HomeMy WebLinkAboutTPFA 01 REV BONDS 11-01-99Com ·
DATE:
November 1, 1999
Inter-
TO:
FROM:
SUBJECT:
William A. Huston, Executive Director, Tustin Public Financing Authority
Ronald A. Nault, Finance Director
TUSTIN PUBLIC FINANCING AUTHORITY REVENUE BONDS
(TUSTIN RANCH) SERIES D
SUMMARY: In February of 1996 the City Council approved the formation of the Tustin Public
Financing Authority to facilitate the reorganization of Assessment Districts 85-1 and 86-2, and
the concurrent refinancing of the outstanding debt of the two Districts into Reassessment
District 95-1, made up of owner occupied residential property with fixed rate bon~l assessments,
and Reassessment District 95-2 made up of commercial and vacant parcels with variable rate
assessments. In keeping with the City Council's policy as stated in the East Tustin
Development Agreement, as vacant parcels are developed as owner occupied residential
property, the variable rate debt is converted to fixed rate debt for the remaining life of the
original issue and the parcels become part of Assessment Distri'ct 95-1.
RECOMMENDATION'
.
Adopt Resolution TPFA No. 99-1 of the Tustin Public Financing Authority authorizing the issuance
of not to exceed $5,200,000 aggregate principal amount of Tustin Public Financing Authority
Bonds (Tustin Ranch), Series D, approving the execution and delivery of a Third Supplemental
Indenture of Trust and Bond Purchase Agreements, and preparation of an Official Statement and
other matters related thereto, approving forms of the enclosed Third Supplemental Indenture of
Trust; Bond Purchase Agreement for City Bonds; Bond Purchase Agreement for Authority Bonds;
and the preliminary Official Statement.
2. Adjourn the Tustin Public Financing Authority Meeting and reconvene as the City Council.
FISCAL IMPACT:
None.
DISCUSSION:
The Tustin Public Financing Authority was established for the purpose of providing for the financing or
refinancing of public capital improvements of any local agency through the purchase by the authority of
obligations of such local agency pursuant to a bond purchase agreement. The Authority issued
$35,705,000 of bonds on February 1, 1996. The proceeds of the bonds were used to purchase
$35,705,000 of City of Tustin Limited Obligation Improvement Bonds, Reassessment District No. 95-1
(Tustin Ranch).
This is the third Supplemental Indenture of Trust that authorizes the authority to issue additional debt
to facilitate the conversion of Reassessment District 95-2 variable rate debt to Reassessment District
95-1, fixed rate debt. The action of the authority will not extend the maturity of the existing debt.
Ronald A. Nault
Finance Director
RAN:ts
Attachments
RAN:TPFA1999SedesDConversionStaffReport.doc
1 RESOLUTION NO. 99-94
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TUSTIN AUTHORIZING THE ISSUANCE OF NOT TO
EXCEED $5,200,000 AGGREGATE PRINCIPAL AMOUNT
OF CITY OF TUSTIN LIMITED OBLIGATION
IMPROVEMENT BONDS REASSESSMENT DISTRICT NO.
95-2 (TUSTIN RANCH), FIXED RATE BONDS, GROUP
THREE, APPROVING THE EXECUTION AND DELIVERY
OF A FOURTH SUPPLEMENTAL FISCAL AGENT
AGREEMENT, A BOND PURCHASE AGREEMENT AND A
CONTINUING DISCLOSURE AGREEMENT (SERIES D)
AND THE PREPARATION OF AN OFFICIAL STATEMENT
AND OTHER MATTERS RELATED THERETO
WHEREAS, pursuant to a Fiscal Agent Agreement, dated as of February 1, 1996 (the
"Original Agreement"), by and between the City and the Fiscal Agent, the City issued its Limited
Obligation Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Series A (the
"Series A Bonds") in the aggregate principal amount of $41,500,000;
WHEREAS, the Original Agreement was amended and supplemented pursuant to a First
Supplemental Fiscal Agent Agreement, dated as of September 1, 1996, by and between the City
and the Fiscal Agent, a Second Supplemental Fiscal Agent Agreement, dated as of November 1,
1997, by and between the City and the Fiscal Agent and a Third Supplemental Fiscal Agent
Agreement, dated as of November 1, 1998, by and between the City and the Fiscal Agent (as so
amended and supplemented, the "Third Amended Original Agreement") (all capitalized terms.
used in these recitals shall have the meanings ascribed thereto in the "Third Amended Original
Agreement");
WHEREAS, the Series A Bonds were originally issued as Adjustable Rate Bonds;
WHEREAS, in accordance with the provisions of the Third Amended Original
Agreement, all or a portion of the Series A Bonds may, and in Certain circumstances are required
to be, converted to Fixed Rate Bonds;
WHEREAS, $4,322,504.68 aggregate principal amount of Series A Bonds are now being
converted to Fixed Rate Bonds (the "Group Three Fixed Rate Bonds");
WHEREAS, the Third Amended Original Agreement provides that the Third Amended
Original Agreement and the rights and obligations of the City, the Fiscal Agent and the Owners of
Fixed Rate Bonds, but only as such rights and obligations relate solely to such Fixed Rate Bonds,
may be modified or amended, as of the Conversion Date for such Fixed Rate Bonds, by a
Supplemental Agreement which the City and the Fiscal Agent may enter into without the consent
of any Bond Owners, but only if such Fixed Rate Bonds have been remarketed by the
Remarketing Agent with such modified or amended rights and obligations;
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WHEREAS, the City desires to amend and modify the Third Amended Original
Agreement with respect to certain of the rights and obligations relating solely to Group Three
Bonds as of Conversion Date for the Group Three Fixed Rate Bonds;
WHEREAS, the Third Amended Original Agreement provides that, in connection with
the conversion of each group of Series A Bonds to Fixed Rate Bonds pursuant to the Third
Amended Original Agreement, the City may, subject to the requirements of the Act, by
Supplemental Agreement establish one or more Series of Bonds, and the City may issue and the
Fiscal Agent may authenticate and deliver Bonds of any Series so established, in such principal
amount as shall be determined by the City in said Supplemental Agreement, but only upon
compliance by the City with the provisions of the Third Amended Original Agreement;
WHEREAS, in connection with the conversion of'the Group Three Fixed Rate Bonds, the
City desires to establish an additional Series of Bonds (the "Series Three Bonds", together with
the Group Three Fixed Rate Bonds, the "Group Three Bonds") for one or more of the purposes
specified in the Third Amended Original Agreement; and
WHEREAS, the Bonds of such additional Series (the "Series Three Bonds") are to be
issued in an aggregate principal amount of not to exceed $877,495.32;
WHEREAS, in order to provide for the authentication and delivery of the Group Three
Fixed Rate Bonds and the Series Three Bonds (collectively, the "Group Three Bonds"), to
establish and declare the terms and conditions upon which the Group Three Bonds are to be
issued and secured and to secure the payment of the principal thereof, premium, if any, and
interest thereon, the City proposes to enter into a Fourth Supplemental Fiscal Agent Agreement
with the Fiscal Agent (such Fourth Supplemental Fiscal Agent Agreement, in the form presented
to this meeting, with such changes, insertions and omissions as are made pursuant to this
Resolution, being referred to herein as the "Fourth Supplemental Agreement");
WHEREAS, the Tustin Public Financing Authority (the "Authority") intends to issue its
Revenue Bonds (Tustin Ranch), Series D (the "Authority Bonds"), and use a portion of the
proceeds of the sale thereof to purchase the Group Three Bonds from the City;
WHEREAS, the Authority has presented the City with a proposal, in the form of a Bond
Purchase Agreement, to purchase the Group Three Bonds (such Bond Purchase Agreement, in the
form presented to this meeting, with such changes, insertions and omissions as are made pursuant
to this Resolution, being referred to herein as the "Bond Purchase Agreement");
WHEREAS, PaineWebber Incorporated, as underwriter (the "Underwriter"), has
submitted to the Authority a proposal to purchase the Authority Bonds;
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934
("Rule 15c2-12") requires that, in order to be able to purchase or sell the Authority Bonds, the
Underwriter must have reasonably determined that an obligated person has undertaken in a
written agreement or contract for the benefit of the holders of the Authority Bonds to provide
disclosure of certain financial information and certain material events on an ongoing basis;
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WHEREAS, in order to cause such requirement to be satisfied, the City desires to enter
into a Continuing Disclosure Agreement (Series D) with State Street Bank and Trust Company of
California, N.A., as Trustee for the Authority Bonds (such Continuing Disclosure Agreement
(Series D), in the form presented to this meeting, with such changes, insertions and omissions as
are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure
Agreement");
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Fourth Supplemental Agreement;
(b) the Bond Purchase Agreement;
(c) the Continuing Disclosure Agreement; and
(d) the Preliminary Official Statement to be used in connection with the offering and
sale of the Authority Bonds, which contains certain information about the City, the Third
Amended Original Agreement, the Fourth Supplemental Agreement, the Group Three Bonds, the
City's Reassessment District No. 95-1, the City's Reassessment District No. 95-2 and the'
proceedings relating thereto (such Preliminary Official Statement in the form presented 'to this
meeting, with such changes, insertions and omissions as are made pursuant to this Resolution,
being referred to herein as the "Preliminary Official Statement"); and
WHEREAS, the City desires to proceed to issue and sell the Group Three Bonds and to
authorize the execution of such documents and the performance of such acts as may be necessary
or desirable to effect the offering, sale and issuance of the Group Three Bonds;
NOW, THEREFORE, BE IT RESOLVED by the City Council the City of Tustin as
follows:
Section 1. Subject to the provisions of Section 2 hereof, the conversion and issuance of
the Group Three Fixed Rate Bonds, in the aggregate principal amount of not to exceed
$4,322,504.68, and the issuance of the Series Three Bonds, in the aggregate principal amount of
not to exceed $877,495'.32 on the terms and conditions set forth in, and subject to the limitations
specified in, the Third Amended Original Agreement, as amended and supplemented by the
Fourth Supplemental Agreement (as so amended and supplemented, the "Fiscal Agent
Agreement"), are hereby authorized and approved. The Group Three Bonds shall be dated, shall
bear interest at the rates, shall mature on the dates, shall be issued in the form, and shall be as
otherwise provided in the Fiscal Agent Agreement.
Section 2. The Fourth Supplemental Agreement, in substantially the form submitted to
this meeting and made a part hereof as though set forth herein, be and the same is hereby
approved. The Mayor of the City, the Mayor Pro Tem of the City, or such other member of the
City Council as the Mayor may designate, the City Manager of the City and the Director of
Finance/Treasurer of the City, or such other officer of the City as the City Manager or the
Director of Finance/Treasurer may designate (the "Authorized Officers") are, and each of them is,
hereby authorized and directed, for and in the name of the City, to execute and deliver the Fourth
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Supplemental Agreement in the form submitted to this meeting, with such changes, insertions and
omissions as the Authorized Officer executing the same may require or approve, such requirement
or approval to be conclusively evidenced by the execution of the Fourth Supplemental Agreement
by such Authorized Officer; provided, however, that such changes, insertions and omissions shall
not authorize an aggregate principal amount of Group Three Bonds in excess of $5,200,000, shall
not result in a final maturity date of the Group Three Bonds later than September 2, 2013 and
shall not result in a true interest cost on the Group Three Bonds in excess of 8.17%.
Section 3. The Bond Purchase Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is hereby
approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for
and in the name of the City, to execute and deliver the Bond Purchase Agreement in the form
presented to this meeting, with such changes, insertions and omissions as the Authorized Officer
executing the same may require or approve, such requirement or approval to be conclusively
evidenced by the execution of the Bond Purchase Agreement by such Authorized Officer;
provided, however, that such changes, insertions and omissions shall not result in an aggregate
purchaser's discount (not including any original issue discount) from the principal amount of the
Group Three Bonds in excess of 1.5% of the aggregate principal amount of the Group Three
Bonds.
Section 4. The Continuing Disclosure Agreement, in substantially the form submitted to
this meeting and made a part hereof as though set forth in full herein, be and the same is hereby
approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for
and in the name of the City, to execute and deliver the Continuing Disclosure Agreement in the
form presented to this meeting, with such changes, insertions and omissions as the Authorized
Officer executing the same may require or approve, such requirement or approval to be
conclusively evidenced by the execution of the Continuing Disclosure Agreement by such
Authorized Officer.
Section 5. The Preliminary Official Statement, in substantially the form presented to this
meeting and made a part hereof as though set forth in full herein, with such changes therein as
may be approved by an Authorized Officer, be and the same is hereby approved, and the use of
the Preliminary Official Statement in connection with the offering and sale of the Authority
Bonds is hereby authorized and approved. The Authorized Officers are, and each of them is,
hereby authorized and directed, for and in the name of the City, to certify to the Underwriter that
the Preliminary Official Statement has been "deemed final" for purposes of Rule 15c2-12.
Section 6. The preparation and delivery of a final Official Statement (the "Official
Statement"), and its use in connection with the offering and sale of the Authority Bonds, be and
the same is hereby authorized and approved. The Official Statement shall be in substantially the
form of the Prelimir/ary Official Statement with such changes, insertions and omissions as may be
approved by an Authorized Officer, such approval to be conclusively evidenced by the execution
and delivery thereof. The Authorized Officers are, and each of them is, hereby authorized and
directed to execute the final Official Statement, and any amendment or supplement thereto, for
and in the name of the City.
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Section 7. The Authorized Officers are hereby authorized and directed to investigate, or
cause to be investigated, the availability and economic Viability of bond insurance for the Group
Three Bonds and/or the Authority Bonds and, if such insurance is determined to be cost effective,
to select a bond insurer and to negotiate the terms of such bond insurance.
Section 8. The Authorized Officers are, and each of them hereby is, authorized and
directed to execute and deliver any and all documents and instruments and to do and cause to be
done any and all acts and things necessary or proper for carrying out the issuance of the Group
Three Bonds and the transactions contemplated by the Fiscal Agent Agreement, the Bond
Purchase Agreement, the Continuing Disclosure Agreement, the Official Statement and this
Resolution.
Section 10. All actions heretofore taken by the officers and employees of the City with
respect to the issuance and sale of the Group Three Bonds, or in connection with or related to any
of the agreements or documents referenced herein, are hereby approved, confirmed and ratified.
Section 11. Thi~ Resolution shall take effect immediately upon its adoption.
APPROVED and ADOPTED by the City Council of the City of Tustin on November 1,
1999.
ATTEST:
Mayor
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF ORANGE )
SS
I, Pamela Stoker, City Clerk of the City of Tustin, California hereby certify that the
foregoing is a full, true and correct copy of a Resolution duly adopted at a regular meeting of the
City Council of said City duly and regularly held at the regular meeting place thereof on
November 1, 1999, of which meeting all of the members of said City Council had due notice and
at which a majority thereof were present; and that at said meeting said Resolution was adopted by
the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:'
ABSENT: COUNCIL MEMBERS'
An agenda of said meeting was posted at least 72 hours before said meeting at 300
Centennial Way, Tustin, California, a location freely accessible to members of the public, and a
brief general description of said Resolution appeared on said agenda.
I further certify that I have carefully compared the same with the original minutes of said
meeting on file and of record in my office; that the foregoing Resolution is a full, true and correct
copy of the original Resolution adopted at said meeting and entered in said minutes; and that said
Resolution has not been amended, modified or rescinded since the date of its adoption, and the
same is now in full force and effect.
Dated: November 1, 1999
City Clerk
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RESOLUTION NO. TPFA 99- 1
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE TUSTIN PUBLIC FINANCING AUTHORITY
AUTHORIZING THE ISSUANCE OF NOT TO EXCEED
$5,200,000 AGGREGATE PRINCIPAL AMOUNT OF
TUSTIN PUBLIC FINANCING AUTHORITY REVENUE
BONDS (TUSTIN RANCH), SERIES D, APPROVING THE
EXECUTION AND DELIVERY OF A THIRD
SUPPLEMENTAL INDENTURE OF TRUST AND BOND
PURCHASE AGREEMENTS AND THE PREPARATION OF
AN OFFICIAL STATEMENT AND OTHER MATTERS
RELATED THERETO
WHEREAS, the Tustin Public Financing Authority (the "Authority") was established for
the purpose, among others, of providing for the financing or refinancing of public capital
~mprovements of any local agency through the purchase by the Authority of obligations of such
local agency pursuant to a bond purchase agreement;
WHEREAS, pursuant to the Indenture of Trust, dated as of February 1, 1996 (the
"Original Indenture"), by and between the Authority and State Street Bank and Trust Company
of California, N.A., as trustee (the "Trustee"), the Authority issued its Revenue Bonds (Tustin
Ranch), Series A (the "Series A Bonds") in the aggregate principal amount of $35,705,000;
WHEREAS, the Original Indenture was amended and supplemented pursuant to the First
Supplemental Indenture of Trust, dated as of November 1, 1997 by and between the Authority
and the Trustee, and the Second Supplemental Indenture of Trust, dated as of November 1, 1998,
by and between the Authority and the Trustee;
WHEREAS, the proceeds of the Series A Bohds were used to purchase $35,705,000
aggregate principal amount of City of Tustin Limited Obligation Improvement Bonds,
Reassessment District No. 95-1 (Tustin Ranch);
WHEREAS, the Original Indenture provides that, in order to provide the funds required
to acquire certain other fixed rate assessment bonds of the City of Tustin (the "City"), in addition
to the Series A Bonds, the Authority may, subject to the requirements of the Bond Law, by
Supplemental Indenture establish one or more Series of Bonds payable from Revenues on a
parity with the Series A Bonds and secured by a lien upon and pledge of Revenues equal to the
lien and pledge securing the Series A Bonds, and that the Authority may issue and the Trustee
may authenticate and deliver Bonds of any Series so established, in such principal amount as
shall be determined by the Authority in said Supplemental Indenture, but only upon compliance
by the Authority with the provisions of the Original Indenture;
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WHEREAS, in order to refinance certain public capital improvements, the City of Tustin
(the "City") is issuing not to exceed $5,200,000 of its Limited Obligation Improvement Bonds,
Reassessment District No. 95-2 (Tustin Ranch), Fixed Rate Bonds, Group Three (the "Group
Three Bonds");
WHEREAS, the Authority desires to assist the City with the Group Three Bonds
refinancing by purchasing the Group Three Bonds from the City;
WHEREAS, in order to provide the funds necessary to purchase the Group Three Bonds
from the City, the Authority desires to authorize the issuance of the Tustin Public Financing
Authority Revenue Bonds (Tustin Ranch), Series D (the "Series D Bonds"), in an aggregate
principal amount of not to exceed $5,200,000;
WHEREAS, in order to provide for the authentication and delivery of the Series D
Bonds, to establish and declare the terms and conditions upon which the Series D Bonds are to
be issued and secured and to secure the payment of the principal thereof, premium, if any, and
interest thereon, the Authority proposes to enter into a Third Supplemental Indenture of Trust
with the Trustee (such Third Supplemental Indenture of Trust, in the form presented to this
meeting, with such changes, insertions and omissions as are made pursuant to this Resolution,
being referred to herein as the "Third Supplemental Indenture");
WHEREAS, the Authority proposes to purchase the Group Three Bonds pursuant to a
Bond Purchase Agreement between the City and the Authority (such Bond Purchase Agreement,
in the form presented to this meeting, with such changes, insertions and omissions as are made
pursuant to this Resolution, being referred to herein as the "City Purchase Agreement");
WHEREAS, the Authority has found and determined/hat the purchase of the Group
Three Bonds by the Authority will result in substantial public benefits, namely, the interest
savings with respect to the Group Three Bonds to be achieved by reason of the credit rating to be
assigned to the Series D Bonds;
WHEREAS, PaineWebber Incorporated (the "Underwriter") has presented the Authority
with a proposal, in the form of a Bond Purchase Agreement, to purchase the Series D Bonds
from the Authority (such Bond Purchase Agreement, in the form presented to this meeting, with
such changes, insertions and omissions as are made pursuant to this Resolution, being referred to
herein as the "Authority Purchase Agreement");
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Third Supplemental Indenture;
(b) the City Purchase Agreement;
(c) the Authority Purchase Agreement; and
(d) the Preliminary Official Statement to be used in connection with the offering and
sale of the Series D Bonds (such Preliminary Official Statement in the form presented to this
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meeting, with such changes, insertions and omissions as are made pursuant to this Resolution,
being referred to herein as the "Preliminary Official Statement"); and
WHEREAS, the Authority desires to proceed to issue and sell the Series D Bonds and to
authorize the execution of such documents and the performance of such acts as may be necessary
or desirable to effect the offering, sale and issuance of the Series D Bonds;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Tustin
Public Financing Authority as follows:
Section 1. Subject to the provisions of Section 2 hereof, the issuance of the Series D
Bonds, in the aggregate principal amount of not to exceed $5,200,000, on the terms and
conditions set forth in, and subject to the limitations specified in, the Indenture, is hereby
authorized and approved. The Series D Bonds shall be dated, shall bear interest at the rates, shall
mature on the dates, shall be issued in the form, and shall be as otherwise provided in the Third
Supplemental Indenture, as the same shall be completed as provided in this Resolution.
Section 2. The Third Supplemental Indenture, in substantially the form submitted to this
meeting and made a part hereof as though set forth herein, be and the same is hereby approved.
The Chairperson of the Board of Directors, or such other member of the Board of Directors as
the Chairperson may designate, the Executive Director of the Authority, the Assistant Executive
Director of the Authority and the Treasurer of the Authority (the "Authorized Officers") are, and
each of them is, hereby authorized and directed, for and in the name of the Authority, to execute
and deliver the Third Supplemental Indenture in the form submitted to this meeting, with such
changes, insertions and omissions as the Authorized Officer executing the same may require or
approve, such requirement or approval to be conclusively evidenced by the execution of the
Third Supplemental Indenture by such Authorized Officer; provided, however, that such
changes, insertions and omissions shall not authorize an aggregate principal amount of Series D
Bonds in excess of $5,200,000, shall not result in a final maturity date of the Series D Bonds
later than September 2, 2013 and shall not result in a true interest cost on the Series D Bonds in
excess of 7.0%.
Section 3. Th6 City Purchase Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is hereby
approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for
and in the name of the Authority, to execute and deliver the City Purchase Agreement in the form
presented to this meeting, with such changes, insertions and omissions as the Authorized Officer
executing the same may require or approve, such requirement or approval to be conclusively
evidenced by the execution of the City Purchase Agreement by such Authorized Officer.
Section 4. The Authority Purchase Agreement, in substantially the form submitted to
this meeting and made a part hereof as though set forth in full herein, be and the same is hereby
approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for
and in the name of the Authority, to execute and deliver the Authority Purchase Agreement in
the form presented to this meeting, with such changes, insertions and omissions as the
Authorized Officer executing the same may require or approve, such requirement or approval to
be conclusively evidenced by the execution of the Authority Purchase Agreement by such
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Authorized Officer; provided, however, that such changes, insertions and omissions shall not
result in an aggregate underwriter's discount (not including any original issue discount) from the
principal amount of the Series D Bonds in excess of 1.5% of the aggregate principal amount of
the Series D Bonds.
Section 5. The Preliminary Official Statement, in substantially the form presented to this
meeting and made a part hereof as though set forth in full herein, with such changes therein as
may be approved by an Authorized Officer, be and the same is hereby approved, and the use of
the Preliminary Official Statement in connection with the offering and sale of the Series D Bonds
is hereby authorized and approved. The Authorized Officers are, and each of them is, hereby
authorized and directed, for and in the name of the Authority, to certify to the Underwriter that
the Preliminary Official Statement has been "deemed final" for purposes of Rule 15c2-12
promulgated by the Securities and Exchange Commission.
Section 6. The preparation and delivery of a final Official Statement (the "Official
Statement"), and its use in connection with the offering and sale of the Series D Bonds, be and
the same is hereby authorized and approved. The Official Statement shall be in substantially the
form of the Preliminary Official Statement with such changes, insertions and omissions as may
be approved by an Authorized Officer, such approval to be conclusively evidenced by the
execution and delivery thereof. The Authorized Officers are, and each of them is, hereby
authorized and directed to execute the final Official Statement and any amendment or
supplement thereto, for and in the name of the Authority.
Section 7. The Authorized Officers are hereby authorized and directed to inVestigate, or
cause to be investigated, the availability and economic viability of bond insurance for the Series
D Bonds and, if such insurance is determined to be cost effective, to select a bond insurer and to
negotiate the terms of such bond insurance.
Section 8. The Authorized Officers are, and each of them hereby is, authorized and
directed to execute and deliver any and all documents and instruments and to do and cause to be
done any and all acts and things necessary or proper for carrying out the issuance of the Series D
Bonds and the transactions contemplated by the Indenture, the City Purchase Agreement, the
Authority Purchase Agreement, the Official Statement and this Resolution.
Section 9. All actions heretofore taken by the officers and employees of the Authority
with respect to the issuance and sale of the Series D Bonds, or in connection with or related to
any of the agreements or documents referenced herein, are hereby approved, confirmed and
ratified.
Section 10. This Resolution shall take effect immediately upon its adoption.
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APPROVED and ADOPTED by the Board of Directors of the Tustin Public Financing
Authority on November 1, 1999.
Chairperson
ATTEST:
Secretary
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STATE OF CALIFORNIA )
COUNTY OF ORANGE )
SS
I, Pamela Stoker, Secretary of the Tustin Public Financing Authority hereby certify that
the foregoing is a full, true and correct copy of a Resolution duly adopted at a meeting of the
Board of Directors of said Authority duly and regularly held on November 1, 1999, of which
meeting all of the members of said Board of Directors had due notice and at which a majority
thereof were present; and that at said meeting said Resolution was adopted by the following
vote:
AYES: DIRECTORS-
NOES: DIRECTORS:
ABSENT: DIRECTORS'
An agenda of said meeting was posted at least 72 hours before said meeting at 300
Centennial Way, Tustin, California, a location freely accessible to members of the public, and a
brief general description of said Resolution appeared on said agenda.
I further certify that I have carefully compared the same with the original minutes of said
meeting on file and of record in my office; that the foregoing Resolution is a full, true and correct
copy of the original Resolution adopted at said meeting and entered in said minutes; and that said
Resolution has not been amended, modified or rescinded since the date of its adoption, and the
same is now in full force and effect.
Dated: November 1, 1999
Secretary
DOCSLA 1:320654.1
'FOURTH SUPPLEMENTAL
FISCAL AGENT AGREEMENT
by and between the
· CITY OF TUSTIN
and
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.,
as FisCal Agent
Dated as of_November 1, 1999
RELATING TO
CITY OF TUSTIN
LIMITED OBLIGATION IMPROVEMENT BONDS
REASSESSMENT DISTRICT NO. 95-2 (TUSTIN RANCH)
FIXED RATE BONDS, GROUP THREE
DOCSLA1:320648.2
TABLE OF CONTENTS
Page
PART 1
ADDITION OF ARTICLE XV
Part 1.1. Addition of Article XV ................................................................................................... 3
ARTICLE XV GROUP THREE BONDS ........... , ........................................................ 3
Section 15.01. Definitions ............... ................................................................................. 3
Section 15.02. Authorization and Issuance of Series Three Bonds .................................. 9
Section 15.03. Terms of Group Three Bonds ....... , ........................................................... 9
Section 15.04. Form of Group Three Bonds ................................................................... 11
Section 15.05. Application of Amounts .......................................................................... 11
Section 15.06. Costs Account (Group Three) ................................................................. 11
Section 15.07. Redemption of Group Three Bonds ........................................................ 11
Section 15.08. Selection of Group Three Bonds for Redemption .................................. 13
Section 15.09. Group Three Accounts ............................................................................ 13
Section 15.1 i. Rebate Fund (Group Three) .................................................................... 14
Section 15.12. Reports to California Debt and Investment Advisory Commission ....... 15
Section 15.13. Modification or Amendment of Agreement.. ........................................... 15
Section 15.14. Defeasance of Group Three Bonds ......................................................... 15
Section 15.15. Reporting Requirements ................. ' ........................................................ 17
Section 15.16. Third-Party Beneficiary .......................................................................... 18
Section 15.17. Group Three Bonds Original Issue Discount .......................................... 18
PART 2
SPECIFIC AMENDMENTS
Part 2.1. Amendment to Section 6.08 ......................................................................................... 19
Part 2.2. Amendment of Section 8.01 ......................................................................................... 19
Part 2.3. Amendment of Section 12.03 ....................................................................................... 19
Part 2.4. Amendment of Section 12.08 ....................................................................................... 20
PART 3
MISCELLANEOUS
Part 3.1. Effect of Fourth Supplemental Agreement .......... ......................................................... 21
Part 3.2. Execution in Several Counterparts ............................................................................... 21
DOCSLA1:320648.2 -i-
TABLE OF CONTENTS
(continued)
Page
Part 3.3. Effective Date of Fourth Supplemental Agreement ..................................................... 21
EXHIBIT F - FORM OF GROUP THREE BONDS ................................................................. F-1
EXHIBIT G- DESIGNATED PARCELS (GROUP THREE) ................................................. G-1
DOCSLA1:320648.2 -ii-
FOURTH SUPPLEMENTAL FISCAL AGENT AGREEMENT
THIS FOURTH SUPPLEMENTAL FISCAL AGENT AGREEMENT (this "Fourth
Supplemental Agreement") is made and entered into as of November 1, 1999 by and between the
CITY OF TUSTIN, a general law city and municipal corporation organized and existing under
and by virtue of the laws of the State of California (the "City"), and STATE STREET BANK
AND TRUST COMPANY OF CALIFORNIA, N.A., a national banking association organized
and existing under and by virtue of the laws of the United States of America, as fiscal agent (the
"Fiscal Agent").
WI T N E S S E T H:
WHEREAS, pursuant to a Fiscal Agent Agreement, dated as of February 1, 1996 (the
"Original Agreement"), by and between the City and the Fiscal Agent, the City issued its Limited
Obligation Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Series A (the
"Series A Bonds") in the aggregate principal amount of $41,500,000;
WHEREAS, the Original Agreement was amended and supplemented pursuant to a First
Supplemental Fiscal Agent Agreement, dated as of September 1, 1996, by and between' the City
and the Fiscal Agent, a Second Supplemental Fiscal Agent Agreement, dated as of November 1,
1997, by and between the City and the Fiscal Agent, and a Third Supplemental Fiscal Agent
Agreement, dated as of November 1, 1998, by and between the City and the Fiscal Agent (as so
amended and supplemented, the "Third Amended Original Agreement") (all capitalized terms
used in these recitals shall have the meanings ascribed thereto in the "Third Amended Original
Agreement");
WHEREAS, the Series A Bonds were originally issued as Adjustable Rate Bonds;
WHEREAS, in accordance with the provisions of the Third Amended Original
Agreement, all or a portion of the Series A Bonds may, and in certain circumstances are required
to be, converted to Fixed Rate Bonds;
WHEREAS, $4,322,504.68 aggregate principal amount of Series A Bonds are now being
converted to Fixed Rate Bonds (the "Group Three Fixed Rate Bonds");
WItEREAS, the Third Amended Original Agreement provides that the Third Amended
Original Agreement and the rights and obligations of the City, the Fiscal Agent and the Owners
of Fixed Rate Bonds, but only as such rights and obligations relate solely to such Fixed Rate
Bonds, may be modified or amended, as of the Conversion Date for such Fixed Rate Bonds, by a
Supplemental Agreement which the City and the Fiscal Agent may enter into without the consent
of any Bond Owners, but only if such Fixed Rate Bonds have been remarketed by the
Remarketing Agent with such modified or amended rights and obligations;
DOCSLA 1:320648.2
WHEREAS, the City desires to amend and modify the Third Amended Original
Agreement with respect to certain of the rights and obligations relating solely to Group Three
Bonds as of Conversion Date for the Group Three Fixed Rate Bonds;
WHEREAS, the Third Amended Original Agreement provides that, in connection with
the conversion of each group of Series A Bonds to Fixed Rate Bonds pursuant to the Third
Amended Original Agreement, the City may, subject to the requirements of the Act, by
Supplemental Agreement establish one or more Series of Bonds, and the City may issue and the
Fiscal Agent may authenticate and deliver Bonds of any Series so established, in such principal
amount as shall be determined by the City in said Supplemental Agreement, but only upon
compliance by the City with the provisions of the Third Amended Original Agreement;
WHEREAS, in connection with the conversion of the Group Three Fixed Rate Bonds,
the City desires to establish an additional Series of Bonds (the "Series Three Bonds", together
with the Group Three Fixed Rate Bonds, the "Group Three Bonds") for one or more of the
purposes specified in the Third Amended Original Agreement; and
%rHEREAS, the City has determined that all things necessary to cause the authorization,
execution and delivery of this Fourth Supplemental Agreement have in all respects been duly
authorized;
NOW, 'THEREFORE, in consideration of the covenants and provisions herein set forth
and for other valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
DOCSLA1:320~48.2 2
PART 1
ADDITION OF ARTICLE XV
Part 1.1. Addition of Article XV. The Third Amended Original Agreement is hereby
amended by adding thereto an additional Article as follows:
ARTICLE XV
GROUP THREE BONDS
Section 15.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section shall for all purposes of this Agreement, of any Supplemental Agreement and of any
certificate, opinion or other document herein or therein mentioned, have the meanings herein
specified.
"Code (Group Three)" means 'the Internal Revenue Code of 1986.
"Continuing Disclosure Agreement (Series D)" means the Continuing Disclosure
Agreement (Series D), dated as of November22, 1999, by and between the City and the
Authority Trustee, as originally executed and as it may be amended from time to time in
accordance with the terms thereof.
"Conversion Date (Group Three)" means November 23, 1999.
"Costs Account (Group Three)" means the account within the Costs of Issuance Fund
by that name established and held by the Fiscal Agent pursuant to Section 15.06.
"Designated Parcels (Group Three)" means the parcels of real property within
Reassessment District designated by the City, pursuant to Section 7.01(e) of the Agreement, to
represent the Group Three Bonds, the assessor's parcel numbers for which are set forth in Exhibit
C hereto.
"Fourth Supplemental Agreement" means the Fourth Supplemental Fiscal Agent
Agreement, dated as of November 1, 1999, by and between the City and the Fiscal Agent.
"Group Three Bonds" means, collectively, the Group Three Fixed Rate Bonds and the
Series Three Bonds.
"Group Three Costs" means all items of expense directly or indirectly payable by or
reimbursable to the City relating to the authorization, issuance, conversion, remarketing, sale and
delivery of the Group Three Bonds and the authorization, issuance, sale and delivery of the
Series D Bonds, including but not limited to printing expenses, rating agency fees, filing and
recording fees, fees, expenses and charges of the Fiscal Agent and its counsel, fees, expenses and
charges of the Authority Trustee and its counsel, fees, charges and disbursements of
underwriters, remarketing agents, attorneys, financial advisors, accounting firms, consultants,
DOCSLA 1:320648.2 3
and other professionals, and fees and charges for preparation, execution and safekeeping of the
Group Three Bonds and the Series D Bonds and any other cost, charge or fee in connection with
the issuance of the Group Three Bonds and the Series D Bonds, including the premium for the
municipal bond insurance policy securing payment of the Series D Bonds.
"Group Three Fixed Rate Bonds" means the $4,322,504.68 ag~egate principal amount
of Fixed Rate Bonds, the Conversion Date for which is the Conversion Date (Group Three).
"Insurance Policy (Series D)" means the Municipal Bond Insurance Policy, and any
endorsement thereto, issued by the Insurer (Series D) guaranteeing the scheduled payment of the
principal of and interest on the Series D Bonds.
"Insurer (Series D)" means Financial Security Assurance Inc., a New York stock
insurance company, or any successor thereto.
"Original Purchaser (Group Three)" means the Authority, as the original purchaser of
the Group Three Bonds. "'
"Participating Underwriter (Series D)" has the meaning ascribed to Participating
Underwriter in the Continuing Disclosure Agreement (Series D).
"Permitted Investments (Group Three)" means any' of the following to the extent then
permitted by the general laws of the State of California:
(1) (a) Direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America ("United States Treasury Obligations"), (b)
obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America, (c) obligations fully and unconditionally
guaranteed as to timely payment of principal and interest by any agency or
instrumentality of the United States of America when such obligations are backed by the
full faith and credit of the United States of America, or (d) evidences of ownership of
proportionate interests in furore interest and principal payments on obligations described
above held by a bank or trust company as custodian, under which the owner of the
investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying government obligations are not
available to any person claiming through the custodian or to whom the custodian may be
obligated.
(2) Federal Housing Administration debentures.
(3) The listed obligations of government-sponsored agencies which are not backed by
the full faith and credit of the United'States of America:
Federal Home Loan Mortgage Corporation (FHLMC)
Participation certificates (excluding stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
DOCSLA1:320648.2 4
Senior debt obligations
Farm Credit Banks (formerly Federal Land Banks, Federal
Intermediate Credit Banks and Banks for Cooperatives)
Consolidated systemwide bonds and notes
Federal Home Loan Banks (FHL Banks)
Consolidated debt obligations
Federal National Mortgage Association (FNMA)
Senior debt obligations
Mortgage-backed securities (excluding stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
Student Loan Marketing Association (SLMA)
Senior debt obligations (excluding securities that do not have a
fixed par value and/or whose terms do not promise a fixed dollar
amount at maturity or call date)
Financing Corporation (FICO)
Debt obligations
Resolution Funding Corporation (REFCORP)
Debt obligations
(4) Unsecured certificates of deposit, time deposits, deposit accounts and bankers'
acceptances (having maturities of not more than 30 days) of any bank the short-term
obligations of which are rated "A-I" or better by S&P.
(5) Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation (FDIC), in banks which have capital and surplus of at least $5
million.
(6) Commercial paper (having original maturities of not more than 270 days) rated
"A- 1 +" by S&P and "Prime- 1" by Moody's.
(7) Money market funds rated "AAm" or "AAm-G" by S&P, or better.
(8) State Obligations, which means
(a) Direct general obligations of any state of the United States of America or
any subdivision or agency thereof to which is pledged the full faith and credit of a
state the unsecured general obligation debt of which is rated "A3" by Moody's
and "A" by S&P, or better, or any obligation fully and unconditionally guaranteed
by any state, subdivision or agency whose unsecured general obligation debt is so
rated.
(b) Direct, general short-term obligations of any state agency or subdivision or
agency described in (a) above and rated "A-l+" by S&P and "Prime-l" by
Moody' s.
DOCSLA1:320648.2 5
(c) Special Revenue Bonds (as defined in the United States Bankruptcy Code)
of any state, state agency or subdivision described in (a) above and rated "AA" or
better by S&P and "Aa" or better by Moody's.
(9) Pre-refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's
meeting the following requirements:
(a) the municipal obligations are (i) not subject to redemption prior to
maturity or (ii) the trustee for the municipal obligations has been given
irrevocable instructions concerning their call and redemption and the issuer of the
municipal obligations has covenanted not to redeem such municipal obligations
other than as set forth in such instructions;
(b) the municipal obligations are secured by cash or United States Treasury
Obligations which may be applied only to payment of the principal of, interest
and premium on such municipal, obligations;
(c) the principal of and interest on the United States Treasury Obligations
(plus any cash in the escrow) has been verified by the report of independent
certified public accountants to be sufficient to pay in full all principal of, interest,
and premium, if any, due and to become due on the municipal obligations
("Verification");
(d) the cash or United States Treasury Obligations serving as security for the
municipal obligations are held by an escrow agent or trustee in trust for owners of
the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be permitted
except with another United States Treasury Obligation and upon delivery of a new
Verification; and
(f) the cash or the United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the trustee or escrow agent.
(10) Repurchase agreements:
A. With (i) any domestic bank, or domestic branch of a foreign bank, the long
term debt of which is rated at least "A" by S&P and Moody's; or (ii) any broker-
dealer with "retail customers" or a related affiliate thereof which broker-dealer
has, or the parent company (which guarantees the provider) of which has, long-
term debt rated at least "A" by S&P and Moody's, which broker-dealer falls under
the jurisdiction of the Securities Investors Protection Corporation; or (iii) any
other entity rated "A" or better by S&P and Moody's and acceptable to the Insurer
(Series D) provided that:
DOCSLA1:320648.2 6
a. The market value of the collateral is maintained at levels and upon
such conditions as would be acceptable to S&P and Moody's to maintain
an "A" rating in an "A" rated structured financing (with a market value
approach);
b. The Fiscal Agent or a third party acting solely as agent therefor or
for the City (the ."Holder of the Collateral") has possession of the collateral
or the collateral has been transferred to the Holder of the Collateral in
accordance with applicable state and federal laws (other than by means of
entries on the transferor's books);
c. The repurchase agreement shall state and an opinion of counsel
shall be rendered at the time such collateral is delivered that the Holder of
the Collateral has a perfected first priority security interest in the
collateral, any substituted collateral and all proceeds thereof (in the case of
bearer securities, this means the Holder of the Collateral is in possession);
d. All other requirements of S&P in respect of repurchase agreements
shall be met;
e. The repurchase agreement shall provide that if during its term the
provider's rating by either Moody's or S&P is withdrawn or suspended or
falls below "A-" by S&P or "A3" by Moody's, as appropriate, the provider
must, at the direction of the City or the Fiscal Agent (who shall give such
direction if so directed by the Insurer (Series D)), within 10 days of receipt
of such direction, repurchase all collateral and terminate the agreement
with no penalty or premium to the City or the Fiscal Agent.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with
no evergreen provision), collateral levels need not be as specified in (a) above, so long as
such collateral levels are 103% or better and the provider is rated at least "A" by S&P and
Moody's, respectively.
(11) Investment agreements with a domestic or foreign bank or corporation (other than
a life or property casualty insurance company) the long-term debt of which, or in the case
of a monoline financial guaranty insurance company, claims payability, or the guarantor
is rated at least "AA" by S&P and "Aa" by Moody's; provided, that, by the terms of the
investment agreement:
(a) interest payments are to be made to the Fiscal Agent at times and in
amounts as necessary to pay debt service (or, if the investment agreement is for
the construction fund, construction draws) on the Bonds;
(b) the invested funds are available for withdrawal without penalty or
premium, at any time upon not more than Seven days' prior notice; the City and
DOCSLA 1:320648.2 7
the Fiscal Agent hereby agree to give or cause to be given notice in accordance
with the terms of the investment agreement so as to receive funds thereunder with
no penalty or premium paid;
(c) the investment agreement shall state that it is the unconditional and
general obligation of, and is not subordinated to any other obligation of, the
provider thereof;
(d) the City or the Fiscal Agent receives the opinion of domestic counsel
(which opinion shall be addressed to the City and the Insurer (Series D)) that such
[nvestment agreement is legal, valid, binding and enforceable upon the provider in
accordance with its terms and of foreign counsel (if applicable) in form and
substance acceptable, and addressed to, the Insurer (Series D);
(e) the investment agreement shall provide that if during its term (i) the
provider's rating by either S&P or Moody's falls below "AA-" or "Aa3",
respectively, the provider shall, at its option, within 10 days of receipt of such
downgrade either (a) collateralize the investment agreement by delivering or
transferring in accordance with applicable state and federal laws (other than by
means of entries on the provider's books) to the City, the Fiscal Agent or a third
party acting solely as agent therefor ( the "Holder of the Collateral") collateral
free and clear of any third-party liens or claims the market value of which
collateral is maintained at levels and upon such conditions as would be acceptable
to S&P and Moody's to maintain an "A" rating in an "A" rated structured
financing (with a market value approach); or (b) repay the principal of and
accrued but unpaid interest on the investment and (ii) the provider's rating by
either Moody's or S&P is withdrawn or sUspended or falls below "A3" or "A-"
respectively, the provider must, at the direction of the City or the Fiscal Agent
(who shall give such direction if so directed by the Insurer (Series D)), within 10
days of receipt of such direction, repay the principal of and accrued but unpaid
interest on the investment, in either case with no penalty or premium to the City
or Fiscal Agent;
(f) the investment agreement shall slate, and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider under
the terms of the investment agreement, at the time such collateral is delivered, that
the Holder of the Collateral has a perfected first priority security interest in the
collateral, any substituted collateral and all proceeds thereof (in the case of bearer
securities, this means the Holder of the Collateral is in possession);
(g) the investment agreement must provide that if during its term (x) the
provider shall default in its payment obligations, the provider's obligations under
the investment agreement shall, at the direction of the City or the Fiscal Agent
(who shall give such direction if so directed by the Insurer (Series D)), be
accelerated and amounts invested and accrued but unpaid interest thereon shall be
DOCSLA1:320648.2 8
repaid to the City or Fiscal Agent, as appropriate, and (y) the provider shall
become insolvent, not pay its debts as they become due, be declared or petition to
be declared bankrupt, etc. ("event of insolvency"), the provider's obligations shall
automatically be accelerated and amounts invested and accrued but unpaid interest
thereon shall be repaid to the City or Fiscal Agent, as appropriate.
"Rebate Fund (Group Three)" means the fund by that name established and held by the
Fiscal Agent pursuant to Section 15.11.
"Rebate Requirement (Series D)" has the meaning ascribed to Rebate Requirement in
the Tax Certificate (Series D). '
"Reserve Requirement (Group Three)" means, as of the date of any calculation, the
least of (a) 10% of the original aggregate principal amount of the Series D Bonds, (b) maximum
annual debt service on the Series D Bonds, and (c) 125% of average annual debt service on the
Series D Bonds.
"Series D Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series D, issued under the Authority Indenture.
"Series Three Bonds" means the City of Tustin Limited Obligation Improvement
Bonds, Reassessment District No. 95-2 (Tustin Ranch), Series Three, issued hereunder.
"Tax Certificate (Series D)" means the Tax Certificate executed by the Authority and
the City at the time of issuance of the Series D Bonds relating to the requirements of Section 148
of the Code (Group Three), as originally executed and as it may from time to time be amended in
accordance with the provisions thereof.
Section 15.02. Authorization and Issuance of Series Three Bonds. The Series Three
Bonds shall be designated "City of Tustin Limited Obligation Improvement Bonds,
Reassessment District No. 95-2 (Tustin Ranch), Series Three", and shall be secUred by and
payable from the Reassessments and other assets pledged hereunder, as provided herein. The
aggregate principal amount of Series Three Bonds that may be issued and Outstanding under this
Agreement shall not exceed $[677,495.32], except as may be otherwise provided in Section 2.14.
On the Conversion Date (Group Three), the City shall execute and the Fiscal Agent shall
authenticate the Series Three Bonds and deliver the Series Three Bonds to the Original PUrchaser
(Group Three) in the aggregate principal amount of $[677,495.32].
Section 15.03. Terms of Group Three Bonds. (a) The Group Three Bonds shall be
issued in fully registered form without coupons in Authorized Denominations, so long as no
Group Three Bond shall have more than one maturity date. The Group Three Bonds shall be
dated as of November 23, 1999, shall be in the aggregate principal amount of $[5,000,000], shall
matUre on September 2, 2013, and shall bear interest (calculated on the basis of a 360-day year
comprised of twelve 30-day months) at the nominal rate of 8.17% per annum; provided,
however, that the actual rate of interest to be borne by the Group Three Bonds shall be adjusted
as of each September 1 to be a rate per annum such that the sum of (i) the product of such rate
DOCSLA 1:320648.2 9
(expressed as a decimal) times the principal amount of Group Three Bonds Outstanding as of the
close of business on such September 1, plus (ii) the amount to be deposited on the following
September 3 in the Redemption Account (Group Three), pursuant to Section 6.02(a), from
amounts transferred by the Authority Trustee from the Surplus Fund established under the
Authority Indenture, is equal to the product of the nominal rate (expressed as a decimal) times
the principal amount of Group Three Bonds Outstanding as of the close of business on such
September 1.
(b) The Interest Payment Dates for the Group Three Bonds shall commence on
March 2, 2000. Interest on the Group Three Bonds shall be payable from the Interest Payment
Date next preceding the date of authentication thereof unless (i) a Group Three Bond is
authenticated on or before an Interest Payment Date and after the close of business on the
preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii)
a Group Three Bond is authenticated on or before the first Record Date therefor, in which event
interest thereon shall be payable from November 23, 1999, or (iii) interest on any Group Three
Bond is in default as of the date of authentication thereof, in which event interest thereon shall be
payable from the date to which interest has been paid in full or made available for such payment,
payable on each Interest Payment Date. Interest shall be paid in lawful money of the United
States on each Interest Payment Date to the Persons in whose names the ownership of the Group
Three Bonds is registered on the Registration Books at the close of business on the immediately
preceding Record Date, except as provided below. Interest on any Group Three Bond 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 Group Three Bond is registered on the Registration
Books at the close of business on a special Record Date to be established by the Paying Agent for
the payment of such defaulted interest, notice of which shall be given to such Owner not less
than ten days prior to such special Record Date. Interest shall be paid by check of the Paying
Agent mailed by first class mail, postage prepaid, on each Interest Payment Date to the Group
Three Bond Owners at their respective addresses shown on the Registration Books as of the close
of business on the preceding Record Date.
(c) The principal of and premium, if any, on the Group Three Bonds shall be payable
in lawful money of the United States of America upon presentation and surrender thereof upon
maturity or earlier redemption at the Office of the Paying Agent. Payment of principal of and
premium, if any, on any Group Three Bond shall be made only upon presentation and surrender
of such Group Three Bond at the Office of the Paying Agent.
(d) Notwithstanding the foregoing, so long as the ownership of a Group Three Bond
is registered in the name of the Authority Trustee, payment of the principal of, premium, if any,
and interest on such Group Three Bond shall be made to the Authority Trustee in immediately
available funds on each applicable payment date, in an amount equal to the principal, interest and
any premi.um due on such Group Three Bond on the applicable payment date.
(e)
The Group Three Bonds shall be subject to redemption as provided in Section
15.07.
DOCSLA1:320648.2 ! 0
Section 15.04. Form of Group Three Bonds. The Group Three Bonds shall be in
substantially the form set forth in Exhibit F hereto, with appropriate or necessary insertions,
omissions and variations as permitted or required hereby. Only such of the Group Three Bonds
as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit F
hereto, manually executed by the Fiscal Agent, shall be valid or obligatory for any purpose or
entitled to the benefits of this Agreement, and such certificate of or on behalf of the Paying
Agent shall be conclusive evidence that the Group Three Bonds so authenticated have been duly
executed, authenticated and delivered hereunder and are entitled to the benefits of this
Agreement.
Section 15.05. Application of Amounts. On the Conversion Date (Group Three), the
proceeds of the sale of the Group Three Bonds $ shall be paid to the Fiscal Agent and,
together with the amount $ required to be transferred pursuant to Section 6.05, shall
be transferred or deposited by the Fiscal Agent as follows:
(a) The Fiscal Agent shall, from the proceeds of the sale of the Group Three
Bonds, transfer the amount of $ to the Paying Agent for deposit in the
Remarketing Proceeds Account.
(b) The Fiscal Agent shall, from the proceeds of the sale of the Group Three
Bonds, and the amount transferred from the Interest Reserve Fund, deposit the amount of
$ in the Reserve Account (Group Three) established pursuant to Sections 6.06
and 15.09, constituting the full amount of the Reserve Requirement (Group Three).
(c) The Fiscal Agent shall, from the proceeds of the sale of the Group Three
Bonds, deposit the amount of $ in the Costs Account (Group Three)
established pursuant to Section 15.06.
Section 15.06..Costs Account (Group Three). There is hereby established within the
Costs of Issuance Fund a separate account to be known as the "Costs Account (Group Three)",
which shall be held by the Fiscal Agent in trust. On the Conversion Date (Group Three), there
shall be deposited in the Costs Account (Group Three) the amount specified in Section 15.05(c).
The moneys in the Costs Account (Group Three) shall be used and withdrawn by the
Fiscal Agent from time to time to pay the Group Three Costs upon submission of a Written
Request of the City stating (a) the Person to whom payment is to be made, (b) the amount to be
paid, (c) the purpose for which the obligation was incurred, (d) that such payment is a proper
charge against the Costs Account (Group Three), and (e) that such amounts have not been the
subject of'a prior disbursement from the Cost.4 Account (Group Three), in each case together
with a statement or invoice for each amount requested thereunder. On [February 1], 2000, all
amounts remaining in the Costs Account (Group Three) shall be withdrawn therefrom by the
Fiscal Agent and transferred to the Redemption Account (Group Three).
Section 15.07. Redemption of Group Three Bonds. (a) Optional Redemption. The
Group Three Bonds shall be subject to Optional redemption, in whole, or in part in Authorized
Denominations, on any Interest Payment Date on or after September 2, 2008, at the following
DOCSLA 1:320648.2 11
respective Redemption Prices (expressed as percentages of tke principal amount of the Group
Three Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
Redemption Price
September 2, 2008 and March 2, 2009
September 2, 2009 and March 2, 2010
September 2, 2010 and thereafter
102%
101
100
The reference in Section 7.01(d) to Section 4.02(a) shall be deemed to also refer to this
Section 15.07(a).
(b) Mandatory Redemption From Reassessment Prepayments. The Group Three
Bonds shall be subject to mandatory redemption, in whole, or in part in Authorized
Denominations, on any Interest Payment Date, from and to the extent of any prepayment of
Reassessments on parcels of real property within the area constituting the Designated Parcels
(Group Three), at the following respective Redemption Prices (expressed as percentages of the
principal amount of the Group Three Bonds to be redeemed), plus accrued interest thereon to the
date of redemption:
Redemption Dates
Redemption Price
March 2, 2000 through March 2, 2006
September 2, 2006 and March 2, 2007
September 2, 2007 and March 2, 2008
September 2, 2008 and thereafter
103%
102
101
100
The City shall notify the Fiscal Agent of Group Three Bonds to be called for redemption
upon prepayment of such Reassessments in amounts sufficient therefor, or whenever sufficient
surplus funds are available therefor in the Redemption Account (Group Three).
(c) Mandatory Sinking Fund Redemption. The Group Three Bonds shall be subject to
mandatory sinking fund redemption, in part, on September 2 in each year, commencing
September 2, 20__, at a Redemption Price equal to the principal amount of the Group Three
Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption,
in the aggregate respective principal amounts in the respective years as follows:
DOCSLA1:320648.2 12
Sinking Fund
Redemption Date
(September 2)
Principal Amount
to be
Redeemed
$
2013 (Maturity)
If some but not all of the Group Three Bonds are redeemed pursuant to Section 15.07(a),
the principal amount of Group Three Bonds to be redeemed pursuant to Section 15.07(c) on any
subsequent September 2 shall be reduced, by $5,000 or an integral multiple thereof, as
designated by the City in a Written Certificate of the City filed with the Fiscal Agent at least 45
days prior to such redemption date; provided, however, that the aggregate amount of such
reductions shall not exceed the aggregate amount of Group Three Bonds redeemed pursuant to
Section 15.07(a). If some but not all of the Group Three Bonds are redeemed pursuant to Section
15.07(b), the principal amount of Group Three Bonds to be subsequently redeemed pursuant to
Section 15.07(c) shall be reduced by the aggregate principal amount of the Group Three Bonds
so redeemed pursuant to Section 15.07(b), such reduction to be allocated as nearly as practicable
on a pro rata basis in amounts of $5,000 or integral multiples thereof, as designated by the City
in a Written Certificate of the City filed with the Fiscal Agent at least 45 days prior to such
redemption date.
Section 15.08. Selection of Group Three Bonds for Redemption. Whenever provision
is made in this Agreement for the redemption of less than all of the Group Three Bonds, the
Fiscal Agent shall select the Group Three Bonds to be redeemed from all Group Three Bonds not
previously called for redemption, by lot in any manner which the Fiscal Agent in its sole
discretion .shall deem appropriate and fair. For purposes of such selection, all Group Three
Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate
denominations shall be treated as separate Group Three Bonds which may be separately
redeemed,
Section 15.09. Group Three Accounts. In accordance with Section 6.02, the Fiscal
Agent shall establish and maintain within the Redemption Fund a separate account designated
the "Redemption Account (Group Three)." In accordance with Section 6.03, the Fiscal Agent
DOCSLA 1:320648.2 13
shall establish and maintain within the Prepayment Account a separate account designated the
"Prepayment Subaccount (Group Three)." In accordance with Section 6.06, the Fiscal Agent
shall establish and maintain within the Reserve Fund a separate account designated the "Reserve
Account (Group Three)."
Section 15.10. Group Three Tax Covenants. (a) The City shall not take any action, or
fail to take any action, if such action or failure to take such action would adversely affect the
exclusion from gross income of interest on the Series D Bonds under Section 103 of the Code
(Group Three). Without limiting the generality of the foregoing, the City shall comply with the
requirements of the Tax Certificate (Series D), which is incorporated herein as if fully set forth
herein. This covenant shall survive payment in full or defeasance of the Group Three Bonds and
the Series D Bonds.
(b) In the event that at any time the City is of the opinion that for purposes of this
Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys
held by the Fiscal Agent in any of the funds or accounts established hereunder, the City shall so
instruct the Fiscal Agent in writing, and the Fiscal Agent shall take such action as may be
necessary in accordance with such instructions.
(c) Notwithstanding any provisions of this Section, if the City shall provide to the
Fiscal Agent an opinion of Bond Counsel to the effect that any specified action required under
this Section is no longer required or that some further or different action is required to maintain
the exclusion from federal income tax of interest on the Series D Bonds, the Fiscal Agent may
conclusively rely on such opinion in complying with the requirements of this Section and of the
Tax Certificate (Series D), and the covenants hereunder shall be deemed to be modified to that
extent.
Section 15.11. Rebate Fund (Group Three). (a) The Fiscal Agent shall establish and
maintain a special fund designated the "Rebate Fund (Group Three)". There shall be dePosited
in the Rebate Fund (Group Three) such amounts as are required to be deposited therein pursuant
to the Tax Certificate (Series D). Notwithstanding anything to the contrary contained herein,
amounts held in the Rebate Fund (Group Three) are not pledged by the City to secure the
payment of the principal of, premium, if any, or interest on the Bonds. All money at any time
deposited in the Rebate Fund (Group Three) shall be held by the Fiscal Agent in trust, to the
extent required to satisfy the Rebate Requirement (Series D), for payment to the United States of
America. Notwithstanding defeasance of the Group Three Bonds pursuant to Article X hereof,
the defeasance of the Series D Bonds pursuant to the Authority Indenture or anything to the
contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate
Fund (Group Three) shall be governed exclusively by this Section and by the Tax Certificate
(Series D) (which is incorporated herein by reference).~ The Fiscal Agent shall be deemed
conclusively to have complied with such provisions if it follows the written directions of the
City, and' shall have no liability or responsibility to enforce compliance by the City with the
terms of the Tax Certificate (Series D). The Fiscal Agent may conclusively rely upon the City's
determinations, calculations and certifications required by the Tax Certificate (Series D). The
DOCSLA1:320648.2 14
Fiscal Agent shall have no responsibility to independently make any calculation or determination
or to review the City's calculations.
(b) Any funds remaining in the Rebate Fund (Group Three) after payment in full of
all of the Group Three Bonds and the Series D Bonds and after payment of any amounts
described in this Section, shall be withdrawn by the Fiscal Agent and remitted to the City.
Section 15.12. Reports to California Debt and Investment AdVisory Commission.
The City shall, not later than October 30 of each year until the final maturity of the Series D
Bonds, supply the information required by Section 6599.1(b) of the California Government Code
to the California Debt and Investment Advisory Commission by mail, postage prepaid.
In accordance with Section 6599.1(c) of the California Government Code, the City shall
notify the California Debt and Investment Advisory Commission by mail, postage prepaid,
within ten days if either (a) the City fails to pay principal of or interest on the Group Three
Bonds on any scheduled payment date, or (b) funds representing all or a portion of the Reserve
Requirement (Group Three) are withdrawn from the Reserve Account (Group Three) to pay
principal of or interest on the Group Three Bonds.
Section 15.13. Modification or Amendment of Agreement. Notwithstanding the
provisions of Article X, any Supplemental Agreement that affects the Group Three Bonds may
be entered into only with the written consent of the Insurer (Series D) (so long as the Insurer
(Series D) is not in default in its payment obligations under the Insurance Policy (Series D)).
Section 15.14. Defeasance of Group Three Bonds. (a) Notwithstanding the provisions
of Article XI, the defeasance of the Group Three Bonds shall occur only in accordance with the
provisions of this Section.
(b) If the City shall pay or cause to be paid or there shall otherwise be paid (i) to the
Owners of all Outstanding Group Three Bonds the principal thereof and the premium, if any, and
interest thereon at the times and in the manner stipulated herein and therein, and (ii) all other
amounts due hereunder, then such Owners shall cease to be entitled to the pledge of and lien on
the Reassessments as provided herein, and all agreements and covenants of the City and the
Fiscal Agent to such Owners hereunder shall thereupon cease, terminate and become void and
shall be discharged and satisfied.
(c) Any Outstanding Group Three Bond shall be deemed to have been paid within the
meaning and with the effect expressed in this Section when the whole amount of the principal
thereof and the premium, if any, and interest thereon shall have been paid or when (i) in case said
Group Three Bond or portion thereof has been selected for redemption in accordance with
Section 15.08 prior to its stated maturity date, the City shall have given to the Fiscal Agent
irrevocable instructions to give, in accordance with the provisions of Section 4.04, notice of
redemption of such Group Three Bond, or portion thereof, (ii) there shall be on deposit with the
Fiscal Agent, moneys, or (A) Permitted Investments (Group Three) described in clause (1)(a) of
the definition thereof, (B) evidences of ownership of proportionate interests in future interest and
DOCSLA 1:320648.2 15
principal payments on Permitted Investments (Group Three) described in clause (1)(a) of the
definition thereof held by a bank or trust company as custodian, under which the owner of the
investment is the real party in interest and has the right to proceed directly and individually
against the obligor and the underlying United States Treasury Obligations are not available to
any person claiming through the custodian or to whom the custodian may be obligated, or (C)
Permitted Investments (Group Three) described in clause (9) of the definition thereof, or any
combinations thereof ("Defeasance Securities"), which Defeasance Securities shall not contain
provisions permitting the redemption thereof other than at the option of the holder, the principal
of and the interest on which when due, and without any reinvestment thereof, will provide
moneys which shall be sufficient to pay when due the principal of and premium, if any, and
interest on such Group Three Bond and due and to become due on said Group Three Bond or
portion thereof on or prior to the redemption date or its stated maturity date, as the case may be,
and (iii) in the event said Group Three Bond does not mature and is not to be redeemed within
the next succeeding 60 days, the City shall have given the Fiscal Agent irrevocable instructions
to give notice, as soon as practicable in the same manner as a notice of redemption given
pursuant to Section 4.04, to the Owner of said Group Three Bond, or portion thereof, stating that
the deposit of moneys or Defeasance Securities required by clause (ii) of this paragraph has been
made with the Fiscal Agent and that said Group Three Bond, or portion thereof, is deemed to
have been paid in accordance with this Section and stating such maturity date or redemption date
upon which moneys are to be available for the payment of the principal of and premium, if any,
and interest on such Group Three Bond, or portion thereof. Neither the moneys nor the
Defeasance Securities deposited with the Fiscal Agent pursuant to this Section nor principal or
interest payments on any such Defeasance Securities shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal of and premium, if any, and
interest on such Group Three Bond, or portions thereof. If payment of less than all of the Group
Three Bonds is to be provided for in the manner and with the effect expressed in this Section, the
Fiscal Agent shall select such Group Three Bonds, or portions thereof, in the manner specified in
Section 15.08 for selection for redemption of less than all of the Group Three Bonds in the
principal amounts designated to the Fiscal Agent by the City.
(d) The Fiscal Agent may seek and is entitled to rely upon (i)an opinion of Bond
Counsel reasonably satisfactory to the Fiscal Agent to the effect that the conditions precedent to
a defeasance pursuant to this Section have been satisfied, 'and (ii)such other opinions,
certifications and computations, as the Fiscal Agent may reasonably request, of accountants or
other financial consultants concerning the matters described in paragraph (c) of this Section.
(e) Prior to any defeasance becoming effective under this Section, (A) all amounts
currently due to the Insurer (Series D) under the Insurance Policy (Series D) shall have been paid
in full, and (B) the City shall cause to be delivered (i) an executed copy of a report, addressed to
the Fiscal Agent, the City and the Insurer (Series D), in form and in substance acceptable to the
Fiscal Agent, the City and the Insurer (Series D), of a nationally recognized certified public
accountant, or firm of such accountants, verifying that the Defeasance Securities and cash, if any,
satisfy the requirements of clause (ii) of paragraph (c), above (a "Verification"), (ii) a copy of the
escrow deposit agreement entered into in connection with such defeasance, which escrow deposit
agreement shall provide that no substitution of Defeasance Securities shall be permitted except
DOCSLA1:320648.2 16
with other Defeasance Securities and upon delivery of a new Verification and no reinvestment of
Defeasance Securities shall be permitted except as contemplated by the original Verification or
upon delivery of a new Verification, and (iii) a copy of an opinion of Bond Counsel, dated the
date of such defeasance and addressed to the Fiscal Agent, the City and the Insurer (Series D), in
form and in substance acceptable to the Fiscal Agent, the City and the Insurer (Series D), to the
effect that such Group Three Bonds have been paid within the meaning and with the effect
expressed in the Fiscal Agent Agreement, and that all agreements and covenants of the City and
the Fiscal Agent to the Owners of such Group Three Bonds under the Fiscal Agent Agreement
have ceased, terminated and become void and have been discharged and satisfied. In the event a
forward purchase agreement will be employed in the refunding, such agreement shall be subject
to the approval of the Insurer (Series D) and shall be accompanied by such opinions of counsel as
may be required by the Insurer (Series D). The Insurer (Series D) shall be provided with final
drafts of the above-referenced documentation not less than five Business Days prior to the
funding of the escrow.
Section 15.15. Reporting Requirements. (a) The City shall deliver to the Insurer
(Series D), upon delivery of the financial statements described in subsection (b), below, a
Written Certificate of the City stating that no Event of Default has occurred, or if an Event of
Default has occurred, specifying the nature thereof and, if the City has a right to correct such
default pursuant to Section 8.01 (c), stating in reasonable detail the steps, if any, being taken by
the City to correct such default.
(b) The City shall promptly provide to the Insurer (Series D) (i) audited financial
statements for each fiscal year, to be submitted within 120 days of the end of such fiscal year,
and (ii) each annual budget of the City, to be submitted within 30 days of the approval thereof.
(c) The City shall file or cause to be filed with the Insurer (Series D) any official
statement issued by, or on behalf of, the City in connection with the incurrence by the City of
any additional indebtedness within 30 days of the incurrence thereof.
(d) If, on the fifth Business Day prior to an Interest Payment Date, maturity date or
redemption date, the Fiscal Agent determines that there will be insufficient funds in the funds
and accounts established hereunder available to pay the principal of or interest on the Group
Three Bonds on such Interest Payment Date, maturity date or redemption date, the Fiscal Agent
shall give notice to the Insurer. (Series D) and to the Authority Trustee by telephone or telecopy
of the amount of such deficiency by 12 noon New York City time on such Business Day.
(e) All notices, reports, certificates and opinions required to be delivered by the City
pursuant hereto shall also be delivered to the Insurer (Series D).
(f)' The City agrees promptly to provide or cause to be provided to the Insurer (Series D)
such financial, statistical and other factual information as the Insurer (Series D) shall from time
to time reasonably request regarding the City.
DOCSLA1:320648.2 17
Section 15.16. Third-Party Beneficiary. Notwithstanding anything to the contrary
contained herein, the Insurer (Series D) .is a third-party beneficiary of this A~eement.
Section 15.17. Group Three Bonds Original Issue Discount. Notwithstanding the
provisions of Section'2.04 and 5.03, the Group Three Bonds may be purchased by the Original
Purchaser (Group Three) on the Conversion Date (Group Three) at such purchase price, which
may include original issue discount, as may be a~eed to by the City and the Original Purchaser
(Group Three).
DOCSLA1:320648.2 18
PART 2
S PECIFI C AMENDMENTS
Part 2.1. Amendment to Section 6.08. Section 6.08 of the Third Amended Original
Agreement is hereby amended by adding thereto a final paragraph, which shall read in full as
follows:
References in this Section 6.08 to Permitted Investments shall,
when such references are applicable to any fund or account established for
the Group Three Bonds, be deemed to be references to Permitted
Investments (Group Three).
Part 2.2. Amendment of Section 8.01. Paragraph (a) of Section 8.01 of the Third
Amended Original Agreement is hereby amended to read in full as follows:
(a) Failure by the City to observe and perform any of the other
covenants, agreements or conditions on its part in this Agreement or in the
Bonds contained, if such failure shall have continued for a period of 30
days after written notice thereof, specifying such failure and requiring the
same to be remedied, shall have been given to the City by the Fiscal Agent
or the Owners of not less than 25% in aggregate principal amount of the
Bonds at the time Outstanding; provided, however, if in the reasonable
opinion of the City the failure stated in the notice can be corrected, but not
within such 30 day period, such failure shall not constitute an Event of
Default (with the consent of the Insurer (Series B) if such failure relates to
the Group One Bonds, with the consent of the Insurer (Series C) if such
failure relates to the Group Two Bonds, and with the consent of the
Insurer (Series D)if such failure relates to the Group Three Bonds),
corrective action is instituted by the City within such 30 day period and
the City shall thereafter diligently and in good faith cure such failure in a
reasonable period of time.
Part 2.3. Amendment of Section 12.03. Section 12.03 of the Third Amended Original
Agreement is hereby amended to read in full as follows:
Section 12.03. Limitation of Rights to Parties and Bond
Owners. Nothing in this Agreement or in the Bonds expressed or implied
is intended or shall be construed to give to any Person other than the Fiscal
Agent, the City, the Paying Agent, the Bank, the Remarketing Agent, the
Insurer (Series B) (with respect to the Group One Bonds), the Insurer
(Series_ C) (with respect to the Group Two Bonds), the Insurer (Series D)
(with respect to the Group Three Bonds) and the Owners of the Bonds, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any covenant, condition or provision therein or herein
DOCSLA 1:320648.2 19
contained; and all such covenants, conditions and provisions are and shall
be held to be for the sole and exclusive benefit of the Fiscal Agent, the
City, the Paying Agent, the Bank, the Remarketing Agent, the Insurer
(Series B) (with respect to the Group One Bonds), the Insurer (Series C)
(with respect to the Group Two Bonds), the Insurer (Series D) (with
respect to the Group Three Bonds) and the Owners of the Bonds.
Part 2.4. Amendment of Section 12.08. Section 12.08 of the Third Amended Original
Agreement is hereby amended to update the address of the Fiscal Agent and to include the
address of the Insurer (Series D) as follows:
If to Fiscal Agent:
State Street Bank and Trust Company
of California, N.A.
633 West Fifth Street, 12th Floor
Los Angeles, California 90071
Attention: Corporate Trust Department
Telephone: (213) 362-7300
.Telecopier: (213) 362-7357
If to the Insurer (Series D):
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022-6022
Attention: Managing Director
Surveillance - Re: Policy No.
Telephone: (212) 826-0100
Telecopier: (212) 339~3529
DOCSLA1:320648.2 20
P3~RT 3
MISCELLANEOUS
Part 3.1. Effect of Fourth Supplemental Agreement. This Fourth Supplemental
Agreement and all of the terms and provisions herein contained shall form part of the Third
Amended Original A~eement as fully and with the same effect as if all such terms and
provisions had been set forth in the Third Amended Original Agreement. The Third Amended
Original Agreement is hereby ratified and confirmed and shall continue in full force and effect in
accordance with the terms and'provisions thereof, as heretofore amended and supplemented, and
as amended and supplemented hereby. If there shall be any conflict between the terms of this
Fourth Supplemental Agreement and the terms of the Third Amended Original A~eement (as in
effect on the day prior to the effective date of this Fourth Supplemental Agreement), the terms of
this Fourth Supplemental Agreement shall prevail.
Part 3.2. Execution in Several Counterparts. This Fourth Supplemental A~eement
may be executed in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original; and all such counterparts, or as many of them as the City
and the Fiscal Agent shall preserve undestroyed, shall together constitute but one and the same
instrument.
Part 3.3. Effective Date of Fourth Supplemental Agreement, This Fourth
Supplemental Agreement shall take effect upon the Conversion Date (Group Three).
DOCSLA1:320648.2 21
IN WITNESS WHEREOF, the City has caused this Fourth Supplemental Agreement to
be signed in its name by its officer thereunto duly authorized, and the Fiscal Agent has caused
this Fourth Supplemental Agreement to be signed in its corporate name by its officer thereunto
duly authorized, all as of the day and year first above written.
CITY OF TUSTIN
By:
Ronald A. Nault
Finance Director
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N,A.,
as Fiscal Agent
By:
Authorized Officer
DOCSLA1:320648.2 22
EXHIBIT F
FORM OF GROUP THREE BOND
No.
CITY OF TUSTIN
LIMITED OBLIGATION IMPROVEMENT BONDS
REASSESSMENT DISTRICT NO. 95-2 (TUSTIN RANCH)
FIXED RATE BOND, GROUP THREE
NOMINAL INTEREST RATE
8.17%
REGISTERED OWNER:
PRINCIPAL AMOUNT:
MATURITY DATE
DATED DATE
September 2, 2013
November 23, 1999
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE
Under and by virtue of the Refunding Act of 1984 for 1915 Improvement Act Bonds
(Division 11.5 of the California Streets and Highways Code) (the "Act"), the City of Tustin,
County of Orange, State of California (the "City"), will, out of the redemption fund for the
payment of the bonds issued upon the unpaid portion of reassessments made for the refunding
bonds more fully described in proceedings taken pursuant to Resolution No. 95-118 adopted by
the City Council of the City on November 20, 1995, pay to the Registered Owner identified
above or registered assigns (the "Registered Owner"), on the Maturity Date identified above or
on any earlier redemption date, the Principal Amount identified above in lawful money of the
United States of America; and pay interest thereon at, except as provided below, the nominal
Interest Rate identified above in like lawful money from the date hereof payable semiannually on
March 2 and September 2 in each year, commencing March 2, 2000 (each such date an "Interest
Payment Date"), until payment of such Principal Amount in full. This Group Three Bond shall
bear interest from the Interest Payment Date next preceding the date of authentication of this
Group Three Bond, unless this Group Three Bond is authenticated on or before an Interest
Payment Date and after the fifteenth calendar day of the month preceding such Interest Payment
Date (the "Record Date"), in which event it shall bear interest from such Interest Payment Date,
or unless 'this Group Three Bond is authenticated on or prior to February 15, 2000, in which
event it shall bear interest from the Dated Date identified above; provided, however, that if, at the
time of authentication of this Group Three Bond, interest is in default, this Group Three Bond
shall bear interest from the Interest Payment Date to which interest hereon has previously been
paid or made available for payment. The Principal Amount hereof is payable upon surrender
DOCSLA 1:320648.2
F-1
hereof upon maturity or earlier redemption at the principal corporate trust office (the "Trust
Office") of State Street Bank and Trust Company of California, N.A., as fiscal agent and paying
agent (the "Fiscal Agent" and "Paying Agent", respectively), in Los Angeles, California. Interest
hereon is payable by check of the Paying Agent mailed by first class mail, postage prepaid, on
each Interest Payment Date to the Registered Owner hereof at the address of the Registered
Owner as it appears on the Registration Books of the Paying Agent as of the close of business on
the Record Date.
This Group Three Bond shall not be entitled to any benefit under the Act, the Resolutions
authorizing the issuance of the bonds, adopted by the City Council of the City on January 15,
1996, September 2, 1997, August 17, 1998.and November 1, 1999 (the "Resolutions of
Issuance") or the Fiscal Agent Agreement, dated as of February 1, 1996, by and between the City
and the Fiscal Agent, as amended and supplemented by the First Supplemental Fiscal Agent
Agreement, dated as of September 1, 1996, by and between the City and the Fiscal Agent, the
Second Supplemental Fiscal Agent Agreement, dated as of November 1, 1997, by and between
the City and the Fiscal Agent, the Third Supplemental Fiscal Agent Agreement, dated as of
November 1, 1998, by and between the City and the Fiscal Agent and the Fourth Supplemental
Fiscal Agent Agreement, dated as of November 1, 1999 by and between the City and the Fiscal
Agent (as so amended and supplemented, the "Agreement"), executed pursuant to the
Resolutions of Issuance, or become valid or obligatory for any purpose, until the certificate of
authentication hereon shall have been dated and signed by the Paying Agent. Capitalized
undefined terms used in this Group Three Bond shall have the meanings ascribed thereto in the
Agreement. Notwithstanding anything to the contrary contained herein, or in the Agreement, the
actual rate of interest to be borne by the Group Three Bonds (including this Group Three Bond)
shall be adjusted as of each September 1 to the a rate per annum such that the sum of (i) the
product of such rate (expressed as a decimal) times the principal amount of Group Three Bonds
Outstanding as of the close of business on such September 1, plus (ii) the amount to be
deposited, pursuant to the Agreement, on the folloWing September 3, in the Redemption Account
(Group Three) established under the Agreement from amounts transferred by the Authority
Trustee from the Surplus Fund established under the Authority Indenture, is equal to the product
of the nominal rate (express as a decimal) times the principal amount of Group Three Bonds
Outstanding as of the close of business on such September 1.
This Group Three Bond is one of several annual series of Limited Obligation
Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Fixed Rate Bonds, Group
Three (the "Group Three Bonds") of like date, tenor and effect, but differing in amounts,
maturities and interest rates, issued by said City under the Act and the Agreement for the purpose
of providing means for paying for the refunding of the bonds as more particularly described in
said proceedings, and is secured by the moneys in the redemption fund (as may be limited by tl~e
Agreement) and by the unpaid portion of the Reassessments made for the payment of said
refunding, and, including principal and interest, is payable exclusively out of said fund.
Notwithstanding the foregoing, the Group Three Bonds shall be payable solely from and secured
solely by the Reassessments (including prepayments thereof) on the parcels of real property
within the ReasSessment District designated by the City, pursuant to the Agreement, t.o be
represented by the Group Three Bonds (the "Designated Parcels (Group Three)"), together with
DOCSLA 1:320648.2
F-2
interest and any penalties on such Reassessments, and any other amounts (including proceeds of
the sale of the Group Three Bonds) held in any account established under the Agreement for the
Group Three Bonds. Reassessments (including prepayments thereof) on parcels of real property
within the Reassessment District other than the Designated Parcels (Group Three), together with
interest and any penalties on such Reassessments, and any amounts held in any fund or account
established under the Agreement other than such accounts established specifically for the Group
Three Bonds, secure certain other Bonds issued or to be issued under the Agreement and shall
not constitute a source of payment for the Group Three Bonds.
Reference is hereby made to the Agreement and all agreements supplemental thereto for a
description of the rights thereunder of the owners of the Group Three Bonds, of the nature and
extent of the Reassessments, of the rights, duties and immunities of the Fiscal Agent and the
Paying Agent and of the rights and obligations of the City thereunder; and all of the terms of the
Agreement are .hereby incorporated herein and constitute a contract between the City and the
Registered Owner hereof, and to all of the provisions of which Agreement the Registered Owner
hereof, by acceptance hereof, aisents and agrees.
The Group Three Bonds maturing on or after September 2, 2009, shall be subject to
optional redemption, in whole or in part, on any Interest Payment Date on or after September 2,
2008, at the following respective redemption prices (expressed as percentages of the principal
amount of the Group Three Bonds to be redeemed), plus accrued interest thereon to the date of
redemption:
Redemption Dates
Redemption Price
September 2, 2008 and March 2, 2009
September 2, 2009 and March 2, 2010
September 2, 2010 and thereafter
102%
101
100
The Group Three Bonds shall be subject to mandatory redemption, in whole or in part, on
any Interest Payment Date, from and to the extent of any prepayments of principal of the
Reassessments on Designated Parcels (Group Three), as more particularly set forth in the
Agreement, at the following respective redemption prices (expressed as percentages of the
principal amount of the Group Three Bonds to be redeemed), plus accrued interest thereon to the
date of redemption.
Redemption Dates
Redemption Price
March 2, 2000 through March 2, 2006
September 2, 2006 and March 2, 2007
September 2, 2007 and March 2, 2008
September 2, 2008 and thereafter
103%
102
101
100
The Group Three Bonds shall be subject to mandatory sinking fund redemption, in part,
on September 2 in each year, commencing September 2, 20m at a redemption price equal to the
principal amount of the Group Three Bonds to be redeemed, without premium, plus accrued
F-3
DOCSLA1:320648.2
interest' thereon to the date of redemption, in the aggregate respective principal amounts specified
in the Agreement.
The Fiscal Agent on behalf and at the expense of the City shall mail (by first class mail)
notice of any redemption to the respective owners of any Group Three Bonds designated for
redemption, at their respective addresses appearing on the Registration Books, at least 30 but not
more than 60 days prior to the redemption date; provided, however, that neither failure to receive
any such notice so mailed nor any defect therein shall affect the validity of the proceedings for
the redemption of such Group Three Bonds or the cessation of the accrual of interest thereon.
The redemption price of the. Group Three Bonds to be redeemed shall be paid only upon
presentation and surrender thereof at the Trust Office of the Paying Agent. From and after the
date fixed for redemption of any Group Three Bonds, interest on such Group Three Bonds will
cease to accrue.
The Group Three Bonds are issuable as fully registered Bonds without coupons in
denominations of $5,000 or any integral multiple thereof. Subject to the limitations and upon
payment of the charges, if any, provided in the Agreement, Group Three Bonds may be
exchanged at the Trust Office of the Paying Agent for a like aggregate principal amount and
maturity of fully registered Group Three Bonds of other authorized denominations.
This Group Three Bond is transferable by the Registered Owner hereof, in person or by
his attorney duly authorized in writing, at the Trust Office of the Paying Agent, but only in the
manner, subject to the limitations and upon payment of'the charges provided in the Agreement,
and upon surrender and cancellation of this Group Three Bond. Upon such transfer a new fully
registered Group Three Bond or Group Three Bonds, of authorized denomination or
denominations, for the same aggregate principal amount and of the same maturity will be issued
to the transferee in exchange herefor. The City, the Fiscal Agent and the Paying Agent may treat
the Registered Owner hereof as the absolute owner hereof for all purposes, and the City, the
Fiscal Agent and the Paying Agent shall not be affected by any notice to the contrary.
The Agreement and the rights and obligations of the City and of the owners of the Bonds
and of the Fiscal Agent may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Agreement.
The Bonds (including the Group Three Bonds) are Limited Obligation Bonds because,
under the Agreement, the City is not obligated to advance funds from the City treasury to cure
any deficiency which may occur in the redemption fund for the Bonds; provided, however, the
City is not prevented, in its sole discretion, from so advancing funds.
DOCSLA1:320648.2
F-4
IN WITNESS WHEREOF, said City has caused this Group Three Bond to be signed in
its name and on its behalf by the facsimile signatures of its Treasurer and City Clerk, and has
caused its corporate seal to be reproduced in facsimile hereon all as of the Dated Date identified
above.
CITY OF TUSTIN
By:
Treasurer
(S £ A L)
Attest:
By:
City Clerk
DOCSLA 1:320648.2
F-5
CERTIFICATE OF AUTHENTICATION
This is one of the Group Three Bonds described in the within-mentioned Agreement and
registered on the Registration Books.
Date:
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as
Fiscal Agent
By:
Authorized Signatory
DOCSLA1:320648.2
F-6
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax
identifying number is , the within-mentioned Group Three Bond and
hereby irrevocably constitute(s) and appoint(s) attorney, to
transfer the same on the registration books of the Paying Agent with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of
the within Group Three Bond in every particular
without alteration or enlargement or any change
whatsoever.
DOCSLA 1:320648.2
F-7
EXHIBIT G
DESIGNATED pARCELS (GROUP THREE)
The assessor's parcel numbers of the parcels of real property within the Reassessment
District designated by the City, pursuant to Section 7.01(e) of the Agreement, to represent the
Group Three Bonds are as follows:
Assessor Parcel Assessor Parcel Assessor Parcel Assessor Parcel
Number ,.. Number Number Number
52502103 50247108 50247140 50246181
52502104 50247109 50247141 50246182
50246154 50247110 50247142 50246183
50246155 50247111 50247143 50246184
50246156 50247112 50247144 50246185
50246157 50247113 50247145 50246186
50246158 50247114 50247146 50246187
50246159 50247115 50247147 50246188
50246160 50247116 50247148 50246189
50246161 50247117 50247149 50247157
50246162 50247118 50247150 50247158
50246163 50247119 50247151 50247159
50246164 50247120 50247152 50247160
50246165 50247121 50247153 50247161
50246166 50247122 50247154 50247162
50246167 50247123 50247155 50247163
50246168 50247124 50247156 50247164
50246169 50247125 50246173 50247165
50247101 50247126 50246174 50247166
50247102 50247134 50246175 50247167
50247103 50247135 50246176 50247168.
50247104 50247136 50246177 50247169
50247105 50247137 50246178 50246101
50247106 50247138 50246179
50247107 50247139 50246180
DOCSLA1:320648,2
G-1
BOND PURCHASE AGREEMENT
by and between the
CITY OF TUSTIN
and the
TUSTIN PUBLIC FINANCING AUTHORITY
Dated as of November __, 1999
DOCSLA 1:320643.1
TABLE OF CONTENTS
Page
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Definitions .................................................................................................. 2
Purchase and Sale of Group Three Bonds ................................................. 2
Representations and Warranties of the City ............................................... 3
Conditions to the Obligations of the Authority ......................................... 3
Expenses .................................................................................................... 6
Benefits; Survival ....................................................................................... 7
Counterparts ............................................................................................... 7
Governing Law .......................................................................................... 7
DOCSLA 1:320643.1 -- -i-
BOND PURCHASE AGREEMENT
THIS BOND PURCHASE AGREEMENT (this "Bond Purchase Agreement") is
entered into as of November , 1999, by and between the Tustin Public Financing Authority
(the "Authority") and the City of Tustin (the "City").
WITNESSETH:
WHEREAS, the Authority is a joint exercise of powers authority duly organized and
existing under the provisions of Articles 1 through 4 (commencing with Section 6500) of
Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Act"), and is
authorized pursuant to Article 4 of the Act to borrow money for the purpose of financing the
acquisition of bonds, notes and other obligations to provide financing or refinancing for public
capital improvements of local agencies within the State of California (the "State");
WHEREAS, the City is issuing $ aggregate principal amount of its Limited
Obligation Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Fixed Rate
Bonds, Group Three (the "Group Three Bonds"), pursuant to a Fiscal Agent Agreement, dated as
of February 1, 1996, by and between the City and State Street Bank and Trust Company of
California, N.A., as fiscal agent (the "Fiscal Agent"), as amended and supplemented by a First
Supplemental Fiscal Agent Agreement, dated as of September 1, 1996, by and between the City
and the Fiscal Agent, a Second Supplemental Fiscal Agent Agreement, dated as of November 1,
1997, by and between the City and the Fiscal Agent, a Third Supplemental Fiscal Agent
Agreement, dated as of November 1, 1998, by and between the City and the Fiscal Agent, and a
Fourth Supplemental Fiscal Agent Agreement, dated as of November 1, 1999 (the "Fourth
Supplemental Agreement"), by and between the City and the Fiscal Agent (as so amended and
supplemented, the "Fiscal Agent Agreement");
WltEREAS, the Authority desires to assist the City with the Group Three Bonds
financing by purchasing the Group Three Bonds from the City;
WHEREAS, in order to provide the funds necessary to purchase the Group Three Bonds
from the City, the Authority has authorized the issuance of the Tustin Public Financing Authority
Revenue Bonds (Tustin Ranch), Series D (the "Series D Bonds"), in the aggregate principal
amount of $ , pursuant to an Indenture of Trust, dated as of February 1, 1996, by
and between the Authority and State Street Bank and Trust Company of California, N.A., as
trustee (the "Trustee"), as amended and supplemented by a First Supplemental Indenture of
Trust, dated as of November 1, 1997, by and between the Authority and the Trustee, a Second
Supplemental Indenture of Trust, dated as of November 1, 1998, by and between the Authority
and the Trustee, and a Third Supplemental Indenture of Trust, dated as of November 1, 1999, by
and between the AuthoritY and the Trustee (as so amended and supplemented, the "Indenture");
WHEREAS, the Authority and the City have found and determined that the sale of the
Group Three Bonds to the Authority will result in substantial public benefits to the City, namely,
DOCSLA 1:320643.1
the interest savings with respect to the Group Three Bonds to be achieved by reason of the credit
rating to be assigned to the Series D Bonds; and
WHEREAS, the Series D Bonds are being purchased from the Authority pursuant to a
Bond Purchase Agreement, dated November ~, 1999 (the "Authority Purchase Agreement"),
by and between the Authority and PaineWebber Incorporated (the "Underwriter");
WHEREAS, the Authority and the City desire to enter into this Agreement providing for
the sale of the Group Three Bonds by the City to the Authority and containing the other
agreements herein set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
Authority and the City agree as follows:
' Section 1. De~Fnitions. Capitalized undefined terms used herein shall have the
meanings ascribed thereto in the Fiscal Agent A~eement.
Section 2. Purchase and Sale of Group Three Bonds. (a) Upon the terms and
conditions and upon the basis of the representations, warranties and agreements hereinafter set
forth, the City hereby agrees to sell to the Authority, and the Authority hereby a~ees to purchase
from the City, all (but not less than all) of the $ aggregate principal amount of the
Group Three Bonds: The Group Three Bonds shall mature on September 2, 2013 and shall bear
interest at the nominal rate of 8.17% per annum.
(b) The Group Three Bonds 'and interest thereon shall be payable from annual
assessments levied on the Designated Parcels (Group Three) and collected in accordance with
the Fiscal Agent Agreement and the proceedings relating thereto. The Group Three Bonds shall
be substantially in the form described in, shall be executed, delivered and secured under and
pursuant to, and shall be payable and subject to redemption as provided in, the Fiscal Agent
Agreement. The proceeds of the Group Three Bonds, together with other available funds, will be
used by the City to (i) pay the Purchase Price of the Series A Bonds being convened to Fixed
Rate Bonds on the Conversion Date (Group Three), (ii) pay costs of issuance relating to the
Group Three Bonds and the Series D Bonds, including the premium for the municipal bond
insurance policy securing the Series D Bonds, and (iii) fund the Reserve Account (Group Three)
established under the Fiscal Agent Agreement. The Fiscal Agent Agreement and this Bond
Purchase Agreement are collectively referred to as the "Legal Documents".
(c) The City hereby ratifies, confirms and approves the Preliminary Official
Statement of the Authority, dated November ~, 1999, relating to the Series D Bonds, which
contains certain information about the City, the City's Reassessment District No. 95-1 (Tustin
Ranch), the City's Reassessment District No. 95-2 (Tustin Ranch), the Fiscal Agent Agreement
and the Group Three Bonds (which, together with the cover page and all appendices thereto, is
referred to herein as the "Preliminary Official Statement"), which Preliminary Official Statement
the City deemed final and so certified as of its date for purposes of Rule 15c2-12 promulgated
under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), except for
information permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to assist
the Authority in the preparation of a final official statement (the "Official Statement"), consisting
DOCSLA 1:320643.1
of the Preliminary Official Statement, with such changes as may be made thereto with the
approval of the Authority, the City and the Underwriter, so that the Authority may deliver or
cause to be delivered to the Underwriter, no later than the earlier of the day prior to the Closing
Date (as hereinafter defined) or seven business days after the date the Underwriter agrees to
purchase the Series D Bonds, copies of the Official Statement in such reasonable quantity as the
Underwriter shall request. The City hereby approves of the use and distribution by the
Underwriter of the Official Statement in connection with the offer and sale of the Series D
Bonds.
(d) The aggregate purchase price for the Group Three Bonds shall be $
(being the principal amount of the Group Three Bonds, less a purchaser's discount of
$ and less original issue discount of $ ), which shall be payable solely from
proceeds of sale of the Series D Bonds.
(e) At 9:00 a.m., California time, on November 23, 1999, or at such other tim~ or on
such other date as the Authority, the City and the Underwhter may mutually agree upon (the
"Closing Date"), at the offices of Orrick, Herrington & Sutcliffe LLP, in Los Angeles,
California, the City shall deliver or cause to be delivered to the Authority, the Group Three
Bonds in the form of a single fully registered certificate (which may be typewritten), registered
in the name of the Trustee, as assignee of the Authority, duly executed and aUthenticated, and the
other documents mentioned herein. The Authority shall accept such delivery and pay the
purchase price of the Group Three Bonds as provided in subparagraph (d) above in immediately
available funds (such delivery and payment'being herein referred to as the "Closing").
Section 3. Representations and Warranties of the City_. The City hereby makes to
the Authority the representations and warranties made by the City to the Underwriter in the
City's Representation Letter, dated as of , 1999 (the "Representation Letter"), the
form of which is attached to the Authority Purchase Agreement, to the same extent as if such
representations and warranties were set forth in full herein.
Section 4. Conditions to the Obligations of the Authority. The Authority has
entered into this Bond Purchase Agreement in reliance upon the represer~tations, warranties and
agreements of the City contained herein and to be contained in the documents and instruments to
be delivered on the Closing Date, and upon the performance by the City of its obligations
hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Authority's
obligations under this Agreement to purchase, to accept delivery of and to pay for the Group
Three Bonds shall be subject to the performance by the City of its obligations to be performed
hereunder and under such documents and insmm~ents at or prior to the Closing Date, and shall
also be subject to the following conditions:
(a) The representations and warranties of the City contained herein shall be true,
complete and correct on the date hereof and on and as of the Closing Date, as if made on the
Closing Date;
(b) On the Closing Date, the Legal DoCuments shall be in full force and effect and
shall not have been amended, modified or supplemented, and the Official Statement shall not
DOCSLA 1:320643.1
-3-
have been amended, modified or supplemented, except in either case as may have been agreed to
by both the Authority and the Underwriter;
(c) As of the Closing Date, all official action of the City relating to the Group Three
Bonds shall be in full force and effect, and there shall have been taken all such actions as, in the
opinion of Orrick, Herrington & Sutcliffe LLP, bond counsel ("Bond Counsel"), shall be
necessary or appropriate in connection therewith, with the issuance of the Series D Bonds and
the Group Three Bonds, and with the transactions contemplated by the Legal Documents, all as
described in the Official Statement;
(d) Between the date hereof and the Closing Date, the market price or marketability,
at the initial offering price or prices set forth in the Official Statement, of the Series D Bonds
shall not have been materially adversely affected, in the reasonable judgment of the Underwriter,
by reason of any of the following:
(i) an amendment to the Constitution of the United States or the constitution
of the State shall have been passed or legislation enacted (or resolution passed) by or
introduced or pending legislation amended in the Congress or recommended for passage
by the President of the United States, the Speaker of the House of Representatives, the
President Pro Tempore of the Senate, the Chairman or ranking minority member of the
Committee of Ways and Means of the House of Representatives or the Chairman or
ranking minority member of the Committee on Finance of the Senate, or a decision
rendered by a court established under Article iii of the Constitution of the United States
or by the Tax Court of the United States, or an order, ruling, regulation (final, temporary
or proposed) or press release issued or made (A) by or on behalf of the Treasury
Department of the United States or the Internal Revenue Service, with the purpose or
effect, directly or indirectly, of imposing federal income taxation upon such interest as
would be received by the owners of the Series D Bonds, (B) by or on behalf of the State
or the California Franchise Tax Board, with the purpose or effect, directly or indirectly,
of imposing California personal income taxation upon such interest as would be received
by the owners of the Series D Bonds, or (C) by or on behalf of the Treasury Department
of the United States or the Internal Revenue Service or by or on behalf of the State or the
California Franchise Tax Board, with the purpose or effect, directly or indirectly, of
changing the federal or State income tax rates, respectively;
(ii) the declaration of war or engagement in major military hostilities by the
United States or the occurrences of any other national emergency or calamity relating to
the effective operation of the government of the United States;
(iii) the declaration of a general banking moratorium by federal, New York or
California authorities, or the general suspension of trading on any national securities
exchange;
(iv) the imposition by the New York Stock Exchange or other national
securities exchange or any governmental ~authority, of any material restrictions not now in
force with respect to the Series D Bonds or obligations of the general character of the
Series D Bonds, or the material increase of any such restrictions now in force;
-- -4-
DOCSLA 1:320643.1
(v) an amendment to the Constitution of the United States or the constitution
of the State shall have been passed or legislation enacted (or resolution passed) by or
introduced or pending legislation amended in the Congress or recommended for passage
by the President of the United States, or an order, decree or injunction issued by any court
of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed) or
press release issued or made by or on behalf of the Securities and Exchange Commission,
or any other governmental agency having jurisdiction of the subject matter, to the effect
that obligations of the general character of the Series D Bonds, or the Series D Bonds,
including any or all underlying arrangements, are not exempt from registration under the
Securities Act of 1933, as amended, or that the Fiscal Agent Agreement or the Indenture
is not exempt from qualification under the Trust Indenture Act of 1939, as amended, or
that the execution, offering or sale of obligations of the general character of the Series D
Bonds, or of the Series D Bonds, including any or all underlying arrangements, as
contemplated hereby or by the Official Statement, otherwise is or would be in violation
of the federal securities laws as amended and then in effect;
(vi) the withdrawal or downgrading of any rating of the Series D Bonds by a
national rating agency;
(vii) any event occurring, or information becoming known which, in the
judgTnent of the Underwriter, makes untrue in any material respect any statement or
information contained in the Official Statement, or has the effect that the Official
Statement contains any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(e) On the Closing Date, the Series D Bonds shall have been issued and delivered to
the Underwriter and all of the conditions to closing contained in the Authority Purchase
Agreement shall have either been satisfied or waived; and
(f) At or prior to the Closing Date, the Authority and the Underwriter shall have
received the following documents, in each case satisfactory in form and substance to the
Authority and the Underwriter:
(i) Two copies of the Fourth Supplemental Agreement, duly executed and
delivered by the parties thereto, with only such amendments, modifications or
supplements as may have been agreed to in writing by the Authority and the Underwriter;
(ii) The approving opinion, dated the Closing Date and addressed to the City,
of Bond Counsel approving, without qualification, the validity of the Group Three Bonds,
and a letter of such counsel, dated the Closing Date and addressed to the Authority and
the Underwriter to the effect that such opinion may be relied upon by the Authority and
the Underwriter to the same extent as if such opinion were addressed to them;
(iii) A copy of the Fiscal Agent Agreement, certified by the City Clerk;
DOCSLA 1:320643.1
-5-
(iv) The opinion of the City Attomey, dated the Closing Date and addressed to
the Authority and the Underwhter, to the effect set forth in Section 3(e)(v) of the
Authority Purchase Agreement;
(v) The opinion, dated the Closing Date and addressed to the City, the
Underwriter and the Authority, of counsel to the Fiscal Agent, to the effect set forth in
Section 3(e)(viii) of the Authority Purchase Agreement;
(vi) A certificate, dated the Closing Date, signed by a duly authorized official
of the City, in form and substance satisfactory to the Authority and the Underwriter, to
the effect that the representations and warranties of the City contained in this Bond
Purchase Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date;
(vii) A certificate, dated the date of Closing, signed by a duly authorized
official of the Fiscal Agent, satisfactory in form and substance to the Authority and the
Unddrwfiter, to the effect set forth in Section 3(e)(ix) of the Authority Purchase
Agreement;
(viii) Two certified copies of the general resolution of the Fiscal Agent
authorizing the execution and delivery of the Fiscal Agent Agreement by the Fiscal
Agent; and
(ix) Such additional legal opinions, certificates, proceedings, instruments or
evidences thereof and other documents as the Authority, the Underwriter or Bond
Counsel may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the representations of the City herein and of the statements
and information contained in the Official Statement, and the due performance or
satisfaction by the Fiscal Agent and the City at or prior to the Closing of all agreements
then to be performed and all conditions then to be satisfied by any of them in connection
with the transactions contemplated hereby and by the Legal Documents.
All of the opinions, letters, certificates, instruments and other documents mentioned
above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with
the provisions hereof if, but only if, they are in form and substance satisfactory to the Authority,
but the approval of the Authority shall not be unreasonably withheld. Receipt of, and payment
for, the Group Three Bonds shall constitute evidence of the satisfactory nature of such as to the
Authority. The performance of any and all obligations of the City hereunder and the
performance of any and all conditions contained herein for the benefit of the Authority may be
waived bythe Authority in its sole discretion.
If the City shall be unable to satisfy the conditions to the obligations of the Authority to
purchase, accept delivery of and pay for the Group Three Bonds contained in this Bond Purchase
Agreement, or if the obligations of the Authority to purchase, accept delivery of and pay for the
Group Three Bonds shall be terminated for any reason permitted by this Bond Purchase
Agreement, this Bond Purchase Agreement shall terminate, and neither the Authority nor the
DOCSLA 1:320643.1
-6-
City shall be under further obligation hereunder, except that the respective obligations of the City
and the Authority set forth in Section 5 hereof shall continue in full force and effect.
Section 5. Expenses. The Authority shall be under no obligation to pay, and the City
shall pay (a) the cost of the preparation of the Group Three Bonds and the Series D Bonds, (b)
the fees and disbursements of Bond Counsel, (c) the fees and disbursements of accountants,
advisers and of any other experts or consultants retained by the City, and (d) any other expenses
incident to the issuance of the Group Three Bonds and the Series D Bonds or the performance of
the City's obligations hereunder.
Section 6. Benefits; Survival. This Bond Purchase Agreement is made solely for the
benefit of the City, the Authority and the Underwriter, and no other person shall acquire or have
any fight hereunder or by virtue hereof. All of the City's representations, warranties and
agreements contained in this Bond Purchase Agreement shall remain operative and in full force
and effect regardless of (a) any investigations made by or on behalf of the Authority, or (b)
delivery of and payment for the Group Three Bonds pursuant to this Agreement. The
agreements contained in this Section shall survive any termination of this Bond Purchase
Agreement.
Section 7. Counterparts. This Bond Purchase Agreement may be executed by the
parties hereto in .separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the same instrument.
Section 8. Governing Law. The validity, interpretation and performance of this
Bond Purchase Agreement shall be governed by the laws of the State.
DOCSLA1:320643.1
-7-
IN WITNESS WHEREOF, the Authority. and the City have each caused this Bond
Purchase Agreement to be executed by their duly authorized officers all as of the date first above
written.
TUSTIN PUBLIC FINANCING AUTHORITY
By:
G. W. Jeffries
Treasurer
CITY OF TUSTIN
By:
Ronald A. Nault
Finance Director
DOCSLA 1:320643.1
-8-
CONTINUING DISCLOSURE AGREEMENT
(SERIES D)
by and between
CITY OF TUSTIN
and
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A,, as Trustee
Dated as of November
,1999
TUSTIN PUBLIC FINANCING AUTHORITY
REVENUE BONDS
(TUSTIN RANCH)
SERIES D
DOCSLA 1:320647.1
CONTINUING DISCLOSURE AGREEMENT (SERIES D)
THIS CONTINUING DISCLOSURE AGREEMENT (SERIES D) (this "Disclosure
Agreement") is made and entered into as of November ~., 1999, by and between STATE
STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., a national banking
association organized and existing under the laws of the United States, as Trustee (the
"Trustee"), and the CITY OF TUSTIN, a general law city and municipal corporation organized
and existing under and by virtue of the laws of the State of California (the "City").
WITNESSETH:
wHEREAS, pursuant to the Indenture of Trust, dated as of February 1, 1996, as by and
between the Tustin Public Financing Authority (the "Authority") and the Trustee, as amended
and supplemented by the First Supplemental Indenture of Trust, dated as of November 1, 1997,
by and between the Authority and the Trustee, the Second Supplemental Indenture of Trust,
dated as of November 1, 1998, by and between the Authority and the Trustee, and the Third
Supplemental Indenture of Trust (the "Third Supplemental Indenture"), dated as of November 1,
1999, by and between the Authority and the Trustee (as so amended and supplemented, the
"Indenture"), the Authority issued its Revenue Bonds (Tustin Ranch), Series D (the "Series D
Bonds"), in the aggregate principal amount of $[5,000,000];
WHEREAS, this Disclosure Agreement is being executed and delivered by the City and
the Trustee for the benefit of the holders and beneficial owners of the Series D Bonds and in
order to assist the underwriter of the Series D Bonds in complying with Securities and Exchange
Commission Rule 15c2-12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual premises and covenants
herein contained, the parties hereto agree as follows:
Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings
ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the
following meanings:
"Act" means, collectively, the Improvement Bond Act of 1915, as amended, being
Division 10 of the California Streets and Highways Code, and the Refunding Act of 1984 for
1915 Improvement Act Bonds, as amended being Division 11.5 of the California Streets and
Highways 'Code.
"Annual Report" means any Annual Report provided by the City pursuant to, and as
describedin, Sections 2 and 3 of this Disclosure Agreement.
"Annual Report Date" means the date in each year that is eight months after the end of
the City's fiscal year, which date, as of the date of this Disclosure Agreement, is March i.
DOCSLA1:320647.1
"Assessment Bonds" means the Assessment Bonds (95-1) and any Assessment Bonds
(95-2) acquired pursuant to Section 3.04 of the Indenture.
"Assessment Bonds (95-1)" means the City of Tustin Limited Obligation Improvement
Bonds, Reassessment District No. 95-1 (Tustin Ranch), which are issued under and pursuant to
the Fiscal Agent Agreement (95-1).
"Assessment Bonds (95-2)" means the City of Tustin Limited Obligation Improvement
Bonds, Reassessment District No. 95-2 (Tustin Ranch), which are issued under and pursuant to
the Fiscal Agent Agreement (95-2) and which bear interest at a fixed rate.
"Authority Bonds" means the Tustin Public Financing Authority Revenue Bonds
(Tustin Ranch) issued under the Indenture, and includes the Series A Bonds, the Series B Bonds,
the Series C Bonds, the Series D Bonds and any additional bonds issued thereunder in
accordance with the terms thereof and ranking on a parity with the Series A Bonds, the Series B
Bonds, the Series C Bonds and the Series D Bonds.
"Disclosure Representative" means the Finance Director of the City or his or her
desi~onee, or such other officer or employee as the City shall designate in writing to the Trustee
from time to time.
"Dissemination Agent" means the Trustee, acting in its capacity as Dissemination Agent
hereunder, or any successor Dissemination Agent designated in writing by the City and which
has filed with the Trustee a written acceptance of such designation.
"Fiscal Agent Agreement (95-1)" means the Fiscal Agent Agreement, dated as of
February 1, 1996, by and between the City and State Street Bank and Trust Company of
California, N.A., as Fiscal Agent, as originally executed or as the same may from time to time be
amended or supplemented in accordance with the terms thereof, under and pursuant to which the
Assessment Bonds (95-1) are issued.
"Fiscal Agent Agreement (95-2)" means the Fiscal Agent Agreement, dated as of
February 1, 1996, by and between the City and State Street Bank and Trust Company of
California, N.A., as Fiscal Agent, as originally executed or as the same may from time to time be
amended or supplemented in accordance with the terms thereof, under and pursuant to which the
Assessment Bonds (95-2) are issued.
"Group of Assessment Bonds (95-2)" means a group of Assessment Bonds (95-2),
registered in the name of the Trustee, that have been designated, pursuant to Section 7.01(e) of
the Fiscal Agent Agreement (95-2), to represent specified parcels of real property within the
Reassessment District (95-2).
"Indenture" means the Indenture of Trust, dated as of February 1, 1996, by and between
the Authority and the Trustee, as originally executed or as it may from time to time be amended
or supplemented by any Supplemental Indenture..
DOCSLA 1:320647.1 2
"Listed Events" means any of the events listed in Section 4(a) hereof.
"National Repository" means any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule.
"Official Statement" means the Official Statement, dated November __, 1999, relating
to the Series D Bonds.
"Participating Underwriter" means any of the original underwriters of the Series D
Bonds required to comply with the Rule in connection with offering of the Series D Bonds.
"Repository" means each National Repository and each State Repository.
"Reassessment District (95-1)" means the area designated "Reassessment District No.
95-1 (Tustin Ranch)", formed by the City under the Act.
"Reassessment District (95-2)" means the area designated "Reassessment District No.
95-2 (Tustin Ranch)", formed by the City under the Act.
"Reassessments (95-1)" means the reassessments levied within Reassessment District
(95-1) by the City under the proceedings taken pursuant to the Act.
"Reassessments (95-2)" means the reassessments levied within Reassessment District
(95-2) by the City under the proceedings taken pursuant to the Act.
"Reassessments" means, collectively, the Reassessments (95-1) and the Reassessments
(95-2).
"Reserve Requirement (95-1)" has the meaning ascribed to Reserve Requirement in the
Fiscal Agent A~eement (95-1).
"Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"Series A Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series A, issued under the Indenture.
"Series B Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series B, issued under the Indenture.
"Series C Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series C, issued under the Indenture.
DOCSLA1:320647.1 3
"Series D Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series D, issued under the Indenture.
"State Repository" means any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and recognized as such by the
Securities and Exchange Commission. As of the date of this Disclosure A~eement, there is no
State Repository.
"Subject Area" means all of Reassessment District (95-1) and those portion, s of
Reassessment District (95-2) upon which are levied Reassessments (95-2) that secure
Assessment Bonds (95-2) that are registered in the name of the Trustee.
"Trustee" means State Street Bank and Trust Company of California, N.A., a national
banking association organized and existing under the laws of the United States of America, as
Trustee under the Indenture, or any successor thereto as Trustee thereunder as provided therein.
Section 2. Provision of Annual Reports. (a) The City shall, or shall cause the
Dissemination Agent to, provide to each Repository an Annual Report which is consistent with
the requirements of Section 3 hereof, not later than the AnnUal Report Date in each year,
commencing with the Annual Report for the 1999-2000 fiscal year. The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may include
by reference other information as provided in Section 3 hereof; provided, however, that the
audited financial statements of the City may be submitted separately from the balance of the
Annual Report, and later than the date required above for the filing of the Annual Report if not
available by that date. If the City's fiscal year changes, it shall give notice of such change in the
same manner as for a Listed Event under Section 4(f) hereof.
(b) Not later than 15 business days prior to the date specified in subsection (a) for
providing the Annual Report to Repositories, the City shall provide the Annual Report to the
Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such
date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City
and the Dissemination Agent to determine if the City is in compliance with the first sentence of
this subsection (b).
(c) If the Trustee is unable to verify that an Annual Report has been provided to
Repositories by the date required in subsection (a), the Trustee shall send a notice to the
Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in
substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and each State Repository, if any; and
DOCSLA1:320647.1 4
(ii) file a report with the City and (if the Dissemination Agent is not the
Trustee) the Truste'e certifying that the Annual Report has been provided pursuant to this
Disclosure A~eement, stating the date it was provided and listing all the Repositories to
which it was provided.
Section 3. Content of Annual Reports.
incorporate by reference the following:
The City's Annual Report shall contain or
(a) The City's audited financial statements prepared in accordance with
generally accepted accounting principles as promulgated to apply to governmental
entities from time to time by the Governmental Accounting Standards Board. If the
City's audited financial statements are not available by the time the Annual Report is
required to be filed, pursuant to Section 2(a), the Annual Report shall contain unaudited
financial statements in a format similar to that used for the City's audited financial
statements, and the audited financial statements shall be filed in the same manner as the
Annual Report when they become available.
(b) The following information:
(i) The principal amount of Series D Bonds Outstanding as of the
September 30 next preceding the Annual Report Date.
(ii) The principal amount of Authority Bonds OUtstanding as of the
September 30 next preceding the Annual Report Date.
(iii) The principal amount of Assessment Bonds outstanding as of the
September 30 next preceding the Annual Report Date.
(iv) The balance in the Improvement Fund established under the Fiscal
Agent Agreement (95-1) as of the September 30 next preceding the Annual
Report Date, and a statement as to whether or not such amount will be sufficient
to pay the costs of the improvements intended to be paid therefrom.
(v) The balance in the Reserve Fund established under the Fiscal
Agent Agreement (95-1), and a statement of the Reserve Requirement (95-1) as of
the September 30 next preceding the Annual Report Date.
(vi) The balance in each Reserve Account established for a Group of
Assessment Bonds (95-2) under the Fiscal Agent Agreement (95-2), and a
statement of the reserve requirement applicable to each such Reserve Account as
of the September 30 next preceding the Annual Report Date.
(vii) The total assessed value of all parcels within the Subject Area on
which the Reassessments are levied, as shown on the assessment roll of the
Orange County Assessor last equalized prior to the September 30 next preceding
DOCSLA1:320647.1 5
the Annual Report Date, and a statement of assessed value-to-lien ratios therefor,
either by individual parcel or by categories (e.g. "below 3:1", "3:1 to 4:1" etc.).
(viii) The Reassessment delinquency rate for the Subject Area, as shown
on the assessment roll of the Orange County Assessor last equalized prior to the
September 30 next preceding the Annual Report Date, the number of parcels
within the Subject Area delinquent in payment of Reassessments, as shown on the
assessment roll of the Orange County Assessor last equalized prior to the
September30 next preceding the Annual Report Date, the amount of each
delinquency, the length of time delinquent and the date on which foreclosure was
commenced, or similar information pertaining to delinquencies deemed
appropriate by the City; provided, however, that parcels with delinquencies of
$2,000 or less may be grouped together and such information may be provided by
category.
(ix) The status of Reassessment foreclosure proceedings and a
summary of the results of any foreclosure sales as of the September 30 next
preceding the Annual Report Date.
(x) The identity of any property owner representing more than 5% of
the Reassessment levy delinquent in payment of Reassessments levied within the
Subject Area, as shown on the assessment roll of the Orange County Assessor last
equalized prior to the September 30 next preceding the Annual Report Date.
(xi) A land ownership summary listing property owners responsible for
more than 5% of the Reassessment levy within the Subject Area, as shown on the
assessment roll of the Orange County Assessor last equalized prior to the
September 30 next preceding the Annual Report Date.
(xii) The number of building permits issued by the City for new
construction within the Subject Area during the one year period ending on the
September 30 next preceding the Annual Report Date.
In addition to any of the information expressly required to be provided under paragraphs
(a) and (b) of this Section, the City shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made, not misleading.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange.
Commission. If the document included by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The City shall clearly identify each
such other document so included by reference.
DOCSLA1:320647.1 6
Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this
Section, the City shall give, or cause to be given, notice of the occurrence of any of the following
events with respect to the Series D Bonds, if material:
(i)
(ii)
(iii)
Principal and interest payment delinquencies.
Non-payment related defaults.
Unscheduled draws on debt
difficulties.
service reserves reflecting financial
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
Unscheduled draws on credit, enhancements reflecting financial
difficulties.
Substitution of credit or liquidity providers, or their failure to perform.
Adverse tax opinions or events affecting the tax-exempt status of the
security.
Modifications to rights of security holders.
Contingent or unscheduled bond calls.
Defeasances.
Release, substitution, or sale of property securing repayment of the
securities.
(xi) Rating changes.
(b) The Trustee shall, within one business day of obtaining actual knowledge of the
occurrence of any of the Listed Events, contact the Disclosure Representative, inform such
person of the event, and request that the City promptly notify the Trustee in writing whether or
not to report the event pursuant to subsection (f).
(c) Whenever the City obtains knowledge of the occurrence of a Listed Event,
whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the City
shall as soon as possible determine if such event would be material under applicable Federal
securities law.
(d) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicable Federal securities law, the City shall promptly notify the Trustee in
writing. Such notice shall instruct the Trustee to report the occurrence pursuant to subsection (f).
DOCSLA1:320647.1 7
(e) If in response to a request under subsection (b), the City determines that the Listed
Event would not be material under applicable Federal securities law, the City shall so notify the
Trustee in writing and instruct the Trustee not to report the occurrence pursuant to subsection (f).
(f) If the Trustee has been .instructed by the City to report the occurrence of a Listed
Event, the Trustee shall file a notice of such occurrence with the Municipal Securities
Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed
Events described in subsections (a)(viii) and (ix) need not be given under this subsection any
earlier than the notice (if any) of the underlying event is given to holders of affected Bonds
pursuant to the Indenture.
Section 5. Termination of Reporting Obligation. The City's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Series D Bonds. If such termination occurs prior to the final maturity of the
Series D Bonds, the City shall give .notice of such termination in the same manner as for a Listed
Event under Section 4(t') hereof.
Section 6. Dissemination Agent. State Street Bank and Trust Company of California,
N.A., is hereby appointed as the initial Dissemination Agent. The City may, from time to time,
appoint or engage a successor Dissemination Agent to assist it in carrying out its obligations
under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or
without appointing a successor Dissemination Agent. If at any time there is not any other
designated Dissemination Agent, the Trustee shall be the Dissemination Agent.
Section 7. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Agreement, the City and the Trustee may amend this Disclosure Agreement (and the
Trustee shall agree to any amendment so requested by the City), and any provision of this
Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to Sections 2(a), 3 or 4(a) hereof it may
only be made in connection with a change in circumstances that arises from a change in
legal requirements, change in law, or change in the identity, nature, or status of an
obligated person with respect to the Series D Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of
the Rule at the time of the primary offering of the Series D Bonds, after taking into
account any amendments or interpretations of the Rule, as well as any change in
circumstances; and
(c) the proposed amendment or waiver (i) is approved by holders of the Series D
Bonds in the manner provided in the Indenture for amendments to the Indenture with the
consent of holders, or (ii) does not, in the opinion of the Trustee or nationally recognized
bond counsel, materially impair the interests of holders of the Series D Bonds.
DOCSLA 1:320647.1 8
If the annual financial information or operating data to be provided in the .~mual Report
is amended pursuant to the provisions hereof, the first annual financial information containing
the amended operating data or financial information shall explain, in narrative form, the reasons
for the amendment and the impact of the change in the type of operating data or financial
information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting principles
on the presentation of the financial statements or information, in order to provide information to
investors to enable them to evaluate the ability of the City to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be sent to the Repositories in the same manner as for a Listed Event
under Section 4(f) hereof.
Section 8. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Agreement. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event in addition to
that which is specifically required by this Disclosure Agreement, the City shall have no
obligation under this Disclosure Agreement to update such information or include it in any future
Annual Report or notice of occurrence of a Listed Event.
Section 9. Default. In the event of a failure of the City or the Trustee to comply with
any provision of this Disclosure Agreement, the Trustee may (and, at the written direction of any
Participating Underwriter or the holders of at least 25% aggregate principal amount of
Outstanding Bonds, shall), or any holder or beneficial owner of the Bonds may, take such actions
as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the City or Trustee, as the case .may be, to comply with its obligations under
this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an
Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in
the event of any failure of the City or the Trustee to comply with this Disclosure Agreement shall
be an action to compel performance.
Section 10. Duties, Immunities and Liabilities of Trustee and Dissemination Agent.
Article VIII of the Indenture is hereby made applicable to this Disclosure Agreement as if this
Disclosure Agreement were (solely for this purpose) contained in the Indenture and the
Dissemination Agent shall be entitled to the protections therein as if it were the Trustee. The
Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination
Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement and
DOCS LA 1:320647.1 9
shall not be responsible for the content of any of the reports or financial statements delivered by
the City pursuant to this Disclosure Agreement.
Section 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the City, the Trustee, the Dissemination Agent, the Participating Underwriters and holders and
beneficial o~amers from time to time of the Series D Bonds, and shall create no rights in any
other person or entity.
Section 12. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
DOCSLA1:320647.1 10
IN WITNESS WHEREOF, the parties hereto have executed this DisclosUre Agreement
as of the date first above written.
CITY OF TUSTIN
By:
Ronald A. Nault
Finance Director
STATE STREET BANK AND TRUST
COMPANY OF cALIFORNIA, N.A., as
Trustee
By:
Authorized Officer
DOCSLA 1:320647.1
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO
FILE ANNUAL REPORT
Name of Issuer:
Tustin Public Financing Authority
Name of Bond Issue: Tustin Public Financing Authority
Revenue Bonds (Tustin Ranch), Series D
Date of Issuance: November ,1999
NOTICE IS HEREBY GIVEN that the City of Tustin (the "City") has not provided an
Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure
A~eement (Series D), dated as of November 22, 1999, by and between the City and State Street
Bank and Trust Company of California, N.A., as Trustee. [The City anticipates that the Annual
Report will be filed by .]
Dated:
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee, on behalf of the City of Tustin
cc: City of Tustin
DOCSLA 1:320647.1
A-1
PRELIMIN~. JFFICIAL STATEMENT DATED NOVEi. . __, 1999
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations,' rulings and court decisions and
assuming, among other matters, compliance with certain covenants, interest on the Series D 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
further opinion of Bond Counsel, interest on the Series D Bonds is not a preference item for purposes of the federal individual or
corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current
earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion
regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt
of interest on, the Series D Bonds. See "TAX MATTERS" herein.
NEW ISSUE - BOOK-ENTRY ONLY
$5,000,000*
TUSTIN PUBLIC FINANCING AUTHORITY
REVENUE BONDS
(Tustin Ranch)
Series D
RATINGS:
Moodys: Aaa
S&P: AAA
(See "RATINGS" herein)
Dated: Date of Delivex3' Due: September 2, as shown below
The $5,000,000* Tustin Public Financing Authority Revenue Bonds (Tustin Ranch), Series D (the "Series D Bonds") are being issued by the Tustin Public Financing
Authority (the "Authority") pursuant to the Indenture of Trust, dated as of February 1, 1996, by and between the Authority and State Street Bank and Trust Company of
California, N.A., as trustee (the "Trustee"), as amended and supplemented by the First Supplemental Indenture of Trust, dated as of November 1, 1997, the Second
Supplemental Indenture of Trust, dated as of November 1, 1998, and the Third Supplemental Indenture of Trust, dated as of November 1, 1999 (as so amended and
supplemented, the "Indenture"), and will be secured as described herein. The Series D Bonds will be on a parity with the Authority's previously issued Revenue Bonds
(Tustin Ranch) Series A (the "Series A Bonds"), Revenue Bonds (Tustin Ranch) Series B (the "Series B Bonds"), Revenue Bonds (Tustin Ranch) Series C (the "Series C
Bonds") and any additional bonds ("Additional Bonds") issued by the Authority pursuant to the Indenture. The Series A Bonds, the Series B Bonds, the Series C Bonds,
the Series D Bonds and any such Additional Bonds are collectively referred to as the "Bonds." The Series D Bonds are being issued to purchase the City of Tustin Limited
Oblieation Improvement Bonds Reassessment District No. 95-2 (Tustin Ranch), Fixed Rate Bonds, Group Three (the "Group Three Bonds"). The Group Three Bonds are
bein~ issued by the CiD' of Tustin (the "City")pursuant to the Fiscal Agent Agreement, dated as of February 1, 1996, by and between the City and State Street Bank and
Trust Company of California, N.A., as fiscal aeent, as amended and supplemented by the First Supplemental Fiscal Agent Agreement, dated as of September 1, 1996, the
Second Supplemental Fiscal Agent Agreement,~dated as of November 1, 1997, and the Third Supplemental Fiscal Agent Agreement, dated as of November 1, 1998, and
the Fourth Supplemental Fiscal Agent Agreement, dated as of November 1, 1999 and will be secured by certain unpaid reassessments (the "Group Three Reassessments")
levied by the City.
The Series D Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust
Company ("DTC"), New York, New York. Interest on the Series D Bonds, payable at the rates set forth below, will be payable on September 2 and March 2 of each
year, commencing March 2, 2000. Purchasers will not receive certificates representing their interest in the Series D Bonds. Individual purchases will be in principal
amounts of $5,000 or in any integral multiple of $5,000. Payments of principal and interest will be paid by the Trustee to DTC for subsequent disbursement to DTC
Participants who will remit such payments to the beneficial owners of the Series D Bonds.
The Series D Bonds will matm-e on September 2 in the years and in the amounts as shown on the Maturity Schedule set forth below. The Series D Bonds are subject to
redemption prior to maturity as set forth herein. See "THE SERIES D BONDS - Redemption of the Series D Bonds" herein.
The Bonds are payable solely from Revenues of the AuthOrity, consisting primarily of debt service payments received from the City by the Trustee, as the owner of certain
assessment bonds (the "Assessment Bonds") of the City, including the Group Three Bonds. The Assessment Bonds are secured by certain unpaid reassessments, including
the Group Three Reassessments, as more fully described herein. Payments under the Assessment Bonds are calculated to be sufficient to permit the Authority to pay the
principal of, premium, if any, and interest on the Bonds when due. The City has determined that it will not obligate itself to advance funds from its treasury to cover any
delinquency on the Assessment Bonds.
THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE PAYABLE SOLELY FROM THE REVENUES AND OTHER ASSETS PLEDGED
THEREFOR UNDER THE INDENTURE. THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE CITY OR OF THE STATE OF CALIFORNIA,
AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE STATE OF CALIFORNIA, OR ANY
POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. THE ASSESSMENT
BONDS ARE LIMITED OBLIGATIONS OF THE CITY, PAYABLE SOLELY FROM THE REASSESSMENTS AND THE OTHER ASSETS PLEDGED
THEREFOR UNDER THE FISCAL AGENT AGREEMENT PURSUANT TO WHICH SUCH ASSESSMENT BONDS ARE ISSUED. NEITHER THE FAITH AND
CREDIT NOR THE TAXING POWER OF THE CITY OR THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO
THE PAYMENT OF THE ASSESSMENT BONDS.
The scheduled payment of principal of and interest on the Series D Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the
delivery of the Series D Bonds by FINANCIAL SECURITY ASSURANCE INC.
[Logo]
This cover page contains information for reference only. It is not a summary of this issue. Investors must read the entire Official Statement, including the section entitled
"SPECIAL RISK FACTORS", for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in making an informed
investment decision about the Series D Bonds.
MATURITY SCHEDULE
$ Serial Series D Bonds
Maturity Price/ Maturity
(September 2) Principal Interest Yield (September 2) Principal Interest
% % 2005 $
2006
2007
2008
2009
$ % Term Series D Bonds due September 2, 2013 Yield: %
2000
2001
2002
2003
2004
The Series D Bonds are offered, when, as and if issued and accepted by the Underwriter, subject to approval as to their validity by
Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel, and subject to certain other conditions.
Certain legal matters will be passed upon for the Authority and the City by Woodruff, Spradlin & Smart,
a Professional Corporation, Orange, California. It is anticipated that the Series D Bonds will be
Price/
Yield
Dr3C'RT .A 1 -qglqfaa
Dated: November __, 1999
*Preliminapj, subject to change
~ailable for delivery in book-entry form in Nc
New York, on or about November 23, 1999.
PaineWebber Incorporated
ork,
TUSTIN PUBLIC FINANCING AUTHORITY
and
CITY OF TUSTIN
(Orange County, California)
MEMBERS OF THE AUTHORITY BOARD OF DIRECTORS
AND CITY COUNCIL
Tracy Wills Worley, Chair/Mayor
Jeffery M. Thomas, Vice Chair/Mayor Pro Tem
Mike Doyle, Board Member/Councilmember
Jim Potts, Board Member/Councilmember
Thomas R. Saltarelli, Board Member/Councilmember
AUTHORITY OFFICERS
AND CITY STAFF
William A. Huston, Executive Director/City Manager
George W. Jeffries, Authority Treasurer/City Treasurer
Christine Shingleton, Assistant Executive Director/Assistant City Manager
Pamela Stoker, Authority Secretary/City Clerk
Ronald A. Nault, City Finance Directm,
Tim Serlet, City Public Works Director
PROFESSIONAL SERVICES
Bond Counsel
Orrick, Herrington & Sutcliffe LLP
Los Angeles, California
City Attorney
Lois E. Jeffrey
Woodruff, Spradlin & Smart
A Professional Corporation
Orange, California
Reassessment Consultant
MBIA MuniFinancial, Inc.
Temecula, California
Trustee
State Street Bank and Trust Company of California, N.A.
Los Angeles, California
DOCSLA1:320644.3
No dealer, broker, salesperson or other person has been authorized to ~ve any information
or to make any representations, other than as contained in this Official Statement, and if ~ven or
made, such other information or representations must not be relied upon as having been authorized
by the Authority or the City. 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 Series D Bonds by any person in
any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
The information set forth herein has been obtained from the Authority, the City, and other
sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and
is not to be construed as a representation of such by the Authority or the City. The information and
expressions of opinion stated herein are subject to change without notice. The delivery of this
Official Statement shall not, under any circumstances, create any implication that there has been no
change in the affairs of the Authority, the City, the Fixed Rate Subject Area (as defined herein), or
any property owner since the date hereof.
The discussion and inforrdation herein relating to the Series D Bonds, the Fixed Rate
Subject Area, the Authority, and the City do not purport to be comprehensive or definitive. All
references to the Series D Bonds are qualified in their entirety by reference to the Indenture setting
forth the terms and descriptions thereof. The summaries and references to any code, act, resolution,
the Indenture or the Fiscal Agent Agreements (as defined herein), and to other statutes and
documents in this Official Statement do not purport to be comprehensive or definitive, and are
qualified in their entirety by reference to each statute and document.
Other than with respect to information conceming Financial Security Assurance Inc.
("Financial Security") contained under the captions "BOND INSURANCE" and "APPENDIX D
- Series D Bond Insurance Policy Specimen" Herein, none of the information in this Official
Statement has been supplied or verified by Financial Security and Financial Security makes no
representation or warranty, express or implied, as to (i) the accuracy or completeness of such
information; (ii) the validity of the Series D Bonds; or (iii) the tax exempt status of the interest
on the Series D Bonds.
IN 'CONNECTION WITH THIS BOND UNDERWRITING,-THE UNDER~TER
MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICE OF THE SERIES D BONDS DESCRIBED HEREIN AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DOCSLA1:320644.3
INSERT LOCATION MAP
DOCSLA1:320644.3
TABLE OF CONTENTS
Paee
INTRODUCTION ..............................· ........................................................................................... 1
CONTINUING DISCLOSURE ..................................................................................................... 4
THE PLAN OF FINANCING .......................................................................................................
ESTINL~kTED SOURCES AND USES ......................................................................................... 6
Series D Bonds ................................................................................................................... 6
Group Three Bonds ............................................................................................................ 6
THE SERIES D BONDS ............................................................................................................... 7
Description of the Series D Bonds ..................................................................................... 7
Redemption of the Series D Bonds .................................................................................... 7
Transfers and Exchange ..................................................................................................... 9
Book-Entry System ..................................................................... : .................................... 10
Debt Service Schedule ..................................................................................................... 14
SECURITY FOR THE BONDS .................................................................................................. 14
General ............................................................................................................................. 14
Payments of Assessment Bonds ....................................................................................... 1
Debt Service Reserves ..................................................................................................... 18
Additional Authority Bonds .......... ] .................................................................................. 20
Additional Assessment Bonds ......................................................................................... 22
Covenant for Superior Court Foreclosure ........................................................................ 22
Priority of Lien ................................................................................................................. 24
BOND INSURANCE .................................................................................................................. 24
Series D Bond Insurance Policy ...................................................................................... 24
Financial Security Assurance Inc ..................................................................................... 24
METHOD OF REASSESSMENT ............................................................................................... 25
THE FIXED RATE SUBJECT AREA ........................................................................................ 25
General ............................................................................................................................. 25
Status of Public Improvements Designated Parcels ......................................................... 26
Location and Terrain of the Fixed Rate Subject Area ..................................................... 27
Land Uses and Development Status ................................................................................ 27
Largest Landowners by Reassessment Amount ............................................................... 28
Debt Service Coverage ..................................................................................................... 30
Delinquency History ........................................................................................................ 31
Estimated Value-to-Lien Ratios .......................................................................................
Direct and Overlapping Debt ....................... ....................................................................
Status of'Development .....................................................................................................
SPECIAL RISK FACTORS ........................................................................................................ 39
The Bonds are Limited Obligations of the Authority ....... ' ............................................... 39
Tl~e Reassessments are Not Personal Obligations of the Property Owners ..................... 39
The Assessment Bonds are Limited Obligations of the City ........................................... 40
Bankruptcy ....................................................................................................................... 40
Payments by FDIC ........................................................................................................... 41
DOCSLA1:320644.3
-i-
TABLE OF CONTENTS
(continued)
Pao_e
Existence of Undeveloped Property ................................................................................. 42
Price Realized Upon Foreclosure ..................................................................................... 42
Uncertainties of Future Development .............................................................................. 43
Direct and Overlapping Indebtedness .............................................................................. 44
Earthquakes ...................................................................................................................... 44
Drought Conditions .......................................................................................................... 44
Land Values ....... : .............................................. · ............................................................... 45
Hazardous Substances ...................................................................................................... 45
Endangered and Threatened Species ................................................................................ 46
Cumulative Burden of Parity Taxes, Special Assessments and Development Costs ...... 46
Loss of Tax Exemption .................................................................................................... 47
California Constitution Article XIIIC and Article XIIID ................................................ 47
Year 2000 Problem .......................................................................................................... 48
THE AUTHORITY ..................................................................................................................... 49
THE CITY ................................................................................................................................... 50
CONCLUDING INFORMATION .............................................................................................. 50
50
Underwriting ' · .................. ~ .....................................
Legal Opinion .................................................................................................................. 50
Tax Matters ...................................................................................................................... 51
No Litigation .................................................................................................................... 52
Ratings .............................................................. ~ .............................................................. 52
Miscellaneous .................................................................................................................. 53
APPENDIX A- Summary of Indenture and Fiscal Agent Agreements ........................................ A-1
APPENDIX B - Proposed Form of Bond Counsel Opinion ................................... ~ ...................... B-1
APPENDIX C - Form of Continuing Disclosure Agreement ........................................................ C-1
APPENDIX D - Series D Bond Insurance Policy Specimen ......................................................... D-1
DOCSLA 1:320644.3'
-ii-
$5,000,000*
TUSTIN PUBLIC FINANCING AUTHORITY
REVENUE BONDS
(Tustin Ranch)
Series D
INTRODUCTION
This Official Statement, including the cover, inside cover, the table of contents and the
Appendices, is provided to furnish information in connection with the sale by the Tustin Public
Financing Authority (the "Authority") of its $5,000,000* aggregate principal mount of Revenue
BOnds (Tustin Ranch), Series D (the "Series D Bonds"). The Series D Bonds will be issued by the
Authority pursuant to an Indenture of Trust, dated as of February 1, 1996 (the "Original
Indenture"), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of
November 1, 1997 (the "First Supplemental Indenture"), a Second Supplemental Indenture of
Trust, dated as of November 1, 1998 (the "Second Supplemental Indenture"), and a Third
Supplemental Indenture of Trust, dated as of November 1, 1999 (the "Third Supplemental
Indenture), each by and between the Authority and State Street Bank and Trust Company of
California, N.A., as trustee (the "Trustee") (as so amended, the "Indenture").
The proceeds from the sale of the Series D Bonds will be used to purchase $5,000,000*
aggregate principal amount of City of Tustin Limited Obligation Improvement Bonds,
Reassessment District No. 95-2 (Tustin Ranch), Fixed Rate Bonds, Group Three (the "Group Three
Bonds"). The Group Three Bonds are being issued by the City of Tustin (the "City") pursuant to a
Fiscal Agent Agreement, dated as of February 1, 1996 (the "Original 95-2 Agreement"), as
amended and supplemented by a First Supplemental Fiscal Agent Agreement, dated as of
September 1, 1996 (the "First Supplemental 95-2 Agreement"), a Second Supplemental Fiscal
Agent Agreement, dated as of November 1, 1997 (the "Second Supplemental 95-2 Agreement"),
Third Supplemental Fiscal Agent Agreement, dated as of November 1, 1998 (the Third
Supplemental 95-2 Agreement) and a Fourth Supplemental Fiscal Agent Agreement, dated as of
November 1, 1999 (the "Fourth Supplemental 95-2 Agreement"), each by and between the City and
State Street Bank and Trust Company of California, N.A., as fiscal agent (the "95-2 Fiscal Agent")
(as so amended, the "95-2 Fiscal Agent Agreement").
On'February 29, 1996, the Authority issued its $35,705,000 aggregate principal amount of
Tustin Public Financing Authority Revenue Bonds (Tustin Ranch), Series A (the "Series A
Bonds"), pursuant to the Original Indenture. The proceeds of the Series A Bonds were used to
purchase '$35,705,000 aggregate principal amount of City. of Tustin Limited Obligation
Improvement Bonds, Reassessment District No. 95-1 (Tustin Ranch) (the "Assessment Bonds (95-
Prelim/nary; subject to change.
DOCSLA1:320644.3
1)"). The Assessment Bonds (95-1) were issued pursuant to the Refunding Act of 1984 for 1915
Improvement Act Bonds (the-"Refunding Law") and the Improvement Bond Act of 1915 (the
"1915 Act" and together with the Refunding Law, the "Act") and a Fiscal Agent Agreement, dated
as of February 1, 1996 (the "95-1 Fiscal Agent Agreement"), by and between the City and State
Street Bank and Trust Company of California, N.A., as fiscal agent (the "95-1 Fiscal Agent"). The
95-1 Fiscal Agent Agreement and the 95-2 Fiscal Agent Agreement are herein referred to
collectively as the "Fiscal Agent Agreements." The 95-1 Fiscal Agent and the 95-2 Fiscal Agent
are herein referred to collectively as the "Fiscal Agent."
On November. 1, 1997, the Authority issued its $3,300,000 aggregate principal amount of
Tustin Public Financing Authority Revenue Bonds (Tustin Ranch), Series B (the "Series B
Bonds"), pursuant to the First Supplemental Indenture. The proceeds of the Series B Bonds were
used to purchase $3,300,000 aggregate principal amount of the City of Tustin Limited Obligation
Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch), Fixed Rate Bonds, Group
One (the "Group One Bonds"), which were issued pursuant to the Second Supplemental 95-2
Agreement. On November 1, 1998, the Authority issued its $4,185,000 aggregate principal amount
of Tustin' Public Financing Authority Revenue Bonds (Tustin Ranch), Series C (the "Series C
Bonds") pursuant to the Second Supplemental Indenture. The proceeds of the Series C Bonds were
used to purchase $4,185,000 aggregate principal amount of the City of Tustin Limited Obligation
Improvement Bonds, Reassessment District No. 95-2 (Tustin Ranch) Fixed Rate Bonds, Group
Two (the "Group Two Bonds"), which were issued pursuant to the Third Supplemental 95-2
Agreement.
The Assessment Bonds (95-1) are secured by unpaid reassessments (the "95-1
Reassessments") levied on all taxable parcels within the City's Reassessment District No. 95-1
(Tustin Ranch) ("Reassessment District No. 95-1"). The Group One Bonds, the Group Two Bonds
and the Group Three Bonds are secured by unpaid reassessments (the "Group One Reassessments,"
the "Group Two Reassessments" and the "Group Three Reassessments," respectively) levied on
certain non-overlapping parcels (the "Group One Designated Parcels," the "Group Two Designated
Parcels" and the "Group Three Designated Parcels," respectively) within the City's Reassessment
District No. 95-2 (Tustin Ranch) ("Reassessment District No. 95-2"). The Group One Bonds are
secured only by reassessments levied on the Group One Designated Parcels and not by
reassessments levied on any other parcels within Reassessment District No. 95-2. The Group Two
Bonds are secured only by reassessments lexded on the Group Two Parcels and not by
reassessments levied on any other parcels within Reassessment District No. 95-2. The Group Three
Bonds are secured only by reassessments levied on the Group Three Designated Parcels and not by
reassessments levied on any other parcels within Reassessment District No. 95-2.
The Assessment Bonds (95-1), the Group One Bonds and the Group Two Bonds are
collectively referred to herein as the "Prior Fixed Rate Assessment Bonds." The Prior Fixed Rate
Assessment Bonds and the Group Three Bonds are herein referred to collectively as the "Fixed
Rate Assessment Bonds." The 95-1 Reassessments, the Group One Reassessments, the Group Two
Reassessments and the Group Three Reassessments are herein referred to collectively as the "Fixed
Rate Reassessments." Reassessment District No. 95-1 and Reassessment District No. 95-2 are
- 2
DOCSLA 1:320644.3
herein referred to collectively as the "Reassessment Districts." Reassessment District No. 95-1, the
Group One Designated Parcels and the Group Three Designated Parcels, the Group Two
Designated Parcels are herein referred to collectively as the "Fixed Rate Subject Area."
The Series A Bonds, the Series B Bonds and the Series C Bonds are collectively referred to
herein as the "Prior Authority Bonds." The Series D Bonds are on a parity with the Prior
Authority Bonds. Pursuant to the Indenture, the Authority may issue additional bonds ("Additional
Bonds") on a parity with the Prior Authority Bonds and the Series D Bonds. The Prior Authority
Bonds, the Series D Bonds and any such Additional Bonds are herein collectively referred to as the
"Bonds." The Bonds are secured by all amounts derived fi.om the Fixed Rate Assessment Bonds or
any other Reassessment District No. 95-2 fixed rate bonds (the "Assessment Bonds (95-2)") issued
pursuant to the 95-2 Fiscal Agent Agreement and acquired by the Authority pursuant to the
Indenture, including but not limited to all payments of principal thereof, premium, if any, and
interest thereon (the "Revenues"). The Fixed Rate Assessment Bonds and any such Assessment
Bonds (95-2) are herein collectively referred to as the "Assessment Bonds."
Pursuant to the Indenture, the Authority has assigned to the Trustee, for the benefit of the
Owners fi.om time to time of the Bonds, all of the Revenues and all ri~ht, title and interest of the
Authority in the Assessment Bonds. See "SECURITY FOR THE BONDS" herein.
The scheduled payment of principal of and interest on the Series D Bonds when due will be
guaranteed under a Municipal Bond Insurance Policy (the "Series D Bond Insurance Policy") to be
issued concurrently with the delivery of the Series D Bonds by Financial Security Assurance Inc.
("Financial Security" or the "Bond Insurer"). See "BOND INSURANCE" herein.
THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE
SOLELY FROM THE REVENUES AND OTHER ASSETS PLEDGED THEREFOR UNDER
THE INDENTURE. THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE
CITY OR OF THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION
THEREOF, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
CITY OR THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF. IS PLEDGED TO
THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS.
The City is located in central Orange County, about 40 miles southeast of Los Angeles and
80 miles north of San Diego. The City spans approximately 11.2 square miles and adjoins the
cities of Irvine, Orange and Santa Ana, as well as unincorporated areas of the County of Orange.
At January. 1, 1999, the City's population was estimated at 66,834, representing an approximate
6.94% increase fi.om January 1, 1995.
The Fixed Rate Subject Area is generally bounded by the Santa Ana Freeway (Interstate 5),
Browning-Avenue and Tustin Ranch Road, Santiago Canyon Road, and Jamboree Road.
Reassessment District No. 95-1 is comprised of approximately 4,528 assessed parcels and covers
approximately 2,782 acres. Reassessment District No. 95-2 is comprised of' approximately 108
assessed parcels covering approximately 1,446 acres. Ninety-eight of such parcels constitute the
Group Three Designated Parcels. See "THE FIXED RATE SUBJECT AREA" herein.
- 3
DOCSLA 1:320644.3
Brief descriptions of the Fixed Rate Subject Area, the Series D Bonds, the Assessment
Bonds, the Indenture and the Fiscal Agent Agreements are included in this Official Statement. The
descriptions of the Series D Bonds, the Assessment Bonds, and other documents are qualified in
their entirety by reference to them. Copies of such documents may be obtained from the City at
300 Centennial Way, Tustin, California 92680, Attention: Finance Department; and, during the
initial public offering period, from PaineWebber Incorporated at 725 South Figueroa Street, 41st
Floor, Los Angeles, California 90017, Attention: Public Finance Department, and, after initial
delivery of the Series D Bonds, at the principal corporate trust office of the Fiscal Agent at 633
West 5th Street, 12th Floor, Los Angeles, California 90071. Capitalized undefined terms used
herein shall have the meanings ascribed thereto in the Indenture.
CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority
(other than the balance in certain funds and accounts established under the Indenture) is material to
any decision to purchase, hold or sell the Series D Bonds, and the Authority will not provide any
such information. The City has undertaken all responsibilities for any continuing disclosure to
Bond Owners as described below, and the Authority shall have no liability to the Owners of the
Bonds or any other person with respeCt to such disclosure.
The City has covenanted for the benefit of holders and beneficial owners of the Series D
Bonds (1) to provide certain financial information and operating date (the "Annual Report")
relating to the City and the property in the Fixed Rate Subject Area not later than eight (8) months
after the end of the City's Fiscal Year (which currently would be March 1),. commencing with the
report for the 1999-2000 Fiscal Year, and (2) to provide notices of the occurrence of certain
enumerated events, if material. The Annual Report will be filed by the Trustee on behalf of the
City, with each Nationally Recognized Municipal Securities Information Repository and with each
State Repository, if any. The notices of material events will be filed by the Trustee on behalf of the
City with the Municipal Securities Rulemaking Board and with each State Repository, if any. The
specific nature of the information to be contained in the Annual Report or the notices of material
events is set forth in the Continuing Disclosure Agreement. See "APPENDIX C - FORM OF
CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in order to
assist the Underwriter in complying with S.E.C. Rule 15c2-12Co)(5) (the "Rule"). The City has not
failed to comply in all material respects with any previous undertaking with respect to the Rule to
provide annual reports or notices of material events.
DOCSLA1:320644.3
THE PLAN OF FINANCING
The Series D Bonds are being issued under the Indenture in order to purchase the Group
Three Bonds. On February 29, 1996, pursuant to the Original 95-2 Agreement, the City issued
$41,500,000 aggregate principal amount of City' of Tustin Limited Obligation Improvement Bonds,
Reassessment District No. 95-2 (Tustin Ranch), Series A (the "Adjustable Assessment Bonds (95-
2)") as Adjustable Rate Bonds (as defined in the Original 95-2 Agreement). Under the Original 95-
2 Agreement, a portion of the Adjustable Assessment Bonds (95-2) are required to be convened to
Fixed Rate Bonds when titles are transferred by The Irvine Company to third parties with respect to
properties upon which the reassessments securing such Adjustable Assessment Bonds (95-2) are
levied. On the delivery date, $4,322,504.68 aggregate principal amount of the Adjustable
Assessment Bonds (95-2) are being purchased with the proceeds of the Group Three Bonds. The
Group Three Bonds consist of two components: the Group Three Fixed Rate Bonds and the Series
Three Bonds (each defined below). As the Adjustable Assessment Bonds (95-2) are purchased,
such Adjustable Assessment Bonds will be canceled and reissued as Fixed Rate Bonds designated
as the "Group Three Fixed Rate Bonds." Additionally, the 95-2 Fiscal Agent Agreement provides
that, in connection with the conversion (or purchase and reissuance) of each group of Adjustable
AsseSsment Bonds (95-2) to Fixed Rate Bonds, the City may, subject to the requirements of the
Act and upon compliance with the provisions of the 95-2 Fiscal Agent Agreement, establish one or
more series of bonds by supplemental agreement. In connection with the reissuance of the Group
Three Fixed Rate Bonds, the City is issuing an additional series of bonds in the aggregate principal
amount of $677,495.32', designated as the "Series Three Bonds," as Related Additional Bonds to
the Group Three Fixed Rate Bonds. The 95-2 Fiscal Agent Agreement defines "Related Additional
Bonds" as, with respect to a group of Fixed Rate Bonds, the additional series of bonds which is
being issued in connection with the conversion of such group of Fixed Rate Bonds and which is
designated by the City to represent the same parcels as such additional Series of Bonds. As such,
both the Group Three Fixed Rate Bonds and the Series Three Bonds are designated to represent the
Group Three Designated Parcels pursuant to the 95-2 Fiscal Agent Agreement. In order to provide
for the authentication and delivery of the Group Three Bonds, and to establish and declare the terms
and conditions upon which the Group Three Bonds are issued and secured, the City and the 95-2
Fiscal Agent are entering into the Fourth Supplemental 95-2 Agreement.
Preliminary; subject to change.
DOCSkA 1:320644.3
ESTIMATED SOURCES AND USES
Series D Bonds
The estimated sources and uses of proceeds of sale of the Series D Bonds are as follows:
Sources
Principal Amount of Series D Bonds
Less Original Issue Discount
Less Underwfiter's Discount
Total Sources:
Uses
Program Fund(u
Total Uses:
Applied to the purchase of $
principal amount of Group Three Bonds.
Group Three Bonds
The estimated sources and uses of proceeds of sale of the Group Three Bonds are as
follows:
Sources
Principal Amount of Group Three Bonds
Less Original Issue Discount
Less Purchaser's Discount
Transfer from Interest Reserve Fund
under 95-2 Fiscal Agent Agreement
Total Sources:
Uses
Purchase of Adjustable Assessment Bonds (95-2)o)
Reserve Account (Group Three)(2)
Costs Account (Group Three)®
Total Uses:
$4,323,000*
(~) $4,322,504.68 aggregate principal amount of Adjustable Assessment Bonds (95-2) will be purchased with the
proceeds of the Group Three Fixed Rate Bonds, and the remaining $495.32 aggregate principal amount will be
purchased with moneys constituting other sources.
(2) An amount equal to the Reserve Requirement (Group Three).
(3) To pay costs of issuance, including legal fees, printing fees and Series D Bond Insurance Policy premium.
Preliminary; subject to change.
DOCSLA 1:320644.3
THE SERIES D BONDS
Description of the Series D Bonds
The Series D Bonds will be issued in the aggregate principal amount of $5,000,000*. The
Series D Bonds will be issued in fully registered form in denominations of $5,000 or any integral
multiple thereof. The Series D Bonds will be dated their date of delivery. The Series D Bonds will
bear interest at the rates per annum and will mature, subject to the redemption provisions set forth
below, on the dates and in the principal amounts, all as set forth on the cover page hereof.
Interest on the Series D Bonds is payable semiannually on March 2 and September 2 of
each year, commencing March 2, 2000 (each an "Interest Payment Date") to the persons in whose
names ownership of the Series D Bonds is registered on the Registration Books at the close of
business on the immediately preceding Record Date, except as provided in the Indenture. Such
interest will be paid by check of the Trustee mailed by first class mail, postage prepaid on each
Interest Payment Date to the Series D Bond Owners at their respective addresses shown on the
Registration Bonds as of the close of business on the preceding Record Date. Interest on the Series
D Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day months.
Principal of, and premium, if any, on the Series D Bonds will be payable upon presentation
and surrender thereof at the principal corporate trust office (the "Trust Office") of the Trustee in
Los Angeles, California. Principal of and premium, if any, and interest on the Series D Bonds will
be paid in lawful money of the United States of America.
The Series D Bonds will be issued in book-entry form, initially registered in the name of
Cede & Co., New York, New York, as nominee of The Depository Trust Company ("DTC"), New
York, New York. Payment of interest with respect to any Series D Bond registered as of each
Record Date in the name of Cede & Co. will be made by wire transfer of same-day funds to the
account of Cede & Co. See "Book-Entry System" herein.
Redemption of the Series D Bonds
Optional Redemption
The Series D Bonds maturing on or after September 2, 2009, are subject to optional
redemption in whole, or in part in authorized denominations, among maturities on such basis as
shall be designated by the Authority in a Written Certificate of the Authority filed with the Trustee,
on any Interest Payment Date on or after September 2, 2008, at the following respective
Redemption Prices (expressed as percentages of the principal amount of the Series D Bonds to be
redeemed), plus accrued interest thereon to the date of redemption:
Preliminary; subject to change.
DOCSLA 1:320644.3
Redemption Dates.
Redemption Price
September 2, 2008 and March 2, 2009
September 2, 2009 and March 2, 2010
September 2, 2010 and thereafter
1 O2%
101
1 O0
Mandatory_ Redemption From Principal Prepayments
The Series D Bonds are subject to mandatory redemption, in whole, or in part in authorized
denominations, on any Interest Payment Date, from and to the extent of any Principal Prepayments
with respect to the Group Three Bonds, at the following respective Redemption Prices (expressed
as percentages of the principal amount of the Series D Bonds to be redeemed), plus accrued interest
thereon to the date of redemption:
Redemption Dates.
Redemption Price
March 2, 2000 through March 2, 2006
September 2, 2006 and March 2, 2007
September 2, 2007 and March 2, 2008
September 2, 2008 and thereafter
103%
102
101
100
The principal mount of Series D Bonds to be redeemed from Principal Prepayments with
respect to the Group Three Bonds will be the' geatest principal amount of Series D Bonds, the
Redemption Price of which is less than or equal to such Principal Prepayments, as specified in a
Written Request of the Authority delivered to the Trustee. In the event that the 95-2 Fiscal Agent
shall mail notice of the redemption of any Group Three Bonds which will produce Principal
Prepayments, the Trustee will concurrently mail notice of the redemption of Series D Bonds, such
redemption to occur on the date fixed for such redemption of the Group Three Bonds. The
proceeds of any such redemption of the Group Three Bonds will be applied by the Trustee to pay
the Redemption Price of Series D Bonds on the date of such redemption of the Group Three Bonds.
For purposes of the selection of Series D Bonds for mandatory redemption, the Series D
Bonds will be selected for redemption among maturities by the Authority (evidenced pursuant to a
Written Certificate of the Authority delivered to the Trustee at least 60 days prior to the redemption
date or such later date as shall be acceptable to the Trustee) on such basis that the remaining
.payments of principal of and interest on the Group Three Bonds, together with other available
Revenues attributable thereto, will be sufficient on a timely basis to pay debt service on the Series
D Bonds, as shall be demonstrated in a report of an Independent Financial Consultant filed with the
Trustee.
Mandatory_ Sinking Fund Redemption
The Series D Bonds maturing on September 2, 2013 are subject to mandatory sinking fund
redemption, in part, on September 2 in each year, commencing September 2, 20__, at a Redemption
Price equal to the principal amount of the Series D Bonds to be redeemed, without premium, plus
- 8
DOCSLA1:320644.3
accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in
the respective years as follows:
Redemption Date
(September 2)
Principal Amount
2013'
Maturity
If some but not all of the Series D Bonds maturing on September 2, 2013 are optionally
redeemed, the principal amount of Series D Bonds maturing on September 2, 2013 to be
redeemed pursuant to mandatory sinking fund redemptions on any subsequent September 2 will
be reduced, by $5,000 or an integral multiple thereof, as designated by the Authority in a Written
Certificate of the Authority filed with the Trustee; provided, however, that the aggregate amount
of such reductions will not exceed the aggregate amount of Series D Bonds maturing on
September 2, 2013 so optionally redeemed. If some but not all of the Series D Bonds maturing
on September 2, 2013 are redeemed pursuant to mandatory redemption from Principal
Prepayments, the principal amount of Series D Bonds maturing on September 2, 2013 to be
subsequently redeemed pursuant to mandatory sinking fund redemptions will be reduced by the
aggregate principal amount of the Series D Bonds maturing on September 2, 2013 so
mandatorily redeemed from Principal Prepayments, such reduction to be allocated as nearly as
practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined
by the Authority, notice of which determination will be given by the Authority to the Trustee at
least 45 days prior to such redemption date.
Transfers and Exchange
So long as the Series D Bonds remain in book-entry, transfer and exchange of any of the
Series D Bonds will be accomplished in accordance with the provisions of such book-entry system.
In the event of termination of such book-entry system with respect to the Series D Bonds, then any
Series D Bond may be transferred upon the Registration Books by the person in whose name it is
registered, in person or by his duly authorized attorney, upon surrender of such Series D Bond for
cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form
acceptable' to the Trustee. Whenever any Series D Bond or Bonds are surrendered fOr transfer, the
Authority will execute and the Trustee will authenticate and deliver a new Series D Bond or Bonds
for a like aggregate principal amount of the same series and maturity, in any authorized
denomination. The Trustee will require the Series D Bond Owner requesting such transfer to pay
any tax or other governmental charge required to be paid with respect to such transfer.
The Bonds may be exchanged at 'the Office of the Trustee for a like aggregate principal
amount of Series D Bonds of the same series and maturity, of other authorized denominations. The
- 9
DOCSLA 1:320644.3
Trustee will require the. payment by the Series D Bond Owner requesting such exchange of any tax
or other governmental charge required to be paid with respect to such exchange.
The Trustee will not be obligated to make any transfer or exchange of Series D Bonds
during the period established by the Trustee for the selection of Series D Bonds for redemption, or
with respect to any Series D Bonds selected for redemption.
Book-Entry System
The description that follows of the procedures and recordkeeping with respect to
beneficial ownership interests in the Series D Bonds, payment of principal of and interest on the
Series D Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in the Series D Bonds, and other Bonds-related transactions by and between
DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the
Authority and the City each believes to be reliable, but the Authority and the City take no'
responsibility for the completeness or accuracy thereof
The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the Series D Bonds. The Series D Bonds will be issued as fully registered
securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name
as may be requested by an authorized representative of DTC. One fully registered Series D Bond
will be issued for each maturity of the Series D Bonds, in the aggregate principal amount of such
maturity, 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 "cleating 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 for
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 ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Series D Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Series D Bonds on DTC's records. The
ownership interest of each actual purchaser of each Series D Bond ("Beneficial Owner") is in
turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not
- 10
DOCSLA 1:320644.3
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 Series D 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
Series D Bonds, except in the event that use of the book-entry system for the Series D Bonds is
discontinued.
To facilitate subsequent transfers, all Series D Bonds deposited by Participants with DTC
are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as
requested by an authorized representative of DTC. The deposit of Series D Bonds with DTC and
their registration in the name of Cede & Co. or such other DTC nominee do not effect any
changes in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the
Series D Bonds; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Series D 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 which may be in effect from time to time.
Beneficial Owners of the Series D Bonds may wish to take certain steps to augment the
transmission to them of notices of significant events with respect to the Series D Bonds, such as
redemptions, tenders, defaults, and proposed amendments to the bond documents. Beneficial
Owners of Series D Bonds may wish to ascertain that the nominee holding the Series D Bonds
for their benefit has agreed to obtain and transmit notice to Beneficial Owners, or in the
alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and
request that copies' of notices be pro.vided directly to them.
Redemption notices shall be sent to DTC. If less than all of the bonds within an issue are
being redeemed, DTC's practice is to determine by lot the amount of interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with
respect to Series D Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to an
issuer 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 Series D Bonds are
credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, mandatory sinking fund payments and interest payments on the Series D Bonds
will be made to Cede & Co. or such other nominee as may be requested by an authorized
representative of DTC. DTC's practice is to credit Direct Participants' accounts on payment
- 11
DOCSkA 1:320644.3
dates in accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the date payable. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the
Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) is the responsibility of the Trustee or
the Authority, disbursement of such payments to Direct Participants is the responsibility of DTC,
and disbursement of such payments to Beneficial Owners is the responsibility of Direct and
Indirect Participants.
NONE OF THE AUTHORITY, THE CITY NOR THE TRUSTEE WILL HAVE ANY
RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT
PARTICIPANTS OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR
THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR
BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR REDEMPTION.
The Authority, the City and the Underwriter cannot and do not give any assurances
that DTC, the Participants or others will distribute payments of principal, interest or
premium, if any, with' respect to the Series D .Bonds paid to DTC or its nominee as the
registered owner, or will distribute any redemption notices or other notices, to the
Beneficial Owners, or that they will do so on a timelY basis or will serve 'and act in the
manner described in this Official Statement. The Authority, the City and the Underwriter
are not responsible or liable for the failure of DTC or any Participant to make any
payment or give any notice to a Beneficial Owner with respect to the Series D Bonds or an
error or delay relating thereto.
DTC management is aware that some computer applications, systems, and the like for
processing data ("Systems") that are dependent upon calendar dates, including dates before, on,
and after January 1, 2000, may encounter "Year 2000 problems." DTC has informed its
Participants and other members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to the timely payment of
distributions (including principal and income payments) to bondholders, book-entry deliveries,
and settlement of trades within DTC ("DTC Services"), continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plans include a testing phase, which is expected to be completed within
appropriate time frames.
However, DTC's ability to perform properly its services is also dependent upon other
parties, including but not limited to issuers and their agents, as well as third party vendors from
whom DTC licenses software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the Industry that it is contacting (and will
- 12
DOCSLA1:320644.3
continue to contact) third party vendors from whom DTC acquires services to: (i) impress upon
them the importance of such services being Year 2000 compliant, and (ii) determine the extent of
their efforts for Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, DTC is in the process of developing such contingency plans, as it deems appropriate.
The foregoing description of the procedures and record-keeping with respect to
beneficial ownership interests in the Series D Bonds, payment of principal, interest and
other payments on the Series D Bonds to DTC Participants or Beneficial Owners,
confirmation and transfer of beneficial ownership interests in such Series D Bonds, other
related transactions by and between DTC, the DTC Participants and the Beneficial Owners
and DTC's Year 2000 compliance is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and 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.
DTC (or a successor securities depository) may discontinue providing its services as
securities depository with respect to the Series D Bonds at any time by giving reasonable notice
to the Authority. The Authority, in 'its sole discretion and without the consent of any other
person, may terminate the services of DTC (or a successor securities depository) with respect to
the Series D Bonds. The Authority and the City undertake no obligation to investigate matters
that would enable the Authority and the City to make such a determination. In the event that the
book-entry system is discontinued as described above, Series D Bonds will be printed and
delivered and the requirements of the Indenture will apply.
DOCSLA 1:320644.3
13
Debt Service Schedule
The schedule of annual debt service payments for the Series D Bonds is as follows:
Annual
Year Debt
(September 2) Principal Interest Service
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total:
General
SECURITY FOR THE BONDS
The Bonds, including the Series D Bonds, are limited obligations of the Authority payable
solely from the Revenues and Other assets pledged therefor under the Indenture. Subject only to the
provisions of the Indenture permitting the application thereof for the purposes and on the terms and
conditions set forth in the Indenture, all of the Revenues and any other amounts held in any fund or
account established pursuant to the Indenture are pledged by the Authority to secure payment of the
principal of and interest on the Bonds. Said pledge constitutes a first lien on and security interest in
such assets. Revenues are defined in the Indenture to mean all amounts derived from or with
respect to the Assessment Bonds, which, as of the date of delivery of the Series D Bonds, consist of
the Fixed Rate Assessment Bonds, including but not limited to all payments of principal thereof,
premium, if any, and interest thereon.
Pursuant to the Indenture, the Authority transfers in trust and assigns to the Trustee, for the
benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the fight, title
and interest of the Authority in the Assessment Bonds. Under the Indenture, the Trustee is entitled
to and will collect and receive all of the Revenues, and any Revenues collected or received by the
- 14
DOCSLA1:320644.3
Authority will be deemed to be held, and to have been collected or received, by the Authority and
will forthwith be paid by the Authority to the Trustee. The Trustee also will be entitled to and may
take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either
jointly with the Authority or separately, all of the fights of the Authority and all of the obligations
of the City under and with respect to the Assessment Bonds.
In accordance with the provisions of the Indenture, the Trustee is the re~stered Owner of
the Prior Fixed Rate Assessment Bonds and, upon the issuance thereof, will be the registered
Owner of the Group Three Bonds and will therefore receive from the Fiscal Agent the payments of
the principal of and the premiums, if any, and interest on the Assessment Bonds. Pursuant to the
Act, the City is required annually to transmit to the Auditor of the County of Orange (the "County")
the respective amounts of individual Fixed Rate Reassessment installments on all unpaid Fixed
Rate Reassessments, the sum of which individual Fixed Rate Reassessment installments is
sufficient to pay the principal of and interest on the Fixed Rate Assessment Bonds as such principal
and interest become due and payable. Said Fixed Rate Reassessment installments are then billed on
the regular County property tax bills and are remitted to the City in accordance with established
procedures for such remittances.
Assuming timely payment by the respective property owners of the obligations (including
the Fixed Rate Reassessment installments) billed on the regular County property tax bills, and
further assuming timely remittance by the County to the City of the amount of such Fixed Rate
Reassessment installments thereby collected, the City will have sufficient funds fi'om the Fixed
Rate Reassessment installments to make timely payment to the Fiscal Agent of each March 2
interest payment and each September 2 principal and interest payment on the Fixed Rate
Assessment Bonds, as the same become due and Payable. See "SPECIAL RISK FACTORS"
herein for a discussion of factors which could affect the collection of Fixed Rate Reassessment
installments.
THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE
SOLELY FROM THE REVENUES AND OTHER ASSETS PLEDGED THEREFOR UNDER
THE INDENTURE. THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE
CITY OR OF THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION
THEREOF, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
CITY OR THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF, PLEDGED TO THE
PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS.
Payments of Assessment Bonds
The Assessment Bonds (95-1) are secured by the unpaid 95-1 Reassessments 'levied upon
private property within Reassessment District No. 95-1. Such unpaid 95-1 Reassessments (together
with interest thereon) and moneys in the Redemption Fund established for the Assessment Bonds
(95-1) (the "Redemption Fund (95-1)") established under the 95-1 Fiscal Agent Agreement
constitute a trust fund for the redemption and payment of the principal of, premium, if any, and
DOCSLA1:320644.3
15
interest on the Assessment Bonds (95-1). Principal of, premium, if any, and interest on the
Assessment Bonds (95-1) are payable exclusively out of the Redemption Fund (95-1).
The Group One Bonds are secured by the unpaid Group One Reassessment levied upon
private property within the Group One Designated Parcels. Such unpaid Group One Reassessments
(together with interest thereon) and moneys in the Redemption Accounts established for the Group
One Bonds (the "Redemption Account (Group One)") within the Redemption Fund established
under the 95-2 Fiscal Agent Agreement (the "Redemption Fund (95-2)"), constitute a trust fund for
the redemption and payment of the principal of, premium, if any, and interest on the Group One
Bonds. Principal of, premium, if any, and interest on the Group One Bonds are payable exclusively
out of the Redemption Account (Group One).
The Group Two Bonds are secured by the unpaid Group Two Reassessment levied upon
private property within the Group Two Designated Parcels. Such unpaid Group Two
Reassessments (together with interest thereon) and moneys in the Redemption' Accounts
established for the Group Two Bonds (the "Redemption Account (Group Two)") within the
Redemption Fund, constitute a trust fund for the redemption and payment of the principal of,
premium, if any, and interest on the Group Two Bonds. Principal of, premium, if any, and interest
on the Group Two Bonds are payable exclusively out of the Redemption Account (Group Two).
The Group Three Bonds are secured by the unpaid Group Three Reassessment levied upon
private property within the Group Three Designated Parcels. Such unpaid Group Three
Reassessments (together with interest thereon) and moneys in the Redemption Accounts
established for the Group Three Bonds (the "Redemption Account (Group Three)") within the
Redemption Fund, constitute a trust fund for the redemption and payment of the principal of,
premium, if any, and interest on the Group Three Bonds. Principal of, premium, if any, and interest
on the Group Three Bonds are payable exclusively out of the Redemption Account (Group Three).
THE OBLIGATIONS OF THE CITY UNDER THE ASSESSMENT BONDS ARE NOT
GENERAL OBLIGATIONS OF THE CITY, BUT ARE LIMITED OBLIGATIONS, PAYABLE
SOLELY FROM THE FIXED RATE REASSESSMENTS AND THE OTHER ASSETS
PLEDGED THEREFOR UNDER THE RESPECTIVE FISCAL AGENT AGREEMENTS.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OR THE
STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED
TO THE PAYMENT OF THE FIXED RATE ASSESSMENT BONDS.
The Fixed Rate Reassessments levied in the Fixed Rate Subject Area and each installment
thereof and any interest 'and penalties thereon constitute liens against the parcels of land on which
they are levied until the same are paid. The liens imposed in the Fixed Rate Subject Area are
subordinate to fixed special assessment liens previously imposed upon the same property but have
priority over existing and future private liens and over any fixed special assessment liens which
hereafter be created against the property. Such liens are co-equal to and independent of the lien for
general property taxes and special taxes. While there are no prior special assessment liens on any
of the parcels of land in the Fixed Rate Subject Area, there are liens for special taxes and the
- 16
DOCSLA 1:320644.3
rectm-ing lien for general property taxes. See "THE FIXED RATE SUBJECT AREA - Direct and
Overlapping Debt" herein.
ALTHOUGH THE UNPAID FIXED RATE REASSESSMENTS CONSTITUTE LIENS
ON THE PARCELS OF LAND ASSESSED, THEY DO NOT CONSTITUTE A PERSONAL
INDEBTEDNESS OF THE RESPECTIVE PROPERTY OWNERS. THERE IS NO
ASSURANCE THAT PRESENT PROPERTY OWNERS WILL REMAIN THE PROPERTY
OWNERS, THAT PROPERTY OWNERS WILL BE FINANCIALLY ABLE TO PAY THEIR
FIXED REASSESSMENTS, OR THAT PROPERTY OWNERS V~rlLL IN FACT PAY SUCH
FIXED REASSESSMENTS EVEN THOUGH FINANCIALLY ABLE TO DO SO.
Under provisions of the Act, Fixed Rate Reassessment installments sufficient to meet
annual payments of principal of and interest on the Fixed Rate Assessment Bonds are to be
collected on the regular property tax bills sent by the County Tax Collector to owners of the parcels
of land against which there are unpaid Fixed Rate Reassessments. Annual installments of 95-1
Reassessments are to be paid into the Redemption Fund (95-1), which will be held by the 95-1
Fiscal Agent and used to pay the principal of and interest on the Assessment Bonds (95-1) as they
become due. Annual installments of the Group One Reassessments, the Group Two Reassessments
and of the Group Three Reassessments are to be paid into the Redemption Account (Group One),
the Redemption Account (Group Two) and the Redemption Account (Group Three) respectively,
which will be held by the 95-2 Fiscal Agent and used to pay the principal of and interest on the
Group One Bonds, the Group Two Bonds and the Group Three Bonds respectively, as they become
due.
The installment billed against each parcel of land within Reassessment District No. 95-1,
each year represents a pro-rata share of the total principal and interest coming due on all of the
Assessment Bonds (95-1) that year. The amount billed against each parcel of land within
Reassessment District No. 95-1 is based on the percentage which the unpaid 95-1 Reassessment
against the parcel bears to the total of unpaid 95-1 Reassessments within Reassessment District No.
95-1, plus an administrative charge of the City. The failure of a property owner to pay an annual
95-1 Reassessment installment will not result in an increase in 95-1 Reassessment installments
against other property in the 95-1 Reassessment District.
The installment billed against each parcel of land within the Group One Designated Parcels
each year represents a pro-rata share of the total principal and interest coming due on all of the
Group One Bonds that year. The amount billed against each parcel of land within the Group One
Designated Parcels is based on the percentage which the unpaid Group One Reassessments against
the parcel bears to the total of unpaid Group One Reassessment within Group One Designated
Parcels, plus an administrative charge of the City. The failure of a property owner to pay an annual
Group One Reassessment installment will not result in an increase in Group One Reassessment
installments against other property in the Group One Designated Parcels.
The installment billed against each parcel of land within the Group Two Designated Parcels
each year represents a pro-rata share of the total principal and interest coming due on all of the
- 17
DOCSLA 1:320644.3
Group Two Bonds that year. The amount billed against each parcel of land within the Group Two
Designated Parcels is based on the percentage which the unpaid Group Two Reassessments against
the parcel bears to the total of unpaid Group Two Reassessment within Group Two Designated
Parcels, plus an administrative charge of the City. The failure of a property owner to pay an annual
Group Two Reassessment installment will not result in an increase in Group Two Reassessment
installments against other property in the Group Two Designated Parcels.
The installment billed against each parcel of land within the Group Three Designated
Parcels each year represents a pro-rata share of the total principal and interest coming due on all of
the Group Three Bonds that year. The amount billed against each parcel of land within the Group
Three Designated Parcels is based on the percentage which the unpaid Group Three Reassessments
against the parcel bears to. the total of unpaid Group Three Reassessment within Group Three
Designated Parcels, plus an administrative charge of the City. The failure of a property owner to
pay an annual Group Three Reassessment installment will not result in an increase in Group Three
Reassessment installments against other property in the Group Three Designated Parcels.
In the event of delinquencies of a certain amount respecting any installment of an unpaid
Fixed Rate Reassessment, and with respect to all delinquencies in certain circumstances, as
prescribed in each Fiscal Agent Agreement, the City has covenanted to institute superior court
foreclosure proceedings to enforce payment of such delinquencies. See "Covenant for Superior
Court Foreclosure" herein.
Debt Service Reserves
Pursuant to the 95-1 Fiscal Agent Agreement, a Reserve Fund has been established for the
Assessment Bonds (95-1) (the "Reserve Fund (95-1)") in the amount of the Reserve Requirement
(as defined in the 95-1 Fiscal Agent Agreement), presently $[3,114,000]. Pursuant to the 95-1
Fiscal Agent Agreement, transfers will be made from the Reserve Fund (95-1) to the Redemption
Fund (95-1) in the event of a deficiency in the Redemption Fund (95-1). The amount so advanced
will be reimbursed to the Reserve Fund (95-1) from the proceeds of redemption or sale of the parcel
for which payment or reimbursement of any delinquent 95-1 Reassessment was made from such
Reserve Fund. If any 95-1 Reassessment Bond is prepaid before final maturity of the 95-1
Reassessment Bonds, the City is authorized by the 95-1 Fiscal Agent Agreement to reduce the
amount in Reserve Fund (95-1), and transfer to the Prepayment Account within the Redemption
Fund (95-1) an amount in the proportion in which the 95-1 Reassessment prepaid bears to the total
original unpaid 95-1 Reassessments.
Pursuant to the 95-2 Fiscal Agent Agreement, a Reserve Account (Group One) has been
established for the Group One Bonds in the amount of the Reserve Requirement (Group One) (as
defined in the Second Supplemental 95-2 Agreement), presently $[310,003.76]. Transfers will be
made pursuant to the 95-2 Fiscal Agent Agreement from the Reserve Account (Group One) to the
Redemption Account (Group One) in the event of a deficiency in the Redemption Account (Group
One). The amount so advanced will be reimbursed to the Reserve Account (Group One) from the
proceeds of redemption or sale of the parcel for which payment or reimbursement of any delinquent
- 18
DOCSLA 1:320644.3
Group One Reassessment was made from the Reserve Account (Group One). If any Group One
Reassessment is prepaid before final maturity of the Group One Bonds, the City is authorized by
the 95-2 Fiscal Agent Agreement to reduce the amount in Reserve Account (Group One) and
transfer to the Prepayment Account (Group One) within the Redemption Fund (95-2) an amount in
the proportion in which the Group One Reassessment prepaid bears to the total original unpaid
Group One Reassessments.
Pursuant to the 95-2 Fiscal Agent Agreement, a Reserve Account (Group Two) has been
established for the Group Two Bonds in the amount of the Reserve Requirement (Group Two) (as
defined in the Third Supplemental 95-2 Agreement), presently $[392,191.25]. Transfers will be
made pursuant to the 95-2 Fiscal Agent Agreement from the Reserve Account (Group Two) to the
Redemption Account (Group Two) in the event of a deficiency in the Redemption Account (Group
Two). The amount so advanced will be reimbursed to the Reserve Account (Group Two) from the
proceeds of redemption or sale of the parcel for which payment or reimbursement of any delinquent
Group Two Reassessment was made from the Reserve Account (Group Two). If any Group Two
Reassessment is prepaid before final maturity of the Group Two Bonds, the City is authorized by
the 95-2 Fiscal Agent Agreement to reduce the amount in Reserve Account (Group Two) and
transfer to the Prepayment Account (Group Two) within the Redemption Fund (95-2) an amount in
the proportion in which the Group Two Reassessment prepaid bears to the total original unpaid
Group Two Reassessments.
Pursuant to the 95-2 Fiscal'Agent Agreement, a Reserve Account (Group Three) has been
established for the Group Three Bonds in the amount of the Reserve Requirement (Group Three)
(as defined in the Fourth Supplemental 95-2 Agreement), presently $ Transfers will
be made pursuant to the 95-2 Fiscal Agent Agreement from the Reserve Account (Group Three) to
the Redemption Account (Group Three) in the event of a deficiency in the Redemption Account
(Group Three). The amount so advanced will be reimbursed to the Reserve Account (Group Three)
from the proceeds of redemption or sale of the parcel for which payment or reimbursement of any
delinquent Group Three Reassessment was made from the Reserve Account (Group Three). If any
Group Three Reassessment is prepaid before final maturity of the Group Three Bonds, the City is
authorized by the 95-2 Fiscal Agent Agreement to reduce the amount in Reserve Account (Group
Three) and transfer to the Prepayment Account (Group Three) within the Redemption Fund (95-2)
an amount in the proportion in which the Group Three Reassessment prepaid bears to the total
original unpaid Gi'oup Three Reassessments.
Upon the conversion Of each group of Adjustable Assessment Bonds (95-2) to Fixed Rate
Bonds, and the issuance of any Related Additional Bonds, a reserve account will be established for
such Fixed Rate Bonds and Related Additional Bonds, if any. There will be deposited in each such
reserve account established for each such group of Fixed Rate Bonds so converted and the Related
Additional Bonds, if any, an amount equal to the Reserve Requirement for such group of Fixed
Rate Bonds and Related Additional Bonds, if any; provided, however, in lieu of such deposit there
may be deposited in such reserve account a Reserve Facility in an amount at least equal to such
Reserve Requirement.
DOCSLA1:320644.3
19
Additional Authorit)' Bond.s,
In addition to the Prior Authority Bonds and the Series D Bonds, the Authority may, subject
to the requirements of the Marks-Roos Bond Pooling Act of 1985 (the "Bond Law"), by
Supplemental Indenture establish one or more Series (as defined in the Indenture) of Bonds payable
from the Revenues on a parity with the Prior Authority Bonds and Series D Bonds and secured by a
lien upon and pledge of Revenues equal to the lien and pledge securing the Prior Authority Bonds
and Series D Bonds, and the Authority may issue and the Trustee may authenticate and deliver
Bonds of any Series so established in such principal amount as shall be determined by the
Authority in said Supplemental Indenture, subject to certain conditions set forth in the Indenture,
summarized as follows:
(1) The Authority shall not be in default under the Indenture.
(2) The Bonds of such additional Series shall be payable as to principal annually on
September 2 of each year in which principal falls due. The Bonds of such additional Series shall be
payable as to interest semiannually on March 2 and September 2 of each year excepting the first
year, provided that the first installment of interest may be payable on either March 2 or
September 2 and shall be for a period of not longer than twelve months and that the interest shall be
payable thereafter semiannually on March 2 and September 2.
(3) The Bonds of such additional Series shall be subject to mandatory redemption fi.om
Principal Prepayments received with respect to the Assessment Bonds (95-2) being acquired with
the proceeds of such Bonds, or with respect to the Assessment Bonds (95-2) theretofore acquired
with the proceeds of Outstanding Bonds being refunded with the proceeds of the Bonds of such
additional Series, as applicable, on the dates on which and at the redemption prices at which such
Assessment Bonds (95-2) may be optionally redeemed or mandatorily redeemed fi.om prepayment
of reassessments pursuant to the 95-2 Fiscal Agent Agreement.
(4) Unless such Series of Bonds is being issued solely to refund Outstanding Bonds, a
portion of the proceeds of such Series of Bonds shall be applied to acquire Assessment Bonds
(95-2) pursuant to a Purchase Agreement.
(5)
Agreement.
No default shall have occurred and be continuing under either Fiscal Agent
(6) The aggregate principal amount of Bonds issued under the Indenture shall not
exceed anY limitation imposed by law or by any Supplemental Indenture.
(7)
The Authority shall have filed the following documents with the Trustee:
(a) An opinion of Bond Counsel substantially to the effect that (i) that such
Bond Counsel has examined the Supplemental Indenture and found it to be in compliance with the
requirements of the 'Indenture, (ii) that the execution and delivery of the additional Series of Bonds
has been duly authorized by the Authority, (iii) that said additional Series of Bonds, when duly
- 20
DOCSLA1:320644.3
executed by the Authority and authenticated and delivered by the Trustee, will be valid and binding
special obligations of the Authority, payable from Revenues as provided in the Indenture, and (iv)
that the issuance of such additional Series of Bonds and the application of the proceeds thereof in
accordance with the Supplemental Indenture pursuant to which said additional Series of Bonds is
issued will not adversely affect the exclusion from gross income of interest on the Outstanding
Bonds;
(b)
has been met;
A certificate of the Authority that the requirement of paragraph (1) above
(c)
has been met;
A certificate of the Fiscal Agent that the requirement of paragraph (5) above
(d) A written report of an Independent Financial Consultant demonstrating that
(i) the Revenues attributable to the Assessment Bonds (95-2) being acquired with the proceeds of
such additional Series of Bonds, or attributable to the Assessment Bonds (95-2) theretofore
acquired with the proceeds of Outstanding Bonds being refunded with the proceeds of such
additional Series of Bonds, as applicable, will be sufficient in time and amount to pay when due the
principal of and interest and premium, if any, on such additional Series of Bonds, (ii) upon the
issuance of such additional Series of Bonds, the Revenues will be sufficient in time and amount to
pay when due the principal of and interest and premium, if any, on all Outstanding Bonds, (iii)
upon the issuance of such additional Series of Bonds; the Revenues in each Bond Year will be at
least equal to 120% of the principal of and interest and premium, if any, on all Outstanding Bonds
scheduled to be paid in such Bond Year, (iv) upon the issuance of such additional Series of Bonds,
the Revenues to be generated from assessments levied on property that is, as of the date of such
issuance, Developed Property in each Bond Year will be at least equal to 100% of the principal of
and interest and premium, if any, on all Outstanding Bonds scheduled to be paid in such year, (v)
upon the issuance of such additional Series of Bonds, no more than 15% (or such greater
percentage as is consented to in writing by the Bond Insurer) of the Revenues will be generated
from assessments levied on property owned by the largest assessee (other than Irvine Apartment
Communities) of assessments levied to pay the Assessment Bonds, or by any Affiliate thereof, (vi)
upon the issuance of such additional Series of Bonds, no more than 30% (or such greater
percentage as is consented to in writing by Financial Security) of the Revenues will be generated
from assessments levied on property owned by the five largest assesse~s (other than Irvine
Apartment Communities) of assessments levied to pay the Assessment Bonds, or by any Affiliate
thereof, and (vii) no property, upon which are levied assessments securing the Assessment Bonds
(95-2) being acquired with the proceeds of such additional Series of Bonds, is owned by an owner
of property (A) upon which are levied assessments securing Assessment Bonds theretofore
acquired pursuant to the Indenture, and (B) that is delinquent in the payment of any installment of
an assessment described in clause (A); and
(e) Said Supplemental Indenture, duly executed.
DOCSLA 1:320644.3
21
None of the above limitations or restrictions on the issuance of Additional Bonds will be
applicable to any Additional Bonds which are to be issued solely for the purpose of refunding and
retiring all of a Series of Bonds issued under the Indenture and then Outstanding, and nothing in the
Indenture limits the issuance of any Additional Bonds if, after the issuance and delivery of such
Additional Bonds, none of the Bonds theretofore authorized under the Indenture will be
Outstanding or the Authority shall have discharged the entire indebtedness on all Bonds
Outstanding in one of the ways authorized by the Indenture.
Additional Assessment Bond.s,,
The 95-2 Fiscal Agent Agreement provides that additional Adjustable Assessment Bonds
(95-2) may, and in certain circumstances must, be converted to Fixed Rate Bonds and that Related
Additional Bonds may be issued in connection with the conversion of such Fixed Rate Bonds.
Such Related Additional Bonds, if any, and Fixed Rate Bonds (together, the "Additional 95-2 Fixed
Rate Bonds") would be secured by 95-2 Reassessments on certain parcels (the "Additional 95-2
Fixed Rate Parcels") within Reassessment District No. 95-2 (other than the Group One Designated
Parcels, the Group Two Designated Parcels or the Group Three Designated Parcels) designed by
the City at the time of such conversion to represent such Additional 95-2 Fixed Rate Bonds.
Subject to the provisions of the Indenture, such Additional 95-2 Fixed Rate Bonds could be
purchased by the Authority with the proceeds of Additional Bonds to be issued pursuant to the
Indenture. All Bonds issued under the Indenture, including any such Additional Bonds, are secured
on a parity basis by all Revenues derived from payments to the Authority on all Assessment Bonds.
No additional Assessment Bonds (95-1) may be issued under the 95-1 Fiscal Agent
Agreement and no additional Assessment Bonds (95-2) may be issued upon the security of the
unpaid Group One Reassessments for the Group One Designated Parcels, the unpaid Group Two
Reassessments for the Group Two Designated Parcels or the unpaid Group Three Reassessments
for the Group Three Designated Parcels. See "-Additional Authority Bonds" above and
"APPENDIX A- SUMMARY OF INDENTURE AND FISCAL AGENT AGREEMENTS."
Covenant for Superior Court Foreclosure
If a delinquency occurs in the payment of any Fixed Rate Reassessment installment
securing any Fixed Rate Assessment Bonds, the Fiscal Agent will have a duty only to transfer into
the related Redemption Fund from the Reserve Fund (95-1), Reserve Account (Group One),
Reserve Account (Group Two) or Reserve Account (Group Three) (but only to the extent funds are
available therein) the amount necessary to pay principal of or interest On such Fixed Rate
Assessment Bonds when due. There is no assurance that sufficient funds will be available in the
Reserve Fund (95-1), Reserve Account (Group One), Reserve Account (Group Two) or Reserve
Account (Group Three), as the case may be, for the Assessment Bonds (95-1), Group One Bonds,
Group TWO Bonds or Group Three Bonds, as applicable, for this purpose. The City has
determined, pursuant to Section 8769 of the California Streets and Highways Code, that it will not
obligate itself to advance funds from its treasury to cover any delinquency on the Fixed Rate
Reassessments or payments on the Fixed Rate Assessment Bonds.
DOCSLA1:320644.3
22
The City has covenanted in the Fiscal Agent Agreement that it will within 150 days of a
delinquency in the payment of Fixed Rate Reassessments or any other reassessments levied on any
Additional 95-2 Fixed Rate Parcels ("Additional 95-2 Fixed Rate Reassessments"), or interest
thereon, or amounts to pay the continuing costs of the Bonds, forthwith undertake and diligently
prosecute foreclosure proceedings in the manner prescribed in the Act to collect such delinquent
amounts; provided, however, that if the amount collected in Reassessment District No. 95-1, on the
Group One Designated Parcels or the Group Three Designated Parcels or on any group of
Additional 95-2 Fixed Rate Parcels securing any series of Additional 95-2 Fixed Rate Bonds is
greater than 92.5% of the installment of the 95-1 Reassessments, Group One Reassessments, Group
Three Reassessments or such Additional 95-2 Fixed Rate Reassessments, as the case may be, and
interest thereon, and amounts to pay such continuing costs, to be collected, the City will not be
required to undertake such foreclosure proceedings, unless it is determined that any single property
owner is delinquent in excess of $25,000 in the payment of such amounts in which case it shall
diligently institute, prosecute and pursue such foreclosure proceedings against such property owner
as set forth therein.
Upon the redemption or sale of the real property responsible for such delinquencies, the
City shall deposit in the Reserve Fund (95-1), the Reserve Account (Group One), Reserve Account
(Group Two) or the Reserve Account (Group Three) established with respect to the Group One
Bonds, Group Two Bonds or Group Three Bonds, respectively, or any other reserve account
established with respect to any Additional 95-2 Fixed Rate Bonds, as applicable, from the net
proceeds of such redemption or sale, the amount of any delinquency advanced therefrom pursuant
to the applicable Fiscal Agent Agreement; provided, however, that if and to the extent that any such
deposit would cause the amount on deposit in the Reserve Fund (95-1), Reserve Account (Group
One), Reserve Account (Group Two), Reserve Account (Group Three), or any other reserve
account established with respect to any Additional 95-2 Fixed Rate Bonds, as applicable, to exceed
the applicable reserve requirement, such excess shall be deposited in the applicable Redemption
Fund. The balance, if any, of such redemption or sale proceeds shall be disbursed as set forth in the
judgment of foreclosure or as required by law.
Even though foreclosure is commenced and diligently prOsecuted in accordance with the
city's covenant of foreclosure, neither the City nor the Authority can provide any assurance that, in
the event such foreclosure progresses to the point of a foreclosure sale, there will be any bidder for
the subject parcel or parcels. While assessed valuations would indicate that each of the parcels in
the Fixed Rate Subject Area has sufficient value to assure meaningful bidding at such foreclosure
sale, there is no assurance that such present value will not decline in the future, and neither the City
nor the Authority is obligated to be a bidder at such foreclosure sale. In the absence of any outside
bidder, the foreclosure sale may not produce money to the City in satisfaction of its foreclosure
judgment from which to pay the principal of or the interest on the Assessment Bonds (95-1), Group
One Bonds or Group Three Bonds, as applicable. See "SPECIAL RISK FACTORS."
DOCSLA 1: 320644.3
23
Priority_ of Lien
The unpaid Fixed Rate Reassessments and each installment thereof and any interest and
penalties thereon constitute a lien against each of the respective parcels within the Fixed Rate
Subject Area until the same are paid. Such lien is subordinate to all special assessment liens
previously imposed upon the same property, but has priority over all private liens and over all
special assessment liens which may thereafter be created against the same property. However, such
lien is on a parity with the lien of general property taxes and any special taxes imposed, whether
prior to the date hereof or in the future, against parcels within the Fixed Rate Subject Area pursuant
to the Mello-Roos Community Facilities Act of 1982, as amended (the "Mello-Roos Act"), or other
applicable legislation. While there are no prior special assessment liens on any of the parcels of
land in the Fixed Rate Subject Area, there are liens for special taxes and the rectmSng lien for
general property taxes. See "THE FIXED RATE SUBJECT AREA - Direct and Overlapping Debt
- Table 6" herein.
BOND INSURANCE
[to be updated]
No representation is made by the Authority as to the accuracy or adequacy of the following
information or as to the absence of material adverse changes in such information subsequent to the
date hereof or that the information contained and incorporated herein by reference is correct. The
following information has been furnished by the Bond Insurer for use in this Official Statement.
Reference is made to Appendix D for a specimen of the Series D Bond Insurance Policy.
Series D Bond Insfirance Policy
Concurrently with the issuance of the Series D Bonds, Financial Security Assurance Inc., as
the Bond Insurer, will issue the Series D Bond Insurance Policy. The Series D Bond Insurance
Policy guarantees the scheduled payment of principal of and interest on the Series D Bonds when
due as set forth in the form of the Series D Bond Insurance Policy included as Appendix D to this
Official Statement.
The Series D Bond Insurance Policy is not covered by any insurance security or guaranty
fund established under New York, California, Connecticut or Florida insurance law.
Financial Security Assurance Inc.
The Bond Insurer is a New York domiciled insurance company and a wholly owned
subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings").. Holdings is a New York
Stock Exchange listed company whose major shareholders include White Mountains Insurance
Group, Inc., XL Capital Ltd., The Tokio Marine and Fire Insurance Co., Ltd. and MediaOne
Capital Corporation. The shareholders of Holdings are not liable for the obligations of Financial
Security.
DOCSLA1:320644.3
24
At June 30, 1999, the Bond Insurer's total policyholders' surplus and contingency reserves
were approximately $1,107,636,000 and its total unearned premium reserve was approximately
$621,693,000 in accordance with statutory accounting principles. At June 30, 1999, the Bond
Insurer's total shareholder's equity was approximately $1,137,952,000 and its total net unearned
premium reserve was approximately $520,986,000 in accordance with generally accepted'
accounting principles.
The financial statements included as exhibits to the annual and quarterly reports filed by
Holdings with the Securities and Exchange Commission are hereby incorporated herein by
reference. Also incorporated herein by reference are any such financial statements so filed from the
date of this Official Statement until the termination of the offering of the Series D Bonds. Copies
of materials incorporated by reference will be provided upon request to Financial Security
Assurance Inc., 350 Park Avenue, New York, New York 10022, Attention: Communications
Department (telephone (212) 826-0100).
The Series D Bond Insurance Policy does not protect investors against changes in market
value of the Series D Bonds, which market value may be impaired as a result of changes in
prevailing interest rates, changes in applicable ratings or other causes. The Bond Insurer makes no
representation regarding the Series D Bonds or the advisability of investing in the Series D Bonds.
The Bond Insurer makes no representation regarding the Official Statement, nor has it participated
in the preparation thereof, except that the Bond Insurer has provided to the Authority the
information presented under this caption for inclusion in the Official Statement.
Information regarding the Bond Insurer's Year 2000 compliance program is available at
the Bond Insurer's website, www.fsa, com/y2k.
METHOD OF REASSESSMENT
The total amount of 95-1 Reassessments, Group One Reassessments, Group Two
Reassessments and Group Three Reassessments levied in Reassessment District No. 95-1, and on
the Group One Reassessment Parcels, the Group Two Designated Parcels and the Group Three
Designated Parcels is equal to the principal amounts of the Assessment Bonds (95-1), Group One
Bonds, Group Two Bonds and Group Three Bonds, respectively. Said amount of each
reassessment was calculated for each of the individual parcels of land within the Fixed Rate Subject
Area in proportion to the unpaid existing reassessment on each such parcel.
General -
THE FIXED RATE SUBJECT AREA
In legal proceedings concluded in 1986, the City established Assessment District No. 85-1
("A.D. 85-1"), then comprised of 19 assessed parcels covering a total area of approximately 522
acres. A.D. 85-1 is bounded by the Santa Ana Freeway (Interstate 5), Browning Avenue, Irvine
- 25
DOCSLA 1:320644.3
Boulevard and Jamboree Road. In legal proceedings concluded in 1988, the City established
Assessment District No. 86-2 ("A.D. 86-2" and together with A.D. 85-1,. the "Prior Districts"), then
comprised of 56 assessed parcels coveting a total area of approximately 2,260 acres, 1,440 of which
were within the City boundary and the remaining portion of which were located primarily in an
unincorporated area of the County (to the northeast of the City), with a small portion of A.D. 86-2
falling within the southeastern border of the City of Orange. A.D. 86-2 is bounded by Irvine
Boulevard, Tustin Ranch Road, Santiago Canyon Road, and Jamboree Road. In August, 1986, the
City issued $50,650,000 principal amount of variable rate improvement bonds for A.D. 85-1, and in
September, 1988, the City issued $81,400,000 principal amount of variable rate improvement
bOnds for A.D. 86-2 (collectively, the "Prior Variable Rate Bonds"). The proceeds of both issues
have been used to fund the design and construction of public improvements within the Prior
Districts, including streets and other traffic access and control facilities, drainage facilities, and
utility improvements.
The respective Indentures of Trust (collectively, the "Prior Indentures") pursuant to which
the Prior Variable Rate Bonds were issued each provided for the conversion of a portion of the
Prior Variable Rate Bonds to fixed rate bonds (collectively, the "Prior Fixed Rate Bonds") upon the
occurrence of certain events prescribed by the Prior Indentures (primarily, the transfer of title by
The Irvine Company, the owner of substantially all of the assessed property at the time of issuance
of the Prior Variable Rate Bonds, to third parties with respect to portions of the assessed property).
The Prior Indentures and related legal documents for the Prior Districts also provided for
conversion to a fixed rate of the unpaid assessments on those certain parcels (the "Prior Fixed Rate
Parcels"), the conveyance of which caused the conversion of the subject portion of the Prior
Variable Rate Bonds into the Prior Fixed Rate Bonds. Reassessment District 95-1 consists of all
Prior Fixed Rate Parcels from the Prior Districts which had an unpaid reassessment. The 95-1
Reassessments were levied within Reassessment District No. 95-1 by the City Council under the
proceedings taken pursuant to Resolution No. 96-8, adopted by the City Council on January 15,
1996. Reassessment District No. 95-2 consists of all those parcels fi'om the Prior Districts which
had an unpaid reassessment securing Prior Variable Rate Bonds that had not been so converted to
Prior Fixed Rate Bonds. The 95-2 Reassessments were levied on the parcels in Reassessment
District No. 95-2 by the City Council under the proceedings take pursuant to Resolution No. 96-10,
adopted by the City Council on January 15, 1996. The Group Three Designated Parcels consist
only of those parcels in Reassessment District No. 95-2, the assessments on which are now being
converted to fixed assessments.
Status of Public Improvements Designated Parcels
The public improvements financed with the proceeds of the Prior Bonds are substantially
complete.
The only remaining improvements necessary to enable the remaining undeveloped property
in the Fixed Rate Subject Area to be developed are in-tract improvements to certain specific parcels
which will be the responsibility of the developer' of such specific parcel or parcels. Examples of
such in-tract improvements are local streets; curb, gutters and sidewalk; traffic control signage and
- 26
DOCSLA 1:320644.3
striping; street lights; landscaping; water distribution lines and appurtenances; sanitary sewer
laterals,' collection lines and appurtenances; and underground gas, electric, telephone and cable
television facilities.
With the exception of school facilities to be developed by the Tustin Unified School
District, no additional major infrastructure such as arterial streets, parks, fire stations, or libraries
are required or anticipated for the full development of the remaining undeveloped property in the
Fixed Rate Subject Area, although as of June 30, 1999, $3,736,919 in proceeds of the Prior Bonds
(including interest earnings) remain in the construction fund established with respect to such Prior
Bonds. The City expects to expend the remaining proceeds of the Prior Bonds over the next several
years to complete an interchange at the junction of Tustin Ranch Road and Interstate 5 and certain
other minor street improvements. Neither completion of such street improvements nor construction
of such 'school facilities is a condition precedent to issuance of building permits for any of the
remaining undeveloped property in the Fixed Rate Subject Area.
Location and Terrain of the Fixed Rate Subject Area
The City is located in central Orange County, about 40 miles southeast of Los Angeles and
80 miles north of San Diego. The City spans approximately 11.2 square miles and adjoins the
cities oflrvine, Orange and Santa Ana.
The combined area of the ReaSsessment Districts, of which the Fixed Rate Subject Area is a
part, is approximately 2,782 acres and is located along the east side of the City, extending generally
in a southwest-to-northeast band approximately 3/4ths of a mile wide, from the Santa Ana Freeway
(Interstate 5) to Santiago Canyon Road, a distance of approximately 6 miles. The terrain is
relatively flat, extending gently uphill toward the northeast, and transitioning to gently rolling hills
in the last mile.
Land Uses and Development Status
The following Table 1 illustrates the land use categories of the parcels in the Fixed Rate
Subject Area. As used in Table 1, the term "developed" means that at least one structure has been
constructed on the parcel, which has been assigned improvement assessed value by the County
Assessor. The developed portion of the Fixed Rate Subject Area represents approximately 82.5%
of the unpaid Fixed Rate Reassessments. The information in Table 1 reflects the County's
1999-2000 property ownership records. However, additional development has occurred in the
Fixed Rate Subject Area since the County's records were last updated. See "Stares of
Development'' below for a description of such additional development.
DOCSLA 1:320644.3
27
TABLE 1
CITY OF TUSTIN
Fixed Rate Subject Area
Parcel Totals For Each Modified Land Use
[to be further revised]
Total Total Reassessment
Parcels Value(~) Amount(2)
Developed Residential 4,968
Developed Commercial 10
Developed Other 2
Undeveloped Residential 261
Undeveloped Commercial 1
Undeveloped Other 12
$1,303,180,714 $33,391,914
24,738,261 2,000,696
8,855,753 62,841
24,026,544 3,755,795
2,189,839 135,522
22,349,316 3,633,849
Percent of
Value- Total
to-Lien Reassessment
39.O3 77.69%
12.36 4.65
140.92 0.15
6.40 8.74
16.16 0.32
6.15 8.45
TOTAL 5,254 $1,385,340,427 $42,980,618 32.23 100.00%
Source: MBIA MuniFmancial, Inc.
(1) Based on County of Orange 1999-2000 secured roll.
(2) Includes September 2, 2000 principal.
Largest Landowners by Reassessment Amount
The following Table 2 illustrates the 17 largest landowners in the Fixed Rate Subject Area,
as measured by total Fixed Rate Reassessment levied on property owned by such landowner. All
other parcels in the Fixed Rate Subject Area are single family residences. The information in
Table 2 reflects the County's 1999-2000 property ownership records. However, a number of the
parcels shown on the following table have been sold to other entities and to individual
homeowners, and additional development has occurred in the Fixed Rate Subject Area since the
County's records were last updated. See "Stares of Development" below for a description of
current development in the Fixed Rate Subject Area.
DOCSLA 1:320644.3
28
TABLE 2
CITY OF TUSTIN
Fixed Rate Subject Area
Top 17 Owners by Fixed Rate Reassessment Amount
Property O~xmer
Percent
of Total
Total Total Assessed Remaining/Proposed Value- Remaining
Parcels Value(~) Reassessment(2) to-Lien Reassessment
Irvine Community Development Company(3) 147
Sanderson J. Ray-Tustin Ranch Plaza 4
Irvine Apartment Communities, L.P.® 8
Richmond American Homes of California(3) 67
WL Homes LLC 57
Kaufman & Broad Coastal Inc. 57
Sanyo Foods Corporation of America 14
Ballesteros Property Inc. 6
Standard Pacific Corp. 10
Warmington Trust Associates L.P. 26
Salvation Army 2
The Upper Room Church 1
B'nai Israel 1
Baywood Homes-Tustin 19
Venturanza Del Verde LLC 9
Catellus Residential-Tustin 11 LLC 7
Tustin Congregation of Jehovah's Witness 1
$ 8,209,727.00 $5,472,514.95 1.50 12.73%
6,654,308.00 1,560,326.09 4.26 3.63
34,933,276.00 1,206,026.98 28.97 2.81
13,812,567.00 1,155,809.35 11.95 2.69
14,676,359.00 723,393.53 20.29 1.68
6,306,681.00 536,561.86 11.75 1.25
35,728,033.00 319,515.52 111.82 0.74
2,065,070.00 277,945.45 7.43 0.65
1,943,000.00 266,646.50 7.29 0.62
5,724,943.00 246,997.68 23.18 0.57
7,220,512.00 205,857.27 35.08 0.48
2,189,839.00 135,521.86 16.16 0.32
2,639,589.00 129,239.13 20.42 0.30
2,926,029.00 124,561.09 23.49 0.29
1,613,712.00 79,412.97 20.32 0.18
698,344.00 59,765.18 11.68 0.14
2,023,852.00 54,915.07 36.85 0.13
TOTAL 436 $149,365,841.00 $12,555,010.48 11.90 0.91%
Source: MBIA MuniFinancial, Inc.
(1) Based on County of Orange 1999-2000 secured roll.
(2) Includes September 2, 2000 principal.
(3) Includes Group Three Designated Parcels. The Group Three Designated Parcels are consisted of 12 of the 147 parcels
owned by Irvine Commumty Development Company, 58 of the 67 parcels owned by Richmond American Homes of
California and 28 parcels owned by individual property owners not included in Table 2. The Group Three Designated
Parcels have a total assessed value of $4,955,000, a combined value-to-lien ratio of 4.98, and represent 0.36% of the total
.remaining reassessment.
(4) Irvine Apartment Communities, L.P. is a related entity to Irvine Community Development Company.
DOCSLA 1:320644.3
29
Debt Service Coverage
The following Table 3 illustrates the estimated coverage for debt service on the Series A
Bonds, Series B Bonds, Series C Bonds and the Series D Bonds fi-om Revenues, consisting of the
debt service on the Fixed Rate Assessment Bonds.
TABLE 3
CITY OF TUSTIN
Fixed Rate Subject Area
Estimated Debt Service Coverage from Revenues
Bond
Year
Total
Revenues
Series A, B, and C
Bond Debt Service..
Series D Bond
Debt Service.*
Total Bond
Debt Service*
2000 $ 5,385,863 $ 3,799,298 $ 500,113 $ 4,299,410
2001 5,383,622 3,799,793 497,200 4,296,993
2002 5,390,434 3,798,145 496,265 4,294,410
2003 5,384,175 3,799,710 499,505 4,299,215
2004 5,389,843 3,794,770 496,673 4,291,443
2005 5,385,397 3,793,630 498,100 4,291,730
2006 5,390,429 3,799,890 498,380 4,298,270
2007 5,387,894 3,797,625 497,635 4,295,260
2008 5,381,977 3,796,570 495,835 4,292,405
2009 5,386,452 3,798,538 497,950 4,296,488
2010 5,383,868 3,797,085 498,893 4,295,978
2011 5,382,999 3,802,094 497,225 4,299,319
2012 4,074,246 2,754,070 499,488 3,253,558
2013 4,073,720 2,755,200 500,413 3,255,613
$72,780,919 $51,086,416 $6,973,673 $58,060,089
Total
Estimated
Coverage*
1.25
1.25
1.26
1.25
1.26
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
* Preliminary; subject to change.
30
DOCSLA1:320644.3
Delinquency History
As of September 10, 1999 the total delinquencies in the Fixed Rate Subject Area, from all
previous fiscal years were $[581,521.31 ] in [352] separate parcels.
The following Table 4 illustrates the historical Fixed Rate Reassessment delinquency for
parcels included in the Fixed Rate Subject Area. All of the delinquencies indicated are attributable
to parcels within Reassessment District No. 95-1 and, following the issuance of the Group One
Bonds in November 1997, to the Group One Designated Parcels. Until recently, all of the Group
Three Designated Parcels were owned by The Irvine Company. There have been no delinquencies
with respect to the payment of assessments or reassessments on the Group Three Designated
Parcels.
Fiscal
Year
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
TABLE 4
CITY OF TUSTIN
Fixed Rate Subject Area
Assessment and Reassessment Installment
Delinquencies for Fiscal Years 1990-91 through 1999-2000
[to be further verified]
Parcels Amount Amount '% of Amount
Parcels Delinquent Levied Delinquent Delinquent
1,918 0 $3,569,329.64 $ 0 0.00%
2,824 3 4,386,679.44 77,063.00 1.76
2,833 6 4,356,611.74 74,168.00 1.70
3,287 21 4,991,716.82 91,040.00 1.82
3,613 232 5,377,882.60 290,077.00 5.39
3,985 11 5,354,888.50 9,951.00 0.19
4,233 17 4,028,451.10 11,500.51 0.29
4,526 1 3,581,836.58 791.22 0.02
4,727 48 4,054,524.08 26,930.58 0.66
5,254 N/A 4,549,043.22 N/A N/A
Source: MBIA MuniFinancial, Inc.
DOCSLA 1:320644.3
31
Estimated Value-to-Lien Ratios
According to the County's 1999-2000 property ownership records, there were
approximately 5,254 separate parcels in the Fixed Rate Subject Area, both developed and
undeveloped. These parcels (including improvements, where developed) had a total assessed value
of $1,385,340.6. Total Fixed Rate Reassessments of $42,980,617.60 secure the Fixed Rate
Assessment Bonds. This provides an overall value-to-lien ratio of approximately 32.23 to 1.
The following Table 5 illustrates the breakdown, by category of value-to-lien range, of the
total number of parcels and the corresponding total Fixed Rate Reassessment amounts attributable
thereto.
TABLE 5
CITY OF TUSTIN
Fixed Rate Subject Area
Totals by Value-to-Lien
1999-2000 Fixed Rate
No. of Total Reassessment
Value-to-Lien Parcels Assessed Value(~) Amount(2) .% of Total
30:1 and Above 4,027 $1,122,081,745 $24,622,105.38 57.29%
25:1 - 29.99:1 542 162,607,029 5,844,790.00 13.60
20:1 - 24.99:1 312 52,533,282 2,279,026.46 5.30
15:1- 19.99:1 77 16,806,044 944,192.65 2.20
10:1 - 14.99:1 95 13,241,769 1,017,856.21 2.37
5:1- 9.99:1 49 8,181,350 1,167,507.28 2.72
3:1- 4.99:1 25 6,310,895 1,513,640.75 3.52
1:1- 2.99:1 89 1,323,375 1,204,038.46 2.80
Less than 0.99:1 38 2,254,938 4,387,460.30 10.21
TOTAL 5,254 $1,385,340,427
$42,980,617.60
oo.oo%
Source: MBIA MuniFinancial, Inc.
(1) Based on County of Orange 1999-2000 secured roll.
(2) Includes, September 2, 2000 principal.
Neither the value-to-lien calculations nor the total reassessment amounts include parity
obligations for CFD No. 88-1 and for general property taxes.
DOCSLA1:320644.3
32
Direct and Overlapping Debt
Community_ Facilities District No. 88-1
The Tustin Unified School District has formed its Community Facilities District No. 88-1
("CFD No. 88-1") pursuant to the Mello-Roos Act, encompassing a major portion of the land
within the Reassessment Districts, to provide financing for school facilities. CFD No. 88-1 initially
authorized the issuance of bonded debt (the "Mello-Roos Bonds") in the amount of $103 million
and the levy of special taxes against the property in CFD No. 88-1 to pay for debt service on the
Mello-Roos Bonds, for certain costs of providing school facilities and sites, and for related
incidental expenses. CFD No. 88-1 has since reduced the initial authorization of Mello-Roos
Bonds to $63,000,000, not inclusive of additional amounts incidental to a refunding of such
indebtedness. After the issuance of $64,615,000 Mello-Roos Bonds by CFD No. 88-1 on
October 23, 1998, there is no remaining authorization against which CFD No. 88-1 may issued
additional bonds. The lien securing payment of the special taxes to be levied fi.om year to year
upon the parcels Within CFD No. 88-1 will be on a parity with the lien securing payment of the
Fixed Rate Reassessments. See "SECURITY FOR THE BONDS - Priority of Lien" herein.
Property within CFD No. 88-1 for which no building permit has been issued is, for purposes
of the special tax formula, determined to be undeveloped property. Residential property within
CFD No. 88-1 for which a building permit has been issued is, for purposes of the special tax
formula, determined to be developed property. The special tax on developed property within CFD
No. 88-1 is a function of the density of the development. Based on current development plans, for
fiscal year 1999-2000, the minimum special tax that may be levied on residential units in any
particular parcel within the Fixed Rate Subject Area is $1,148.43 per unit, and the maximum
special tax that may be levied on residential units in any particular parcel within the Fixed Rate
Subject Area is $1,320.70 per unit.
For fiscal years 1999-2000 and thereafter, the special tax formula for CFD No. 88-1
specifies that, subject to the. exceptions stated therein, the special tax will be levied only in an
amount necessary to insure payment of debt service on the outstanding Mello-Roos Bonds issued
through fiscal year 1999-2000. Commencing in fiscal year 1999-2000, the special tax on residential
property may be increased by four percent every year, if required. The final maturity of the
currently outstanding Mello-Roos Bonds is September 1, 2024. Because the amount of the special
tax levy on a particular parcel in CFD No. 88-1 in any year will vary not only based on the status of
the remaining parcels as developed or undeveloped property, but also based on the density of the
remaining parcels that are developed property, such parcel's proportionate share of the obligations
of CFD No. 88-1 cannot be determined with certainty prior to development of all of the property in
CFD No. 88-1. Prior to such time, the most meaningful figure for ascertaining the burden that may
be imposed on a parcel in any year for CFD No. 88-1 obligations is probably the amount of the
maximum special tax that may be levied on such parcel.
DOCSLA 1:320644.3
33
Irvine Ranch Water District
As shown on Table 6, the Irvine Ranch Water District ("IRWD") has created two
improvement districts, I.D. No. 105 and I.D. No. 250 (collectively, the "IRWD Improvement
Districts"), that overlap the Reassessmem Districts. IRWD has sold bonds on behalf of I.D. No.
105 to provide regional and local water supply, storage, transmission and distribution facilities to
serve residential and commercial development in such improvement districts. IRWD has sold
bonds on behalf of I.D. No. 250 to provide reclaimed water supply and sewage collection, treatment
and disposal facilities for residential and commercial development within such improvement
districts. In addition to the outstanding bonded debt of approximately $107 million reflected on the
following schedule, the two IRWD Improvement Districts have a total of approximately $324.5
million in authorized but unissued bonded debt. The Fixed Rate Subject Area's share of
outstanding debt of the two IRWD Improvement Districts is approximately $40 million. The Fixed
Rate Subject Area's share of the authorized but unissued debt of the two IRWD Improvement
Districts is approximately $121 million. The IRWD Improvement District's Bonds are general
obligation bonds payable from ad valorem taxes; the mount of the tax levy on each parcel is based
on the asseSsed valuation of the land only. If, as property is developed and sold within the Fixed
Rate Subject Area, and the assessed valuation of such parcels increases disproportionately to other
parcels in the IRWD Improvement Districts, then Such parcels' share of the debt of the IRWD
Improvement Districts would increase.
The City cannot predict the amount of authorized but unissued bonds for the IRWD
Improvement Districts that will ultimately be issued by IRWD, nor can it predict when such debt
would be issued or the debt service payments thereon.
Estimated Debt
Set forth in Table 6 is the existing authorized indebtedness payable from taxes and
assessments that may be levied on property within the Fixed Rate Subject Area. No additional
Fixed Rate Assessment Bonds can be issued upon the security of the unpaid Fixed Rate
Reassessments for the Fixed Rate Subject Area. However, other public agencies may issue
additional indebtedness on property within the Fixed Rate Subject Area at any time. See
"SECURITY FOR THE BONDS - Profity of Lien."
DOCSLA 1:320644.3
34
TABLE 6
CITY OF TUSTIN
Fixed Rate Subject Area
Direct and Overlapping Debt
1999-2000 Assessed Valuation: $1,386,618,518
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT'
Orange County Teeter Plan Obligations
Metropolitan Water District
Irvine Ranch Water District, I.D. No. 105
Irvine Ranch Water District, I.D. No. 250
City of Tustin Reassessment District No. 1995-1
City of Tustin Reassessment District No. 1995-2
Tustin Unified School District Community Facilities District No. 1988-1
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND OBLIGATION DEBT'
Orange County General Fund Obligations
Orange County Pension Obligations
Orange County Transit Authority
Municipal Water District of Orange County Water Facilities Corporation
South Orange County Community College District Certificates of Participation
City of Tustin Water Corporation
Irvine Ranch Water District Certificates of Participation
Orange County Water District Certificates of Participation
Orange County Sanitation District No. 14 Certificates of Participation
TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT
Less: Orange County Transit Authority (80% self-supporting)
Municipal Water District of' Orange County Water Facilities Corporation
City of Tustin Water Corporation
Orange County Water District Certificates of Participation
TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT
Debt
% Applicable 12/1/99
0.739% $ 963,102
0.156 901,735
37.200 16,714,732
37.321 23,117,803
100. 29,960,000
100. 6,885,000(!)
100. 63,915,000
$142,457,372
0.739% $ 7,876,292
0.739 2,228,591
0.739 90,860
1.110 713,730
1.895 892,924
33.822 1,258,296
5.359 3,001,040
1.259 2,312,783
8.419 140,261
$ 18,514,777
72,688
713,730
608,796
2,312,783
$ 14,806,780
GROSS COMBINED TOTAL DEBT
NET COMBINED TOTAL DEBT
Ratios to 1999-2000 Assessed Valuation
Direct Debt ($6,885,000) ...................................................................... 0.50%
Total Direct and Overlapping Tax and Assessment Debt .................. 10.27%
Gross Combined Total Debt ............................................................... 11.61%
Net Combined Total Debt ................................................................... 11.34%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/99:$0
Source: California Municipal Statistics, Inc.
$160,972,149(2)
$157,264,152
(1) Excludes Group Three Bonds.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital
lease obligations.
DOCSLA1:320644.3
35
Status of Development
Active residential development within the Fixed Rate Subject Area, along with a
description of each of the developers actively developing at the present time within the Fixed Rate
Subject Area, is set forth below. Other residential developments within the Fixed Rate Subject
Area have been completed, and all homes planned for construction in such developments have been
sold to homebuyers.
EXCEPT AS OTHERWISE INDICATED, THE OWNERS OF THE PROPERTY
WITHIN THE FIXED RATE SUBJECT AREA HAVE PROVIDED THE FOLLOWING
INFORMATION REGARDING OWNERSHIP AND PLANNED DEVELOPMENT OF FIXED
RATE SUBJECT AREA. NO ASSURANCE CAN BE GIVEN THAT THE PLANNED
DEVELOPMENT WILL OCCUR OR THAT THE PLANNED DEVELOPMENT WILL OCCUR
IN A TIMELY MANNER. NO REPRESENTATION IS MADE AS TO THE ACCURACY OR
ADEQUACY OF SUCH INFORMATION PROVIDED BY THE PROPERTY OWNERS.
The table below summarizes certain information regarding the planned residential
development that is currently under construction in the Fixed Rate Subject Area:
TABLE 7
CITY OF TUSTIN
Fixed Rate Subject Area
Active Planned Residential Development
Density and Selling Prices
as of October 1, 1999
Builder Development
Rielly Homes Venturanza del
Verde
Kaufman & Sedona
Broad, Inc.
John Laing Madrid
Homes
Brookfield Emerson
Homes
Warmington Treviso
Homes
Standard Pacific Tustin Ranch
Homes Estates
Total
Total Building Total
Planned Permits Units
Units Issued(') Sold(2)
[192] (3)
[130]
Selling Price
Range
(3) Based on City of Tustin records as of~
(2) Closed escrow.
(3) For . units.
,1999.
- 36
DOCSLA1:320644.3
Rielly Homes. Rielly Homes ("Rielly") owns approximately ~ acres within the Fixed
Rate Subject Area which are approved for construction of condominium units for sale to
homebuyers in a development known as "Venturanza del Verde." As of October __, 1999,
according to City records, the City had issued building permits for construction of
condominiums included in the Venmranza del Verde development. As of October , 1999,
construction of~ units have been completed and ~ of such condominiums have been sold to
homeowners.
Rielly reports that the homes are currently planned to range from 1,116 to 1,865 square feet,
and to sell at prices ranging from $ to $
Kaufman & Broad. Kaufrnan & Broad ("K&B") owns approximately ~ acres within the
Fixed Rate Subject Area which are approved for construction of~ single family detached
residential units for sale to homebuyers in a development known as "Sedona." As of October __,
1999, according to City records, the City had issued__ building permits for construction of homes
included in the Sedona development. As of October __, 1999, construction of~ of such units
have been completed.and __ of such houses have been sold to homeowners.
K&B reports that the homes are currently planned to range from 1,901 to 2,392 square feet,
and to sell at prices ranging from approximately $ to $
Laing. John Laing Homes ("Laing") owns approximately ~ acres within the Fixed
Rate Subject Area which are approved for construction of__ single family detached residential
units for sale to homebuyers, in a development known as "Madrid." As of October __, 1999,
according to City records, the City had issued __ building permits for construction of single
family detached residential units included in the Madrid development. As of October ,1999,
construction of~ of such units have been completed and units have been sold to
homeowners.
Laing reports that the homes are currently planned to range from 2,598 to 4,200 square feet,
and to sell at prices ranging from $ to $
Brookfield. Brookfield Homes ("Brookfield") is constructing homes on approximately
~ acres within the Fixed Rate Subject Area which are approved for construction of single
family detached residential units for sale to homebuyers, in a development known as "Emerson."
As of October __, 1999, according to City records, the City had issued ~ building permits for
construction of the homes included in the Emerson development. As of October ~, 1999,
construction of of such units have been completed and units have been sold to
homeowners.
Brookfield reports that the Emerson units ranged from 3,280 to 4,083 square feet, and sold
at prices from $ to $
DOCSLA1:320644.3
37
Warmington. Warmington Homes California ("Warmington") is constructing homes on
approximately ~ acres within the Fixed Rate Subject Area which are approved for construction
of~ single family detached residential units for sale to homebuyers, in a development known as
"Treviso." As of October __, 1999, according to City records, the City had issued ~ building
permits for construction of the homes included in the Treviso development As of October ~,
1999, construction of~ of such units have been completed and ~ units have been sold to
homeowners.
Warmin~°n reports that the Treviso units ranged from 3,430 to 4,458 square feet, and sold
at prices from $ to $
Standard Pacific. Standard Pacific Homes ("Standard Pacific") is constructing homes on
approximately ~ acres within the Fixed Rate Subject Area which are approved for construction
of__ single family detached residential units for sale to homebuyers, in a development known as
"Tustin Ranch Estate." As of October __, 1999, according to City records, the City had issued __
building permits for construction of the homes included in the Tustin Ranch Estate development.
As of October ,1999, construction of of such units have been completed and__ units have
been sold to homeowners.
Standard Pacific reports that the Tustin Ranch Estate units ranged fi'om 3,950 to 5,145
square feet, and sold at prices fi'om $ to $
[The majority of the parcels owned by the merchant builders described above are vacant.]
The above description of development is based on information provided to the City by the
merchant builders referred to above. Except to the limited extent indicated above, neither such
merchant builders nor any other purchaser or potential purchaser of any portion of the Fixed Rate
Subject Area has provided the City or the Authority with any information about its development
plan, its financing for such plan, its experience or its abilities, nor have such merchant builders or
any other such purchaser or potential purchaser participated in any other way in the issuance of the
Group Three Bonds or the Series D Bonds. Furthermore, neither the City nor the Authority has
made, nor will make, any investigation of such merchant builders or any other purchaser or
potential purchaser of portions of the property within the Fixed Rate Subject Area. Therefore, no
representation is made herein as to the experience, abilities or financial resources of such merchant
builders or any other such purchasers or pOtential purchasers or as to the likelihood that such
merchant builders or any other such purchasers or potential purchasers will be successful in
developing the purchased portions of the Fixed Rate Subject Area. Purchasers of the Series D
Bonds should not assume that such merchant builders or any other persons or entities that purchase
portions of the Fixed Rate Subject Area from The Irvine Company will have the experience,
abilities or financial resources necessary to successfully develop such property beyond the stage of
development reached by The Irvine Company.
DOCSLA1:320644.3
38
SPECIAL RISK FACTORS
The following information should be considered by prospective investors in evaluating the
Series D Bonds. However, it does not purport to be an exhaustive listing of the risks and other
considerations which may be relevant to an investment in the Series D Bonds. In addition, the
order in which the following information is presented .is not intended to reflect the relative
importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could
delay or preclude payment of principal of or interest on the Series D Bonds or both.
The Bonds are Limited Obligations of the Authorit~,
Funds for the payment of the principal of and the interest on the Series D Bonds are derived
from debt service payments on the Fixed Rate Assessment Bonds which are derived only from
annual Fixed Rate Reassessment installments. While a modest coverage factor has been
established in structuring the annual debt service on the Fixed Rate Assessment Bonds (see "THE
FIXED RATE SUBJECT AREA - Debt Service Coverage - TABLE 3" herein), the amount of
annual Fixed Rate Reassessment installments that are collected by the City could be insufficient to
pay principal of and interest on the Fixed Rate Assessment Bonds due to non-payment of such
annual Fixed Rate Reassessment installments levied or due to insufficient proceeds received from a
judicial foreclosure sale of land within the Fixed Rate Subject Area following delinquency. The
City's legal obligations with respect to any delinquent Fixed Rate Reassessment installments are
limited to (1) payments from the Reserve Fund (95-1), Reserve Account (Group One), Reserve
Account (Group Two) or Reserve Account (Group Three) (depending on the location of the
delinquent parcel) to the extent of funds on deposit therein, and (2) the institution of judicial
foreclosure proceedings with respect to any parcels for which the Fixed Rate Reassessment
installment is delinquent (see "SECURITY FOR THE BONDS- Covenant for Superior Court
Foreclosure" herein). The City has determined that it will not obligate itself to advance funds from
its treasury to cover any delinquency'on the Fixed Rate Reassessments or payments on the Fixed
Rate Assessment Bonds. The Series D Bonds cannot be accelerated in the event of any default.
,The Reassessments are Not Personal Obligations of the Properly Owners
Under the provisions of the Act, Fixed Rate Reassessment installments will be billed to the
owner of each parcel in the Fixed' Rate Subject Area against which there is an unpaid Fixed Rate
Reassessment, such billing to be made on the regular property tax bills sent to such owners. Such
Fixed Rate Reassessment installments are due and payable at the same time and bear the same late
charges and penalties as for non-payment of regular property tax installments. '
The obligation to pay Fixed Rate Reassessment installments does not constitute a personal
obligation of the current or subsequent owners of the respective parcels which are subject to the
Fixed Rate Reassessment liens. Enforcement of Fixed Rate ReasSessment payment obligations by
the City is limited to judicial foreclosure in the Orange County Superior Court pursuant to Sections
8830 et seq. of the California Streets and Highways Code. There is no assurance that any current or
subsequent owner of a parcel subject to a Fixed Rate Reassessment lien will be able to pay the
39
DOCSkA 1:320644.3
Fixed Rate Reassessment installments or that such owner will choose to pay such installments even
though financially able to do so.
The Assessment Bonds are Limited Obligations of the City_
The obligation of the City, as issuer of the Fixed Rate Assessment Bonds, to advance the
amount of delinquencies to the Trustee, as the registered holder of the Assessment Bonds, is strictly
limited to funds on deposit in the Reserve Fund (95-1), Reserve Account (Group One), Reserve
Account (Group Two) or Reserve Account (Group Three) established and held by the City pursuant
to the respective Fiscal Agent Agreements.. Pursuant to Section 8769 of the California Streets and
Highways Code, the City has expressly elected not to obligate itself to advance available funds
from the City's treasury to make up deficiencies in the amount of Fixed Rate Reassessment
installments collected.
Sustained failure by property owners to pay Fixed Rate Reassessment installments when
due, combined with depletion of the Reserve Fund (95-1), Reserve Account (Group One), Reserve
Account (Group Two) or Reserve Account (Group Three), or all four, and the inability of the City
to sell parcels which have become subject to judicial foreclosure proceedings for amounts sufficient
to cover the delinquent 'Fixed Rate Reassessment installments, will most likely result in the
inability of the City to make full or punctual payments of interest on or principal of the Assessment
Bonds (95-1), the Group One Bonds, the Group Two Bonds or the Group Three Bonds, or all four,
which could result in a default on the Fixed Rate Bonds.
Bankruptcy
The payment of Fixed Rate Reassessment installments and the ability of the City to
foreclose the lien of a delinquent Fixed Rate Reassessment is normally delayed by and may be
limited in other ways by bankruptcy, insolvency, or other laws generally affecting creditors' rights
or by State law relating to judicial foreclosure. In addition, the prosecution of a judicial foreclosure
may be delayed due to congested local court calendars or procedural delays.
The various legal opinions to be delivered concurrently with the delivery of the Series D
Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability
of the various legal instruments, including the Series D Bonds, by bankruptcy, reorganization,
insolvency or other similar laws affecting the rights of creditors generally.
Although bankruptcy proceedings would not cause the Reassessments to become
extinguished, bankruptcy of a property owner could result in a delay in prosecuting judicial
foreclosure proceedings and could result in delinquent Fixed Rate Reassessment installments not
being paid in full. Such a delay would increase the likelihood of a delay or default in payment of
the principal of and interest on the Series D Bonds.
DOCSLA1:320644.3
4O
Payments by FDIC
The ability of the City to collect Fixed Rate Reassessment installment and interest and
penalties specified by state law, and to foreclose the lien of delinquent Fixed Rate Reassessment
installment, may be limited in certain respects with regard to properties in which the Federal
Deposit Insurance Corporation (the "FDIC") or other similar federal governmental agencies has or
obtains an interest. On June 4, 1991, the FDIC issued a Statement of Policy Regarding the
Payment of State and Local Property Taxes (the "1991 Policy Statement"). The 1991 Policy
Statement was revised and superseded by new Policy Statement effective January 9, 1997 (the
"Policy Statement"). The Policy Statement provides that real property owned by the FDIC is
subject to state and local real property taxes only if those taxes are assessed according to the
property's value, and that the FDIC is immune from real property taxes assessed on any basis other
than property value. According to the Policy Statement, the FDIC will pay its property tax
obligations when they become due and payable and will pay claims for delinquent property taxes as
promptly as is consistent with sound business practice and the orderly administration of the
institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The
FDIC will pay claims for interest' 6n delinquent property taxes owed at the rate provided under state
law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay
any amounts in the nature of fines or penalties and will not pay nor recognize liens for such
amounts. If any property taxes (including interest) on FDIC owned property are secured by a valid
lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims.
The Policy Statement further provides that no property of the FDIC is subject to levy, attachment,
garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit
a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's
consent.
The Policy Statement states that the FDIC generally will not pay non ad valorem taxes,
including special assessments, on property in which it has a fee interest unless the amount of tax is
fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the
validity of any lien to the extent it purports to secure the payment of any such amounts. Special
taxes imposed under the Act and a special tax formula which determines the special tax due each
year, are specifically identified in the Policy Statement as being imposed each year and therefore
covered by the FDIC's federal immunity. With respect to property in California owned by the
FDIC on January 9, 1997 and that was owned by.the RTC on December 31, 1995, or that became
the property of the FDIC through foreclosure of a security interest held by the RTC on that date, the
FDIC will continue the RTC's prior practice of paying special taxes imposed pursuant to the Mello-
Roos Act if the taxes were imposed prior to the RTC's acquisition of an interest in the property.
All other special taxes may be challenged by the FDIC.
The FDIC has filed claims against the County in the United States Bankruptcy Court
contending, among other things, that special taxes are not ad valorem taxes, and, therefore, special
taxes levied after the FDIC is appointed as receiver are not payable by the FDIC, and to the extent
previously paid bY the FDIC must be refunded. The Banlmtptcy Court ruled in favor of the FDIC's
positions and, on March 22, 1999, the United States Bankruptcy Appellate Panel of the Ninth
- 41
DOCSLA1:320644.3
Circuit affirmed the decision of the Bankruptcy Court. The County has appealed such ruling to the
United States Court of Appeals for the Ninth Circuit and the FDIC has cross-appealed. The Ninth
Circuit has not yet issued a ruling on the matter. Based upon the secured tax roll as of January 1,
1999, the FDIC was not listed as the owner of any of the property in the Reassessment District No.
95-1 and Reassessment District No. 95-2.
Neither the Authority nor the City is able to predict what effect the application of the Policy
Statement would have in the event of a delinquency with respect to a parcel in the Fixed Rate
Subject Area in which the FDIC has or obtains an interest, although prohibiting the lien on the
FDIC-owned property to be foreclosed on at a judicial foreclosure sale would prevent the sale of
such a parcel at a foreclosure sale. Owners of the Series D Bonds should assume that the City will
be unable to foreclose on any parcel in the Fixed Rate Subject Area owned by the FDIC. Such an
outcome would cause a draw on the Reserve Fund (95-1), Reserve Account (Group One), Reserve
Account (Group Two) or Reserve Account (Group Three) and perhaps, ultimately, a default in
payment of the Series D Bonds. Neither the Authority nor the City has undertaken to determine
whether the FDIC currently has, or is likely to acquire, any interest in any of the parcels in the
Fixed Rate Subject Area, and therefore expresses no view concerning the likelihood that the risks
described above will materialize while the Series D Bonds are outstanding.
Existence of Undeveloped Property.
Approximately 17.5% of the Fixed Rate Reassessments are secured by liens on
undeveloped property, and the average value-to-lien ratio for such undeveloped property is 6.45
(see "THE FIXED RATE SUBJECT AREA - Land Uses and Development Status - TABLE 1"
herein). Such ratio reflects the County's 1999-2000 property ownership records. Additional
development has occurred in the Fixed Rate Subject Area since such records were last updated.
The undeveloped property consists primarily of subdivided lots which are owned by merchant
builders who intend to develop the property for single family residential use (see "THE FIXED
RATE SUBJECT AREA- Status of Development" herein). There may be subsequent transfers of
ownership of the undeveloped property prior to completion of development. Failure of the owners
of undeveloped property to pay the Fixed Rate Reassessment installments when due could result in
a default in the payments of principal of and interest on the Assessment Bonds (95-1), the Group
One Bonds or the Group Three Bonds, which could result in the inability of the Authority to make
payments of the principal of and interest on the Series D Bonds.
Price Realized Upon Foreclosure
Section 8832 of the Act prescribes the minimum price (the "Minimum Price") at which
property may be sold in a judicial foreclosure resulting from delinquencies on assessment
installments. The Minimum Price is the amount equal to the delinquent installments of principal
and intereSt of the assessment, together with all interest, penalties, costs, fees, charges and other
amounts more fully detailed in said Section 8832. However, Section 8836 of the Streets and
Highways Code provides that the court may authorize a sale at less than the Minimum Price if the
court makes certain determinations, based on the evidence introduced at the required hearing, which
DOCSLA 1:320644.3
42
evidence must establish that no ultimate loss will result to the bondholders or that no other remedy
is acceptable and at least 75% of the bondholders' consent.
The Fixed Rate Reassessment lien upon property sold pursuant to this procedure at a lesser
price than the Minimum Price would be reduced by the difference between the Minimum Price and
the actual sale price. In addition, the court would permit participation by the Authority, as owner of
all of the Fixed Rate Assessment Bonds, in its consideration of the petition as necessary to it
determination. Reference should be made to Section 8836 for the complete presentation of this
provision.
If foreclosure proceedings do not result in full collection of delinquent Fixed Rate
Reassessments, it is possible that owners of the Series D Bonds may not receive payment of
principal of or interest on the Series D Bonds.
Uncertainties of Future Development
The motivation of the present or future owners of the undeveloped property in the Fixed
Rate Subject Area may be diminished in the event significant delays are experienced in
development efforts. HoweVer, further development of property in the Fixed Rate Subject Area
may be affected by changes in general economic conditions, fluctuations in the real estate market,
changes in the ownership of the land, and other factors. In addition, any proposed development is
subject to existing and future federal, state and local regulations. Approval may be required from
various public agencies in connection with the design, nature and extent of the required public
improvements, or such matters as land use and zoning. Failure to meet any such furore regulations
· or obtain any such approvals in a timely manner could delay or adversely affect any proposed
development of the parcels of land in the Fixed Rate Subject Area.
The development of property within the Fixed Rate Subject Area is subject to a number of
contingencies which could slow or prevent future development of the undeveloped land.
Consequently, no assurance can be given that such development will be partially or fully
completed, and in assessing the investment quality of the Series D Bonds, prospective purchasers
should evaluate the risks ofnoncompletion, including but not limited to the following.
First, undeveloped land is less valuable than such land in a developed condition and
provides less valuable security to the Series D Bondowners should it be necessary for the City to
foreclose due to the nonpayment of Fixed Rate Reassessment installments which secure the
Fixed Rate Assessment Bonds.
Second, if the remaining undeveloped land in the Fixed Rate Subject Area is not
developed, the number of likely purchasers at a foreclosure sale, in the event the City forecloses
the lien of delinquent unpaid Fixed Rate Reassessment installments, is likely to be reduced.
Third, in addition to potentially reducing the ability and willingness of the landowners to
pay Fixed Rate Reassessment installments, a slowdown of the economic development process in
DOCSLA1:320644.3
43
the region could'adversely affect land values and reduce the proceeds received at a foreclosure
sale in the event Fixed Rate Reassessment installments are not paid when due.
There can be no assurance that land development operations within the Fixed Rate Subject
Area will not be adversely affected by future governmental policies, including, but not limited to,
governmental policies to restrict or control development.
Any event that significantly impacts the ability to develop land in the Fixed Rate Subject
Area may cause the property values of undeveloped property to decrease substantially from the
assessed values set forth herein and could affect the willingness and ability of the owners of'the
undeveloped property to pay the Fixed Rate Reassessment installments when due.
Direct and Overlap_~ing Indebtedness
The ability or willingness of an owner of land within the Fixed Rate Subject Area to pay
Fixed Rate Reassessment installments could be affected by the imposition of other taxes and
assessments imposed upon the land. In addition, other public agencies whose boundaries overlap
those of the Fixed Rate Subject Area could, without the consent of the City or the Authority, and in
certain cases without the consent of the owners of the land within the Fixed Rate Subject Area,
impose additional taxes or assessment liens on the property within the Fixed Rate Subject Area to
finance public improvements or services to be located or provided inside of or outside of the Fixed
Rate Subject Area. A statement of direct and overlapping indebtedness on land within the Fixed
Rate Subject Area is included herein under the heading "THE FIXED RATE SUBJECT AREA -
Direct and Overlapping Debt - Table 6."
Earthquakes
The land area comprising the Fixed Rate Subject Area is subject to unpredictable seismic
activity. The occurrence of seismic activity in or around the Fixed Rate Subject Area could result
in substantial damage to properties in the Fixed Rate Subject Area, which, in mm, could
substantially reduce the value of such properties and could affect the willingness or ability of the
property owners to pay their Fixed Rate Reassessment installments when due.
Drought Conditions
California has experienced drought conditions, although rainfall in recent years has
terminated the droug~ht conditions throughout the State. Water service within the Fixed Rate
Subject Area is provided by the Irvine Ranch Water District. While IRWD currently anticipates
being able to supply water for existing and new development within its service area for the
foreseeable future, there can be no assurance that any renewal of drought conditions will not
adversely .affect IRWD's ability to do so. Such failure could adversely affect the financial
condition of the. property owners and could slow or halt development efforts, thereby adversely
affecting the willingness or the ability of the owners of undeveloped property to pay their Fixed
Rate Reassessment installments when due.
DOCSLA1:320644.3
44
Land Values
The value of land within the Fixed Rate Subject Area is an important factor in evaluating
the investment quality of the Fixed Rate Bonds. In the event that a property owner defaults in the
payment of a Fixed Rate Reassessment installment, the City's only remedy is to judicially foreclose
on that property. Prospective purchasers of the Series D Bonds should not assume that the property
within the Fixed Rate Subject Area could be sold for the assessed value described herein at a
foreclosure sale for delinquent Reassessment installments or for an amount adequate to pay
delinquent Reassessment installments.
The property values set forth in the various tables herein are the property values determined
by the County Assessor for property tax purposes. These assessed value determinations may be
subject to an appeal by the property owner. Assessment appeals are annually filed with the County
Assessment Appeals Board for a heating and resolution. At the time of filing, applicants are
required to estimate an opinion of value. The resc31ution of an appeal may result in a reduction to
the County Assessor's original taxable value and a tax refund to the applicant/property owner. Any
reduction in assessed taxable values of property within the Fixed Rate Subject Area would have an
adverse impact on the value-to-lien ratios discussed in the tables herein.
The actual market value of the property is subject to future events such as downturn in the
economy, occurrences such as earthquakes, droughts or floods or other events, all of which could
adversely impact the value of the land in the Fixed Rate Subject Area which is the security for the
Fixed Rate Assessment Bonds, which secure the Series D Bonds. As discussed herein, many
factors could adversely affect property values or prevent or delay land development within the
Fixed Rate Subject Area.
Hazardous Substances
The market value of the property in the Fixed Rate Subject Area is subject to ~diminution
upon the future release or discovery thereon of a hazardous substance. In general, the owners and
operators of a parcel may be required by law to remedy conditions relating to releases or threatened
releases of hazardous substances. The federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or "Superfund Act",
is the most well known and widely applicable of these laws, but California laws with regard to
hazardous substances are also stringent and similar. Under many of these laws, the owner (or
operator) is obligated to remedy a hazardous 'substance condition of property whether or not the
owner (or.operator) had anything to do with creating or handling the hazardous substance. The
effect therefore, should any of the parcels be affected by a hazardous substance, is to reduce the
marketability and value by the costs of remedying the condition, because the purchaser, upon
becoming owner, will become obligated to remedy the condition just as is the seller.
The value of the property within the Fixed Rate Subject Area, as set forth in the various
tables herein, does not reflect the presence of any hazardous substance or the possible liability of
the owner (or operator) for the remedy of a hazardous substance condition of the property. Neither
the Authority nor the City has independently verified, and neither is aware, that the owner (or
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DOCSLA 1:320644.3
operator) of any of the parcels within the Fixed Rate Subject Area have such a current liability with
respect to any such parcel. However, it is possible that such liabilities do currently exist and that
neither the Authority nor the City is aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the land
within the Fixed Rate Subject Area resulting from the existence, currently, of a substance presently
classified as hazardous but which has not been released or the release of which is not presently
threatened, or may arise in the furore resulting from the existence, currently, on the parcel of a
substance not presently classified as hazardous but which may in the furore be so classified.
Further, such liabilities may ar/se not 'simply from the existence of a hazardous substance but from
the method of handling it. All of these possibilities could significantly adversely affect the value of
a parcel and the willingness or ability of the owner of any parcel to pay the Fixed Rate
Reassessment installments when due.
Endangered and Threatened Species
There is no known presence of any endangered or threatened species of animal or plant life
within the Fixed Rate Subject Area. Furore discovery of any endangered or threatened species
could delay or halt further development of the undeveloped property in the Fixed Rate Subject
Area.
Cumulative Burden of Parity. Taxes, Special Assessments and Development Costs
The Fixed Rate Reassessments and the annual installments thereof constitute a lien against
the parcels of land on which the Fixed Rate Reassessments have been levied. Such lien is on a
parity with all special taxes levied by other agencies and is co-equal to and independent of the lien
for general property taxes, regardless of when they are imposed upon the same property.
Approximately 17.5% of the Fixed Rate Reassessments are on undeveloped land within the
Fixed Rate Subject Area. Such percentage reflects the County's 1999-2000 property ownership
records. However, additional development has occurred in the Fixed Rate Subject Area since the
date such records were last updated. See "THE FIXED RATE SUBJECT AREA - Status of
Development" for a description of such additional development. Although most of the public
improvements required for the development of this land has been completed, it is possible that
additional improvements might be required, the cost of which could increase the public and private
debt for which the undeveloped land within the Fixed Rate Subject Area is security. This increased
debt could reduce the ability or willingness of the owners of the undeveloped property to pay the
Fixed Rate Reassessment installments when due.
Neither the City nor the Authority has control over the ability of other entities to issue
indebtedness secured by special taxes or assessments payable from all or a portion of the property
within the Fixed Rate Subject Area. In addition, the owners of property within the Fixed Rate
Subject Area may, without the consent or knowledge of the City or the Authority, petition other
public agencies to issue public indebtedness secured by special taxes or assessments. Any such
DOCSLA1:320644.3
46
special taxes may have a lien on such property on a parity with the lien of the Fixed Rate
Reassessments.
Loss of Tax 'Exemption
As discussed under the caption "CONCLUDING INFORMATION - Tax Matters" herein,
the interest on the Series D Bonds could become includable in Foss income for federal income tax
purposes, retroactive to the date of issuance of the Series D Bonds, as a result of failure of the
Authority or the City to comply with certain provisions of the Internal Revenue Code. Should such
an event of taxability occur, the Series D Bonds are not subject to early redemption and will remain
Outstanding to maturity or until redeemed under the optional or mandatory redemption or
mandatory sinking fund redemption provisions of the Indenture.
California Constitution Article XIIIC and Article XIIID
On November 5, 1996, the voters of the State approved Proposition 218, the so-called
"Rig~ht to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State
Constitution, which contain a number of provisions affecting the ability of the City to levy and
collect both existing and future taxes, assessments, fees and charges.
Article XIIID requires that, beginning July 1, 1997, the proceedings for the levy of any
assessment by the City under the Act (including, if applicable, any increase in such assessment or
any supplemental assessment under the Act) must be conducted in conformity with the provisions
of Section 4 of Article XIIID. Because the City completed its proceedings for the levy of
assessments in the Fixed Rate Subject Area on January 15, 1996, the provisions of Section 4 of
Article XIIID do not apply to the unpaid Fixed Rate Reassessments which secure the Fixed Rate
Assessment Bonds. In addition, under Section 10400 of the Act, any challenge (including any
constitutional challenge) to the proceedings or the assessment must be brought within 30 days after
the date the assessment was levied.
Article XIIIC removes limitations on the initiative power in matters of local taxes,
assessments, fees and charges. Article XIIIC does not define the term "assessment", and it is
unclear whether this term is intended to include assessments levied under the Act. Furthermore,
this provision of Article XIIIC is not, by its terms, restricted in its application to assessments which
were established or imposed on or after July 1, 1997. In the case of the unpaid Fixed Rate
Reassessments which are pledged as security for payment of the Fixed Rate Assessment Bonds, the
Act provides a mandatory, statutory duty of the City and the County Auditor to post installments on
account of the unpaid 95-1 Reassessments, Group One Reassessments or Group Three
Reassessments, as the case may be, to the property tax roll of the County each year while any of the
Assessment B,onds (95-1), Group One Bonds or Group Three Bonds, as applicable, are outstanding,
in amounts equal to the principal of and interest on the Assessment Bonds (95-1), Group One
Bonds or Group Three Bonds, as applicable, coming due in the succeeding calendar year. While
the matter is not free from doubt, it is likely that a court would hold that the initiative power cannot
be used to reduce or repeal the unpaid Fixed Rate Reassessments which are pledged as security for
payment of the Fixed Rate Assessment Bonds or to otherwise interfere with performance of the
- 47
DOCSLA1:320644.3
mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Fixed Rate
Reassessments which are pledged as security for payment of the Fixed Rate Assessment Bonds.
The interpretation and application of the Proposition 218 will ultimately be determined by
the courts with respect to a number of the matters discussed above, and it is not possible at this time
to predict with certainty the outcome of such determination.
Year 2000 Problem
The inability of many computer programs to distinguish between the years 2000 and 1900
(the "Year 2000 Problem") could disrupt the ability of the County, the City and others to provide
municipal services in general and' services pertaining to the collection of Fixed Rate Reassessments
in particular and/or could increase the cost of providing such services. For example, the Year 2000
Problem could impede or make more costly (i)the County's collection of Fixed Rate
Reassessments and the City's compliance with on-going disclosure requirements and with
restrictions applicable to investment yield and rebate, (ii)the Trustee's (or Fiscal Agent's)
maintenance of the funds and accounts held by it under the Indenture (or the Fiscal Agent
Agreement) and (iii) DTC's (and its Direct Participants' and Indirect Participants') distributions to
the Beneficial Owners of the Series D Bonds their respective shares of the principal of and interest
on the Series D Bonds.
The City
As ofthe printing of this Official Statement, the City has completed its evaluation of all of
its mission-critical computers and other systems and equipment (including those containing
embedded chips) to ascertain which may be impacted by a failure to properly recognize and process
transactions as the result of the Year 2000 Problem. The City has received confirmations that the
City's network system, personal computer-based systems, telephone systems and peripheral
systems (banking, utilities and security systems) are all Year 2000 compliant. Because of the
unprecedented nature of the Year 2000 Problem, it is not possible to provide assurances that the
City has achieved or will achieve complete Year 2000 compliance, even after all Year 2000
corrective actions and related testing. The City also cannot determine the effect, if any, on City
operations should entities external to the City (such as other governments, significant vendors,
suppliers, service providers, customers, taxpayers, businesses) fail to achieve Year 2000
compliance in a timely manner.
The County
The County reports that it has assessed the status of Year 2000 compliance with respect to
virtually every County department, and has developed a plan to modify or replace any non-
compliant.system in. a manner that will eliminate significant operational problems. The Board of
Supervisors approved approximately $17 million in funding for certain modifications and
replacements through Fiscal Year 1998-99, with an additional several million dollars for Year 2000
compliance use in the Fiscal Year 1999-2000 budget. While some systems have akeady been
determined to be in compliance, several departmental systems are not scheduled to be completed
- 48
DOCSLA1:320644.3
until late 1999. The costs of the proposed modifications and replacements and their expected
completion dates are based on certain assumptions and the County's best estimates. There can be
no guarantee that these estimates will be achieved and actual results could differ materially from
those anticipated. Specific factors that might cause a different outcome include, but are not limited
to, the availability and cost of trained personnel, the ability to locate and correct all relevant
computer codes and reliance on manufacturers' representations with respect to Year 2000
compliance. If the proposed modifications or replacements do not occur as anticipated, the Year
2000 Problem could have a material impact on the County's operations.
With respect to property tax assessment, billing, collection, apportionment, appeals and
related treasury operations, many of the necessary systems, including, but not limited to the
Assessment Tax System used by the Assessor, Tax Collector, Clerk of the Board, and Auditor-
Controller, the Clerk of the Board's assessment appeals systems and the Treasurer's Fund
Accounting and Portfolio Accounting systems are believed to be Year 2000 compliant. Each
department continues to scan their systems for potential problems. A substantial upgrade of the
County Accounting and Personnel System ("CAPS"), the backbone of the County's financial
systems, including Year 2000 modifications, was completed in September 1999.
All of the County's systems depend on the delivery of basic services, such as electricity and
telephone. The County is working with Southern California Edison and other infrastructure
providers in an effort to ensure that basic services will be delivered. In addition, many County
systems interface with systems of non-County entities, including, but not limited to, the State, the
federal government, banks and trust companies. Although the County will work with all interfaces,
there can be no guarantee that the systems of any interface or non-County entity will be timely
modified or converted, nor that such systems will not adversely impact timely payment of the
Series D Bonds.
The D-ustee/Fiscal Agent
For publicly distributed information relating to State Street's Year 2000 readiness, see State
Street's home page on the Internet at http://www, statestreet, com.
DTC
See "THE SERIES D BONDS- Book-Entry System" for information provided by DTC
with respect to its efforts to address the Year 2000 Problem. Prospective purchasers of the Series D
Bonds should contact the DTC Participants through which they would purchase Series D Bonds in
order to determine whether such DTC Participants and DTC itself will be able to successfully
address the Year 2000 Problem in a timely and efficient manner.
THE AUTHORITY
The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers
Agreement, dated as of MaY 1, 1995, between the City and the Tustin COmmunity Redevelopment
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DOCSLA 1:320644.3
Agency (the "Agreement"). The Agreement was entered into pursuant to Chapter 5 of Division 7
of Title 1 of the California Government Code (Sections 6500 et seq.) (the "Joint Powers Act"). The
Authority is a separate entity, constituting a public insmumentality of the State of California and
was formed for the public purpose of assisting in financing and refinancing projects pursuant to the
Joint Powers Act for the benefit of California local agencies.
The Authority is governed by a Board of Directors, which is comprised of five members.
The members of the City Council of the City constitute the members of the Board of Directors of
the Authority. The Authority is specifically ~anted all of the powers specified in the Joint Powers
Act, including but not limited to the power to issue bonds and to sell such bonds to public or private
purchasers at public or by negotiated sale.
THE CITY
The City of Tustin is located in central Orange County, approximately 40 miles southeast of
Los Angeles and 80 miles north of San Diego. The City covers approximately 11.2 square miles
and adjoins the cities oflrvine, Orange and Santa Ana.
CONCLUDING INFORMATION
Underwriting
The Series D Bonds are being purchased through negotiation of PaineWebber .Incorporated
(the "Underwriter"). The Underwriter has agreed to purchase the Series D Bonds at a discount of
$33,480 from the principal amount thereof. Simultaneously with the purchase of the Series D
Bonds by the Undemwiter, the Authority has agreed to purchase the Group Three Bonds from the
City. The Underwr/ter's obligation to purchase the Series D Bonds is contingent upon the
Authority's purchase of the Group Three Bonds, the approval of certain legal matters by counsel
and certain other conditions.
The Underwriter may offer and sell the Series D Bonds to certain dealers and others at
prices lower than the public offering prices set forth on the inside cover hereof. The offering prices
of the Series D Bonds may be changed from time to time by the Underwriter.
Legal Opinion
The legality of the Series D Bonds and certain other legal matters are subject to the approval
of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel. Certain legal
matters will be passed upon for the Authority and the City by Woodruff, Spradlin & Smart, a
Professional Corporation, Orange, California, as City Attorney. The fees of Bond Counsel are
contingent upon issuance of the Series D Bonds.
DOCSLA 1:320644.3
50
Tax Matters
In the opinion of Orrick, Herrington & Sutcliffe LLP ("Bond Counsel"), based on an
analysis of existing laws, regulations, rulings and court decisions, and assuming, among other
things, compliance with certain covenants, interest on the Series D Bonds is excluded from gross
income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986
(the "Code") and is exempt from State of California personal income taxes.~ Bond Counsel is of the
further opinion that the interest on the Series D Bonds is not a specific preference item for purposes
of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes
that such interest is included in adjusted current earnings when calculating corporate alternative
minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is
set forth in Appendix B hereto.
To the extent the issue price of any maturity of the Series D Bonds is less than the amount
to be paid at maturity of such series D Bonds (excluding amounts stated to be interest and payable
at least annually over the term of such Series D Bonds), the difference constitutes "original issue
discount," the accrual of which, to the extent properly allocable to each owner thereof, is treated as
interest on the Series D Bonds which is excluded from gross income for federal income tax
purposes and State of California personal income taxes. For this purpose, the issue price of a
particular maturity of the Series D Bonds is the first price at which a substantial amount of such
maturity of the Series D Bonds is sold to the public'(excluding bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement agents or wholesalers).
The orig/nal issue discount with respect to any maturity of the Series D Bonds accrues daily over
the term to maturity of such Series D Bonds on the basis of a constant interest rate compounded
semiannually (with straight-line interpolations between compounding dates). The accruing original
issue discount is added to the adjusted basis of such Series D Bonds to determine taxable gain or
loss upon disposition (including sale, redemption, or payment on maturity) of such Series D Bonds.
Owners of the Series D Bonds should consult their own tax advisors with respect to the tax
consequences of ownership of Series D Bonds with original issue discount, including the treatment
of purchasers who do not purchase such Series D Bonds in the original offering to the public at the
first price at which a substantial amount of such Series D Bonds is sold to the public.
The Code imposes various restrictions, conditions and requirements relating to the
exclusion from gross income for federal income tax purposes of interest on obligations such as the
Series D Bonds. The Authority and the City haVe covenanted to comply with certain restrictions
designed to insure that interest on the Series D Bonds will not be included in federal gross income.
Failure to comply with these covenants may result in interest on the Series D Bonds being included
in gross income for federal income tax purposes, possibly from the date of original issuance of the
Series D Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond
Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or
not taken) or events occurring (or not occurring) after the date of issuance of the Series D Bonds
may adversely affect the value of, or the tax status of interest on, the Series D Bonds. Further, no
assurance can be given that pending or future legislation or amendments to the Code, if enacted into
law, or any proposed legislation or amendments to the Code, will not adversely affect the value of,
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DOCSLA 1:320644.3
or the tax status of interest on, the Series D Bonds. Prospective owners of the Series D Bonds are
urged to consult their own tax advisors with respect to proposals to restructure the federal income
tax.
Series D Bonds purchased, whether at original issuance or otherwise, for an amount greater
than their principal amount payable 'at maturity (or, in some cases, at their earlier call date)
("Premium Bonds") will be treated as having amortizable bond premium. No deduction is
allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the
interest on which is excluded from gross income for federal income tax purposes. However, a
purchaser's basis in a Premium Bond and, under Treasury Regulations, the amount of tax exempt
interest received, will be reduced by the amount of amortizable bond premium properly allocable to
such purchaser'. Owners of Premium Bonds should consult their own tax advisors with respect to
the proper treatment of amortizable bond premium in their particular circumstances.
Certain requirements and procedures contained or referred to in the Indenture, the Fiscal
Agent Agreement, the Tax Certificate, and other relevant documents may be changed and certain
actions (including, without limitation, defeasance of the Series D Bonds) may be taken or omitted
under the circumstances and subject to the terms and conditions set forth in such documents. Bond
Counsel expresses no opinion as to any Series D Bond or the interest thereon if any such change
occurs or action is taken or omitted upon the advice or approval of bond counsel other than Orrick,
Herrin~on & Sutcliffe LLP.
Although Bond Counsel is of the opinion that interest on the Series D Bonds is excluded
from gross income for federal income tax purposes and is exempt from State of California personal
income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Series D
Bonds may otherwise affect an owner's federal or state tax liability. The nature and extent of these
other tax consequences will depend upon the particular tax status of the owner or the owner's other
items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax
consequences.
No Litigation
There is no proceeding or litigation now pending to restrain or enjoin the issuance, sale,
execution or delivery of the Series D Bonds, or in any way contesting or affecting the validity of the
Series D Bonds, the proceedings of the Authority taken with respect to the issuance or sale thereof,
the pledge or application of any moneys or securities provided for the payment of the Series D
Bonds, the existence or powers of the Authority or the title of any directors or officers of the
Authority tO their respective positions. A certificate of the Authority to this effect will be delivered
on the date of delivery of the Series D Bonds.
Ratings
It is expected that MoOdy's Investors Service and Standard & Poor's Ratings Services will
assign ratings of "Aaa" and "AAA," respectively, to the Series D Bonds, with the understanding
that, upon delivery of the Bonds, a policy insuring the payment when due of principal of and
- 52
DOCSLA1:320644.3
interest on the Series D Bonds will be issued by the Bond Insurer. Such ratings reflect only the
views of such organizations and any desired explanation of the significance of such ratings should
be obtained from the rating agency furnishing the same, at the following addresses: Moody's
Investors Services, Inc. 99 Church Street, New York, New York 10007; Standard & Poor's Ratings
Services, 55 Water Street, New York, New York 10041. Generally, a rating agency bases its rating
on the information and materials rum/shed to it and on investigations, studies and assumptions of
its own. There is no assurance such ratings will continue for any given period of time or that such
ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the
judgment of such rating agencies, circumstances so warrant. Any such downward revision or
withdrawal of such ratings may have an adverse effect on the market price of the Series D Bonds.
Miscellaneous
All of the preceding summaries of the Indenture, the Fiscal Agent Agreements, applicable
legislation, agreements and other documents are made subject to the provisions of such documents
and legislation and do not purport to be complete statements of any or all of such provisions.
Reference is hereby made to such documents on file with the City for further information in
connection therewith.
This Official Statement does not constitute a contract with the purchasers of the Series D
Bonds.
Any statements made in this Official Statement involving matters of opinion' or of
estimates, whether or not so expressly stated, are set forth as such and not as representations of fact,
and no representation is made that any of the estimates will be realized.
The execution and delivery of this Official Statement have been authorized by the members
of the Board of Directors of the Authority and by the members of the City Council of the City.
TUSTIN PUBLIC FINANCING AUTHORITY
By:
Chairman
CITY OF TUSTIN
By:
Mayor
DOCSLA1:320644.3
53
APPENDIX A
SUMMARY OF INDENTURE AND FISCAL AGENT AGREEMENTS
DOCSLA1:320644.3
A-1
APPENDIX B
PROPOSED FORM OF BOND COUNSEL OPINION
Upon delivery of the Series D Bonds, Orrick, Herrington & Sutcliffe LLP, Bond Counsel,
proposes to render its approving opinion with respect thereto in substantially the following form:
[Date of Delivery]
Tustin Public Financing Authority
300 Centennial Way
Tustin, California
Ladies and Gentlemen:
Tustin Public Financing Authority
Revenue Bonds (Tustin Ranch), Series D
(Final Opinion)
We have acted as bond counsel in connection with the issuance by the Tustin Public
Financing Authority (the "Authority") of $ aggregate principal amount of Tustin
public Financing Authority Revenue Bonds (Tustin Ranch), Series D (the "Series D Bonds"),
issued pursuant to the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of
Division 7 of Title 1 of the California Government Code and pursuant to the Indenture of Trust,
dated as of February 1, 1996, by and between the Authority and State Street Bank and Trust
Company of California, N.A., as trustee (the "Trustee"), as amended and supplemented by the
First Supplemental Indenture of Trust, dated as of November 1, 1997, by and between the
Authority and the Trustee, the Second Supplemental Indenture of Trust, dated as of November 1,
1998, by and between the Authority and the Trustee, and the Third Supplemental Indenture of
Trust, dated as of November 1, 1999, by and between the Authority and the Trustee (as so
amended and supplemented, the "Indenture"). Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Indenture.
In such connection, we have reviewed the Indenture, the Tax Certificate of the Authority
and the City of Tustin, dated the date hereof (the "Tax Certificate"), certificates of the Authority,
the Trustee and others, opinions of counsel to the Authority and the Trustee, and such other
documents, opinions and matters to the extent we deemed necessary to render the opinions set
forth herein.
DOCSLA1:320644.3
B-1
Tustin Public Financing Authority
[Date of Delivery]
Page 2
Certain agreements, requirements and procedures contained or referred to in the
Indenture, the Tax Certificate and other relevant documents may be changed and certain actions
(including, without limitation, defeasance of the Series D Bonds) may be taken or omitted under
the circumstances and subject to the terms and conditions set forth in such documents. No
opinion is expressed herein as to any Series D Bond or the interest thereon if any Such change
occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves.
The opinions expressed herein are based on an analysis of existing laws, regulations,
rulings and court decisions and cover certain matters not directly addressed by such authorities.
Such opinions may be affected by actions taken or omitted or events occurring after the date
hereof. We have not undertaken to determine, or to inform any person, whether any such actions
are taken or omitted or events do occur. Our engagement with respect to the Series D Bonds has
concluded with their issuance, and we disClaim any obligation to update this letter. We have
assumed the genuineness of all documents and signatures presented to us (whether as originals or
as copies) and the due and legal execution and delivery thereof by, and validity against, any
parties other than the Authority. We have not undertaken to verify independently, and have
assumed, the accuracy of the factual matters represented, warranted or certified in the .documents
referred to in the second para~aph hereof. Furthermore, we have assumed compliance with all
covenants and agreements contained in the Indenture and the Tax Certificate, including (without
limitation) covenants and agreements compliance with which is necessary to assure that future
actions, omissions or events will not cause interest on the Series D Bonds to be included in gross
income for federal income tax purposes. In addition, we call attention to the fact that the rights
and obligations under the Series D Bonds, the Indenture and the Tax Certificate and their
enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium and other similar laws relating to or affecting creditors' rights, to the
application of equitable principles, to the exercise of judicial discretion in appropriate cases and
to the limitations on legal remedies against governmental entities in the State of California. We
express no opinion with respect to any indemnification, contribution, choice of law, choice of
forum or waiver provisions contained in the foregoing documents. Finally, we undertake no
responsibility for the accuracy, completeness or fairness of the Official Statement or other
offering material relating to the Series D Bonds and express no opinion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we
are of the following opinions:
1. The Series D Bonds constitute the valid and binding limited obligations of the
Authority, payable solely from the Revenues and other assets under the Indenture.
DOCSLA 1:320644.3
B-2
Tustin Public Financing Authority
[Date of Delivery]
Page 3
2. The Indenture has been duly executed and delivered by, and constitutes the valid and
binding obligation of, the Authority.
3. Interest on the Series D Bonds is excluded from goss 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. Interest on the Series D Bonds is not a specific preference
item for purposes of the federal individual or corporate alternative minimum taxes, although we
observe that it is included in adjusted current earnings in calculating corporate alternative
minimum taxable income. We express no opinion regarding other tax consequences related to the
ownership or disposition of, or the accrual or receipt of interest on, the Series D Bonds.
Faithfully yours,
DOCSLA1:320644.3
B-3
APPENDIX C
FORM OF CONTINUING DISCLOSURE AGREEMENT (SERIES D)
THIS CONTINUTNG DISCLOSUT,_E AGREEMENT (SERIES D) (this "Disclosure
A=o-reement") is made and entered into as of ., 1999, by and between STATE STREET
BANK AND TRUST COMPANY OF CALIFORNIA, N.A., a national banking association
organized and existing under the laws of the United States, as Trustee (the "Trustee"), and the
CITY OF TUSTIN, a general law city and municipal corporation organized and existing under
and by virtue of the laws of the State of California (the "City").
WITNESSETH:
WHEREAS, pursuant to the Indenture of Trust, dated as of February 1, 1996, as by and
between the Tustin Public Financing Authority (the "Authority") and the Trustee, as amended
and supplemented by the First Supplemental Indenture of Trust, dated as of November 1, 1997,
by and between the Authority and the Trustee, the Second Supplemental Indenture of Trust,
dated as of November 1, 1998, by and between the Authority and the Trustee, and the Third
Supplemental Indenture of Trust, dated as of November 1, 1999, by and between the Authority
and the Trustee (as so amended and supplemented, the "Indenture"), the Authority issued its
Revenue Bonds (Tustin Ranch), Seh. es D (the "Series D Bonds"), in the aggregate principal
amount of $ ;
WHEREAS, this Disclosure Agreement is being executed and delivered by the City and
the Trustee for the benefit of the holders and beneficial owners of the Series D Bonds and in
order to assist the underwriter of the Series D Bonds in complying with Securities and Exchange
Commission Rule 15c2-12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual premises and covenants
herein contained, the parties hereto agree as follows:
Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings
ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the
following meanings:
"Act" means, collectively, the Improvement Bond Act of 1915, as amended, being
Division 10 of the California Streets and Highways Code, and the Refunding Act of 1984 for
i915 Improvement Act Bonds, as amended being Division 11.5 of the California Streets and
Highways Code.
"Annual Report" means any Annual Report provided by the City pursuant to, and as
described in, Sections 2 and 3 of this Disclosure Agreement.
DOCSLA1:320644.3
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"Annual Report Date" means the date in each year that is eight months after the end of
the City's fiscal year, which date, as of the date of this Disclosure Agreement, is March 1.
"Assessment Bonds" means the Assessment Bonds (95-1) and any Assessment Bonds
(95-2) acquired pursuant to Section 3.04 of the Indenture.
"Assessment Bonds (95-1)" means the City of Tustin Limited Obligation Improvement
Bonds, Reassessment District No. 95-1 (Tustin Ranch), which are issued under and pursuant to
the Fiscal Agent Agreement (95-1).
"Assessment Bonds (95-2)" means the City of Tustin Limited Obligation Improvement
Bonds, Reassessment District No. 95-2 (Tustin Ranch), which are issued under and pursuant to
the Fiscal Agent Agreement (95-2) and which bear interest at a fixed rate.
"Authority Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch) issued under the Indenture, and includes the Series A Bonds, the Series B, the Series C
Bonds, the Series D Bonds and any additional bonds issued thereunder in accordance with the
terms thereof and ranking on a parity with the Series A Bonds, the Series B Bonds, the Series C
Bonds and the Series D Bonds.
"Disclosure Representative" means the Finance Director. of the City or his or her
designee, or such other officer or employee as the City shall designate in writing to the Trustee
from time to time.
"Dissemination Agent" means the Trustee, acting in its capacity as Dissemination Agent
hereunder, or any successor Dissemination Agent designated in writing by the City and which
has filed with the Trustee a written acceptance of such designation.
"Fiscal Agent Agreement (95-1)" means the Fiscal Agent Agreement, dated as of
February 1, 1996, by and between the City and State Street Bank and Trust Company of
California, N.A., as Fiscal Agent, as originally executed or as the same may from time to time be
amended or supplemented in accordance with the terms thereof, under and pursuant to which the
Assessment Bonds (95-1) are issued.
"Fiscal Agent Agreement (95-2)" means the Fiscal Agent Agreement, dated as of
February 1, 1996, by and between the City and State Street Bank and Trust Company of
California, N.A., as Fiscal Agent, as originally executed or as the same may from time to time be
amended or supplemented in accordance with the terms thereof, under and pursuant to which the
Assessment Bonds (95-2) are issued.
"Group of Assessment Bonds (95-2)" means a group of Assessment Bonds (95-2),
registered, in the name of the Trustee, that have been designated, pursuant to Section 7.01(e) of
the Fiscal Agent Agreement (95-2), to represent specified parcels of real property within the
Reassessment District (95-2).
DOCSLA1:320644.3
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"Indenture" means the Indenture of Trust, dated as of February 1, 1996, by and between
the Authority and the Trustee, as originally executed or as it may from time to time be amended
or supplemented by any Supplemental Indenture.
"Listed Events" means any of the events listed in Section 4(a) hereof.
'national Repository" means any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule.
"Official Statement" means the Official Statement, dated , 1999, relating to
the Series D Bonds.
"Participating Underwriter" means any of the original underwriters of the Series D Bonds
required to comply with the Rule in connection with offering of the Series D Bonds.
"Repository" means each National Repository and each State Repository.
"Reassessment District (95-i)" means the area designated "Reassessment District No. 95-
1 (Tustin Ranch)", formed by the City under the Act.
"Reassessment District (95-2)" means the area designated "Reassessment District No. 95-
2 (Tustin Ranch)", formed by the City under the Act.
"Reassessments (95-1)" means the.reassessments levied within Reassessment District
(95-1) by the City under the proceedings taken pursuant to the Act.
"Reassessments (95-2)" means the reassessments levied within Reassessment District
(95-2) by the City under the proceedings taken pursuant to the Act.
"Reassessments" means, collectively, the Reassessments (95-1) and the Reassessments
(95-2).
"Reserve Requirement (95-1)" has the meaning ascribed to Reserve Requirement in the
Fiscal Agent Agreement (95-1).
"Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"Series A Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), series A, issued under the Indenture.
"Series B Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series B, issued under the Indenture.
"Series C Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series C, issued under the Indenture.
DOCSLA 1:320644.3
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"Series D Bonds" means the Tustin Public Financing Authority Revenue Bonds (Tustin
Ranch), Series D, issued under the Indenture.
"State Repository" means any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and recognized as such by the
Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no
State Repository.
"Subject Area" means all of Reassessment District (95-1) and those portions of
Reassessment District (95-2) upon which are levied Reassessments (95'2) that secure
Assessment Bonds (95-2) that are registered in the name of the Trustee.
"Trustee" means State Street Bank and Trust Company of California, N.A., a national
banking association organized and existing under the laws of the United States of America, as
Trustee under the Indenture, or any successor thereto as Trustee thereunder as provided therein.
Section 2. Provision of Annual Reports. (a) The City shall, or shall cause the
Dissemination Agent to, provide to each Repository an Annual Report which is consistent with
the requirements of Section 3 hereof, not later than the Annual Report Date in each year,
commencing with the Annual Report for the 1999-2000 fiscal year. The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may include
by reference other information as provided in Section 3 hereof; provided, however, that the
audited financial statements of the Cit~; may be submitted separately from the balance of the'
Annual Report, and later than the date required above for the filing of the Annual Report if not
available by that date. If the City's fiscal year changes, it shall give notice of such change in the
same manner as for a Listed Event under Section 4(f) hereof. '
(b) Not later than 15 business days prior to the date specified in subsection (a) for
providing the Annual Report to Repositories, the City shall provide the Annual Report to the
Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such
date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City
and the Dissemination Agent to determine if the City is in compliance with the first sentence of
this subsection (b).
(c) If the Trustee is unable to verify that an Annual Report has been provided to
Repositories by the date required in subsection (a), the Trustee shall send a notice to the
Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in
substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and each State Repository, if any; and
(ii) file a report with the .City and (if the Dissemination Agent is not the Trustee)
the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure
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DOCSLA 1:320644.3
Agreement, stating the date it was provided and listing all. the Repositories to which it was
provided.
Section 3. Content of Annual Reports.
incorporate by reference the following:
The City's Annual Report shall contain or
(a) The City's audited financial statements prepared in accordance with generally
accepted accounting principles as promulgated to apply to govemrnental entities fi.om time to
time by the Governmental Accounting Standards Board. If the City's audited financial
statements are not available by the time the Annual Report is required to be filed pursuant to
Section 2(a), the Annual Report shall contain unaudited financial statements in a format similar
to that used for the City's audited financial statements, and the audited financial statements shall
be filed in the same manner as the Annual Report when they become available.
(b) The following information:
(i) The principal amount of Series D Bonds Outstanding as of the September 30
next preceding the Annual Report Date.
(ii) The principal amount of Authority
September 30 next preceding the Annual Report Date.
Bonds Outstanding as of the
(iii) The principal amount of Assessment Bonds
September 30 next preceding the Annual Report Date.
outstanding 'as of the
(iv) The balance in the Improvement Fund established under the Fiscal Agent
Agreement (95-1) as of the September 30 next preceding the Annual Report Date, and a
statement as to whether or not such amount will be sufficient to pay the costs of the
improvements intended to be paid therefrom.
(v) The balance in the Reserve Fund established under the Fiscal Agent
Agreement (95-1), and a statement of the Reserve Requirement (95-1) as of the
September 30 next preceding the Annual Report Date.
(vi) The balance in each Reserve Account established for a Group of Assessment
Bonds (95-2) under the Fiscal Agent Agreement (95-2), and a statement of the reserve
requirement applicable to each such Reserve Account as of the September 30 next
preceding the Annual Report Date.
(vii) The total assessed value of all parcels within the Subject Area on which the
Reassessments are levied, as shown on the assessment roll of the Orange County Assessor
last equalized prior to the September 30 next preceding the Annual Report Date, and a
statement of assessed value-to-lien ratios therefor, either by individual parcel or by
categories (e.g. "below 3:1", "3:1 to 4:1" etc.).
DOCSLA 1:320644.3
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(viii) The Reassessment delinquency rate for the Subject Area, as shown on the
assessment roll of the Orange Uounty Assessor last equalized prior to the September 30
next preceding the Annual Report Date, the number of parcels within the Subject Area
delinquent in payment of Reassessments, as shown on the assessment roll of the Orange
County Assessor last equalized prior to the September 30 next preceding the Annual Report
Date, the amount of each delinquency, the length of time delinquent and the date on which
foreclosure was commenced, or similar information pertaining to delinquencies deemed
appropriate by the City; provided, however, that parcels with delinquencies of $2,000 or
less may be grouped together and such information may be provided by category.
(ix) The status of Reassessment foreclosure proceedings and a summary of the
results of any foreclosure sales as of the September 30 next preceding the Annual Report
Date.
(x) The identity of any property owner representing more than 5% of the
Reassessment levy delinquent in payment of Reassessments levied within the Subject Area,
as shown on the assessment roll of the Orange County Assessor last equalized prior to the
September 30 next preceding the Annual Report Date.
(xi) A land ownership summary listing property owners responsible for more
than 5% of the Reassessment levy within the Subject Area, as shown on the assessment roll
of the Orange County Assessor last equalized prior to the September 30 next preceding the
Annual Report Date.
(xii) The number of building permits issued by the City for new construction
within the Subject Area during the one year period ending on the September 30 next
preceding the Annual Report Date.
In addition to any of the information expressly required to be provided under paragraphs
(a) and (b) of this Section, the City shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made, not misleading.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange
Commission. If the document included by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The City shall clearly identify each
such other 'document so included by reference.
Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this
Section, the City shall give, or cause to be given, notice of the occurrence of any of the following
events with respect to the Series D Bonds, if material:
(i)
Principal and interest payment delinquencies.
DOCSLA1:320644.3
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(ii) Non-payment related defaults.
(iii)
Unscheduled draws on debt service reserves reflecting financial difficulties.
(iv)
Unscheduled draws on credit enhancements reflecting financial difficulties.
(v)
Substitution of credit or liquidity providers, or their failure to perform.
(vi)
security.
Adverse tax opinions or events affecting the tax-exempt status of the
(vii) Modifications to rights of security holders.
(viii) Contingent or unscheduled bond calls.
(ix) Defeasances.
(x)
securities.
Release, substitution, or sale of property securing repayment of the
(xi) Rating changes.
(b) The Trustee shall, within one business day of obtaining actual knowledge of the
occurrence of any of the Listed Events, contact the Disclosure Representative, inform such
person of the event, and request that the City promptly notify the Trustee in writing whether or
not to report the event pursuant to subsection (f).
(c) Whenever the City obtains knowledge of the occurrence of a Listed Event,
whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the City
shall as soon as possible determine if such event would be material under applicable Federal
securities law.
(d) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicable Federal securities law, the City shall promptly notify the Trustee in
writing. Such notice shall instruct the Trustee to report the occurrence pursuant to subsection (f).
(e) If in response to a request under subsection (b), the City determines that the Listed
Event would not be material under applicable Federal securities law, the City shall so notify the
Trustee in writing and instruct the Trustee not to report the occurrence pursuant to subsection (f).
(f) If the Trustee has been instructed by the City to report the occurrence of a Listed
Event, the Trustee shall file a notice of such occurrence with the Municipal Securities
Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed
Events described in subsections (a)(viii) and (ix) need not be given under this subsection any
earlier than the notice (if any) of the underlying event is given to holders of affected Bonds
pursuant to the Indenture.
DOCSLA 1:320644.3
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Section 5. Termination of Reporting Obligation. The City's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Series D Bonds. If such termination occurs prior to the final maturity of the
Series D Bonds, the City shall give notice of such termination in the same manner as for a Listed
Event under Section 4(f) hereof.
Section 6. Dissemination Agent. State Street Bank and Trust Company of California,
N.A., is hereby appointed as the initial Dissemination Agent. The City may, from time to time,
appoint or engage a successor Dissemination Agent to assist it in carrying out its obligations
under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or
without appointing a successor Dissemination Agent. If at any time there is not any other
designated Dissemination Agent, the Trustee shall be the Dissemination Agent.
Section 7. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Agreement, the City and the Trustee may amend this Disclosure Agreement (and the
Trustee shall agree to any amendment so requested by the City), and any provision of this
Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to Sections 2(a), 3' or 4(a) hereof it may only
be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature, or status of an obligated person
with respect to the Series D Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule
at the time of the primary offering of the Series D Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver (i) is approved by holders of the Series D
Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent
of holders, or (ii) does not, in the opinion of the Trustee or nationally recognized bond counsel,
materially impair the interests of holders of the Series D Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first annual financial information containing
the amended operating data or financial information shall explain, in narrative form, the reasons
for the amendment and the impact of the change in the type of operating data or financial
information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting principles
on the presentation of the financial statements or information, in order to provide information to
C-8
DOCSLA1:320644.3
investors to enable them to evaluate the ability of the City to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be sent to the Repositories in the same manner as for a Listed Event
under Section 4(t) hereof.
Section 8. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Agreement. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event in addition to
that which is specifically required by this Disclosure Agreement, the City shall have no
obligation under this Disclosure Agreement to update such information or include it in any future
Annual Report or notice of occurrence of a Listed Event.
Section 9. Default. In the event of a failure of the City or the Trustee to comply with
any provision of this Disclosure Agreement, the Trustee may (and, at the written direction of any
Participating Underwriter or the holders of at least 25% aggregate principal amount of
Outstanding Bonds, shall), or any holder or beneficial owner of the Bonds may, take such actions
as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the City or Trustee, as the case may be, to comply with its obligations under
this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an
Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in
the event of any failure of the City or the Trustee to comply with this Disclosure Agreement shall
be an action to compel performance.
Section 10. Duties, Immunities and Liabilities of Trustee and Dissemination Agent.
Article VIII of the Indenture is hereby made applicable to this Disclosure Agreement as if this
Disclosure Agreement were (solely for this purpose) contained in the Indenture and the
Dissemination Agent shall be entitled to the protections therein as if it were the Trustee. The
Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination
Agent) shall have only such duties'as are specifically set forth in this Disclosure Agreement and
shall not be responsible for the content of any of the reports or financial statements delivered by
the City pursuant to this Disclosure Agreement.
Section 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the City, the Trustee, the Dissemination Agent, the Participating Underwriters and holders and
beneficial owners from time to time of the Series D Bonds, and shall create no rights in any
other person or entity.
DOCSLA 1:320644.3
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Section 12. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement
as of the date first above written.
CITY OF TUSTIN
By:
Ronald A. Nault
Finance Director
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as
Trustee
By:
Authorized Officer
DOCSLA1:320644.3
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO
FILE ANNUAL REPORT
Name of Issuer: Tustin Public Financing Authority
Name of Bond Issue: Tustin Public Financing Authority
Revenue Bonds (Tustin Ranch), Series D
Date of Issuance: ,1999
NOTICE IS HEREBY GIVEN that the City of Tustin (the "City") has not provided an
Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure
Agreement (Series D), dated as of ., 1999, by and between the City and State Street
Bank and Trust Company of California, N.A., as Trustee. [The City anticipates that the Annual
Report will be filed by .]
Dated:
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee, on behalf of the City of Tustin
cc: City of Tustin
DOCSLA 1:3'20644.3
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APPENDIX D
INSURANCE' POLICY SPECIMEN
DOCSLA1:320644.3
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