
and note any differences. For any differences noted, inspect evidence of asset disposal
subsequent to January 31, 2012 and ascertain that the proceeds were deposited into the Successor
Agency's trust fund. For assets listed at recently estimated market value, inspect evidence
supporting the value and note the methodology used.
Finding:
As of June 30, 2012, the Successor Agency's total assets related to All Other Funds of the former
redevelopment agency that are not liquid amounted to $24,744,718 as shown in Schedule 7.
8A. Procedure:
If the Successor Agency identified that existing asset balances were needed to be retained to
satisfy enforceable obligations, obtain an itemized schedule of asset balances (resources) as of
June 30, 2012 that were dedicated or restricted for the funding of enforceable obligations.
Compare the information on the schedule to the legal documents that formed the basis for the
dedication or restriction of the resource balance in question. Compare all current balances which
needed to be retained to satisfy enforceable obligations to the amounts reported in the accounting
records of the Successor Agency or to an alternative computation. Compare the specified
enforceable obligations to those that were included in the final Recognized Obligation Payment
Schedule (BOPS) approved by the California Department of Finance. If applicable, identify any
listed balances for which the Successor Agency was unable to provide appropriate restricting
language in the legal document associated with the enforceable obligation.
Finding:
As of June 30, 2012, the Successor Agency's asset balances to be retained in order to satisfy
enforceable obligations amounted to $514,957 as detailed in Schedule 8. These enforceable
obligations were reported on ROPS 1. Payments of these obligations are scheduled after
June 30, 2012. These enforceable obligations were not listed on the approved ROPS for the
periods July 1, 2012 to December 31, 2012 (BOPS 2) and January 1, 2013 to June 30, 2013
(BOPS 3). Therefore, the Successor Agency believes that $514,957 of existing asset balances
need to be retained to satisfy these enforceable obligations.
0
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
813. Procedure:
If the Successor Agency identified that future revenues together with balances dedicated or
restricted to an enforceable obligation are insufficient to fund future obligation payments and
thus retention of current balances is required, obtain from the Successor Agency a schedule of
approved enforceable obligations that include a projection of the annual spending requirements to
satisfy each obligation and a projection of the annual revenues available to fund those
requirements. Compare the enforceable obligations to those that were approved by the California
Department of Finance for the six month period from January 1, 2012 through June 30, 2012 and
for the six month period July 1, 2012 through December 31, 2012. Compare the forecasted
annual spending requirements to the legal document supporting the enforceable obligation and
obtain the Successor Agency's assumptions relating to the forecasted annual spending
requirements. Obtain the Successor Agency's assumptions for the forecasted annual revenues.
Disclose the major assumptions for the forecasted annual spending requirements and the
forecasted annual revenues in this AUP report.
Finding:
This procedure is not applicable as the Successor Agency did not identify any assets to be
retained under this procedure.
8C. Procedure:
If the Successor Agency identified that projected property tax revenues and other general purpose
revenues to be received by the Successor Agency are insufficient to pay bond debt service
payments (considering both the timing and amount of the related cash flows), obtain a schedule
demonstrating this insufficiency. Compare the timing and amounts of bond debt service
payments to the related bond debt service schedules in the bond agreement. Obtain the
assumptions for the forecasted property tax revenues and other general purpose revenues and
disclose them in this AUP report.
Finding:
This procedure is not applicable as the Successor Agency did not identify any assets to be
retained under this procedure.
8D. Procedure:
If Procedures 8A, 8B and 8C were performed, calculate the amount of unrestricted balances
necessary for retention in order to meet enforceable obligations. Combine the amount identified
as currently restricted balances and the forecasted annual revenues to arrive at the amount of total
resources available to fund enforceable obligations. Reduce the total resources available by the
amount of forecasted annual spending requirements. Include the calculation in this AUP report.
7
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED-UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
8D. Finding:
The unrestricted balances necessary for retention to meet enforceable obligations is detailed in
Schedule 8. The Successor Agency does not expect any revenues to pay for these enforceable
obligations.
9. Procedure:
If the Successor Agency identified that cash balances as of June 30, 2012 need to be retained to
satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of
July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period of
July 1, 2012 through December 31, 2012 and a copy of the final ROPS for the period
January 1, 2013 through June 30, 2013. For each obligation listed on the ROPS, the Successor
Agency should identify (a) any dollar amount of existing cash that was needed to satisfy the
obligation, and (b) the Successor Agency's explanation as to why the Successor Agency believes
that such balances were needed to satisfy the obligation. Include this schedule as an attachment
to this AUP report.
Finding:
The Successor Agency has identified $10,029,640 in cash balances be retained to satisfy
obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of
July 1, 2012 to December 31, 2012 as shown in Schedule 9.
10. Procedure:
Present a schedule detailing the computation of the Balance Available for Allocation to Affected
Taxing Agencies. Amounts included in the calculation should agree to the results of the
procedures performed above. Agree any deductions for amounts already paid to the County
Auditor-Controller on July 12, 2012 as directed by the California Department of Finance to
evidence of payment.
Finding:
The computation of the Balance Available for Allocation to Affected Taxing Agencies is shown
in Schedule 10. The computation shows that the Successor Agency has a balance of $5,965,538
available for allocation to affected taxing agencies.
8
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO ALL OTHER FUNDS
11. Procedure:
Obtain a representation letter from management of the Successor Agency acknowledging their
responsibility for the data provided and the data presented in the report or in any schedules or
exhibits to the report. Included in the representations is an acknowledgment that management is
not aware of any transfers (as defined by Section 34179.5) from either the former redevelopment
agency or the Successor Agency to other parties for the period from January 1, 2011 through
June 30, 2012 that have not been properly identified in this AUP report and its related schedules
or exhibits. Management's refusal to sign the representation letter should be noted in the AUP
report as required by attestation standards.
Finding:
No exceptions were noted as a result of this Procedure.
W
SCHEDULEI
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE ALL OTHER FUNDS
LISTING OF ASSETS TRANSFERRED TO SUCCESSOR AGENCY
As of February 1, 2012
Total
Assets
as of
February 1, 2012
ASSETS
Cash and investments $ 59,636,745
Cash with fiscal agent (Bond Trustee) 4,527,882
Accounts receivable 592
Advances to City of Tustin 20,976,317
Prepaid costs 3,640
Property held for resale 1,345,000
SUBTOTAL MODIFIED ACCRUAL BASIS 86,490,176
Land 119,000
Building 190,000
Accumulated depreciation (70,617)
TOTAL ASSETS $ 86,728,559
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVLOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
TRANSFERS TO THE CITY OF TUSTIN
FOR THE PERIOD FEBRUARY 1, 2012 THROUGH JUNE 30,2012:
Date of
Transfer Description of Transfer Purpose of Transfer Amount
5/30/2012 Transfer of cash to City of Tustin Payment pursuant to public works $ 8.558,775
reimbursement agreement
SCHEDULE2
Enforceable Obligation/Other
Legal Requirement Supporting Transfer
Public Works Agreement
Reported on ROPS 1, Line 34
SUCCESSOR AGENCY TOT HE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
TRANSFERS TO THE TUSTIN HOUSING AUTHORITY
FOR THE PERIOD FEBRUARY 1, 2012 THROUGH JUNE 30,2012:
Date of
Transfer Description of Transfer Purpose of Transfer
SCHEDULE3
Enforceable Obligation/Other
Amount Legal Requirement Supporting Transfer
5 {3112012 Transfer of cash to Tustin Repayment for Town Center Housing Set- $ 900,000 Town Center Housing Deficit Reduction Plan
Housing Authority Aside funds diverted to support non - housing Reported on RODS 1, Line 17
Redevelopment activities in Town Center
during the period of 1986 - 1991
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
RECONCILIATION OF FINANCIAL TRANSACTIONS FOR THE PERIODS ENDED
JUNE 30, 2010, JUNE 30, 2011, JANUARY 31, 2012 AND JUNE 30, 2012
Assets (modified accrual basis)
Cash and investments
Cash with fiscal agent
Accounts receivable
Interest receivable
Due from the City of Tustin
Loans receivable
Prepaid items
Land held for resale
Total Assets
Liabilities (modified accrual basis)
Accounts payable
Deposits payable
Due to the City of Tustin
Deferred revenue
Total Liabilities
Equity
Total Liabilities and Equity
Total Revenues
Total Expenditures
Total Transfers to the City of Tustin
Total Transfers to Housing Authority
Net change in equity
Beginning Equity
Restatement
Ending Equity
Other Information (show year end
balances for all three years presented):
Capital assets as of end of year
Long -term debt as of end of year
(a)
(b)
Redevelopment
Redevelopment
Agency
Agency
12 Months Ended
12 Months Ended
613012010
6/30/2011
$ 41,474,322
$ 80,401,438
3,572,754
6,400,412
404,850
216,987
160,527
103,155
20,112,456
20,976,317
373,964
373,200
38,383
35,830
26,345,000
1,707,677
$ 92,482,256 $ 110,215,016
$ 2,574,481 $ 3,071,952
10,050 10,936
9,166,411 12,913,285
1,675,473 2,488,668
13,426,415 18, 484, 841
SCHEDULE4
(c)
(c)
Redevelopment
Successor
Agency
Agency
7 Months Ended
5 Months Ended
1/31/2012
6/30/2012
$ 67,583,181
$ 58,324,836
6,400,408
6,400,456
41,776
29,792
21,422,064
21,877,282
30,382,345
-
33,640
10,650
L707,677
1,345,000
$ 127,571,091 $ 87,988,016
$ 2,312,465 $ 2,512347
10,936 1,000
32,948,560 2,995,532
35,271,961 5,508,879
$ 44,089,000 $ 77,600,000 $ 75,010,000 $ 75,010,000
Notes:
(a) Agreed amounts to State Controller's Report
(b) Agreed amounts to audited financial statements
(c) Agreed amounts to Successor Agency's accounting record
(d) The beginning equity was restated to remove land held for resale that is owned by the City of Tustin.
79,055,841
91,730,175
92,299,130
82,479,137
$
92,482,256
$
110,215.016
$
127,571,091
$
87,988,016
$
48,316,675
$
63,078,965
$
16,483,765
$
6,136,887
(51,529,033)
(25,404,631)
(15914,810)
(6,099,505)
-
-
-
(8,558,775)
-
-
-
(1,298,600)
(3,212,358)
37,674,334
568,955
(9,819,993)
82,268,199
79,055,841
91,730,175
92,299,130
-
(25,000,000) (d)
-
-
$
79,055,841
$
91,730,175
$
92,299,130
$
81479,137
$
244,400
$
240,600
$
238383
$
236,800
$ 44,089,000 $ 77,600,000 $ 75,010,000 $ 75,010,000
Notes:
(a) Agreed amounts to State Controller's Report
(b) Agreed amounts to audited financial statements
(c) Agreed amounts to Successor Agency's accounting record
(d) The beginning equity was restated to remove land held for resale that is owned by the City of Tustin.
SCHEDULES
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
LISTING OF ASSETS
As of June 30, 2012
ASSETS
Cash and investments
$ 50,417,353
Cash and investments with trustee
4,527,888
Accounts receivable
550
Interest receivable
29,793
Prepaid costs
10,650
Due from City of Tustin
21,877,282
Bond Issue Costs
1,255,379
Property held for resale
1,345,000
SUBTOTAL MODIFIED ACCRUAL BASIS 79,463,895
Land - 119,000
Building 190,000
Accumulated depreciation (72,200)
TOTAL ASSETS $ 79,700,695
SCHEDULE 6
SUCCESSOR AGENCY TO THE TUSTIN COMMUNI "TY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
UNSPENT BOND PROCEEDS
Per Bond Transcripts
Less: Deposit to Cost of Issuance Fund
1998 Tax
2010 Tax
Total
Par Amount of Bonds
$ 20,805,000
$ 44,170,000
$ 64,975,000
Less: Original Issue Discount
(60,405)
(888,712)
(949,117)
Less: Underwriter's Discount
(156,038)
-
(156,038)
Add: Transfer from Refunded
(19,350,659)
-
(19,350,659)
Bonds Funds and Accounts
891,252
-
891,252
Bond Proceeds
21,479,809
43,281,288
64,761,097
Per Bond Transcripts
Less: Deposit to Cost of Issuance Fund
(366,386)
(453,788)
(820,174)
Less: Deposit to Reserve Fund
(1,677,012)
(2,827,500)
(4,504,512)
Less: Deposit to Interest Account
(85,752)
-
(85,752)
Less: Deposit to Refunding Bond Escrow
(19,350,659)
-
(19,350,659)
Net Bond Funds
-
40,000,000
40,000,000
Deposit to Project Fund
-
40,000,000
40,000,000
Accumulated Interest
-
389,876
389,876
Disbursements:
Date
City of Tustin (Salary and Benefits)
Various
-
(291,902)
(291,902)
First American Title Co
03/11/11
-
(450)
(450)
Hunsaker & Associates
04/01/11
-
(84,350)
(84,350)
NMG Geotechnical Inc
04/08/11
-
(61,297)
(61,297)
Woodruff Spradlin & Smart
05/06/11
-
(5,704)
(5,704)
David Taussig & Associates Inc
06110 /11
-
(1,600)
(1,600)
Woodruff Spradlin & Smart
06/30/11
-
(4,210)
(4,210)
Pacific States Environmental Inc
09/02/11
-
(46,283)
(46,283)
Woodruff Spradlin & Smart
09/16/11
-
(3,026)
(3,026)
Parsons Transportation Group Inc
09/23/11
-
(20,621)
(20,621)
Woodruff Spradlin & Smart
10 /20 /11
-
(4,908)
(4,908)
Woodruff Spradlin & Smart
11 /10 /11
-
(3,705)
(3,705)
Parsons Transportation Group Inc
11 /10 /11
-
(85,743)
(85,743)
Pacific States Environmental Inc
11/23/11
-
(2,860)
(2,860)
Woodruff Spradlin & Smart
12/29/11
-
(2,328)
(2,328)
Parsons Transportation Group Inc
01 /05 /12
-
(78,025)
(78,025)
Sandoval Pipeline Engineering Inc
01/26/12
-
(1,986,329)
(1,986,329)
Pacific States Environmental Inc
02/02/12
-
(390)
(390)
Parsons Transportation Group Inc
02/02/12
-
(203,522)
(203,522)
Sandoval Pipeline Engineering Inc
03/01/12
-
(750,606)
(750,606)
Palen Solutions Inc
03/01/12
-
(4,638)
(4,638)
Sandoval Pipeline Engineering Inc
03/01/12
-
(2345,771)
(2,349,771)
Parsons Transportation Group Inc
04 /05 /12
-
(85,743)
(85,743)
Palen Solutions Inc
04/05/12
-
(4,114)
(4,114)
RBF Consulting
04/19/12
-
(3,260)
(3,260)
Woodruff Spradlin & Smart
04/26/12
-
(3,007)
(3,007)
Sandoval Pipeline Engineering Inc
05/03/12
-
(43,994)
(43,994)
Woodruff Spradlin & Smart
05 /17/12
-
(1,862)
(1,862)
Pacific States Environmental Inc
05/31/12
-
(2,600)
(2,600)
RBF" Consulting
05/31/12
-
(1000)
(3,000)
Sandoval Pipeline Engineering Inc
06/07/12
-
(244,378)
(244378)
Palen Solutions Inc
06/28/12
-
(2,396)
(2,396)
NMG Geotechnical Inc
06/28/12
-
(89,300)
(89,300)
Actual Current Balance
-
33,917,954
33,917,954
Reserve Fund Balance
1,700,269
2,827,619
4,527,888
Total Unspent Bond Proceeds
$
1,700
36,745,573-
45;8U'
SCHEDULE7
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
LISTING OF NONLIQUID ASSETS
As of June 30, 2012
Asset Description
Fair market value change in cash and investments (A)
Prepaid asset
Due from City of Tustin (B)
Property held for resale
Capital assets
Deferred bond issue costs
Basis for
Balance at
Determining Value
June 30, 2012
Fair Market Value
19,607
Cost
10,650
Cost
21,877,282
Cost
1,345,000
Cost
236,800
Cost
1.255.379
$ 24,744,718
(A) The change in fair value of cash and investments was made at June 30, 2012. This is an accounting entry and
the asset is not available for distribution.
(B) Outstanding balance, including accrued interest of promissory note from the City of Tustin dated December 1, 2008.
Balance is not due until December 1, 2013. This asset is not available for distribution.
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
CALCULATION OF CASH BALANCES FOR RETENTION (ROPS 1)
June 30, 2012
Vendor/Pavee
Purpose of Transactions
702
Reported on ROPS 1, Form C, Line 1
AFFLAC
Payment of payroll deductions
Armbruster Goldsmith & Dely
Legal services
AT &T
Phone service
Bank of New York Mellon
Trustee fees for 2010 Tax
55
Allocation Bonds
Capello & Noel LLP
Legal services
County of Orange
Project reimbursement
Developers Research Inc
Development advisor services for
implementation plan and strategy
related to Tustin Legacy
Graffiti Control Systems
Graffiti removal
Kutak Rock LLP
Legal services
National Construction Rental
Fence repairs at MCAS Tustin
Pouch Records Management
Storage services
Progressive Concepts
Payroll checks
RBF Consulting
Consulting fees
SCHEDULE 8
Enforceable Obligation /Other Legal
Amount Requirement Supporting Retention
$ 174 Reported on ROPS 1, Form A, Line 8
26,942
Reported on ROPS 1, Form C, Line 1
702
Reported on ROPS 1, Form C, Line 1
1,854
Reported on ROPS 1, Form A, Line 50
151,033
Reported on ROPS 1, Form C, Line 1
3,401
Reported on ROPS 1, Form A, Line 4
3,933
Reported on ROPS 1, Form A. Line 55
8,936
Reported on ROPS 1, Form A, Line 5
24,318
Reported on ROPS 1, Form C, Line 1
390
Reported on ROPS 1, Form A, Line 62
55
Reported on ROPS 1, Form C, Line 1
766
Reported on ROPS 1, Form C, Line 1
12,845
Reported on ROPS 1, Form A. Lines 56
and 60
SMS Architects Planning services for 8,482 Reported on ROPS 1, Form A, Line 57
implementation plan and strategy
Spectrum Care Landscape Landscaping services for 11,868 Reported on ROPS 1, Form A, Line 63
undeveloped land
City of Tustin Payroll deductions 26 Reported on ROPS 1, Form A, Line 8
Woodruff Spradlin Legal services 236,719 Reported on ROPS 1, Form C, Line 1
Xerox Corporation Copier charges 306 Reported on ROPE 1, Form C, Line 1
City ofTustin Bank fee allocation 837 Reported on ROPS 1, Form C, Line I
City of Tustin Accrued payroll 21,370 Reported on ROPS 1, Form A, Line 8
$ 514957
These enforceable obligations were reported on ROPS I and have been incurred but not paid as ofJune 30, 2012. Payments ofthese
obligations are scheduled after June 30, 2012. These enforceable obligations were not listed on the approved ROPS for the periods
July 1, 2012 to December 31, 2012 (ROPS 2) and January 1, 2013 to June 30, 2013 (ROPS 3). Therefore Successor Agency believes
that $514,957 ofexisting asset balances need to be retained to satisfy these enforceable obligations.
SCHEDULE 9
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
SCHEDULE OF CASH BALANCES FOR RETENTION TO MEET
ENFORCEABLE OBLIGATIONS IN FISCAL YEAR 2012 -2013 (ROPS 2)
County of Orange County administrative fee
Graffiti Control Systems Graffiti removal
City of Tustin Direct project related costs (including
salary and benefits funded by Successor
Agency
Tustin Housing Authority Repayment for Tow Center Housing
Set Aside funds diverted to support
non - housing redevelopment activities
in Town Center during period of 1986 to
1992
US Bank Scheduled debt service payment on 1998
Tax Allocation Refunding Bonds
US Bank Fiscal agent fees on 1998 Tax Allocation
Refunding Bonds
Applied Best Practices; Continuing disclosure and arbitrage fees
Wildand and Associates
Critical Structure Inc Engineering services related to Stevens
Square Parking Structure
Stevens Square Parking Ongoing maintenance costs as required
Structure Condominium by CC &Rs.
Association
City of Tustin Repayment of loan based on city funded
Phase I work
213,000 Reported on ROPS 2, line 4
13,800 Reported on ROPS 2, line 5
299,652 Reported on ROPS 2, line 7
900,000 Town Center Housing Deficit
Reduction Plan
Reported on ROPS 2, line 19
1,492,830 Bond documents
Reported on ROPS 2, line 20
3,300 Reported on ROPS 2, line 21
3,000 Reported on ROPS 2, line 22
8,100 Reported on ROPS 2, line 23
8,920 Stevens Square Parking Garage
Declaration of Covenants, Conditions
Restrictions and Reservations
Reported on ROPS 2, line 24
1,954,712 Public Works Agreement
Reported on BOPS 2, line 36
Enforceable Obligation/
Other Legal Requirement
Payee
Purpose of Transactions
Amount
Supporting Retention
Cash balances needed to be
retained for the funding of future enforceable obligations.
Bank of New York
Scheduled debt service payment on
$ 1,815,181
Bond documents
2010 Housing Tax Allocation Bonds
Reported on BOPS 2, line 1
Bank of New York
Fiscal agent fees on 2010 Housing
3,300
Reported on ROPS 2, line 2
Tax Allocation Bonds
Applied Best Practices;
Continuing disclosure and arbitrage fees
1,350
Reported on ROPS 2, line 3
Wildand and Associates
County of Orange County administrative fee
Graffiti Control Systems Graffiti removal
City of Tustin Direct project related costs (including
salary and benefits funded by Successor
Agency
Tustin Housing Authority Repayment for Tow Center Housing
Set Aside funds diverted to support
non - housing redevelopment activities
in Town Center during period of 1986 to
1992
US Bank Scheduled debt service payment on 1998
Tax Allocation Refunding Bonds
US Bank Fiscal agent fees on 1998 Tax Allocation
Refunding Bonds
Applied Best Practices; Continuing disclosure and arbitrage fees
Wildand and Associates
Critical Structure Inc Engineering services related to Stevens
Square Parking Structure
Stevens Square Parking Ongoing maintenance costs as required
Structure Condominium by CC &Rs.
Association
City of Tustin Repayment of loan based on city funded
Phase I work
213,000 Reported on ROPS 2, line 4
13,800 Reported on ROPS 2, line 5
299,652 Reported on ROPS 2, line 7
900,000 Town Center Housing Deficit
Reduction Plan
Reported on ROPS 2, line 19
1,492,830 Bond documents
Reported on ROPS 2, line 20
3,300 Reported on ROPS 2, line 21
3,000 Reported on ROPS 2, line 22
8,100 Reported on ROPS 2, line 23
8,920 Stevens Square Parking Garage
Declaration of Covenants, Conditions
Restrictions and Reservations
Reported on ROPS 2, line 24
1,954,712 Public Works Agreement
Reported on BOPS 2, line 36
SCHEDULE 9
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO ALL OTHER FUNDS
SCHEDULE OF CASH BALANCES FOR RETENTION TO MEET
ENFORCEABLE OBLIGATIONS IN FISCAL YEAR 2012 -2013 (ROPS 2)
Enforceable Obligation/
Other Legal Requirement
Payee Purpose of Transactions Amount Supporting Retention
Psomas Engineering
Mapping and survey services - Newport
$ 13,800
Reported on ROPS 2, line 40
Avenue /SR 55 North Bound Ramp
Reconfiguration
AndersonPenna
Program management services - Newport
1,875
Reported on ROPS 2, line 41
Avenue /SR 55 North Bound Ramp
Reconfiguration
Dokken Engineering
Design services - Newport Avenue
200
Reported on ROPS 2, line 42
Extension
Nuvis
Landscape design services - Newport
19,290
Reported on ROPS 2, line 43
Avenue Extension
Morrow Management
Dry utility design and coordination -
1,200
Reported on ROPS 2, line 44
Newport Avenue Extension
AndersonPenna
Program management services - Newport
5,000
Reported on BOPS 2, line 41
Avenue Extension
Bank of New York
Scheduled debt service payment on
2,81 1,901
Bond documents
2010 :PICAS Tax Allocation Bonds
Reported on ROPS 2, line 49
Bank of New York
Fiscal agent fees on MCAS 2010 Tax
3,300
Reported on ROPS 2, line 50
Allocation Bonds
Applied Best Practices;
Continuing disclosure and arbitrage fees
1,350
Reported on ROPS 2, line 51
Wildand and Associates
Developers Research Inc
Development advisor services fo
11,000
Reported on ROPS 2, line 55
implementation plan and strategy
RBF Consulting
Plan check and tract mapping services
20,000
Reported on ROPS 2, line 56
SMS Architects
Development advisor services fo
45,000
Reported on ROPS 2, line 57
implementation plan and strategy
Hunsaker and Associates
Disposition strategy and mapping services
16,000
Reported on ROPS 2, line 58
David Tausig & Associate;
Financial advisory services
12,750
Reported on ROPS 2, line 59
RBF Consulting
Preparation of Gateway master plan
20,000
Reported on ROPS 2, line 60
and design of landscape improvements
Compro LLC
Website Hosting Agreement
900
Reported on ROPS 2, line 61
I
SCHEDULE
SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AGREED-UPON PROCEDURES RELATED TO ALL OTHER FUNDS
SCHEDULE OF CASH BALANCES FOR RETENTION TO MEET
ENFORCEABLE OBLIGATIONS IN FISCAL YEAR 2012-2013 (ROPS 2)
Enforceable Obligation/
Other Legal Requirement
Payee Purpose of Transactions Amount Supporting Retention
National Construction Fence repairs at MCAS Tustin
Rental Inc.
Spectrum Landscaping Maintenance of undeveloped land
City of Tustin Administrative Allowance
1,200 Reported on ROPS 2, line 62
35,604 Reported on ROPS 2, line 63
292,125 Administrative Cost Allowance
Reported on ROPS 2, Form C, Line I
$ 10,029,640
SCDEVULE}O
SUCCESSOR AGENCY T0 THE TU8TVNCOMMUNITY REDEVELOPMENT AGENCY
AGREED-UPON PROCEDURES RELATED T0AL[ OTHER FUNDS
SUMMARY 0P BALANCE AVAILABLE FOR ALLOCATION T0 AFFECTED TAXING AGENCIES
Auo[ June 30.2Ol2
Total amount of assets held by the Successor Agency as of June 30, 2012 - (Procedure 5)
79.700,695
Less assets legally restricted for uses specified by debt covenants, grant restrictions,
v, restrictions imposed hy other governments ' (Procedure 6)
(38.445,842)
Less assets that are not cash or cash equivalents (e.g., physical assets) - (Procedure 7)
(24,744,718)
Less balances that are legally restricted for the funding ^fnn enforceable obligation
(net of projected annual revenues available to fund those obligations) - (Procedure 8)
(514.957)
Less balances needed ro satisfy V0P8 for the 20)2-|3 fiscal year ' (Procedure 9)
(10,029,640)
Less the amount of payments made on July 12, 2012 to the County Auditor-Controller
os directed hy the California Department vfFinance
'
Add the amount ^f any assets transferred m the City for which auenforceable
obligation with ^ third party requiring such transfer and obligating the use of
the transferred assets did not exist - (Procedures 2 and 3)
-
Amount tvhe remitted /o County for disbursement w affected taxing agencies
`J I ■ _.
1998 TAX ALLOCATION REFUNDING BOND DOCUMENTS
NEW ISSUE— BOOK -ENTRY ONLY
RATINGS
Moody's: Aaa
Standard & Poor's: AAA
(See "RATINGS" herein)
In the opinion of McFarlin & Anderson, Lake Forest, California, Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions and
assuming, among other marten, compliance with certain covenants and agreements, interest on the 1998 Bonds is excluded from gross income for federal income tax purposes
under ,Section 103 of the Internal Revenue Code of 1986 and is exempt from State of Califbrnia personal income tares. In the opinion of Bond Counsel. interest on the
1998 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum tares, although Bond Counsel observes that interest
an the 1998 Bonds is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding
other tax consequences related to the ownership or disposition of or the accrual or receipt of interest on, the 1998 Bonds. See the information contained herein under the
caption "TAX MATTERS" and the form oicopinion of Bond Counsel attached hereto as Appendix D.
Dated: July 1, 1998
$20,805,000
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
(Town Center Area Redevelopment Project)
Tax Allocation Refunding Bonds, 1998 Series A
Due: December 1, as shown on the inside cover hereof
Proceeds from the sale of the Tustin Community Redevelopment Agency (the "Agency ") (Town Center Area Redevelopment Project) Tax Allocation Refunding
Bonds, 1998 Series A (the "1998 Bonds'), will be used to W refinance redevelopment activities within or of benefit to the Redevelopment Project and specifically
to refund (a) the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution No. RDA 87 -8,
adopted by the Agency on August 3, 1987, in the aggregate principal amount of $8,060,000, of which $5,145,000 remains outstanding, and (b) the Ageno s Town
Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No. RDA 91 -12, adopted by the Agency on
July 15, 1991, in the aggregate principal amount of $13,100,000, of which $12,880,000 remains outstanding; and 60 to provide for the cost of issuing the 1998
Bonds.
Interest on the 1998 Bonds will be payable semi - annually on each June i and December 1, commencing December 1, 1998 (each, an "Interest Payment
Date "). The 1998 Bonds will be issued in fully registered form without coupons and will be registered in the name of Cede & Co., as nominee for The Depositor,
Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the 1998 Bonds. Purchases of beneficial interests in the 1998 Bonds will
be made in book -entry form only in denominations of $5,000 or any integral multiple thereof. Purchasers of such beneficial interests will not receive physical
certificates representing their interests in the 1998 Bonds. Payment of principal of, interest and premium, if any, on the 1998 Bonds will be made directly to DTC
or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the 1998 Bonds. Disbursement of such payments to the DTC Participants
(as defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC
Participants, as more fully described herein. See "THE 1998 BONDS — Book -Entry -Only System" herein.
The 1998 Bonds will be issued under an Indenture of Trust, dated as of July 1, 1998 (the "Indenture "), by and between the Agency and U.S. Bank Trust
National Association, as trustee (the "Trustee"). The 1998 Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of that
portion of the tax increment revenues receivable by the Agency with respect to the 72swn Center Redevelopment Project Area pursuant to section 333343 of the
Redevelopment Law (herein referred to as the "Tax Revenues "), subject to the provisions of the Indenture permitting the application thereof for other purposes,
and by a pledge of amounts in certain funds and accounts established under the Indenture, as further discussed herein.
The 1998 Bonds are subject to optional and mandatory redemption prior to maturity. See "THE 1998 BONDS — Redemption" herein.
The scheduled payment of principal ofand interest on the 1998 Bonds will be insured by a municipal bond insurance policy to be issued simultaneously with
delivery of the 1998 Bonds by MBIA Insurance Corporation.
THE 1998 BONDS ARE SPECIAL, OBLIGATIONS OF THE AGENCY PAYABLE SOLEI Y FROM THE "FAX REVENUES, AS DESCRIBED HEREIN,
AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS MAINTAINED UNDER THE INDENTURE AND, AS SUCH, ARE NOT A DEBT OF THE
CITY OR THE STATE OF CALIFORNIA, OR ANY OF THE STATE'S POLITICAL SUBDIVISIONS, AND NEITHERTHE CITY NOR THE STATE OF
CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS, IS LIABLE THEREFOR. THE 1998 BONDS ARE NOT PAYABLE FROM, AND ARE
NOT SECURED BY, ANYTAX INCREMENT REVENUES OF THE AGENCY, OTHERTHAN THETAX REVENUES PLEDGED PURSUANT TO THE
INDENTURE. THE 1998 BONDS DO NO "I- CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSONS RESPONSIBLE FOR
']-HE EXECUTION OF THE 1998 BONDS IS LIABLE PERSONALLY FOR PAYMENT OF THE 1998 BONDS BY REASON OF THEIR ISSUANCE
MATURITY SCHEDULE IS LOCATED ON THE INSIDE FRONT COVER
This cover page contains information for quick reference only. It is not intended to he a summary of all factors relating to an investment in the 1998 Bonds.
Investors must read the entire Official Statement, including the cover page and appendices hereto, to obtain information essential to making an informed investment
decision with respect to the 1998 Bonds,
l e 1998 Bondi are offered when. as and if issued, subject to the approval as to their legality by Mr'Farlin Anderson, Lake Forest, California. Bond Cotosel, and
subject to certain other conditions. Certain legal matters will be passed upon for the Agenry by the City Attorney acing as Agency Counsel and by McFarlin & Anderson.
Lake Forest, California, as Disclosure Counsel It is anticipated that the 1998 Bonds will be avai4ablr for delivery through DTC in New fork. New )ark, on or about
August -t. 1998_
John Nuveen & Co.
Incorporated
Dated: Jul, 8, 1998
MATURITY SCHEDULE
Maturities, Principal Amounts, Interest Rates and Prices or Yields
$20.805,000 Serial 1998 Bonds
Maturity
Principal
Interest
Maturity
Principal
Interest
Price or
December I
Amount
Rate
Yield
December I
Amount
Rate
Yield
1998........
$ 775,000
3.50%
3.50%
2008........
$1,105,000
4A0%
4.4i%
1999 ........
760,000
3.70
3.70
2009........
1,150,000
4.50
4.55
2000........
795,000
3,85
3.85
2010........
1,205,000
4.65
4.65
2001 ........
825,000
3.90
3.95
2011 .....
1,255,000
4.75
4.75
2002........
850.000
4.00
4.05
2012 .....
1,315,000
4.85
4.85
2003........
890,000
4.10
4.15
2013
1.380.000
4.90
4,95
2004........
920.000
4.20
4.20
2014 ......
1.445,000
5.00
5.00
2005 ........
960,000
4.30
4.30
2015
1,525,000
5.(X)
i.()�;
2006........
1,000,000
5.00
4.35
2016........
1,5950X)
4.75
10
510
2017........
1.055.000
4.30
4.40
CITY OF TUSTIN AND
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
City Council
Thomas R. Saltarelli, Mayor
Tracy Wills Worley, Mayor Pro Tern
Mike Doyle, Councilmember
Jim Potts, Councilmember
Jeffery M. Thomas, Councilmember
Agency Board
Thomas R. Saltarelli, Chairperson
Tracy Wills Worley, Chairperson Pro Tern
Mike Doyle, Agency Member
Jim Potts, Agency Member
Jeffery M. Thomas, Agency Member
City Staff
William A. Huston, City Manager
Christine Shingleton, Assistant City Manger
Pamela Stoker, City Clerk
Elizabeth Binsack, Director of Community Development
Steve Foster, Chief of Police
Ron Nault, Finance Director
Tim Serlet, Director of Public Works
G.W. Jeffries, CCMT, Treasurer
City Attorney and Agency General Counsel
Woodruff, Spradlin & Smart, a professional corporation
Orange, California
SPECIAL SERVICES
Financial Advisor
Public Financial Management
Newport Beach California
Bond Counsel and Disclosure Counsel
McFarlin & Anderson
Lake Forest, California
Trustee
U.S. Bank Trust National Association
Los Angeles, California
Underwriter
John Nuveen & Co. Incorporated
Irvine, California
No dealer, broker, salesperson or other person has been authorized by the Agency or the Underwriter to
give any information or to make any representations in connection with the offer or sale of the 1998 Bonds
other than those contained herein and, if given or made, such other information or representations must not
be relied upon as having been authorized by any ofthe foregoing. This Official Statement does not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 1998 Bonds by a person
in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the 1998 Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion,
whether or not expressly so described herein, are intended solely as such and are not to be construed as
representations of fact.
The information set forth herein has been obtained from sources which are believed to be reliable but
such information is not guaranteed as to accuracy or completeness, and is not to be construed as a
representation by the Underwriter or the Agency. The information and expressions of opinions herein are
subject to change without notice, and neither the delivery of this Official Statement nor any sale made
hereunder shall, under any circumstances, create any implication that there has been no change in the affairs
of the Agency since the date hereof. All summaries of the Indenture and other documents are made subject
to the provisions of such documents and do not purport to be complete statements of any or all such
provisions.
This Official Statement is submitted in connection with the sale of the 1998 Bonds referred to herein and
may not be reproduced or used, in whole or in part, for any other purpose.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOTOREFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 1998 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
UNDERWRITER MAY OFFER AND SELL THE 1998 BONDS TO CERTAIN DEALERS AND DEALER
BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING
PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE
CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
TABLE OF CONTENTS
INTRODUCTION
Page
General.............................................. ............................... i
TheAgency .......................................... ............................... I
Purpose of Issuance . ............................... .. ............................... 1
The Project Area ...................................... ............................... I
The1998 Bonds ....................................... ............................... 2
Source of Payment for the Bonds ......................... ............................... 2
ParityDebt ........................................... ............................... 3
Continuing Disclosure .................................. ............................... 3
TaxMatters .......................................... ............................... 4
Municipal Bond Insurance ............................... ............................... 4
Professionals Involved in the Offering ..................... ............................... 4
Other Information ..................................... ............................... 4
PLAN OF REFUNDING
Refunding of 1987 Bonds ............................... ............................... 4
Refunding of 1991 Bonds ............................... ............................... S
ESTIMATED SOURCES AND USES OF FUNDS .................. ............................... 6
DEBT SERVICE SCHEDULE .................................. ............................... 7
THE 1998 BONDS
General Provisions ..................................... ............................... 7
Redemption.......................... .............. ............................... 8
Book- Entry -Only System ................................ ............................... 9
Discontinuance of DTC Services ......................... ............................... II
SECURITY FOR THE 1998 BONDS
TaxRevenues ........................................ ............................... 12
Pledge of Tax Revenues ............................... ............................... 13
Limited Obligations ................................... ............................... 14
Reserve Account ..................................... ............................... 14
Issuance of Parity Debt ................................ ............................... 14
Funds and Accounts; Flow of Funds ...................... ............................... 16
THE MUNICIPAL BOND l?;SUP.ANCE POLICY
Payment Pursuant to Municipal Bond Insurance Policy ....... ............................... 18
MBIA Insurance Corporation ........................... ............................... 19
RISK FACTORS
Bonds Are Limited Obligations and Not General Obligations .. ............................... 20
Tax Revenues ........................................ ............................... 20
Estimated Tax Revenues ............................... ............................... 21
Educational Revenue Augmentation Fund; State Budget ...... ............................... 21
Seismic Considerations ................................ ............................... 22
Hazardous Substances ................................. ............................... 22
Loss of Tax Exemption ................................ ............................... 22
Assumptions and Projections ............................ ............................... 23
LIMITATIONS ON TAX REVENUES
Property Tax Collection Procedures ...................... ............................... 23
Supplemental Assessments ............................. ............................... 24
TaxCollection Fees ................................... ............................... 24
in
Property Tax Rate Limitations — Article XIIIA ............................................. 24
Legislation Implementing Article XIIIA .................................................. 25
Appropriation Limitation — Article XITIB; .................. ............................... 25
Unitary Taxation of Utility Property ................................................... 26
Exclusion of Tax Revenues for General Obligation Bonds Debt Service ......................... 26
Housing Set-Aside ................................................................... 27
Proposition 218 ..................................................................... 28
Future Initiatives or Legislation ......................................................... 28
Redevelopment Plan Limitations Under AB 1290 ........................................... 28
THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
Organization.......................................................................
29
AgencyStaff .......................................................................
29
Agency Powers and Duties ............................................................
30
Financial Information ................................................................
30
Investment of Agency Funds ...........................................................
30
Controls, Land Use and Building Restrictions .............................................
30
TOWN CENTER AREA REDEVELOPMENT PROJECT
Background............................................................. ..........
33
Controls, Land Use and Building Restrictions .............................................
34
Major Development Activities in the Project Area ..........................................
34
TAX REVENUES
Historical and Estimated Tax Revenues ................... ...............................
36
COVERAGE ANALYSIS
Debt Service Coverage ................................ ...............................
37
CERTAIN LEGAL MATTERS ................................................................
38
CONTINUING DISCLOSURE ..................... ..................... ....................
38
ABSENCE OF LITIGATION .................................................................
38
VERIFICATION OF MATHEMATICAL ACCURACY ............................................
38
FINANCIAL ADVISOR .....................................................................
39
TAX MATTERS ................... .......................................................
39
UNDERWRITING .........................................................................
40
RATINGS... . ............................................................................
40
PROFESSIONAL FEES .......... ..........................................................
40
MISCELLANEOUS . . ......................................................................
41
APPENDIX A - Summary of Certain Provisions of the Indenture ....................................
A-1
APPENDIX B - General Information Regarding the City ..........................................
B-I
APPENDIX C - Agency's Audited Financial Statements for Fiscal Year Ending June 30, 1997 ............
C-1
APPENDIX D - Form of Bond Counsel Opinion .................................................
D-1
APPENDIX E - Form of Continuing Disclosure Certificate .........................................
E-I
APPENDIX F - Form of Municipal Bond Insurance Policy ........... ...............................
F-I
me
OFFICIAL STATEMENT
$20,805,000
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
(Tustin Center Area Redevelopment Project)
Tax Allocation Refunding Bonds, 1998 Series A
INTRODUCTION
General
This Official Statement of the Tustin Community Redevelopment Agency (the "Agency ") provides
information regarding the sale by the Agency of $20,805,000 aggregate principal amount of the Agency's
(Tustin Center Area Redevelopment Project) Tax Allocation Refunding Bonds, 1998 Series A (the "1998
Bonds ").
Definitions of certain capitalized terms used in this Official Statement are set forth in "APPENDIX
A— SUMMARY OF CERTAIN PROVISIONS OF TBE INDENTURE" hereto. This Official Statement
contains brief descriptions of the 1998 Bonds, the Indenture (as defined herein) and the Agency. Such
descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to
documents are qualified in their entirety by reference to such documents, and references to the 1998 Bonds
are qualified in their entirety by reference to the form of the 1998 Bonds included in the Indenture. Copies
of the Indenture and other documents described in this Official Statement may be obtained from the Trustee
(described below) at its corporate trust office in Los Angeles, California.
The Agency
The Agency was activated by the City Council of the City of Tustin under the provisions of
Ordinance No. 696 -A, adopted October 20, 1976. The five members of the City Council serve as the
governing body of the Agency and exercise all rights, powers, duties and privileges of the Agency.
Purpose of Issuance
Proceeds from the sale of the 1998 Bonds will be used (i) to refinance redevelopment activities
within or of benefit to the Redevelopment Project and specifically to refund (a) the Agency's Town Center
Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987, issued pursuant to Resolution
No. RDA 87 -8, adopted by the Agency on August 3,1987, in the aggregate principal amount of $8,060,000,
of which $5,145,000 remains outstanding (the "1987 Bonds "), and (b) the Agency's Town Center Area
Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991, issued pursuant to Resolution No.
RDA 91 -12, adopted by the Agency on July 15, 1991, in the aggregate principal amount of $13,100,000, of
which $12,880,000 remains outstanding (the "1991 Bonds" and, with the 1987 Bonds, the "Prior Bonds ");
(ii) to fund a reserve account for the 1998 Bonds and (iii) to provide for the costs of issuing the 1998 Bonds.
The Project Area
The Agency adopted a redevelopment plan (the "Redevelopment Plan") for the Project Area pursuant
to Ordinance No. 701 enacted by the City Council of the City on November 22,1976, amended by Ordinance
No. 855 (the "First Amendment") enacted by the City Council of the City on September 8, 1981 to increase
the limitation on the average yearly tax increment which could be collected and allocated to projects and
programs from $600,000 to $3,000,000 per year and to increase the limitation on bonded indebtedness from
$6,500,000 to $20,000,000. The First Amendment also permitted the Agency to issue bonds or incur
obligations which may extend beyond the November 22, 2006 termination date of the Redevelopment Plan.
On March 20, 1989 by Ordinance No. 1021 (the "Second Amendment"), the Agency further amended the
Redevelopment Plan to expand the list of eligible projects within the Project Area and to (i) convert the
yearly tax increment limit from $3,000,000 per year to a cumulative total of $90,000,000 and (ii) to increase
the amount of bonded indebtedness to be repaid with tax increment revenues that may be outstanding at any
onetime from $20,000,000 to $35,000,000. The Second Amendment also revised and updated the list of
public improvements and extended the time limit on eminent domain authority. On November 21, 1994, the
Agency adopted Ordinance No. 1141 amending the Redevelopment Plan (the "Third Amendment") to
establish a time Iimit for incurring indebtedness or receipt of property taxes and a time limit on the
effectiveness of the Redevelopment Plan of November 22, 2016.
The Project Area consists of approximately 360 acres in the center of the City, and contains
commercial, service - commercial, neighborhood commercial, and residential land uses. The total assessed
valuation of taxable property in the Project Area in fiscal year 1997 -98 is $205,307,184 greater than the
adjusted assessed valuation in the base year. See "TAX REVENUES" herein. Assessed valuations in the
Project Area are subject to numerous risks which could result in decreases from those reported for fiscal year
1997 -98. See "RISK FACTORS" herein.
The 1998 Bonds
The 1998 Bonds are being issued pursuant to the laws of the State of California (the "State "),
including the provisions of issued pursuant to Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title
5 ofthe California Government Code, commencing with section 53570 of said Code (the "Law "), Resolution
No. RDA -98 -2, adopted by the Agency on June 15,1998 (the "Resolution "), and an Indenture of Trust, dated
as of July 1, 1998, between the Agency and U.S. Bank Trust National Association, as trustee (the
"Indenture").
The 1998 Bonds will be issued in denominations of $5,000 each or integral multiples thereof.
Interest on the 1998 Bonds is payable on each June 1 and December 1, commencing on December 1, 1998.
Interest and principal on the 1998 Bonds are payable by the Trustee to DTC which will be responsible for
remitting such principal and interest to the Participants which will in turn be responsible for remitting such
principal and interest to the Beneficial Owners of the 1998 Bonds. No physical distribution of the 1998
Bonds will be made to the public initially. See "THE 1998 BONDS — Book - Entry -Only System" herein.
Source of Payment for the Bonds
The Bonds are special obligations of the Agency and are payable from and secured by a pledge of
Tax Revenues, and amounts in certain funds and accounts held under the Indenture. The term Tax Revenues
is defined in the Indenture as all taxes annually allocated to the Agency with respect to the Project Area
following the Closing Date pursuant to Article 6 of Chapter 6 (commencing with Section 33 670) of the Law
and Section 16 of Article XVI of the California Constitution and as provided in the Redevelopment Plan,
including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to
ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (a) all amounts of
N
such taxes required to be paid by the Agency to other taxing agencies pursuant to pass - through agreements
or similar tax- sharing agreements entered into pursuant to Section 33401 ofthe Redevelopment Law existing
on the Closing Date and (b) all amounts of such taxes required to be deposited into the Low and Moderate
Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment
Law.
The Tax Revenues are not subject to the pledge and lien of any indebtedness of the Agency other
than the 1998 Bonds and any Parity Debt issued in accordance with the Indenture. The Bonds are not
payable from, and are not secured by, any Tax Increment Revenues (as defined below) of the Agency other
than the Tax Revenues. See "SECURITY FOR THE 1998 BONDS" herein.
Parity Debt
The Indenture provides that the Agency may issue loans, advances or indebtedness issued or incurred
by the Agency secured by a pledge of Tax Revenues (as such term is defined in the Indenture for purposes
of issuing Parity Debt) on a parity with outstanding Bonds provided, among other conditions specified in the
Indenture, that (i) the Agency shall be in compliance with all covenants set forth in the Indenture and all
Supplemental Indentures; (ii) the Tax Revenues for the then current Bond Year, based on the most recent
assessed valuation of property in the Project Area as evidenced in written documentation from an appropriate
official of the County, plus, at the option of the Agency, the Additional Allowance, shall be at least equal
to one hundred twenty -five percent (125 %) of Maximum Annual Debt Service on all Bonds and Parity Debt
which will be Outstanding following the issuance of such Parity Debt; (iii) the Supplemental Indenture
providing for the issuance of such Parity Debt shall provide that (A) interest on said Parity Debt shall be
payable on June 1 and December 1 in each year of the term of such Parity Debt except the first twelve month
period, during which interest may be payable on any June 1 or December 1; and (B) the principal of such
Parity Debt shall be payable on December 1 in any year in which principal is payable; (iv) the Supplemental
Indenture providing far the issuance of such Parity Debt may provide for the establishment of separate funds
and accounts; (v) the aggregate amount of the principal of and interest on all Outstanding Bonds and
Subordinate Debt coming due and payable following the issuance of such Parity Debt shall not exceed the
maximum amount of Tax Revenues permitted under the Plan Limit to be allocated and paid to the Agency
following the issuance of such Parity Debt; (vi) an opinion of Bond Counsel stating (A) that the
Supplemental Indenture relating to the Parity Debt is valid and enforceable in accordance with its terms, (B)
that such Supplemental Indenture creates a valid pledge of that which it purports to pledge, and (C) that the
total principal amount of Parity Debt to be issued or incurred and then Outstanding will not exceed any limit
imposed by law; and (vii) the Supplemental Indenture providing for the issuance of such Parity Debt shall
provide for the deposit into the Reserve Account of an amount required to cause the balance therein to equal
the full amount of the Reserve Requirement or shall make provision for a Qualified Surety Bond in lieu of
cash - funding the Reserve Account, or a combination of cash and a Qualified Surety Bond.
Continuing Disclosure
The Agency has covenanted, pursuant to a Continuing Disclosure Certificate dated as of July 1,
1998, for the benefit of holders and beneficial owners of the 1998 Bonds to provide certain financial
information and operating data related to the Agency by not later than 270 days following the end of the
Agency's Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated
events, if material. The Annual Report will be filed by the Agency with each Nationally Recognized
Municipal Securities Information Repository, and with the appropriate State information depository, if any.
The notices of material events will be filed by the Agency with the Municipal Securities Rulemaking Board
(and with the appropriate State information depository, if any). The specific nature of the information to be
contained in the Annual Report or the notices of material events is summarized below under the caption
3
"APPENDIX E —Farm of Continuing Disclosure Certificate." These covenants have been made in order to
assist the Underwriter in complying with S.E.C. Rule 15c2- 12(bx5).
Tax Matters
In the opinion of McFarlin & Anderson, Lake Forest, California, Bond Counsel, based on an
analysis of existing laws, regulations, rulings and court decisions and assuming, among other
matters, compliance with certain covenants and agreements, interest on the 1998 Bonds is excluded
from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code
of 1986 and is exempt from State of California personal income taxes. In the opinion of Bond
Counsel, interest on the 1998 Bonds is not a specific preference item for purposes of the federal
individual or corporate alternative minimum taxes, although Bond Counsel observes that interest on
the 1998 Bonds is included in adjusted current earnings when calculating corporate alternative
minimum taxable income. Bond Counsel expresses no opinion regarding other tax consequences
related to the ownership or disposition of, or the accrual or receipt of interest on, the 1998 Bonds.
See "TAX MATTERS" herein.
Municipal Bond Insurance
Payment of principal of and interest on the 1998 Bonds as the same shall become due will become
secured by a financial guaranty insurance policy to be issued simultaneously with the issuance of the 1998
Bonds by MBIA Insurance Corporation. See "THE MUNICIPAL BOND INSURANCE POLICY" herein.
Professionals Involved in the Offering
Public Financial Management, Newport Beach, California, is the Agency's financial advisor with
respect to the 1998 Bonds. The proceedings of the Agency in connection with the issuance of the 1998
Bonds are subject to the approval as to their legality of McFarlin & Anderson, Lake Forest, California, Bond
Counsel to the Agency. The Underwriter for the 1998 Bonds is John Nuveen & Co. Incorporated. McFarlin
& Anderson, Lake Forest, California, will serve as Disclosure Counsel. U.S. Bank Trust National
Association, Los Angeles, California, will act as the Trustee under the Indenture.
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject
to change.
PLAN OF REFUNDING
Refunding of 1987 Bonds
A portion of the proceeds from the sale of the 1998 Bonds, together with certain funds made
available through the defeasance ofthe 1987 Bonds, will be deposited in trust with U.S. Bank Trust National
Association (the "Escrow Agent") pursuant to an escrow deposit and trust agreement (the "1987 Bonds
Escrow Agreement"). The funds deposited with the Escrow Agent will be applied to the purchase of direct
obligations of the United States of America (the "1987 Bonds Escrow Securities "). The 1987 Bonds Escrow
Securities, including interest thereon, together with other moneys held in trust by the Escrow Agent, will be
sufficient to pay principal and interest coming due on the 1987 Bonds through November 1, 1998, and to
4
redeem all of the then outstanding 1987 Bonds in full on November 1, 1998, together with a redemption
premium of 1 -112 %. The foregoing deposit with the Escrow Agent will result in the defeasance of the 1987
Bonds, pursuant to the provisions of the financing documents under which they were issued, as of the date
of issuance of the 1998 Bonds. See "VERIFICATION OF MATHEMATICAL ACCURACY" herein.
The 1987 Bonds Escrow Securities and other moneys held by the Escrow Agent under the 1987
Bonds Escrow Agreement are pledged to the payment of the 1987 Bonds. Neither the principal of the 1987
Bonds Escrow Securities deposited with the Escrow Agent nor the interest thereon will be available for the
payment of the 1998 Bonds.
Refunding of 1991 Bonds
A portion of the proceeds from the sale of the 1998 Bonds, together with certain funds made
available through the defeasance of the 1991 Bonds, will be deposited in trust with the Escrow Agent
pursuant to an escrow deposit and trust agreement (the "1991 Bonds Escrow Agreement "). The funds
deposited with the Escrow Agent will be applied to the purchase of direct obligations of the United States
of America (the "1991 Bonds Escrow Securities "). The 1991 Bonds Escrow Securities, including interest
thereon, together with other moneys held in trust by the Escrow Agent, will be sufficient to pay principal and
interest coming due on the 1991 Bonds through December 1, 2001, and to redeem all of the then outstanding
1991 Bonds in full on December 1, 2001, together with a redemption premium of 2 %. The foregoing deposit
with the Escrow Agent will result in the defeasance of the 1991 Bonds, pursuant to the provisions of the
financing documents under which they were issued, as of the date of issuance of the 1998 Bonds. See
"VERIFICATION OF MATHEMATICAL ACCURACY" herein.
The 1991 Bonds Escrow Securities and other moneys held by the Escrow Agent under the 1991
Bonds Escrow Agreement are pledged to the payment of the 1991 Bonds. Neither the principal of the 1991
Bonds Escrow Securities deposited with the Escrow Agent nor the interest thereon will be available for the
payment of the 1998 Bonds.
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth a summary of the estimated sources and uses of funds associated with
the issuance and sale of the 1998 Bonds.
Table 1
.. . _it; r.
Par Amount of 1998 Bonds $20,805,000.00
Plus: Accrued Interest 85,752.10
Plus: Released 1987 Bond Moneys 805,500.00
Less: Original Issue Discount 60,404.90
Total Sources $21,635,847.20
Uses of Funds
Deposit to 1987 Bonds Escrow Fund
Deposit to 1991 Bonds Escrow Fund
Deposit to Reserve Account
Deposit to Costs of Issuance Fund
Deposit to Interest Account cad
Underwriter's Discount
Total Uses
$5,394,471.00
13,956,188.00
1,677,012.50
366,386.10
85,752.10
156,037.50
$21,635,847.20
Costs of issuance includes, among other things, fees and expenses of bond counsel, disclosure counsel, financial adviser,
verification agent, rating agency and Trustee, premium for Municipal Bond Insurance Policy and printing expenses.
(2) Represents accrued interest from July 1, 1998.
i 01 Do 1.30 dki 31 MrSTARM112 iIi_ 0 yy
The following table sets forth the scheduled debt service for the 1998 Bonds, assuming no prior
redemption.
Table 2
Year
Total
Ending
Debt
(December 1)
Principal
Interest
Service
1998
$775,000.00
$389,782.29
$1,164,782.29
1999
760,000.00
908,352.50
1,668,352.50
2000
795,000.00
880,232.50
1,675,232.50
2001
825,000.00
849,625.00
1,674,625.00
2002
850,000.00
817,450.00
1,667,450.00
2003
890,000.00
783,450.00
1,673,450.00
2004
920,000,00
746,960.00
1,666,960.00
2005
960,000.00
708,320.00
1,668,320.00
2006
1,000,000.00
667,040.00
1,667,040.00
2007
1,055,000.00
617,040.00
1,672,040.00
2008
1,105,000.00
571,675.00
1,676,675.00
2009
1,150,000.00
523,055.00
1,673,055.00
2010
1,205,000.00
471,305.00
1,676,305.00
2011
1,255,000.00
415,272.50
1,670,272.50
2012
1,315,000.00
355,660.00
1,670,660.00
2013
1,380,000.00
291,882.50
1,671,882.50
2014
1,445,000.00
224,26250
1,669,262.50
2015
1,525,000.00
152,012.50
1,677,012.50
2016
1,595,000.00
75.762.50
1,670.762.50
$20,805,000.00
$10,449,139.79
$31,254,139.79
THE 1998 BONDS
General Provisions
The 1998 Bonds will be issued and sold in the aggregate principal amount of $20,805,000. The 1998
Bonds will be delivered in registered form, without coupons, in authorized denominations of $5,000 or any
integral multiples thereof. Interest on the 1998 Bonds is payable semiannually on June I and December 1
of each year, commencing December 1, 1998 (each, an "Interest Payment Date "), to the registered owner
thereof as of the close of business on the fifteenth (I 5th) calendar day of the month preceding each Interest
Payment Date, whether or not such fifteenth (I 5th) calendar day is a business day (each, a "Record Date ").
Principal of the 1998 Bonds will be payable on December 1 in each of the years and in the amounts shown
on the cover page hereof.
Interest on the 1998 Bonds is payable by check of the Trustee mailed by first class mail, postage
prepaid, on each Interest Payment Date to the owners of the 1998 Bonds at their respective addresses shown
7
on the registration books kept by the Trustee as of the applicable Record Date; provided, however, that
payment of interest to each registered owner of $1,000,000 or more aggregate principal amount of Bonds,
as applicable, may be made by wire transfer to an account in the continental United States of America
designated by such owner in a written request filed with the Trustee prior to such Record Date. Principal
of the 1998 Bonds is payable in lawful money of the United States by check of the Trustee upon presentation
and surrender thereof at the corporate trust office of the Trustee in St. Paul, Minnesota.
The 1998 Bonds will be dated as of July 1, 1998 and will bear interest (calculated on the basis of a
360 -day year comprised of twelve 30 -day months) from the Interest Payment Date next preceding the date
of authentication thereof, unless (i) a Bond is authenticated on or before an Interest Payment Date and after
the close of business on the preceding Record Date, in which event such Bond will bear interest from such
Interest Payment Date, or (ii) a Bond is authenticated on or before the first Record Date, in which event such
Bond will bear interest from July 1, 1998, or (iii) interest on any Bond is in default as of the date of
authentication thereof, in which event interest thereon will be payable on each Interest Payment Date from
the date to which interest has been paid in full. Interest on any of the 1998 Bonds which is not punctually
paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the
ownership of such Bond is registered on the registration books of the Trustee at the close of business on a
special record date for the payment of such defaulted interest to be fixed by the Trustee.
Redemption
Optional Redemption of 1998Bonds. The 1998 Bonds maturing on or before December 1, 2008, are
not subject to optional redemption prior to maturity. The 1998 Bonds maturing on or after December 1,
2009, shall be subject to redemption, at the option of the Agency on any date on or after December 1, 2008,
as a whole or in part, by such maturities as shall be determined by the Agency, and by lot within a maturity,
from any available source of funds, at the following redemption prices (expressed as percentages of the
principal amount of the 1998 Bonds to be redeemed) together with accrued interest thereon to the date fixed
for redemption.
Redemption Periods Price
December 1, 2008 through November 30, 2009 101%
December 1, 2009 through November 30, 2010 100 -112
December 1, 2010 and thereafter 100
The Agency shall be required to give the Trustee written notice of its intention to redeem 1998 Bonds
with a designation of the maturities to be redeemed at least sixty (60), but not more than ninety (90) days,
prior to the date fixed for such redemption, and shall transfer to the Trustee for deposit in the Debt Service
Fund all amounts required for such redemption at least five (5) Business Days prior to the date fixed for such
redemption.
.Notice of Redemption. The Trustee on behalf and at the expense of the Agency shall mail (by fast
class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days
prior to the redemption date, to (i) the Owners of any Bonds designated for redemption at their respective
addresses appearing on the Registration Books, and (ii) the Securities Depositories and to one or more
Information Services designated in a Written Request of the Agency filed with the Trustee; but such mailing
shall not be a condition precedent to such redemption and neither failure to receive any such notice nor any
defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation
of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall
state that such redemption is conditioned upon the timely delivery of the redemption price by the Agency to
the Trustee for deposit in the Redemption Account, shall designate the CUSIP number of the Bonds to be
redeemed, shall state the individual number of each Bond to be redeemed or shall state that all Bonds
between two stated numbers (both inclusive) or all of the Bonds Outstanding are to be redeemed, and shall
require that such Bonds be then surrendered at the Principal Corporate Trust Office for redemption at the
redemption price, giving notice also that further interest on such Bonds will not accrue from and after the
redemption date.
Upon the payment of the redemption price of 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.
Partial Redemption ofBonds. In the event only a portion of any Bond is called for redemption, then
upon surrender of such Bond the Agency shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same interest rate and maturity,
of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Bond to
be redeemed.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the
payment of the redemption price of and interest on the Bonds so called for redemption shall have been duly
deposited with the Trustee, such Bonds so called shall cease to be entitled to any benefit under the Indenture
other than the right to receive payment of the redemption price and accrued interest to the redemption date,
and no interest shall accrue thereon from and after the redemption date specified in such notice.
Manner of Redemption. Whenever any Bonds or portions thereof are to be selected for redemption
by lot, the Trustee shall make such selection, in such manner as the Trustee shall deem appropriate, and shall
notify the Agency thereof. In the event of redemption by lot of Bonds, the Trustee shall assign to each Bond
then Outstanding a distinctive number for each $5,000 of the principal amount of each such Bond. The
Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected, but only so much of
the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall
equal $5,000 for each number assigned to it and so selected. All Bonds redeemed or purchased pursuant to
the Indenture shall be canceled.
Book-Entry-Only System
unless otherwise noted, the following description of the procedures and record beeping with respect
to beneficial ownership interests in the 1998 Bonds, payment ofprincipal of and interest on the 1998 Bonds
to Participants or Beneficial Owners (as such terms are defined below) of the 1998 Bonds, confirmation and
transfer of beneficial ownership interests in the 1998 Bonds and other Bond - related transactions by and
between DTC, Participants and Beneficial Owners of the 1998 Bonds is based solely on information
furnished by DTC to the Agency which the Agency believes to be reliable, but the Agency and the
Underwriter do not and cannot make any independent representations concerning these matters and do not
take responsibility for the accuracy and completeness thereof Neither the DTC Participants nor the
Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead
confirm the same with DTC or the DTC Participants, as the case may be.
When the 1998 Bonds are issued, ownership interests will be available to purchasers only through
a book- entry -only system maintained by DTC. Beneficial ownership in the 1998 Bonds may be acquired or
transferred only through book entries made on the records of DTC and its Participants. If the 1998 Bonds
are taken out of the book- entry -only system and delivered to owners in physical form, as described below,
the following discussion will not apply.
9
The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository
for the 1998 Bonds. The 1998 Bonds will be issued as fully registered securities registered in the name of
Cede & Co. (DTC's partnership nominee). One fully registered 1998 Bond will be issued for each maturity
of the 1998 Bonds in the aggregate principal amount of each maturity of the 1998 Bonds, and will be
deposited with DTC.
DTC 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 securities that its participants (the "Participants ") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need
of physical movement of securities certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc.,
and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants "). The Rules
applicable to DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of 1998 Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the 1998 Bonds on DTC's records. The ownership interest of each actual
purchaser of each 1998 Bond (the `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,
but Beneficial Owners are 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 1998 Bonds are to be
accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in 1998 Bonds, except in the event
that use of the book -entry system for the 1998 Bonds is discontinued.
To facilitate subsequent transfers, all 1998 Bonds deposited by Participants with DTC are registered
in the name of DTC's partnership nominee, Cede & Co. The deposit of 1998 Bonds with DTC and their
registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge
of the actual Beneficial Owners of the 1998 Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such 1998 Bonds are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may
be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the 1998 Bonds are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.
10
Neither DTC nor Cede & Co. will consent or vote with respect to the 1998 Bonds. Under its usual
procedures, DTC mails an Omnibus Proxy to the Agency 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 the 1998 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus
Proxy).
The Agency, the Underwriter and the Trustee 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 1998 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 1998 Bonds; (iii) the
delivery of any notice which is permitted or required to be given to registered owners under the Indenture;
(iv) the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial
redemption of the 1998 Bonds; (v) any consent given or other action taken by DTC as registered owner; or
(vi) any other matter arising with respect to the 1998 Bonds or the Indenture. The Agency, the Underwriter
and the Trustee cannot and do not give any assurances that DTC, DTC Participants or others will distribute
payments of principal of or interest on the 1998 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 Agency and the Trustee 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 1998 Bonds or any error or delay relating thereto.
Payment of the principal of and interest and premium, if any, on the 1998 Bonds will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on a payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive
payment on such payment date. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC,
the Trustee or the Agency, subject to any statutory and regulatory requirements as may be in effect from time
to time. Payment of principal, interest and any premium to DTC is the responsibility of the Trustee,
disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its service as securities depository with respect to the 1998 Bonds
at any time by giving reasonable notice to the Agency and the Trustee. Under such circumstances, in the
event that a successor securities depository is not obtained, 1998 Bond certificates are required to be printed
and delivered.
The Agency may decide to discontinue use of the system of book -entry transfers through DTC (or
a successor securities depository). In that event, 1998 Bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy
thereof.
Discontinuance of DTC Services
In the event that (a) DTC determines not to continue to act as securities depository for the 1998
Bonds, or (b) the Agency determines that DTC shall no longer act and delivers a written certificate to the
Trustee to that effect, then the Agency will discontinue the Book -Entry System with DTC for the 1998
11
Bonds. If the Agency determines to replace DTC with another qualified securities depository, the Agency
will prepare or direct the preparation of a new single separate, fully registered Bond for each maturity of the
1998 Bonds registered in the name of such successor or substitute securities depository as are not
inconsistent with the terms of the Indenture. If the Agency fails to identify another qualified securities
depository to replace the incumbent securities depository for the 1998 Bonds, then the 1998 Bonds shall no
longer be restricted to being registered in the 1998 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 1998 Bonds shall designate.
In the event that the Book -Entry System is discontinued, the following provisions would also apply:
(i) the 1998 Bonds will be made available in physical form, (ii) principal of, and redemption premiums if any,
on the 1998 Bonds will be payable upon surrender thereof at the principal corporate trust office of the
Trustee in St. Paul. Minnesota, (iii) interest on the 1998 Bonds will be payable by check mailed by first -class
mail or, upon the written request of any Owner of $1,000,000 or more in aggregate principal amount of
Bonds received by the Trustee on or prior to the 15th day of the calendar month immediately preceding the
interest payment date (the "Record Date "), by wire transfer in immediately available funds to an account with
a financial institution within the limits of the United States of America designated by such owner and (iv)
the 1998 Bonds will be transferable and exchangeable as provided in the Indenture.
SECURITY FOR THE 1998 BONDS
Tax Revenues
Tax Allocations. The Redevelopment Law provides a means for financing redevelopment projects
based upon an allocation of taxes collected within a project area. The taxable valuation ofa project area last
equalized prior to adoption of the redevelopment plan, or base roll, is established in the base year.
Thereafter, except for any period during which the taxable valuation drops below the base year level, the
taxing bodies receive the taxes produced by the levy of the then - current tax rate upon the base roll. Taxes
collected upon any increase in taxable valuation over the base roll (with the exception of taxes derived from
increases in the tax rate imposed by taxing agencies to support new bonded indebtedness) are allocated to
the redevelopment agency and may be pledged to the repayment of any indebtedness incurred in financing
or refinancing redevelopment. Redevelopment agencies themselves have no authority to levy property taxes
and must Iook exclusively to such allocation of taxes. Currently, such taxes are collected by the County of
Orange (the "County ") and paid to the affected entities.
As provided in the Redevelopment Plan for the Project Area, and pursuant to Article 6 of Chapter
6 of the Redevelopment law and section 16 of Article XVI of the State Constitution, taxes levied upon
taxable property in the Project Area each year by or for the benefit of the State, cities, counties, districts or
other public corporations (collectively, the "Taxing Agencies "), for fiscal years beginning after the effective
date of the Redevelopment Plan, will be divided as follows:
(1) To taxing agencies: The portion equal to the amount of those taxes which would have
been produced by the current tax rate, applied to the taxable valuation of such property in the
redevelopment project area as last equalized prior to the establishment ofthe redevelopment project,
or base roll, is paid into the funds of those respective taxing agencies as taxes by or for said taxing
agencies; and
(2) To the Agency: The portion of said levied taxes each year in excess of the amount
referred to in (1) above is allocated to, and when collected, is paid into the Special Fund of the
12
Agency; provided that portion of the taxes identified in (1) above which are attributable to a tax rate
levied by a taxing agency to pay indebtedness approved by the voters of that taxing agency on or
after January 1, 1989, shall be allocated to, and when collected shall be paid into, the fund of such
taxing agency. Such excess is referred to as "Tax Increment Revenues."
Housing Set Aside Amounts. The Redevelopment Law requires generally that, unless a specified
finding is made, redevelopment agencies set aside 20% of all Tax Increment Revenues (as described above)
derived from redevelopment project areas into a low and moderate income housing fund (the "Low and
Moderate Income Housing Fund "), to be used for the purpose of increasing, improving and or preserving the
supply of low and moderate income housing. Sections 33334.2 and 33334.6 of the Redevelopment Law
dictate the low and moderate income housing set -aside requirement for the Project Area.
Under the provisions of the Redevelopment Plan for the Project Area, the following limitations are
imposed: (1) no loans, advances or indebtedness to finance in whole or in part projects and programs for the
Project Area shall be established or incurred by the Agency beyond January 1, 2004; (2) the time Iimit of the
effectiveness of the Redevelopment Plan shall not exceed 40 years from the effective date of the ordinance
adopting the Redevelopment Plan (November 22, 2016); and (3) the time limit for the repayment of
indebtedness shall not exceed November 22, 2026. The cumulative total yearly tax increment which may
be collected shall not exceed $90 million. Through May 21, 1998, the Agency has collected a cumulative
total of $31.4 million of tax increment revenues. The Redevelopment Plan established a bond debt limit of
$30 million for the Project Area. These limits can only be extended by an amendment by an amendment of
the Redevelopment Plan.
Pledge of Tax Revenues
Pursuant to the Indenture, all right, title and interest of the Agency in Tax Revenues (as defined
below) payable to or receivable by the Agency under the California Constitution, the Redevelopment Law
and other applicable laws, are assigned and pledged to secure the payment of principal of and interest on the
Bonds. The Indenture defines the term Tax Revenues as all taxes annually allocated to the Agency with
respect to the Project Area following the Closing Date pursuant to Article 6 of Chapter 6 (commencing with
Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State of California and
as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if any) to
the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate
limitations; but excluding (a) all amounts of such taxes required to be paid by the Agency to other taxing
agencies pursuant to pass - through agreements or similar tax- sharing agreements entered into pursuant to
Section 33401 of the Redevelopment Law existing on the Closing Date and (b) all amounts of such taxes
required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year
pursuant to Section 33334.3 of the Redevelopment Law.
Except as may be otherwise provided in any Supplemental Indenture, the Agency is not obligated
to transfer to the Trustee for deposit in the Special Fund in any Bond Year an amount of Tax Revenues
which, together with other available amounts in the Special Fund, exceeds the amounts required in such Bond
Year pursuant to the Indenture. In the event that, for any reason whatsoever, any amounts remain on deposit
in the Special Fund on any September 2 after making all of the transfers theretofore required to be made to
the Interest Account, the Principal Account and the Reserve Account pursuant to the Indenture and pursuant
to any Supplemental Indenture, the Trustee will withdraw such amounts from the Special Fund and transfer
such amounts to the Agency to be used for any lawful purpose of the Agency.
The Agency has no power to levy and collect property taxes, and any property tax limitation,
legislative measure, voter initiative or provision of additional sources of income to taxing agencies having
13
the effect of reducing the property tar rate or collections or the value of property subject to ad valorem
taxation, could reduce the amount of Tax Revenues that would otherwise be available to pay the principal
of, and interest on, the Bonds. Likewise, broadened property tar exemptions could have a similar effect.
Limited Obligations
THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE 1998 BONDS ARE
PAYABLE SOLELY FROM TAX REVENUES AND FROM AMOUNTS IN CERTAIN FUNDS AND
ACCOUNTS HELD BY THE TRUSTEE UNDER AND PURSUANT TO THE INDENTURE. THE 1998
BONDS ARE NOT A DEBT OF THE CITY, THE STATE OR ANY OF THE POLITICAL
SUBDIVISIONS OF THE STATE, AND NEITHER THE CITY NOR THE STATE, NOR ANY OF ITS
POLITICAL SUBDIVISIONS, IS LIABLE THEREFOR, NOR IN ANY EVENT WILL THE 1998 BONDS
BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE TAX REVENUES OF THE
AGENCY AS SET FORTH IN THE INDENTURE.
THE 1998 BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF
ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION. NEITHER THE
MEMBERS OF THE AGENCY NOR ANY PERSON RESPONSIBLE FOR THE EXECUTION OF THE
1998 BONDS IS LIABLE PERSONALLY FOR THE 1998 BONDS BY REASON OF THE ISSUANCE
THEREOF.
Reserve Account
Pursuant to the Indenture, a reserve account (the "Reserve Account") has been established and is held
by the Trustee in trust for the benefit of the Agency and the registered owners of the 1998 Bonds. The
amount on deposit in the Reserve Account is required to be maintained at an amount equal to the Reserve
Requirement. The term "Reserve Requirement" means, as of any calculation date, an amount, calculated by
or on behalf of the Agency and certified to the Trustee in writing, equal to Maximum Annual Debt Service
on all Outstanding Bonds and any Parity Debt. The Reserve Requirement as of the Closing Date is
$1,677,412.50.
In the event that the amount on deposit in the Reserve Account at any time becomes less than the
Reserve Requirement, the Trustee will promptly notify the Agency of such deficiency. Promptly upon
receipt of any such notice, the Agency will transfer to the Trustee an amount of available Tax Revenues
sufficient to maintain the Reserve Requirement on deposit in the Reserve Account.
Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose
of making transfers to the Interest Account and the Principal Account established under the Indenture, in such
order of priority, on any date on which Bonds are payable in the event of any deficiency at any time in any
of such accounts. So long as no Event of Default (as defined in the Indenture) shall have occurred and be
continuing, any amount in the Reserve Account in excess ofthe Reserve Requirement preceding each Interest
Payment Date will be withdrawn from the Reserve Account by the Trustee and deposited in the Interest
Account established under the Indenture on or before the Interest Payment Date.
Issuance of Parity Debt
In addition to the Bonds, the Agency may, by Supplemental Indenture, issue or incur Parity Debt
payable from Tax Revenues on a parity with the Bonds to finance the Project in such principal amount as
shall be determined by the Agency. The Agency may issue and deliver any such other Parity Debt subject
to the following specific conditions precedent to the issuance and delivery of such Parity Debt:
14
and the Sinking Account (and any sinking account created for Parity Debt), based upon the
principal and sinking account payments then due, if the amount then in the Reserve Account,
after satisfying any deficiency in the Interest Account (and any interest account created for
Parity Debt), is not sufficient to fully satisfy any then deficiencies in the Principal Account (and
any principal account created for Parity Debt) and the Sinking Account (and any sinking
account created for Parity Debt)), in the event of any deficiency at any time in any of such
accounts or for the retirement of all the Bonds or Parity Debt then Outstanding, except that so
long as the Agency is not in default under the Indenture, any amount in the Reserve Account in
excess of the Reserve Requirement (as determined by the Trustee based upon a valuation of
investments held in such account) shall be withdrawn from the Reserve Account semiannually
on or before the Business Day preceding each March 1 and September 1 by the Trustee and
deposited in the Interest Account (and any interest account created for Parity Debt).
If a valuation discloses that amounts in the Reserve Account are less than the Reserve
Requirement, which valuation must occur not less than semi - annually, the Agency shall
immediately cause the cure thereof from any available moneys. All amounts in the Reserve
Account on the Business Day preceding the final Interest Payment Date shall be withdrawn
from the Reserve Account and shall be transferred either (i) to the Interest Account and the
Principal Account, in such order, to the extent required to make the deposits then required to be
made pursuant to the Indenture or, (ii) if the Agency shall have caused to be transferred to the
Trustee an amount sufficient to make the deposits required by the Indenture, then, at the
Written Request of the Agency, to the Agency for deposit by the Agency into the Debt Service
Fund. The Trustee may conclusively presume that there has been no change in the Reserve
Requirement unless notified in writing by the Agency.
As defined in the Indenture, the term "Reserve Requirement" means, as of any
calculation date, an amount, calculated by or on behalf of the Agency and certified to the
Trustee in writing, equal to the least of (a) Maximum Annual Debt Service on all Outstanding
Bonds and any Parity Debt, (b) 125% of average annual debt service on the Bonds and any
Parity Debt, and (c) 10% of the then outstanding principal amount of the Bonds and any Parity
Debt. The Reserve Requirement as of the Closing Date is $2,827,500.00.
Redemption Account. On or before the Business Day preceding any date on which Bonds
are to be redeemed, the Trustee shall withdraw from the Debt Service Fund any amount
transferred by the Agency for deposit in the Redemption Account, such amount being the
amount required to pay the principal of and premium, if any, on the Bonds or Parity Debt to be
redeemed on such date. All moneys in the Redemption Account shall be used and withdrawn
by the Trustee solely for the purpose of paying the principal of and premium, if any, on the
Bonds or Parity Debt to be redeemed on the date set for such redemption. Interest due on Bonds
or Parity Debt to be redeemed on the date set for redemption shall, if applicable, be paid from
funds available therefor in the Interest Account.
Issuance of Parity Debt
In addition to the Bonds, the Agency may issue or incur Parity Debt to finance
redevelopment projects within or of benefit to the Redevelopment Project in such principal
amount as shall be determined by the Agency. The Agency may issue and deliver any such
Parity Debt subject only to the following specific conditions:
(a) The Agency shall be in compliance with all covenants set forth in this Indenture and
all existing Parity Debt Instruments.
(b) Subject to paragraph (e) below,
-15-
2010 MCAS TAX ALLOCATION BOND DOCUMENTS
NEW ISSUE - BOOK -ENTRY ONLY RATING:
S &P: "A„
See "RATING' herein.
In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject, however, to certain qualifications described in this Official Statement, under
existing law, interest on the Bonds (i) is excludable from gross income of the owners thereof for federal income tax purposes, (ii) is not included as an item of tax preference
in computing the federal alternative minimum tax for individuals and corporations, and (iii) is not taken into account in computing adjusted current earnings, which is
used as an adjustment in determining the federal alternative minimum tax for certain corporations. In addition, in the opinion of Bond Counsel, interest on the Bonds is
exempt from personal income taxation imposed by the State of California. See "TAX MATYERS" herein.
TUSTIN
$44,170,000
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
(Orange County, California)
Tax Allocation Bonds
(MCAS- Tustin Redevelopment Project Area), Series 2010
Dated: Date of Delivery Due: September 1, as shown below
Proceeds from the sale of the $44;170,000 Tustin Community Redevelopment Agency Tax Allocation Bonds (MCAS- Tustin Redevelopment Project Area), Series 2010 (the `Bonds "), will be
used by the Tustin Community Redevelopment Agency (the "Agency") to (a) finance redevelopment activities within or for the benefit of the Agency's MCAS- Tustin Redevelopment
Project Area, (b) fund a reserve account for the Bonds, and (c) provide for the costs of issuing the Bonds. See "FINANCING PLAN" herein.
Interest on the Bonds will be payable semi - annually on each March 1 and September 1, commencing March 1, 2011 (each, an "Interest Payment Date "). The Bonds will be issued in fully
registered form without coupons and will be re gistered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ('DTC"). DTC will act as
securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book -entry form only in denominations of $5,000 or any integral multiple thereof.
Purchasers of such beneficial interests will not receive physical certificates representing their interests in the Bonds. Payment of principal of, interest and premium, if any, on the Bonds
will be made directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursement of such payments to the DTC Participants (as
defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more holy
described herein. See "THE BONDS- Book -Entry System" herein.
The Bonds will be issued under and pursuant to an indenture of Trust, dated as of November 1, 2010 (the "Indenture"), by and between the Agency aid The Bank of New York Mellon
Trust Company, N.A., as trustee (the "Trustee "). The Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of the Tax Revenues (as defined
herein), subject to the provisions of the Indenture permitting the application thereof for other purposes, and by a pledge of amounts in certain funds and accounts established under the
Indenture, as further discussed herein.
The Bonds are subject to optional and mandatory sinking account redemption prior to maturity. See "THE BONDS- Redemption" herein.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY FROM THE TAX REVENUES, AS DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN FUNDS
AND ACCOUNTS MAINTAINED UNDER THE INDENTURE AND ARE NOT A DEBT OF THE AUTHORITY, THE CITY OR THE STATE OF CALIFORNIA (THE "STATE") OR ANY
POLITICAL SUBDIVISIONS THEREOF (OTHER THAN THE AGENCY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), AND NONE OF THE AUTHORITY, THE CITY
OR THE STATE OR ANY POLITICAL SUBDIVISIONS THEREOF (OTHER THAN THE AGENCY) IS LIABLE THEREFOR. THE BONDS ARE NOT PAYABLE FROM, AND ARE NOT
SECURED BY, ANY FUNDS OF THE AGENCY, OTHER THAN THE TAX REVENUES PLEDGED PURSUANT TO THE INDENTURE. THE BONDS DO NOT CONSTITUTE AN
INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY NOR
ANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE 13ONDS IS LIABLE PERSONALLY FOR PAYMENT OF THE BONDS BY REASON OF THEIR ISSUANCE.
MATURITY
DATES PRINCIPAL
AMOUNTS, INTEREST RATES PRICES OR YIELDS AND
CUSIP NUMBERS
$22,355,000 Serial Bonds
CUSIPt Prefix: 901048
Maturity
Principal
Interest
CUSIPt Maturity
Principal
Interest
CUSIPt
(September l)
Amount
Rate.
Yield
Suffix (September 1)
A_ oun
Rate
Yield
suffix
2011
S 640,000
10001
I,000
LY34 2021
$1,095,000
4.000"/
4.3501%
EC8
2012
805,000
1000
1.550
DT2 2022
1,135,000
4150
4.550
ED6
2013
830,000
3.000
2.000
DU9 2023
111851000
4.500
4.650
EE4
2014
855,000
3.000
2.400
DV7 2024
1,240,000
5.000
4.750c
EF1
2015
880,000
3.000
2.800
DW5 2025
1,300X0
5.000
4.850c
EG9
2016
905,000
3.000
3.100
DX3 2026
1,365,000
4.750
4.950
EH7
2017
935,000
4.000
3.400
DYl 2027
1,430,000
4.750
5.000
EJ3
2018
970,000
4.000
3.650
DZ8 2028
1,500,000
5.000
5.050
EKO
2019
1,010,000
4.000
1900
EA2 2029
1,575,000
5.OW
5.100
EL8
2020
1,050,600
4.000
4.150
EBO 2030
1,650,000
5.000
5.120
EM6
$3,555,000 5.00% Term Bonds due September 1, 2032, Price: 97.784 %, to Yield 5.17 %; CUSIPt- 901048 EN4
$6,030,000 5.00% Term Bonds due September 1, 2035, Price: 96.951 %, to Yield 5.22 %; CUSIPt: 901048 EP9
$12,230,000 5.00% Term Bonds due September 1, 2040, Price: 95.234 %, to Yield 5.32 %; CUSIPt: 901048 EQ7
c Priced to the September 1, 2020, par call date
This cover page is not intended to be a summary of the Bonds or the security therefor. Investors are advised to read the Official Statement in its entirety to obtain information essential to
the making of an informed investment decision with respect to the Bonds.
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approval as to their legality by Quint & Thimmig LLP, San Francisco, California, Bond
Counsel. Certain other legal matters related to this offering will be passed upon for the Authority and the Agency by Woodruff, Spradlin & Smart, P.C., Costa Mesa, California, Agency
Counsel, and by Quint & Thimmig LLP, San Francisco, California, as Disclosure Counsel. It is expected that the Bonds in definitive form will be available for delivery to DTC in New York,
New York on c r about November 10, 2010.
October 27, 2010 STONE & YO U N G B E RG
t Copyright 2010, American Bankers Association CUSIPTS is a registered trademark of the American Bankers Association. CUSIP data herein is provided by the CUSIP Service Bureau, operated by Standard
& Pomr s, a division of Tile 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 Services Bureau. CUSIP numbers have
been assigned by an independent company not affiliated with the Agency and are included solely for the convenience of the registered owners of the Bonds. The Agency is not responsible for the selection or
uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the
issuanm of the Bonds as a result of various subsequent actions including, but not limited m, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other
similar enhancement by investors that is applicable to ail or a portion of certain maturities of the Bonds.
No dealer, broker, salesperson or other person has been authorized by the Agency 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 representations must not be relied upon as having been authorized
by the Agency. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make
such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements
contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly
so described herein, are intended solely as such and are not to be construed as representations of fact.
The information set forth herein has been obtained from sources which are believed to be reliable but such
information is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein
are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency since
the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement: The
Underwriter has reviewed the information in this Official Statement in accordance with and as part of this
transaction but the Underwriter does not guarantee the accuracy or completeness of such information. All summaries
of the Indenture and other documents are made subject to the provisions of such documents and do not purport to be
complete statements of any or all such provisions.
While the City of Tustin maintains an Internet website for various purposes, none of the information on
such website is incorporated by reference herein or intended to assist investors in making any investment decision or
to provide any continuing information with respect to the Bonds.
This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not
be reproduced or used, in whole or in part, for any other purpose.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER -ALLOT 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 UNDERWRITER MAY OFFER AND SELL THE
BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER
THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC
OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
This Official Statement contains forward looking statements by the Agency concerning future conditions
affecting the Agency, the City, the State and the United States which may relate to its business operations and
financial condition of the Agency. The Official Statement contains the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" or variations of
those terms to identify "forward looking statements" within the meaning of the U.S. Private Securities Litigation
Reform Act of 2000 Section 21E of the U.S. Securities and Exchange Act of 1934, as amended, and Section 27A of the
U.S. Securities and Exchange Act of 1933, as amended. You should not rely on these forward - looking statements
which speak only as to the Agency's expectations as of the date of this Official Statement. Such statements are subject
to risks and uncertainties that could cause actual results to differ materially from those contemplated in such
forward - looking statements. Except as required by law, neither the Agency, the City or the Underwriter undertake
any duty to update any forward looking statements after the date of this Official Statement, either to confirm any
statement to reflect actual results or to reflect the occurrence of unanticipated events.
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 SECTION
3(a)(2) OF SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE. THE INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT
OF 1939, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT.
TABLE OF CONTENTS
Page
INTRODUCTION....................................... ..............................1
General..................................................... ..............................1
Purpose of Issuance ................................ ..............................1
TheCity .................................................... ..............................1
TheAgency .............................................. ..............................1
The Redevelopment Project .................. ..............................2
Tax Allocation Financing ....................... ..............................2
TheBonds ................................................ ..............................2
Source of Payment for the Bonds ......... ..............................3
Reserve Account ..................................... ..............................3
ParityDebt ............................................... ..............................3
Fiscal Consultants Report ..................... ..............................4
RiskFactors .............................................. ..............................4
Continuing Disclosure ........................... ..............................4
TaxMatters .............................................. ..............................4
Professionals Involved in the Offering ..............................4
Forward - Looking Statements ............... ..............................5
OtherMatters .......................................... ..............................5
OtherInformation .................................. ..............................5
ESTIMATED SOURCES AND USES OF FUNDS ................6
FINANCING PLAN ................................... ..............................6
DEBT SERVICE SCHEDULE .................... ..............................7
THEBONDS ................................................ ..............................7
General Provisions ................................. ..............................7
Redemption............................................. ..............................8
Book -Entry System... .......................................................... 11
TAX ALLOCATION FINANCING ......... .............................11
General.................................................... .............................11
Allocation of Taxes ................................ .............................11
SECURITY FOR THE BONDS ................. .............................12
Pledge of Tax Revenues... ............................ ..................... 12
Security of Bonds; Equal Security ....... .............................13
Special Fund; Deposit of Tax Revenues ..........................13
Deposit of Amounts by Trustee .......... .............................13
Issuance of Parity Debt ......................... .............................15
Issuance of Subordinate Debt .... - ........ .............................17
THECITY .................................................... .............................17
THEAGENCY ..................... - ............................ ...................... 17
AgencyMembers ................................... .............................17
Agency Administration ..................... ... ............................. 18
AgencyPowers ...................................... .............................18
Redevelopment Projects ....................... .............................18
Outstanding Indebtedness of the Agency ......................20
Agency Financial Statements ............... .............................20
Redevelopment Plan.. ........................................................ 21
Redevelopment Plan Limits ................. .............................21
Annual Tax Receipts to Tax Levy ....... .............................22
Appeals of Assessed Values ................. .............................23
Page
Proposition 13 Inflationary Adjustments .......................24
Proposition 8 Reductions ..................... .............................24
AB1389 ................................................... .............................25
THE REDEVELOPMENT PROJECT .... ...............................
25
General................................................. ...............................
25
Description of the Redevelopment Project .....................
26
Redevelopment Activity .................... ...............................
27
Redevelopment Plan Limitations ....... .............................30
Tax Sharing Agreements .................... ...............................
31
Assessed Valuation ............................... .............................31
Appeals of Assessed Values ................ .............................32
Tax Revenue Projections and Debt Service Coverage.,
34
Adjustments to Tax Increment Revenues .......................
36
BONDOWNERS' RISKS ........................... .............................37
Factors Which May Affect Tax Revenues .......................
37
Real Estate and General Economic Risks .......................
44
Limited Obligations .............................. .............................45
No Acceleration on Default ......... - .... ...............................
45
Bankruptcy........................................... ...............................
45
Federal Tax - Exempt Status of the Bonds ........................
46
Investment Risk ................................... ...............................
46
SecondaryMarket ................................. .............................46
CONSTITUTIONAL AND STATU'T'ORY PROVISIONS
AFFECTING TAX REVENUES ............ ..............................-
47
Property Tax Limitations - Article XIIIA ..........................47
Challenges to Article XIIIA .................. .............................47
Implementing Legislation .................. ...............................
47
UnitaryProperty ................................... .............................48
Property Tax Collection Procedures ...............................
48
Appropriations Limitations - Article XIIIB ......................49
State Board of Equalization and Property
Assessment Practices .......................... .............................50
Exclusion of Tax Revenues for General Obligation
Bonds Debt Service .......................... ...................._ ..........
50
Proposition218 .................................... ...............................
50
AB1290 ................................................... .............................50
Future Initiatives ................................... .............................51
Low and Moderate Income Housing . .............................51
Statement of Indebtedness... ............................ ................
51
CERTAIN LEGAL MATTERS ............... ...............................
52
ENFORCEABILITY OF REMEDIES ....... .............................52
RATING.................................................... ...............................
52
CONTINUING DISCLOSURE .............. ...............................
52
ABSENCE OF LITIGAT ION .................. ...............................
53
TAXMATTERS ....................................... ...............................
53
UNDERWRITING ...................... ....... - ..... .......... ... ,..,............
56
MISCELLANEOUS ................................... .............................56
APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
APPENDIX B - GENERAL INFORMATION REGARDING THE CITY
APPENDIX C - AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR
THE FISCAL YEAR ENDED JUNE 30, 2009
APPENDIX D - FISCAL CONSULTANT'S REPORT
APPENDIX E - FORM OF BOND COUNSEL'S OPINION
APPENDIX F - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX G - BOOK -ENTRY ONLY SYSTEM
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
300 Centennial Way
Tustin, CA 92780
(714) 573-3000
(714) 832-0825 (Fax)
http://www.tustinca.org
Agency Board/City Council
Jerry Amante, Chair /Mayor
John Nielsen, Vice ChairlMayor Pro Tem
Debora Gavello, Boardmember/Councilmember
Doug Davert, Boardmember/Councilmember
Jim Palmer, BoardmeniberICouncilmember
Agency/City Staff and Officials
David C. Biggs, Executive Director /City Manager
Christine A. Shingleton, Assistant Executive Director /Assistant City Manager
George Jeffries, Treasurer/City Treasurer
Pamela Stoker, Secretary/City Clerk
Pamela Arends-King, Director of Finance
Douglas C. Holland, Agency Counsel/City Attorney
Special Services
Fieldman, Rolapp & Associates
Irvine, California
Financial Advisor
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
Trustee
David Taussig & Associates
Newport Beach, California
Fiscal Consultant
Quint & Thimmig LLP
San Francisco, California
Bond Counsel and Disclosure Counsel
OFFICIAL STATEMENT
$44,170,000
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
Tax Allocation Bonds
(MCAS-Tustin Redevelopment Project Area), Series 2010
INTRODUCTION
General
This Official Statement of the Tustin Community Redevelopment Agency (the
"Agency") provides information regarding the sale by the Agency of 44,170,000 aggregate
principal amount of its Tustin Community Redevelopment Agency (Tustin Redevelopment
Project) Tax Allocation Bonds (MCAS-Tustin Redevelopment Project Area), Series 2010 (the
"Bonds").
Definitions of certain capitalized terms used in this Official Statement are set forth in
APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE. This Official
Statement contains brief descriptions of the Bonds, the Indenture, the Agency and the Agency's
MCAS-Tustin Redevelopment Project Area (the "Redevelopment Project"). Such descriptions
do not purport to be comprehensive or definitive. All references in this Official Statement to
specific documents are qualified in their entirety by reference to such documents and references
to the Bonds are qualified in their entirety by reference to the form of the Bonds included in the
Indenture. Copies of the Indenture and other documents described in this Official Statement
may be obtained from the Agency as described under the subheading "Other Information"
below.
Purpose of Issuance
Proceeds from the sale of the Bonds will be used to (a) finance redevelopment activities
within and for the benefit of the Redevelopment Project (the "2010 Project"), (b) fund a reserve
account for the Bonds, and (c) provide for the costs of issuing the Bonds. See "ESTIMATED
SOURCES AND USES OF FUNDS" and "FINANCING PLAN."
The City
The City of Tustin (the "City") is located in Orange County (the "County"),
approximately 41 miles south of the City of Los Angeles and approximately 90 miles north of
the City of San Diego. Incorporated in 1927, the City operates as a general law city with a
Council-Manager form of government. The Mayor is selected by the City Council from among
its members. For certain information with respect to the City, see "THE CITY" and APPENDIX
B--GENERAL INFORMATION REGARDING THE CITY.
The Agency
The Agency was established pursuant to the California Community Redevelopment
Law, constituting Part 1 of Division 24 of the California Health and Safety Code (the
"Redevelopment Law"), and was activated by the City Council by Ordinance No. 696-A,
enacted by the City Council of the City on October 20, 1976. The Agency has the authority, and
is charged generally with the responsibility, to redevelop and upgrade blighted areas of the
City. The members of the City Council serve as the governing body of the Agency and exercise
all rights, powers, duties and privileges of the Agency. See "THE AGENCY."
The Redevelopment Project
The Redevelopment Project, established in 2003, is comprised of 1,508.6 acres, including
1,504.5 acres that were part of the former Marine Corps Air Station Tustin and 4.1 acres that are
located outside of the former base boundaries, at the northwest corner of Edinger Avenue and
Jamboree Road. Development of the Redevelopment Project, known as Tustin Legacy, is
expected to include 4,210 homes, over 10 million square feet of non - residential space including
major office, retail, entertainment, business park, educational and community support facilities.
Significant acreage will be dedicated to parkland and recreational open spaces which will
feature a two -mile community lineal park with walking spaces, playgrounds, tranquil natural
areas and sports facilities.
The total assessed valuation of taxable property in the Redevelopment Project in Fiscal
Year 2010 -11 is approximately $1,172,858,826, which is $1,171,744,748 greater than the adjusted
assessed valuation of $1,114,078 in the base year (2002 -03). Assessed valuations in the
Redevelopment Project are subject to numerous risks which could result in decreases from
those reported for Fiscal Year 2010 -11. See "BONDOWNERS' RISKS." Also see "THE
REDEVELOPMENT PROJECT."
The Agency maintains two other redevelopment project areas, the Town Center
Redevelopment Project and the South Central Redevelopment Project, which are not involved
in this financing.
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based
upon an allocation of taxes collected within a project area. The taxable valuation of a project
area last equalized prior to adoption of the redevelopment plan, or "base roll," is established
and, except for any period during which the taxable valuation drops below the base year level,
the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate
upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (the
tax increment revenues) are allocated to the applicable redevelopment agency and may be
pledged by the redevelopment agency to the repayment of any indebtedness incurred in
financing or refinancing a redevelopment project. Redevelopment agencies themselves have no
authority to levy property taxes and must look specifically to the allocation of taxes produced as
above indicated.
llj►
The Bonds are being issued pursuant to the Redevelopment Law, a resolution adopted
by the Agency on October 19, 2010, and an Indenture of Trust, dated as of November 1, 2010
(the "Indenture"), by and between the Agency and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "Trustee"). See "THE BONDS" and APPENDIX A— SUMMARY
OF CERTAIN PROVISIONS OF THE INDENTURE.
The Bonds will be issued in denominations of $5,000 each or integral multiples thereof.
Interest on the Bonds will be payable on each March 1 and September 1, commencing March 1,
2011. Principal of and interest on the Bonds will be payable by the Trustee to The Depository
Trust Company ( "DTC ") which will be responsible for remitting such principal and interest to
the DTC participants which will in turn be responsible for remitting such principal and interest
N
to the beneficial owners of the Bonds. No physical distribution of the Bonds will be made to the
public. See "THE BONDS —Book -Entry System."
Source of Payment for the Bonds
The Bonds are special obligations of the Agency and are payable from and secured by a
pledge of Tax Revenues and amounts in certain funds and accounts held under the Indenture.
The term "Tax Revenues" is defined in the Indenture as all taxes pledged and annually
allocated within the Plan Limitations, following the Closing Date, and paid to the Agency with
respect to the Redevelopment Project pursuant to Article 6 of Chapter 6 (commencing with
section 33670) of the Law and section 16 of Article XVI of the Constitution of the State, or
pursuant to other applicable State laws, and as provided in the Redevelopment Plan, and all
payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations, excluding all other
amounts of such taxes (if any) (i) which are required to be deposited into the Low and Moderate
Income Housing Fund of the Agency in any Fiscal Year pursuant to section 33334.3 of the
Redevelopment Law, (ii) which constitute supplemental subventions payable by the State to the
Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with
section 16110) of the California Government Code, (iii) which constitute amounts required to be
paid by the Agency pursuant to the Pass - Through Agreements, except and to the extent such
amounts so payable are payable on a basis subordinate to the payment of the Notes, and (iv)
which constitute amounts payable by the Agency under sections 33607.5 or 33607.7 of the Law
for payments to affected taxing entities, except and to the extent such amounts so payable are
payable on a basis subordinate to the payment of the Bonds.
The Tax Revenues are not subject to the pledge and lien of any indebtedness of the
Agency other than the Bonds and any Parity Debt hereafter issued in accordance with the
Indenture, and certain other obligations which are made or are by their terms subordinate to the
payment of the Bonds. See "CONSTITUTIONAL AND STATUTORY PROVISIONS
AFFECTING TAX REVENUES" and "THE AGENCY — Outstanding Indebtedness of the
Agency." The Bonds are not payable from, and are not secured by, any funds of the Agency
other than the Tax Revenues and amounts in certain funds and accounts pledged therefore
under the Indenture. See "SECURITY FOR THE BONDS."
Reserve Account
A reserve account (the "Reserve Account ") will be established and held under the
Indenture in order to secure the payment of principal of and interest on the Bonds in an
amount, as of the Closing Date, equal to the Reserve Requirement. If, on any Interest Payment
Date for the Bonds, the amounts on deposit under the Indenture to pay the principal of or
interest due on the Bonds are insufficient therefor, the Trustee will draw on the Reserve
Account to replenish the Interest Account, the Principal Account or the Sinking Account, in that
order, to make up such deficiencies. See "SECURITY FOR THE BONDS — Deposit of Amounts
by Trustee — Reserve Account" and APPENDIX A— SUMMARY OF CERTAIN PROVISIONS
OF THE INDENTURE for additional information on the Reserve Account.
Parity Debt
The Indenture provides that in addition to the Bonds, the Agency may provide for the
issuance of Parity Debt secured by a lien on Tax Revenues on a parity with the Bonds to finance
redevelopment activities within or of benefit to the Redevelopment Project in such principal
amount as shall be determined by the Agency. The Agency may deliver Parity Debt subject to
certain specific conditions set forth in the Indenture. See "SECURITY FOR THE BONDS —
Issuance of Parity Debt."
-3-
Fiscal Consultants Report
David Taussig & Associates, Newport Beach, California (the "Fiscal Consultant") has
been retained to prepare a report (the "Fiscal Consultant's Report") for the Bonds. See
APPENDIX D—FISCAL CONSULTANT'S REPORT.
Risk Factors
Prospective investors should review this Official Statement and the appendices hereto in
their entirety and should consider certain risk factors associated with the purchase of the Bonds,
some of which have been summarized in the section herein entitled "BONDOWNERS' RISKS."
Continuing Disclosure
The Agency will covenant, pursuant to a continuing disclosure certificate (the
"Continuing Disclosure Certificate") to be executed on the date of delivery of the Bonds, for the
benefit of owners and beneficial owners of the Bonds, to provide certain financial information
and operating data related to the Agency and the Redevelopment Project by not later than nine
months following the end of the Agency's Fiscal Year (the "Annual Report"), and to provide
notices of the occurrence of certain enumerated events, if material. The Annual Report and
notices of material events will be filed by the Agency with the Municipal Securities Rulemaking
Board. The specific nature of the information to be contained in the Annual Report and any
notices of material events is summarized below under the caption "CONTINUING
DISCLOSURE." The form of the Continuing Disclosure Certificate is set forth in APPENDIX I—
FORM OF CONTINUING DISCLOSURE CERTIFICATE. The covenants of the Agency in the
Continuing Disclosure Certificate have been made in order to assist the Underwriter in
complying with S.E.C. Rule 15c2-12(b)(5).
Tax Matters
In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel,
subject, however, to certain qualifications described in this Official Statement, under existing
law, interest on the Bonds (i) is excludable from gross income of the owners thereof for federal
income tax purposes, (ii) is not included as an item of tax preference in computing the federal
alternative minimum tax for individuals and corporations, and (iii) is not taken into account in
computing adjusted current earnings, which is used as an adjustment in determining the federal
alternative minimum tax for certain corporations. In addition, in the opinion of Bond Counsel,
interest on the Bonds is exempt from personal income taxation imposed by the State of
California (the "State"). See "TAX MATTERS."
Professionals Involved in the Offering
The proceedings of the Agency in connection with the issuance of the Bonds are subject
to the approval as to their legality of Quint & Thimmig LLP, San Francisco, California, Bond
Counsel. Certain legal matters will be passed upon for the Agency by Quint & Thimmig LLP,
San Francisco, California, as Disclosure Counsel, and by Woodruff, Spradlin & Smart, P.C.,
Costa Mesa, California, Agency Counsel. The Bank of New York Mellon Trust Company, N.A.,
Los Angeles, California, will act as the Trustee under the Indenture. Fieldman, Rolapp and
Associates, Irvine, California, is serving as financial advisor to the Agency for the Bonds (the
"Financial Advisor,"). The Fiscal Consultant has been retained to prepare the Fiscal Consultant's
Report for the Bonds. The fees of Bond Counsel, Disclosure Counsel, the Financial Advisor and
the Trustee are contingent upon the sale and delivery of the Bonds.
-4-
Forward-Looking Statements
This Official Statement, and particularly the information contained under the headings
entitled "FINANCING PLAN," "ESTIMATED SOURCES AND USES OF FUNDS," "SECURITY
FOR THE BONDS," "THE REDEVELOPMENT PROJECT,- "BONDOWNERS' RISKS" and
APPENDIX B—GENERAL INFORMATION REGARDING THE CITY, contains statements
relating to future results that are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 2000. When used in this Official Statement, the words
"estimate," "forecast," "intend," "expect" and similar expressions identify forward-looking
statements. Such statements are subject to risks and uncertainties that could cause actual results
to differ materially from those contemplated in such forward-looking statements. Any forecast
is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will
not be realized and unanticipated events and circumstances may occur. Therefore, there are
likely to be differences between forecasts and actual results, and those differences may be
material. The Agency is not obligated to issue any updates or revisions to the forward-looking
statements if or when its expectations, or events, conditions or circumstances on which such
statements are based occur. See "BONDOWNERS' RISKS" and "LIMITATIONS ON TAX
REVENUES."
Other Matters
There follows in this Official Statement brief descriptions of the Bonds, the security for
the Bonds, the Indenture, the Agency, the City, the Redevelopment Project, and certain other
information relevant to the issuance of the Bonds. The descriptions and summaries of
documents herein do not purport to be comprehensive or definitive, and reference is made to
each such document for the complete details of all its respective terms and conditions. All
statements herein with respect to such documents are qualified in their entirety by reference to
each such document for the complete details of all of their respective terms and conditions. All
statements herein with respect to certain rights and remedies are qualified by reference to laws
and principles of equity relating to or affecting creditors' rights generally. Copies of the
Indenture are available for inspection during business hours at the corporate trust office of the
Trustee.
The information and expressions of opinion herein speak only as of the date of this
Official Statement and are subject to change without notice. Neither delivery of this Official
Statement nor any sale made hereunder nor any future use of this Official Statement shall,
under any circumstances, create any implication that there has been no change in the affairs of
the Agency or the City since the date hereof.
All financial and other information presented in this Official Statement has been
provided by the Agency and the City from their records, except for information expressly
attributed to other sources. The presentation of information, including the table of receipts from
taxes and other revenues, is intended to show recent historic information and is not intended to
indicate future or continuing trends in the financial or other affairs of the Agency or the City.
No representation is made that past experience, as it might be shown by such financial and
other information, will necessarily continue or be repeated in the future.
Other Information
This Official Statement speaks only as of its date and the information contained herein is
subject to change without notice. Copies of the Indenture are available from the Agency upon
written request to the Agency, 300 Centennial Way, Tustin, CA 92780, Attention: Executive
Director. The Agency may impose a charge for copying, mailing and handling expenses related
to any request for documents.
-5-
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth a summary of the estimated sources and uses of funds
associated with the issuance and sale of the Bonds.
Sources of Funds
Par Amount of Bonds $44,170,000.00
Less: Net Original Issue Discount (888,711.70)
Total Sources $43,281,288.30
Uses of Funds
Deposit to Redevelopment Fund (1) $40,000,000,00
Deposit to Reserve Account (2) 2,827,500.00
Costs of Issuance (3) 453,788.30
Total Uses $43,281,288.30
(1) Represents amount required to finance the 2010 Project. See "FINANCING PLAN."
(2) Represents an amount equal to the initial Reserve Account Requirement for the Bonds.
(3) Includes Underwriter's discount, fees and expenses of the Trustee, the Financial Advisor, the Fiscal Consultant,
Bond Counsel and Disclosure Counsel, printing expenses and other costs of issuance.
FINANCING PLAN
Proceeds from the sale of the Bonds will be used to (a) finance the 2010 Project (b) fund
a reserve account for the Bonds, and (c) provide for the costs of issuing the Bonds.
The types of facilities proposed to be financed are various capital improvements within
and outside the Redevelopment Project boundaries (for which a benefit resolution shall have
been adopted by the Agency), including those that are contained in the Tustin Legacy Backbone
Infrastructure Program established by the City which accommodates much of the
environmental mitigation requirements of the Redevelopment Project, including traffic and
circulation mitigation to support the Redevelopment Project, street and roadway
improvements, including grading, paving, curbs and gutters, sidewalks, street signalization and
signage, street lights, parkway and landscaping thereto, and storm drains and flood control
channels, runoff management improvements and water quality mitigation measures, integrated
utilities backbone (including electricity, gas, telephone, cable, telecommunications, and other
dry utilities and domestic and reclaimed water and sewer facilities as permitted to be financed
from the proceeds of tax-exempt bonds), telemetry, noise mitigation expenses associated with
roadway projects, public parkland and recreation facilities, right-of-way and easements
necessary for any such facilities.
The initial priority project will be the extension of Tustin Ranch Road from Warner
Avenue on the south to Walnut Avenue on the north, including the Tustin Ranch Road bridge
and interchange at Edinger Avenue along with the integrated improvements associated with
the roadway improvement including necessary and integrated utility backbone systems.
0
DEBT SERVICE SCHEDULE
The following table sets forth the scheduled annual debt service for the Bonds.
Bond Year Ending
(September 11
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
TOTALS
(1) Includes sinking fund installments
General Provisions
Principal
Amount (1)
$ 640,000
805,000
830,000
855,000
880,000
905,000
935,000
970,000
1,010,000
1,050,000
1,095,000
1,135,000
1,185,000
1,240,000
1,300,000
1,365,000
1,430,000
1,500,000
1,575,000
1,650,000
1,735,000
1,820,000
1,910,000
2,010,000
2,110,000
2,215,000
2,325,000
2,440,000
2,560,000
2,690,000
Interest
$ 1,642,351.46
2,018,975-00
1,994,825.00
1,969,925.00
1,944,275.00
1,917,875.00
1,890,725.00
1,853,325.00
1,814,525.00
1,774,125.00
1,732,125.00
1,688,325-00
1,640,087-50
1,586,762.50
1,524,762.50
1,459,762.50
1,394,925.00
1,327,000.00
1,252,000.00
1,173,250.00
1,090,750.00
1,004,000.00
913,000.00
817,500.00
717,000.00
611,500-00
500,750.00
384,500.00
262,500.00
134,500.00
$40,035,926-46
THE BONDS
Total
$ 2,282,351.46
2,823,975.00
2,824,825.00
2,824,925.00
2,824,275.00
21822,875.00
2,825,725.00
2,823,325.00
2,824,525.00
2,824,125.00
2,827,125-00
2,823,325.00
2,825,087.50
2,826,762.50
2,824,762.50
2,824,762.50
2,824,925.00
2,827,000.00
2,827,000.00
2,823,250.00
2,825,750.00
2,824,000.00
2,823,000.00
2,827,500.00
2,827,000.00
2,826,500.00
2,825,750.00
2,824,500.00
2,822,500,00
2,824,500.00
$84,205,926.46_
The Bonds will be delivered in fully registered form, without coupons, in the
denomination of $5,000 each or any integral multiple thereof. Interest on the Bonds will be
payable semiannually on each March 1 and September 1, commencing March 1, 2011 (each, an
"Interest Payment Date"), to the Owner thereof as of the close of business on the fifteenth (15th)
calendar day of the month preceding each Interest Payment Date, whether or not such fifteenth
(15th) calendar day is a business day (each, a "Record Date"). Principal of the Bonds will be
payable on September 1 in each of the years and in the amounts shown on the inside cover page
hereof.
The Bonds will be dated as of their date of delivery. Each Bond will bear interest from
the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is
executed during the period from the day after the Record Date for an Interest Payment Date to
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and including such Interest Payment Date, in which event it will bear interest from such Interest
Payment Date, or (ii) it is executed on or prior to the Record Date for the first Interest Payment
Date, in which event it will bear interest from the date of its initial delivery; provided, however,
that if, at the time of registration of any Bond, interest with respect to such Bond is in default,
such Bond will bear interest from the Interest Payment Date to which interest has been paid or
made available for payment with respect to such Bond.
Interest on the Bonds will be payable in lawful money of the United States of America
on each Interest Payment Date to the Owner thereof as of the close of business on the Record
Date. Subject to the book-entry system established for the Bonds (see "Book-Entry System"
below), such interest to be paid by check of the Trustee, mailed by first class mail no later than
the Interest Payment Date to the Owners at their addresses as they appear, on such Record
Date, on the bond registration books maintained by the Trustee; provided, however, that at the
written request of the Owner of at least $1,000,000 in aggregate principal amount of
Outstanding Bonds filed with the Trustee prior to any Record Date, interest on such Bonds will
be paid to such Owner on each succeeding Interest Payment Date (unless such request has been
revoked in writing) by wire transfer of immediately available funds to an account in the
continental United States designated in such written request. Payments of defaulted interest
with respect to the Bonds will be paid by check to the registered Owners of the Bonds as of a
special record date to be fixed by the Trustee, notice of which special record date shall be given
to the Owners of the Bonds not less than ten days prior thereto. The principal of and premium,
if any, on the Bonds are payable when due upon surrender thereof at the principal corporate
trust office of the Trustee in San Francisco, California, in lawful money of the United States of
America.
Redemption
Optional Redemption of Bonds. The Bonds maturing on or before September 1, 2018, are
not subject to optional redemption prior to maturity. The Bonds maturing on or after September
1, 2019, are subject to redemption, at the option of the Agency on any date on or after September
1, 2018, as a whole or in part, from any available source of funds, at the following redemption
prices (expressed as a percentage of the principal amount of Bonds called for redemption),
together with accrued interest to the date fixed for redemption:
Redemption Period Redemption Price
.
September 1, 2018, through August 31, 2019 102%
September 1, 2019, through August 31, 2020 101
September 1, 2020 and thereafter 100
The Agency is required to give the Trustee written notice of its intention to optionally
redeem Bonds under the Indenture with a designation of the maturities to be redeemed at least
forty-five (45) days, but not more than seventy-five (75) days, or such shorter period as shall be
acceptable to the Trustee, prior to the date fixed for such redemption, and shall transfer to the
Trustee for deposit in the Debt Service Fund all amounts required for such redemption on or
prior to the date fixed for such redemption. The maturity or maturities of Bonds to be called for
redemption shall be determined by the Agency. If the Agency shall fail to select a particular
maturity or maturities for redemption, such redemption shall be made on a pro rata basis.
Sinking Account Redemption. The Term Bonds maturing on September 1, 2032 (the "2032
Term Bonds") are subject to mandatory redemption, in part by lot, from Sinking Account
payments set forth in the following schedule on September 1, 2031, and September 1, 2032, at a
redemption price equal to the principal amount thereof to be redeemed (without premium),
together with interest accrued thereon to the date fixed for redemption; provided, however, that if
some but not all of the 2032 Tenn Bonds have been redeemed pursuant to subsection (a) above,
M
the total amount of Sinking Account payments to be made subsequent to such redemption shall
be reduced in an amount equal to the principal amount of the 2032 Tenn Bonds so redeemed by
reducing each such future Sinking Account payment on a pro rata basis (as nearly as
practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice
filed by the Agency with the Trustee.
Redemption Date Principal
(5eptember 1) Amount
2031 $1,735,000
2032t 1,820,000
t Maturity.
In lieu of such redemption, the Trustee may apply amounts in the Sinking Account to
the purchase of 2032 Term Bonds at public or private sale, as and when and at such prices
(including brokerage and other charges, but excluding accrued interest, which is payable from
the Interest Account) as may be directed by the Agency, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to the 2032
Tenn Bonds, as set forth in a Written Request of the Agency
The Term Bonds maturing on September 1, 2035 (the "2035 Term Bonds") are subject to
mandatory redemption, in part by lot, from Sinking Account payments set forth in the
following schedule on September 1, 2033, and on each September 1 thereafter to and including
September 1, 2035, at a redemption price equal to the principal amount thereof to be redeemed
(without premium), together with interest accrued thereon to the date fixed for redemption;
provided, however, that if some but not all of the 2035 Term Bonds have been redeemed pursuant
to subsection (a) above, the total amount of Sinking Account payments to be made subsequent
to such redemption shall be reduced in an amount equal to the principal amount of the 2035
Term Bonds so redeemed by reducing each such future Sinking Account payment on a pro rata
basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to
written notice filed by the Agency with the Trustee.
Redemption Date
Principal
(September 1)
Amount
2033
$1,910,000
2034
2,010,000
2035+
2,110,000
t Maturity.
In lieu of such redemption, the Trustee may apply amounts in the Sinking Account to
the purchase of 2035 Term Bonds at public or private sale, as and when and at such prices
(including brokerage and other charges, but excluding accrued interest, which is payable from
the Interest Account) as may be directed by the Agency, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to the 2035
Term Bonds, as set forth in a Written Request of the Agency.
The Term Bonds maturing on September 1, 2040 (the "2040 Term Bonds") are subject to
mandatory redemption, in part by lot, from Sinking Account payments set forth in the
following schedule on September 1, 2036, and on each September 1 thereafter to and including
September 1, 2040, at a redemption price equal to the principal amount thereof to be redeemed
(without premium), together with interest accrued thereon to the date fixed for redemption;
provided, however, that if some but not all of the 2040 Term Bonds have been redeemed pursuant
to subsection (a) above, the total amount of Sinking Account payments to be made subsequent
to such redemption shall be reduced in an amount equal to the principal amount of the 2040
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Term Bonds so redeemed by reducing each such future Sinking Account payment on a pro rata
basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to
written notice filed by the Agency with the Trustee.
Redemption Date Principal
(September 1) Am >c
2036 $2,215,000
2037 2,325,000
2038 2,440,000
2039 2,560,000
2040t 2,690,000
t Maturity.
In lieu of such redemption, the Trustee may apply amounts in the Sinking Account to
the purchase of 2040 Term Bonds at public or private sale, as and when and at such prices
(including brokerage and other charges, but excluding accrued interest, which is payable from
the Interest Account) as may be directed by the Agency, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to the 2040
Tenn Bonds, as set forth in a Written Request of the Agency.
Notice of Redemption. The Trustee on behalf and at the expense of the Agency is required
to mail (by first class mail, postage prepaid) notice of any redemption at least thirty (30) but not
more than sixty (60) days prior to the redemption date, to (i) the Owners of any Bonds
designated for redemption at their respective addresses appearing on the Registration Books,
and (ii) the Securities Depositories and to one or more Information Services designated in a
Written Request of the Agency filed with the Trustee; but such mailing is not a condition
precedent to such redemption and neither failure to receive any such notice nor any defect
therein will affect the validity of the proceedings for the redemption of such Bonds or the
cessation of the accrual of interest thereon. Such notice must state the redemption date and the
redemption price, must designate the CUSIP number of the Bonds to be redeemed, must state
the individual number of each Bond to be redeemed or must state that all Bonds between two
stated numbers (both inclusive) or all of the Bonds Outstanding are to be redeemed, and must
require that such Bonds be then surrendered at the Principal Corporate Trust Office for
redemption at the redemption price, giving notice also that further interest on such Bonds will
not accrue from and after the redemption date.
Notwithstanding the foregoing, in the case of any optional redemption of the Bonds, the
notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee
of sufficient moneys to redeem the Bonds on the anticipated redemption date, and that the
optional redemption shall not occur if, by no later than the scheduled redemption date,
sufficient moneys to redeem the Bonds have not been deposited with the Trustee. In the event
that the Trustee does not receive sufficient funds by the scheduled optional redemption date to
so redeem the Bonds to be optionally redeemed, such event shall not constitute and Event of
Default, the Trustee shall send written notice to the owners of the Bonds, to the Securities
Depositories and to one or more of the Information Services to the effect that the redemption
did not occur as anticipated, and the Bonds for which notice of optional redemption was given
shall remain Outstanding for all purposes of the Indenture.
Partial Redemption of Bonds. In the event only a portion of any Bond is called for
redemption, then upon surrender of such Bond the Agency is required to execute and the
Trustee is required to authenticate and deliver to the Owner thereof, at the expense of the
Agency, a new Bond or Bonds of the same interest rate and maturity, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion of the Bond to
be redeemed.
a U1
Effect of Redemption. From and after the date fixed for redemption, if funds available for
the payment of the redemption price of and interest on the Bonds so called for redemption have
been duly deposited with the Trustee, such Bonds so called shall cease to be entitled to any
benefit under the Indenture other than the right to receive payment of the redemption price and
accrued interest to the redemption date, and no interest shall accrue thereon from and after the
redemption date specified in such notice.
Manner of Redemption. Whenever any Bonds or portions thereof are to be selected for
redemption by lot, the Trustee shall make such selection, in such manner as the Trustee shall
deem appropriate, and shall notify the Agency thereof. In the event of redemption by lot of
Bonds, the Trustee shall assign to each Bond then Outstanding a distinctive number for each
$5,000 of the principal amount of each such Bond. The Bonds to be redeemed shall be the Bonds
to which were assigned numbers so selected, but only so much of the principal amount of each
such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for
each number assigned to it and so selected. All Bonds redeemed or purchased shall be canceled.
Book-Entry System
The Bonds will be subject to a book-entry system of registration, transfer and payment
and each Bond will initially be registered in the name of Cede & Co, as nominee of The
Depository Trust Company, New York, New York ("DTC"). As part of such book-entry system,
DTC has been appointed securities depository for the Bonds, and registered ownership may not
thereafter be transferred except as provided in the Indenture. The Bonds are being delivered in
book-entry form only. Purchasers will not receive securities certificates representing their
interests in the Bonds. Rather, in accordance with the book-entry system, purchasers of the
Bonds will have beneficial ownership interest in the purchased Bonds through DTC Participants
(as hereinafter defined). For more information concerning the book-entry system, see
APPENDIX G—BOOK-ENTRY ONLY SYSTEM.
TAX ALLOCATION FINANCING
General
Tax Allocations. The Redevelopment Law provides a means for financing redevelopment
projects based upon an allocation of taxes collected within a project area. The taxable valuation
of a project area last equalized prior to adoption of the redevelopment plan for the project area,
or base roll, is established as of the date of adoption of the redevelopment plan. Thereafter,
except for any period during which the taxable valuation drops below the base year level, the
taxing bodies receive the taxes produced by the levy of the then current tax rate upon the base
roll. Taxes collected upon any increase in taxable valuation over the base roll (with the
exception of taxes derived from increases in the tax rate imposed by Taxing Agencies
(hereinafter defined) to support new bonded indebtedness) (the "Tax Increment Revenues") are
allocated to the redevelopment agency and may be pledged to the repayment of any
indebtedness incurred in financing or refinancing redevelopment. Redevelopment agencies
themselves have no authority to levy property taxes and must look exclusively to such
allocation of taxes.
Allocation of Taxes
As provided in the redevelopment plan for the project area, and pursuant to Article 6 of
Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the State Constitution,
taxes levied upon taxable property in the project area each year by or for the benefit of the State,
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cities, counties, districts or other public corporations (collectively, the "Taxing Agencies"), for
fiscal years beginning after the effective date of the redevelopment plan, will be divided as
follows:
(1) To Taxing Agencies: The portion equal to the amount of those taxes which would have
been produced by the then current tax rate, applied to the taxable valuation of such property in
the redevelopment project area as last equalized prior to the establishment of the
redevelopment project, or base roll, is paid into the funds of those respective Taxing Agencies
as taxes by or for said Taxing Agencies; and
(2) To the Agency: The portion of said levied taxes each year in excess of the amount
referred to in (1) above is allocated to, and when collected, is paid to the agency; provided that
the portion of the tax increment revenues which are attributable to a tax rate levied by a taxing
agency to pay indebtedness approved by the voters of that taxing agency on or after January 1,
1989, shall be allocated to, and when collected shall be paid into, the fund of such taxing agency.
Housing Set-Aside Amounts. Sections 33334.2 and 33334.3 of the Redevelopment Law
require each agency to set aside not less than 20% of all Tax Increment Revenues in a low and
moderate income housing fund (the "Low and Moderate Income Housing Fund") to be
expended for authorized low and moderate income housing purposes (the "Housing Set-Aside
Amount"). Amounts on deposit in the Low and Moderate Income Housing Fund may also be
applied to pay debt service on bonds, loans or advances used to provide financing for such low
and moderate income housing purposes. Under the Redevelopment Law, the Housing Set-
Aside Amount could be reduced or eliminated if the agency finds that (1) no need exists in the
community to improve or increase the supply of low and moderate income housing, (2) that
some stated percentage less than 20% of the tax increment is sufficient to meet the housing need
or (3) that other substantial efforts, including the obligation of funds from certain local, state or
federal sources for low and moderate income housing, or equivalent impact are being provided
for in the community. See "LIMITATIONS ON TAX REVENUES." The Agency has made no
such finding and is, therefore, obligated to make such set-aside. No portion of the proceeds of
the Bonds is expected to be deposited in the Low and Moderate Income Housing Fund. The
Agency is currently setting aside 20 percent of the Redevelopment Project's tax increment
revenue and the Fiscal Consultant's projections assume that the Agency will continue to do so
for the duration of the plan life of the Redevelopment Project.
Tax Sharing Agreements. Pursuant to section 33607.5 of the Redevelopment Law, the
Agency is required to implement statutory tax sharing with all taxing entities levying taxes
upon property within the Redevelopment Project. See "THE REDEVELOPMENT PROJECT—
Tax Sharing Agreements."
SECURITY FOR THE BONDS
Pledge of Tax Revenues
The Bonds and all payments required of the Agency under the Indenture are not general
obligations of the Agency but are limited special obligations of the Agency and are secured by
an irrevocable pledge of, and are payable as to principal and interest, from Tax Revenues and
other funds as hereinafter described, including similar revenues derived from any
redevelopment project that may be created by the City in the future. The Bonds and interest
thereon are not a debt of the City, the State or any of its political subdivisions, and neither the
City, the State nor any of its political subdivisions is liable on them. In no event shall the Bonds
or interest thereon be payable out of any funds or properties other than those of the Agency as
set forth in the Indenture. The Bonds do not constitute an indebtedness within the meaning of
any constitutional or statutory debt limitation or restriction. Neither the members of the Agency
nor any persons executing the Bonds are liable personally on the Bonds by reason of their
issuance.
The Agency has no independent power to levy and collect property taxes, and any property tax
limitation, legislative measure, voter initiative or provision of additional sources of income to taxing
agencies having the effect of reducing the property tax rate or collections, could reduce the amount of Tax
Revenues that would otherwise be available to pay the principal of, and interest on, the Bonds. Likewise,
broadened property tax exemptions could have a similar effect. See "BONDOWNERS' FACTORS."
Security of Bonds; Equal Security
The Bonds and any Parity Debt issued in accordance with the Indenture are secured by a
pledge of, security interest in and a first and exclusive lien on all of the Tax Revenues, and a
first and exclusive pledge of, security interest in and lien upon all of the moneys in the Special
Fund and the Debt Service Fund, without preference or priority for series, issue, number, dated
date, sale date, date of execution or date of delivery. Except for the Tax Revenues and such
other moneys on deposit in the funds and accounts established under the Indenture, no funds
or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal
of or interest or redemption premium (if any) on the Bonds.
In consideration of the acceptance of the Bonds by those who shall hold the same from
time to time, the Indenture shall be deemed to be and shall constitute a contract between the
Agency and the Owners from time to time of the Bonds, and the covenants and agreements set
forth in the Indenture to be performed on behalf of the Agency shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
priority or distinction as to security or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution and delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein.
Special Fund; Deposit of Tax Revenues
The Indenture establishes a special fund to be known as the "Special Fund," which shall
be held by the Agency. The Agency shall transfer all of the Tax Revenues received in any Bond
Year to the Special Fund promptly upon receipt thereof by the Agency, until such time during
such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts
required to be transferred to the Trustee for deposit into the Interest Account, the Principal
Account, the Sinking Account and the Reserve Account in such Bond Year.
All Tax Revenues received by the Agency during any Bond Year in excess of the amount
required to be deposited in the Special Fund during such Bond Year, including delinquent
amounts if any, shall be released from the pledge and lien under the Indenture for the security
of the Bonds and may be applied by the Agency for any lawful purposes of the Agency,
including but not limited to the payment of Subordinate Debt, or the payment of any amounts
due and owing to the United States of America. Prior to the payment in full of the principal of
and interest and redemption premium (if any) on the Bonds and the payment in full of all other
amounts payable under the Indenture and under any Parity Debt Instrument, the Agency shall
not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as
may be provided in the Indenture and in any Parity Debt Instrument.
Deposit of Amounts by Trustee
There is established in the Indenture a trust fund to be known as the Debt Service Fund,
which shall be held by the Trustee in trust. Moneys in the Special Fund shall be transferred by
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the Agency to the Trustee in the following amounts, at the following times, and deposited by
the Trustee in the following respective special accounts, which are established in the Debt
Service Fund, and in the following order of priority, provided, however, that if amounts to be so
deposited are insufficient to fund the full amount required for the Bonds and any Parity Debt,
such amounts shall be allocated pro rata among the Bonds and any Parity Debt:
Interest Account. On or before the fifth Business Day preceding each Interest Payment
Date, the Agency shall withdraw from the Special Fund and transfer to the Trustee, for deposit
in the Interest Account an amount which when added to the amount contained in the Interest
Account on that date, will be equal to the aggregate amount of the interest becoming due and
payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit
need be made to the Interest Account if the amount contained therein is at least equal to the
interest to become due on the next succeeding Interest Payment Date upon all of the
Outstanding Bonds and any Parity Debt. All moneys in the Interest Account shall be used and
withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall
become due and payable (including accrued interest on any Bonds redeemed or purchased
prior to maturity pursuant to the Indenture).
Principal Account; Sinking Account. On or before the fifth Business Day preceding each
principal payment date in each year, or date on which any Outstanding Term Bonds become
subject to mandatory Sinking Account redemption, beginning September 1, 2011, the Agency
shall withdraw from the Special Fund and transfer to the Trustee for deposit (i) in the Principal
Account an amount which, when added to the amount then contained in the Principal Account,
will be equal to the principal becoming due and payable on the Outstanding Bonds on the next
September 1, and (ii) in the Sinking Account an amount which, when added to the amount then
contained in the Sinking Account, will be equal to the aggregate principal amount of the Term
Bonds subject to mandatory Sinking Account redemption on such date. In the event that the
amount then in the Special Fund, following the transfer described in the preceding paragraph,
is not sufficient to fully fund the amounts described in the preceding clauses (i) and (ii), the
Trustee shall deposit the available funds in the Special Fund pro rata to the Principal Account
and the Sinking Account, based on the aggregate principal and Sinking Account payments then
due on the Bonds. No such transfer and deposit need be made to the Principal Account if the
amount contained therein is at least equal to the principal or sinking fund installment to become
due on the next September 1 on all of the Outstanding Bonds. All moneys in the Principal
Account shall be used and withdrawn by the Trustee solely for the purpose of paying the
principal of the Bonds as it shall become due and payable.
Reserve Account. In the event that the Trustee has actual knowledge that the amount on
deposit in the Reserve Account at any time is less than the Reserve Requirement, the Trustee
shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the
Agency shall transfer to the Trustee, Tax Revenues sufficient to maintain the Reserve
Requirement on deposit in the Reserve Account. If there shall then not be sufficient Tax
Revenues to transfer an amount sufficient to maintain the Reserve Requirement on deposit in
the Reserve Account, the Agency shall be obligated to continue making transfers as Tax
Revenues become available in the Special Fund until there is an amount sufficient to maintain
the Reserve Requirement on deposit in the Reserve Account. No such transfer and deposit need
be made to the Reserve Account so long as there shall be on deposit therein a sum at least equal
to the Reserve Requirement.
Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for
the purpose of making transfers to (i) the Interest Account (and any interest account created for
Parity Debt), and (ii) the Principal Account (and any principal account created for Parity Debt)
and the Sinking Account (and any sinking account created for Parity Debt) in such order of
priority (pro rata to the Principal Account (and any principal account created for Parity Debt)
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