HomeMy WebLinkAbout13 REVENUE BONDS 06-03-96NO. 13
6-3-96
DATE:
MAY 29, 1996
Inter-Com
TO:
F~OM:
SUBJECT:
RONALD A.~T,. FINANCE DIRECTOR
APPROVAL OF FINANCING DOCUMENTS - COUNTYWIDE PUBLIC
FINANCING AUTHORITY 1996 REVENUE BONDS
RECOMMENDATION:
The following actions should be taken by the City Council:
i ·
Adopt Resolution No. 96-62 authorizing the execution of a
joint exercise of powers agreement creating the CountyWide
Public Financing Authority;
·
Adopt Resolution No. 96-63 approving financing proceedings for
the City's share of the Countywide 800MHz Communication System
and/or to finance other capital improvements within the
geographic boundaries of the City, approving issuance of
revenue bonds by the Countywide Public Financing Authority for
such purpose, and approving related documents and official
actions;
·
Introduce Ordinance No. 1168, an ordinance approving the
service lease back of certain facilities with the Countywide
Public Financing Authority.
DISCUSSION:
The City has been a participant for the past several years in a
countywide .project to upgrade the current County centralized
communication system to the new 800MHz band to improve the
reliability and security of communication for both Public Safety
and Public Works. After a lengthy and litigious process, the
County awarded a fixed price Contract to Motorola Communications
and Electronics for $70.5 million. The City of Tustin's pro rata
share of the backbone communication system and Police Field
Equipment is approximately $1.36 million. The implementation of
the system is scheduled to begin by July 1996 and is scheduled for
completion during the fiscal year 1999-2000. A funding plan,
escrow accounts and payment schedules have been approved by various
participant subcommittees and are in place. The City of Tustin was
represented on a countywide financing committee and contributed to
the idea of forming a Count.ywide Financing Authority as a cost
effective alternative for those participants who were severely
impacted by the County's bankruptcy or were looking for reasonable
financing alternatives.
At the City Council meeting of May 6 the City Manager presented the
City Council with the concept and flexibility offered by the new
Authority, and Staff was directed to join with the Authority to
finance the City's 800MHz requirements and in addition to include
a portion of the construction costs to complete the 5.0 acre park
at Tustin Ranch Road and Heritage Way. The total City financing
will be approximately $2.4 million.
At this time eleven cities are included in the Financing Authority
and will be financing approximately $20.3 million of the 800MHz
costs and about $14 million of other projects. The total issue is
currently estimated at $39.5 million. As of May 15 the estimated
interest rate was just slightly higher than 5%. The City of Tustin
has chosen to utilize a ten year lease period to reduce ~he overall
cost of financing to the City.
Attached are several exhibits detailing current participants, cash
flows at bond closing and cash flows over the term of the bonds.
There will not be members of the financing team available at the
City Council Meeting but Staff feels that it is well enough versed
in the concept and documents to be able to respond to questions
from the City Council.
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RESOLUTION NO. 96-62
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, AUTHORIZING THE EXECUTION OF
A JOINT EXERCISE OF POWERS AGREEMENT CREATING TO
THE COUNTYWIDE PUBLIC FINANCING AUTHORITY
WHEREAS, the City and the Cities of Brea, Buena Park,
Fullerton, Garden Grove, Orange, San Clemente, Santa Ana, Seal
Beach and Stanton (the ~Other Members"), desire to create a joint
exercise of powers authority to assist in the financing
requirements of the City and the Other Members pursuant to
Articles 1 through 4 (commencing with section 6500) of Chapter 5,
Division 7, Title 1 of the California Government Code;
NOW THEREFORE BE IT RESOLVED, as follows-
10 Section 1. Formation of Joint Powers Authority. The Council
hereby authorizes the officers and staff members of the City to
11 assist in the organization of a joint powers authority among the
City and the Other Members, to be known as the "Countywide Public
12 Financing Authority" (the "Authority"). The Council hereby
approves and authorizes the Mayor, the City Manager, the Finance
13 Director or other appropriate officer or official of the City to
execute and the City Clerk to attest a joint exercise of poWers
14 agreement forming said joint powers authority, in substantially
the form on file with the City Clerk, together with any changes
15 therein deemed advisable by the counsel to the City.
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Section 2. Authority Director. The Council hereby designates
and appoints the City Manager or his designee to act as the City's
representative on the Board of Directors of the Authority.
Section 3. Official Actions. The Mayor, the City Manager, the
Finance Director, the City Clerk and all other proper officers of
19 the City are hereby authorized and directed to take all actions
and do all things necessary or desirable hereunder with respect to
20 the formation of the Authority, including, but not limited to the
execution and delivery of any and all agreements, certificates,
21 instruments and other documents, which they, or any of them, may
deem necessary or desirable and not inconsistent with the purposes
22 of this resolution.
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Section 4. Effect. This Resolution shall take effect
24 immediately.
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ResolUtion No. 96-62
Page 2
PASSED AND ADOPTED at a regular meeting of the City Council
of the City of Tustin held on the 3rd day of June, 1996.
ATTEST:
TRACY WILLS WORLEY, MAYOR
PAMELA STOKER
CITY CLERK
13128-01
JHHW:BDQ:kla
03/06/96
04/29/96
JOINT EXERCISE OF POWERS AGREEMENT
by and among the
CITIES OF BREA, BUENA PARK, FULLERTON, GARDEN GROVE,
LA PALMA, NEWPORT BEACH, ORANGE, SAN CLEMF2qTE,
SANTA ANA, SEAL BEACH, STANTON AND TUSTIN
Dated June 19,1996
(COUNTYWIDE PUBLIC FINANCING AU2~ORITY)
JOINT EXERCISE OF POWERS AGREEMF_aNT
COUNTYWIDE PUBLIC FINANCING AUTHOI~TY
THIS JOINT POWERS AGREEMENT (the "Agreement"), dated June 19, 1996, is by and
among the CITIES OF BREA, BUENA PARK, FULLERTON, GARDEN GROVE, LA PALMA,
NEWPORT BEACH, ORANGE, SAN CLEMENTE, SANTA ANA, SEAL BEACH, STANTON
AND TUSTIN (collectively, the "Members"), each duly organized and existing under the laws
of the State of California;
WITNESSETH:
WHEREAS, the Members are each authorized to own, lease, purchase, receive and hold
property necessary or convenient for their governmental operations; and
WHEREAS, the financing of costs related to the acquisition of property by the Members
acting separately may result in duplication of effort, inefficiencies in administration, and
excessive cost, all of which, in the judgment of the Members, could be eliminated if the financing
of costs related to the acquisition of property and other public capital improvements were
capable of being performed through a single public agency, and such is the purpose of this
Agreement; and
WHEREAS, the Marks-Roos Local Bond Pooling Act of 1985 authorizes agencies
formed under the Act to assist in the financing of public capital improvements to be owned by
any of its members.
NOW, THEREFORE, in consideration of the above premises and of the mutual promises
herein contained, the Members do.hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the words and terms
defined in this Article shall, for the purpose hereof, have the meanings herein specified.
"Act" means Articles 1 through 4 (commencing with section 6500) of Chapter 5, Division
7, Title 1 of the California Government Code.
"Agreement" means this Agreement.
"Auditor and Treasurer" means the Auditor and Treasurer of the Authority appointed
pursuant to Section 3.02.
"Authority" means the Countywide Public Financing Authority established pursuant to
this Agreement.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of
the Act (commencing with section 6584), as now in effect or hereafter amended, Article 2 of the
Act as now in effect or hereafter amended, or any other law available for use by the Authority
in the authorization and issuance of bonds to provide for the financing of Obligations and/or
Public Capital Improvements.
"Bond Purchase Agreement" means an agreement between the Authority and a Member,
pursuant to which the Authority agrees to purchase Obligations from a Member.
"Board" means the Board of Directors referred to in Section 2.04, which shall' be the
governing body of the Authority.
"Bonds" means bonds of the Authority issued pursuant to the Bond Law.
"Directors" means the representatives of the Members appointed to the Board pursuant
to Section 2.03.
"Fiscal Year" means the period from July 1st to and including the following June 30th.
"Members" means the Cities of Brea, Buena Park, Fullerton, Garden Grove, La Palma,
Newport Beach, Orange, San Clemente, Santa Ana, Seal Beach, Stanton and Tustin.
"Obligations" has the meaning given to the term "Bonds" in section 6585(c) of the Bond
Law.
"Public Agency" means any public agency authorized by the Act to enter into a joint
exercise of powers agreement with the Members.
"Public Capital Improvement" has the meaning given to such term in section 6585(g) of the
Act, as in effect on the date hereof, and as hereafter amended.
"Secretary" means the Secretary of the Authority appointed pursuant to Section 3.01.
ARTICLE II
GENERAL PROVISIONS
Section 2.01. Purpose. This Agreement is made pursuant to the Act providing for the
joint exercise of powers common to the Members, and for other purposes as permitted under
the Act, the Bond Law and as agreed by one Or more of the parties hereto. The purpose of this
Agreement is to provide for the financing of Public Capital Improvements for, and working
capital requirements of, the Members through the acquisition by the Authority of such Public
Capital Improvements and/or the purchase by the Authority of Obligations of a Member
pursuant to Bond Purchase Agreements and/or the lending of funds by the Authority to a
Member and/or the leasing of Public Capital Improvements to a Member.
Section 2.02. Creation of Authority. Pursuant to the Act, there is hereby created a public
entity to be known as the "Countywide i~ublic Financing Authority". The Authority shall be a
public entity separate and apart from the Members, and shall administer this Agreement.
Section 2.03. Board. The Authority shall be administered by a Board of twelve (12)
Directors, unless and until changed by amendment of this Agreement. One Directors shall be
appointed by the governing body of each of the Members. Each Director shall hold office until
the governing body of his or her related Member shall have appointed a successor. The Board
shall be called the "Board of Directors of the Countywide Public Financing Authority." All
voting power of the Authority shall reside in the Board.
Section 2.04. Meetings of the Board.
(a) Regular Meetings. The Board shall provide for its regular meetings; provided, however,
that at least one regular meeting shall be held each year. The date, hour and place of the holding
of regular meetings shall be fixed by resolution of the Board and a copy of such resolution shall
be filed with each of the Members.
Co) Special Meetings. Special meetings of the Board may be called in accordance with the
provisions of section 54956 of the California Government Code.
(c) Call, Notice and Conduct of Meetings. All meetings of the Board, including without
limitation, regular, adjourned regular and special meetings, shall be called, noticed, held and
conducted in accordance with the provisions of sections 54950 et seq. of the California
Government Code.
Section 2.05. Minutes. The Secretary shall cause to be kept minutes of the meetings of the
Board and shall, as soon as possible after each meeting, cause a copy of the minutes to be
forwarded to each Director and to the Members.
Section 2.06. Votine. Each Director shall have one vote.
Section 2.07. Quorum: Required Votes: Approvals. Directors holding a majority of the
votes shall constitute a quorum for the transaction of business, except that less than a quorum
may adjourn from time to time. The affirmative votes of at least a majority of the Directors
(whether present or not) shall be required to take any action by the Board.
Section 2.08. Bylaws. The Board may adopt, from time to time, such bylaws and other
rules and regulations for the conduct of its meetings as are necessary for the purposes hereof.
ARTICLE 111
OFFICERS AND EMPLOYEES
Section 3.01. Chairman and Vice Chairman. The Board shall elect a Chairman and Vice
Chairman from among the Directors. The officers shall perform the duties normal to said
offices.
Section 3.02. Executive Director. The City Manager of the City of Santa Ana is hereby
designated as the Executive Director of the Authority.
Section 3.03. Auditor and Treasurer. Pursuant to section 6505.6 of the Act, the Finance
Director of the City of Santa Ana is hereby designated as the Auditor and Treasurer of the
Authority. The Auditor and Treasurer shall be the depository, shall have custody of all of the
accounts, funds and money of the Authority from whatever source, shall have the duties and
obligations set forth in sections 6505 .and 6505.5 of the Act and shall assure that there shall be
strict accountability of all funds and reporting of all receipts and disbursements of the
Authority.
Section 3.04. Secretary. The City Clerk of the City of Santa Ana is hereby designated as
the Secretary of the Authority. The Secretary shall countersign all contracts signed by the
Chairman, the Vice Chairman or the Executive Director on behalf of the Authority, perform such
other duties as may be imposed by the Board and cause a copy of this Agreement to be filed
with the Secretary of State of the State of California pursuant to the Act.
Section 3.05. Officers in Charge of Records, Funds and Accounts. Pursuant to section
6505.1 of the Act, the Auditor and Treasurer shall have charge of, handle and have access to all
accounts, funds and money of the Authority and all records of the Authority relating thereto;'
and the Secretary shall have charge of, handle and have access to all other records of the
Authority.
Section 3.06. Bonding Persons Havin~ Access to Public Capital Improvement~. From
time to time, the Board may designate perso~ns, in addition to the Secretary and the Auditor
and Treasurer, having charge of, handling or having access to any records, funds or accoCmts or
any Public Capital Improvement of the Authority, and the respective amounts of the official
bonds of the Secretary and the Auditor and Treasurer and such other persons pursuant to
section 6505.1 of the Act.
Section 3.07. Le~tal Advisor. The Board shall have the power to appoint the legal
advisor of the Authorit~ who shall perform such duties as may be prescribed by the Board.
Such legal advisor may be the City Attorney of the City of Santa Aha.
Section 3.08..Other Emvlovees. The Board shall have the power to appoint and employ
such other consultants and in~lel~endent contractors as may be necessary for the purposes of
this Agreement.
All of the privileges and immunities from liability, exemption from laws, ordinances and
rules, all pension, relief, disability, workers' compensation and other benefits which apply to
the activities of officers, agents, or employees of a public agency when performing their
respective functions shall apply to them to the same degree and extent while engaged in the
performance of any of the functions and other duties under this Agreement.
None of the officers, agents, or employees directly employed by the Board shall be
deemed, by reason of their employment by the Board to be employed by a Member or, by reason
of their employment by the Board, to be subject to any of the requirements of a Member.
Section 3.07. Assistant Officer~. The Board may appoint such assistants to act in the
place of the Secretary or other officers of the Authority (other than any Director) as the Board
shall from time to time deem appropriate.
ARTICLE IV
POWERS
Section 4.01. General Powers. The Authority shall exercise in the manner herein provided
the powers common to the Members, or as otherwise permitted under the Act, and necessary to
the accomplishment of the purposes of this Agreement, subject to the restrictions set forth in
Section 4.04. The Authority shall have the sovereign power of eminent domain and by reason of
such fact will constitute a political subdivision of the State of California for purposes of federal
income taxation.
As provided in the Act, the Authority shall be a public entity separate from the
Members. The Authority shall have the power to acquire and to finance the acquisition of Public
Capital Improvements necessary or convenient for the operation of a Member, and to acquire
Obligations of a Member.
Section 4.02. Power to Issue Revenue Bonds. The Authority shall have all of the powers
provided in the Act, ' including but not limited to Article 4 of the Act (commencing with section
6584), and including the power to issue Bonds under the Bond Law.
Section 4.03. Specific Powers. The Authority is hereby authorized, in its own name, to
do all acts necessary for the exercise of the foregoing powers, including but not limited to, any
or all of the following:
(a) to make and enter into contracts;
(b) to employ agents or employees;
(c) to acquire, construct, manage, maintain or operate any Public Capital Improvement,
including the common power of the Members to acquire any Public Capital Improvement by the
power of eminent domain;
(d) to sue and be sued in its own name;
(e) to issue Bonds and otherwise to incur debts, liabilities or obligations, provided that
no such Bond, debt, liability or obligation shall constitute a debt, liability or obligation of the
Members;
(f) to apply for, accept, receive and disburse grants, loans and other aids from any
agency of the United States of America or of the State of California;
(g) to invest any money in the treasury pursuant to section 6505.5 of the Act that is not
required for the immediate necessities of the Authority, as the Authority determines is
advisable, in the same manner and upon the same conditions as local agencies, pursuant to
section 53601 of the California.Government Code;
(h) to apply for letters of credit or other form of financial guarantees in order to secure
the repayment of Bonds and enter into agreements in connection therewith;
(i) to carry out and enforce all the provisions of this Agreement;
(j) to make and enter into Bond Purchase Agreements;
(k) to purchase Obligations of a Member; and
(1) to exercise any and all other powers as may be provided in the Act.
Section 4.04. Restrictions on Exercise of Powers. The powers of the Authority shall be
exercised in the manner provided in the Act and in the Bond Law and, except for those powers
set forth in Article 4 of the Act, shall be subject (in accordance with section 6509 of the Act) to
the restrictions upon the manner of exercising such powers that are imposed upon the City of
Santa Ana in the exercise of similar powers.
Section 4.05. Obli~ation~ of Authoritv. The debts, liabilities and obligations of the
Authority shall not be the ~lebts, liabilities and c~bligations of any Member.
ARTICLE V
METHODS OF PROCEDURE; CREDIT TO MEMBERS
Section 5.01. Assumption of Responsibilities By the Authority. As soon as practicable
after the date of execution of this Agreement, the Directors shall give notice (in the manner
required by Section 2.04) of the organizational meeting of the Board. At said meeting the Board
shall provide for its regular meetings as required by Section 2.04 and elect a Chairman and Vice
Chairman, and appoint the Secretary.
Section 5.02. Delegation of Powers. The Members hereby delegate to the Authority the
power and duty to acquire, by lease, lease-purchase, installment sale agreements, or otherwise,
or make loans to finance, such Public Capital Improvements as may be necessary or convenient
for the operation of the Members and to exercise the power of condemnation as necessary in
connection therewith.
Section 5.03. Credit to Member~. All accounts or funds created and established
pursuant to any instrument or agreement to which the Authority is a party, and any interest
earned or accrued thereon, shall inure to the benefit of the Members in the respective
proportions for which such funds or accounts were created.
ARTICLE VI
CONTRIBUTION; ACCOUNTS AND REPORTS; FUNDS
Section 6.01. Contributions. The Members may in the appropriate circumstance when
required hereunder: (a) make contributions from their treasuries for the purposes set forth
herein, (b) make payments of public funds to defray the cost of such purposes, (c) make
advances of public funds for such purposes, such advances to be repaid as provided herein, or
(d) use its. personnel, equipment or property in lieu of other contributions or advances. The
provisions of section 6513 of the California Government Code are hereby incorporated into this
Agreement.
Section 6.02. Accounts and Reports. To the extent not covered by the duties assigned to
a trustee chosen by the Authority, the Auditor and Treasurer shall establish and maintain such
funds and accounts as may be required by good accounting practice or by any provision of any
trust agreement entered into with respect to the proceeds of any Bonds issued by the Authority.
The books and records of the Authority in the hands of a trustee or the Auditor and Treasurer
shall be open to inspection at all reasonable times by representatives of the Members. The
Auditor and Treasurer within 120 days after the close of each Fiscal Year, shall give a complete
written report of all financial activities for such fiscal year to the Members to the extent such
activities are not covered by the report of such trustee. The trustee appointed under any trust
agreement shall establish suitable funds, furnish financial reports and provide suitable
accounting procedures to carry out the provisions of said trust agreement. Said trustee may be
given such duties in said trust agreement as may be desirable to carry out this Agreement.
Section 6.03..Fund~. Subject to the applicable provisions of any instrument or agreement
which the Authority may enter into, which may provide for a trustee to receive, have custody of
and disburse Authority funds, the Auditor and Treasurer of the Authority shall receive, have
the custody of and disburse Authority funds as nearly as possible in accordance with generally
accepted accounting practices, shall make the disbursements required by this Agreement or to
carry out any of the provisions or purposes of this Agreement.
Section 6.04. Annual Budeet and Administrative Exvenses. The Board may adopt a
budget for administrative expenses, which shall include ali expenses not included i~ any
financing issue of the Authority, annually prior to July 1st of each year. The estimated annual
administrative expenses of the Authority shall be allocated by the Authority to the Members
.equally.
ARTICLE VII
Section 7.01. Term. This Agreement shall become effective as of the date hereof and shall
continue in full force and effect so long as any Bonds remaining outstanding or so long as the
Authority shall own any interest in Public Capital Improvements.
Section 7.02. Disposition of Assets. Upon termination of this Agreement, all property of
the Authority, both real and personal, shall be divided among the parties hereto in such manner
as shall be agreed upon by the parties.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Notices. Notices hereunder shall be in writing and shall be sufficient if
delivered to the notice address of each party hereto for legal notices or as otherwise provided
by a party hereto in writing to each of the other parties hereto.
Section 8.02. Section Headings. All section headings in this .Agreement are for
convenience of reference only and ar~' not to be construed as modifying or governing the
language in the section referred to or to define or limit the scope of any provision of this
Agreement.
Section 8.03. Consent. Whenever in this .Agreement any consent or approval is required,
the same shall not be unreasonably withheld.
Section 8.04. Law Governing. This Agreement is made in the State of California under
the constitution and laws of the Stale of California, and is to be so construed.
Section 8.05..Amendments. This Agreement may be amended at any time, or from time
to time, except as limited by contract with the owners of Bonds issued by the .Authority or
certificates of participation in payments to be made by the Authority or the Members or by
applicable regulations or laws of any jurisdiction having authority, by one or more supplemental
agreements executed by all of the parties to this Agreement either as required in order to carry
out any of the provisions of this .Agreement or for any other purpose, including without
limitation addition of new parties (including any legal entities or taxing areas heretofore or
hereafter created) in pursuance of the purposes of this Agreement.
Section 8.06. Enforcement by .Authority. The Authority is hereby authorized to take any
or all legal or equitable actions, including but not limited to injunction and specific performance,
necessary or permitted by law to enforce this Agreement.
Section 8.07. Severability. Should any part, term or provision of this Agreement be
decided by any court of competent jurisdiction to be illegal or in conflict with any law of the
State of California, or otherwise be rendered unenforceable or ineffectual, the validity of the
remaining portions or provisions shall not be affected thereby.
Section 8.08. Successors. This Agreement shall be binding upon and shall inure to the
benefit of the successors of the Members, respectively. No Member may assign any right or
obligation hereunder without the written consent of the others.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their proper officers thereunto duly authorized and their official seals to be
hereto affixed, on the day and year first set forth above.
CITY OF BREA
ATTEST:
By
Title
City Clerk
CITY OF BUENA PARK
ATTEST:
By
Title
City Clerk
CITY OF FULLERTON
ATTEST:
By
Title
City Clerk
CITY OF GARDEN GROVE
ATTEST:
By
Title
City Clerk
CITY OF LA PALMA
ATTEST:
By
Title
City Clerk
ATTEST:
City Clerk
ATTEST:
City Clerk
ATTEST:
City Clerk
ATTEST:
City Clerk
ATTEST:
City Clerk
CITY OF NEWPORT BEACH
By
Title
CITY OF ORANGE
By
Title
CITY OF SAN CLEMENTE
By
Title
CITY OF SANTA ANA
By
Title
CITY OF SEAL BEACH
By
Title
CITY OF STANTON
ATTEST:
By
Title
City Clerk
CITY OF TUSTIN
ATTEST:
By
Title
City Clerk
RESOLUTION NO. 96-63
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, APPROVING FINANCING
PROCEEDINGS FOR THE CITY'S SHARE OF THE
COUNTYWIDE 800 MHZ COMMUNICATIONS SYSTEM AND/OR
TO FINANCE OTHER CAPITAL IMPROVEMENTS WITHIN THE
GEOGRAPHIC BOUNDARIES OF THE CITY, APPROVING
ISSUANCE OF REVENUE BONDS BY THE COUNTYWIDE
PUBLIC FINANCING AUTHORITY FOR SUCH PURPOSE, AND
APPROVING RELATED DOCUMENTS AND OFFICIAL ACTIONS
WHEREAS, the City is proceeding to finance its share of the
Countywide 800 MHz communications system and/or to finance other
capital improvements within the geographic boundaries of the city
(collectively, the ~Project"), and the City has proposed to
implement a lease financing.for the purpose of raising the funds
to finance the Project;
WHEREAS, for the purpose of obtaining the moneys required to
finance the Project, the City proposes to lease one or more
existing real property sites and the buildings thereon
(collectively, the "Leased Premises"), to the Countywide Public
Financing Authority (the "Authority"), which has been formed for
the purpose of assisting the City and other member cities in
connection with their financing needs, and to lease the Leased
Premises back from the Authority, and the Authority proposes to
issue its Countywide Public Financing Authority (Orange County,
California) 1996 Revenue Bonds (the "Bonds") which will be secured
by rental payments made by the City under such lease and by rental
payments to be made by such other member cities under separate
leases; and
WHEREAS, the Council approves all of said transactions in
furtherance of the public purposes of the City, and wish~s at this
time to take its action approving the issuance and sale of the
Bonds and the lease financing to be accomplished thereby;
NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as
follows:
Section 1. Approval of Bonds. The Council hereby approves the
issuance of the Bonds by the Authority for the purpose, among
others, of providing funds to enable the City to undertake the
Project.
Section 2. ApDroval of Financinq Leases. The Council hereby
approves each of the following agreements required to implement
the financing described in this Resolution, in substantially the
respective forms on file with the City Clerk together with any
changes therein or additions thereto deemed advisable by the
Mayor, the City Manager or the Finance Director, whose execution
thereof shall be conclusive evidence of the approval of any such
changes or additions:
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Resolution No. 96-63
Page 2
(a) a Site and Facility Lease by and between the City, as
lessor, and the Authority, as lessee, relating to the lease of the
Leased Premises by the City to the Authority; and
(b) a Lease Agreement by and between the Authority, as
lessor, and the City, as lessee, relating to the lease of the
Leased Premises by the Authority back to the City, so long as the
term of the Lease Agreement does not exceed 10 years and so long
as the maximum annual lease payments to be paid by the City
thereunder does not exceed $420,000.
The Mayor, the City Manager or the Finance Director is hereby
authorized and directed for and in the name and on behalf of the
City to execute, and the City Clerk is hereby authorized and
directed to attest and affix the seal of the City to, the final
form of each of the foregoing documents.
Section 3. Sale of Bonds by Authority; Letter of
Representations. The Council hereby approves the negotiated sale
of the Bonds to Stone & Youngberg LLC (the "Underwriter") pursuant
to the terms and conditions set forth in bond purchase agreement
(the "Bond Purchase Contract"), by and between the Underwriter and
the Authority, substantially in the form on file with the City
Clerk, together with any additions thereto or changes therein as
may be deemed necessary or advisable by the Mayor, the City
Manager or the Finance Director, so long as the principal amount
of Bonds sold which are allocable to the City does not exceed
$3,100,000 and so long as the Underwriter's discount (exclusive of
original issue discount which does not constitute compensation to
the Underwriter) does not exceed 1%. The Bonds may be issued in a
single series, or in multiple series which are issued by the
Authority from time to time, as may be determined by The Mayor,
the City Manager or the Finance Director taking into account the
financing needs of the City.
The Council hereby approves the Letter of Representations, in
substantially the form on file with the City Clerk together with
any changes therein or additions thereto deemed advisable by the
Mayor, the City Manager or the Finance Director, whose execution
thereof shall be conclusive evidence of the approval of any such
changes or additions.
Section ~. Official Statement. The Council hereby approves,
and hereby deems final, within the meaning of Rule 15c2-12 of the
Securities Exchange Act of 1934, the preliminary official
statement describing the Bonds (the "Preliminary Official
Statement"), excluding information therein relating to financing
participants other than the City, in substantially the form on
file with the City Clerk. The Mayor, the City Manager or the
Finance Director is hereby authorized to execute an appropriate
Resolution No. 96-63
Page 3
certificate stating the Council's determination that the
Preliminary Official Statement has been deemed final within the
meaning of such Rule. Distribution of the Preliminary Official
Statement by the Underwriter in connection with the sale of the
Bonds is hereby approved. The Mayor, the City Manager or the
Finance Director is hereby authorized and directed to approve any
changes in or additions to a final form of official statement (the
"Final Official Statement~). The Council hereby authorizes the
distribution of the Final Official Statement by the Underwriter.
8 Section 5. Official Actions. The Mayor, the City Manager, the
Finance Director, the City Clerk and all other officers of the
9 City are each authorized and directed in the name and on behalf of
the City to make any and all assignments, certificates,
10 requisitions, agreements' notices, consents, instruments of
conveyance, warrants and other documents, which they or any of
11 them might deem necessary or appropriate in order to consummate
any of the transactions contemplated by the documents approved
12 pursuant to this Resolution. Whenever in this Resolution any
officer of the City is authorized to execute or countersign any
13 document or take any action, such execution, countersigning or
action may be taken on behalf of such officer by any person
14 designated by such officer to act on his or her behalf in the case
such officer shall be absent or unavailable.
15
Section 6. Effect. This Resolution shall take effect
immediately.
PASSED AND ADOPTED at a regular meeting of the City Council
of the City of Tustin held on the 3rd day of June, 1996.
19
2O
21
ATTEST-
TRACY WILLS WORLEY, MAYOR
22
PAMELA STOKER
23
CITY CLERK
24
25
26
27
28
13128-01
JHHW:BDQ:kla
03/06/96
04/29/96
INDENTURE OF TRUST
Dated as of July 1,1996
by and between
as trustee
and the
COUNTYWIDE PUBLIC FINANCING AUTHORITY
Authorizing the Issuance of
$
Countywide Public Financing Authority
(Orange County, California)
1996 Revenue Bonds
Section 1.01.
Section 1.02.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Definitions ......................................................................... ........................ 3
Interpretation .............................................................................................................. 9
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
Section 2.07.
Section 2.08.
Section 2.09.
ARTICLE II
THE BONDS
Authorization of Bonds .................................................................................... · .......... 10
Terms of the Bonds .................................................................................................... 10
Transfer and Exchange of Bonds ................................................................................ 11
Book-Entry System .................................................................................................... 11
Registration Books ...................................................................................................... 12
Form and Execution of Bonds ..................................... · , .... 13
Temporary Bonds ...................................................................................................... 13
Bonds Mutilated, Lost, Destroyed or Stolen ................................................................. 13
CUSIP Numbers ............
Section 3.01.
Section 3.02.
Section 3.03.
Section 3.04.
Section 3.05.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Issuance of the Bonds ................................................................................................. 15
Application of Proceeds of Sale of Bonds ..................................................................... 15
Establishment and Application of Costs of Issuance Fund ............................................ 15
Establishment and Application of Project Fund ........................................................... 15
Validity of Bonds .................................... ~ .................................................................. 15
Section 4.01.
Section 4.02.
Section 4.03.
Section 4.04.
Section 4.05.
Section 4.06.
ARTICLE IV
REDEMPTION OF BONDS
Terms of Redemption ............................................................................................. .~.16
Selection of Bonds for Redemption ............................................................................. 16
Notice of Redemption ................................................................................................ 16
Partial Redemption of Bonds ...................................................................................... 17
Effect of Redemption ................................................................................................. 17
Purchase of Bonds ..................................................................................................... 17
Section 5.01.
Section 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Section 5.06.
Section 5.07.
Section 5.08.
Section 5.09.
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL
AND INTEREST
Pledge and Assignment; Bond Fund .......................................................................... 18
Allocation of Revenues .............................................................................................. 18
Application of Interest Account .................................................................................. 19
Application of Principal Account ................................................................................ 19
Application of Reserve Account ................................................................................. 19
Application of Redemption Fund ............................................................................... 20
Insurance and Condemnation Fund ........................................................................... 20
Investments .................................................................. 21
Valuation and Disposition of Investments ................................................................... 21
-i-
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
6.01.
6.02.
6.03.
6.04.
6.05.
6.06.
6.07.
6.08.
6.09.
6.10.
6.11.
ARTICLE VI
PARTICULAR COVENANTS
Punctual Payment ..................................................................................................... 22
Extension of Payment of Bonds ....................... : .......................................................... 22
Against Encumbrances .................................................................. ' ............................ 22
Power to Issue Bonds and Make Pledge and Assignment ............................................ 22
Accounting Records ................................................................................................... 22
No Additional Obligations ......................................................................................... 22
Tax Covenants ................................................... : ................................................... '...23
Collection of Amounts Due Under Lease Agreements ................................................. 23
Continuing Disclosure ............................................................................................... 23
Waiver of Laws ......................................................................................................... 24
Further Assurances ................................................................................................... 24
SectiOn
Section
Section
Section
Section
Section
Section
Section
Section
Section
7.01.
7.02.
7.03.
7.04.
7.05.
7.06.
7.07.
7.08.
7.09.
7.10.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Events of Default ....................................................................................................... 25
Remedies Upon Event of Default ............................................................................... 25
Application of Revenues and Other Funds After Default ............................................ 26
Trustee to Represent Bond Owners ............................................................................ 26
Bond Owners' Direction of Proceedings ...................................................................... 27
Limitation on Bond Owners' Right to Sue ................................................................... 27
Absolute Obligation of Authority ............................................................................... 27
Termination of Proceedings ....................................................................................... 28
Remedies Not Exclusive ............................................................................................ 28
No Waiver of Default ................................................................................................ 28
Section 8.01.
Section 8.02.
Section 8.03.
Section 8.04.
SeCtion 8.05.
Section 8.06.
ARTICLE VIII
THE TRUSTEE
Duties, Immunities and Liabilities of Trustee ....................... ~ ...................................... 29
Merger or Consolidation ............................................................................................ 30
Liability of Trustee ................................................................................................ .~...30
Right to Rely on Documents ...................................................................................... 32
Preservation and Inspection of Documents .................................................................. 32
Compensation and Indemnification ............................................................................ 32
Section 9.01.
Section 9.02.
Section 9.03.
Section 9.04.
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Amendments Permitted ............................................................................................ 33
Effect of Supplemental Indenture ............................................................................... 34
Endorsement of Bonds; Preparation of New Bonds ...................................................... 34
Amendment of Particular Bonds ................................................................................ 34
Section 10.01.
Section 10.02.
Section 10.03.
Section 10.04.
ARTICLE X
DEFEASANCE
Discharge of Indenture .............................................................................................. 35
Discharge of Liability on Bonds ................................................................................. 35
Deposit of Money or Securities with Trustee ............................................................... 35
Unclaimed Funds ...................................................................................................... 36
Section 11.01.
Section 11.02.
Section 11.03.
Section 11.04.
Section 11.05.
Section 11.06.
Section 11.07.
Section 11.08.
Section 11.09.
Section 11.10.
Section 11.11.
Section 11.12.
Section 11.13.
Section 11.14.
EXHIBIT A:
EXHIBIT B:
EXHIBIT C:
EXHIBIT D:
ARTICLE XI
MISCELLANEOUS
Liability of Authority Limited to Revenues ................................................................ 37
Limitation of Rights to Parties and Bond Owners .................. 37
Funds and Accounts .................................................................................................. 37
Waiver of Notice; Requirement of Mailed Notice ........................................................ 37
Destruction of Bonds .................................................................................................. 37
Severability of Invalid Provisions ............................................................................... 37
Notices ...................................................................................................................... 38
Evidence of Rights of Bond Owners ............................... 38
Disqualified Bonds ........................................................ 1111111111111111111111111111111111111111111138
Money Held for Particular Bonds ............................................................................... 39
Waiver of Personal Liability ...................................................................................... 39
Successor Is Deemed Included in All References to Predecessor .................... ' ............... 39
Execution in Several Counterparts .............................................................................. 39
Governir/g Law ......................................................................................................... 39
Form of Bond
Members
Description of Project
Members' Percentage of Annual Debt Service
INDENTURE OF TRUST
This INDENTURE OF TRUST, made and entered into as of July 1, 1996, is by and
between the COUN~DE PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority duly organized and existing under and by virtue of the laws of the State of California
(the "Authority"), and , a organized and existing
under the laws of the United States of America with a corporate trust office in Los Angeles,
California, being qualified to accept and administer the trusts hereby created (the "Trustee");
WITNESSETH'
WHEREAS, the Authority is a joint exercise of powers authority duly organized and
existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated
, 1996, by and among the Cities of Brea, Buena Park, Fullerton, Garden Grove, La
Palma, Newport Beach, Orange, San Clemente, Santa Ana, Seal Beach, Stanton and Tustin
(collectively, the "Members"), and 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 (commencing with section 6584) of the Act (the
"Bond Law") to borrow money for the purpose of financing the acquisition of bonds, notes and
other obligations of, or for the purpose of making loans to, public entities, including the
Members, and to provide financing for public capital improvements of public entities, including
the Members; and
WHEREAS, the Members each wish to finance their prbportionate share of the Orange
County Countywide 800 MHz communications system and to finance other capital
improvements within the geographic boundaries of the certain of the Members (collectively, the
"Project");
WHEREAS, for the purpose of providing financing for the Project, the Authority has
determined to issue its Countywide Public Financing Authority (Orange County, California)
1996 Revenue Bonds, in the aggregate principal amount of $ (the "Bonds"), all
pursuant to and secured by this Indenture in the manner provided herein; and
WHEREAS, in order to provide for the repayment of the Bonds, each Member has
agreed to lease certain real property and improvements to the Authority and to lease-back such
real property and improvements from the Authority pursuant to separate lease agreements,
each dated as of July 1, 1996, by and between the Authority, as lessor, and such Member, as
lessee, under which such Members, in the aggregate, have agreed to make certain lease payments
to the Authority which have been calculated to be sufficient to enable the Authority to pay the
principal of and interest and premium (if any) on the Bonds when due and payable; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and
secured and to secure the payment of the principal thereof and interest and premium, if any,
thereon, the Authority has authorized the execution and delivery of this Indenture;
WHEREAS, all acts and proceedings required by law necessary to make the Bonds,
when executed by the Authority, authenticated and delivered by the Trustee, and duly issued,
the valid, binding and legal special obligations of the Authority, and to constitute this Indenture
a valid and binding agreement for the uses and purposes herein set forth in accordance with its
terms, have been done and taken, and the execution and delivery of the Indenture have been in
all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time
issued and outstanding under this Indenture, according to their tenor, and to secure the
performance and observance of all the covenants and conditions therein and herein set forth,
and to declare the terms and conditions upon and subject to which the Bonds are to be issued
and received, and in consideration of the premises and of the mutual covenants herein
contained and of the purchase and acceptance of the Bonds by the owners thereof, and for
other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does
hereby covenant and agree with the Trustee, for the benefit of the respective owners from time
to time of the Bonds, as follows:
-2-
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitiorts. Unless the context otherwise requires, the terms defined in this
Section 1.01 shall, for all purposes of this Indenture and of any indenture supplemental hereto
and of any certificate, opinion or other document herein mentioned, have the meanings herein
specified, to be equally applicable to both the singular and plural forms of any of the terms
herein defined. In addition, all capitalized terms used herein and not otherwise defined in this
Section 1.01 shall have the respective meanings given such terms in the Lease Agreements.
"Additional Payments" means the additional payments to be made by a Member
pursuant to Section 4.7 of the Lease Agreements.
"Authority" means the Countywide Public Financing Authority, a joint exercise of
powers authority duly organized and existing under the laws of the State.
"Authority Continuing Disclosure Certificate" shall mean that certain Continuing
Disclosure Certificate executed by the Authority and dated the Closing Date, as originally
executed and as it may be amended from time to time in accordance with the terms thereof.
"Author&ed Representative" means: (a) with respect to the Authority, its Chairman,
Secretary or Treasurer, or any other person designated as an Authorized Representative of the
Authority by a Written Certificate of the Authority signed by its Chairman and filed with the
Member and the Trustee; and (b) with respect to a Member, its Mayor, City Manager, Finance
Director, or any other person designated as an Authorized Representative of Member by a
Written Certificate of the Member signed by its Mayor, City Manager or Finance Director and
filed with the Authority and the Trustee.
"Bond Counsel" means (a) Jones Hall Hill & White, A Professional Law Corporation, or
(b) any other attorney or firm of attorneys appointed by or acceptable to the Authority of
nationally-recognized experience in the issuance of obligations the interest on which is
excludable from gross income for federal income tax purposes under the Code.
"Bond Fund" means the fund by that name established and held by the Trustee pursuant
to Section 5.01.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting
Article 4 (commencing with section 6584) of Chapter 5, Division 7, Title 1 of the Government
Code of the State, as amended from time to time.
"Bond Year" means each twelve-month period extending from July 2 in one calendar year
to July 1 of the succeeding calendar year, both dates inclusive; except that the first Bond Year
shall commence on the Closing Date and extend to and including July 1,1997.
"Bonds" means the $ aggregate principal amount of Countywide Public Financing
Authority (Orange County, California) 1996 Revenue Bonds authorized by'and at any time
Outstanding pursuant to the Bond Law and this Indenture.
"Business Day" means a day (other than a Saturday or a Sunday) on which banks are
not required or authorized to remain closed in the city in which the (Sffice of the Trustee is
located.
"Closing Date" means July _ , 1996, being the date of delivery of the Bonds to the
Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or
(except as otherwise referenced herein) as it may be amended to apply to obligations issued on
the Closing Date, together with applicable proposed, temporary and final regulations
promulgated, and applicable official public guidance published, under such Code.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority,
initial fees and expenses of the Trustee (including but not limited to fees and expenses for legal
counsel), title insurance premiums, appraisal fees, compensation to any financial consultants or
underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of
preparation and reproduction of documents and costs of printing.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"Defeasance Obligations" means (a) cash, or (b) non-callable Federal Securities.
"Event of Default' means any of the events specified in Section 7.01.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "fair market value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired
in accordance with applicable regulations under the Code, (ii) the investment is an agreement
with specifically negotiated withdrawal or reinvestment provisions and a specifically
negotiated interest rate (for example, a guaranteed investment contract, a forward supply
contract or other investment agreement) that is acquired in accordance with applicable
regulations under the Code, (iii) the investment is a United States Treasury Security--State and
Local Government Series, that is acquired in accordance with applicable regulations ot the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State of California but only if at all times during which the investment is held its
yield'is reasonably expected to be equal to or greater than the yield on a reasonably comparable
direct obligation of the United States. The Trustee shall have no duty in connection with the
determination of Fair Market Value other than to follow the investment directions of a City
Representative in any written directions of a City Representative.
"Federal Securities" means direct general obligations of the United States of America
(including obligations issued or held in book entry form on the books of the Department of the
Treasury) or obligations the payment of principal of and interest on which are unconditionally
guaranteed by, the United States of America.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month
period selected and designated by the Authority as its official fiscal year period.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
"Independent Accountant" means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority or the Member, and who, or each of
whom (a) is in fact independent and not under domination of the Authority or the Member; Co)
does not have any substantial interest, direct or indirect, in the Authority or the Member; and
(c) is not connected with the Authority or the Member as an officer or employee of the
Authority or the Member but who may be regularly retained to make annual or other audits of
the books of or reports to the Authority or the Member.
"InfOrmation Services" means Financial Information, Inc.'s "Daily Called Bond Service",
30 Montgomery Street, 10th Floor, Jersey City, NJ 07302, Attention: Editor; Kenny Information
Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, NY 10006; Moody's'
5250 77 Centre Drive, Suite 150, Charlotte, NC 28217, Attention: Called Bonds Dept.; S&P's
"Called Bond Record," 25 Broadway, 3rd Floor, New York, NY 10004; and, in accordance with
then current guidelines of the Securities and Exchange Commission, such other addresses
and/or such other services providing information with respect to the redemption of bonds as
the Authority may designate in a Written Certificate of the Authority delivered to the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and held
bY the Trustee pursuant to Section 5.07.
"Interest Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
"Interest Payment Date" means each January 1 and July 1, commencing January 1,1997.
"Lease Agreements" means those certain Lease Agreements, each dated as of July 1, 1996,
by and between the Authority, as lessor, and each Member, as lessee, of the Leased Premises,
as originally executed and as it may from time to time be supplemented, modified or amended
in accordance with the terms thereof and of this Indenture.
"Lease Payments" means the aggregate amount of all the payments required to be paid by
each Member pursuant to Section 4.3 of its respective Lease Agreement.
"Leased Premises" means the real property and improvements leased by the Autho?ity to
each Member pursuant to its respective Lease Agreement~
"Members" means the Cities of Brea, Buena Park, Fullerton, Garden Grove, La Palma,
Newport Beach, Orange, San Clemente, Santa A_ua, Seal Beach, Stanton and Tustin.
"Moody's" means Moody's Investors Service, New York, New York, or its successors.
"Net Proceeds" means amounts derived from any policy of casualty insurance or title
insurance with respect to the Leased Premises, or the proceeds of any taking of the Leased
Premises or any portion thereof in eminent domain proceedings (including sale under threat of
such proceedings), to the extent remaining after payment therefrom of all expenses incurred in
the collection and administration thereof.
"Office" means, with respect to the Trustee, the corporate trust office of the Trustee at
, Los Angeles, CA , or at such other or additional offices as may be
spedfied by the Trustee in writing to the Authority and the Members.
"Origi~taI Purchaser" means Stone & Youngberg LLC, as original purchaser of the Bonds
upon their delivery by the Trustee on the Closing Date.
"Outstanding", when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to.
which all liability of the Authority shall have been discharged in accordance with Section 10.02,
including Bonds (or portions thereof) described in Section 11.10; and (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner", whenever used herein with respect to a Bond, means the person in whose
name the oWnership of such Bond is registered on the Registration Books.
"Participating Underwriter" shall have the meaning ascribed thereto in the Authority
Continuing Disclosure Certificate.
"Permitted Investments" means the following, but only to the extent that the same are
acquired at Fair Market Value:
(a) Federal Securities;
(b) debentures of the Federal Housing Administration to the extent such obligations are
guaranteed by the full faith and credit of the United States of America;
(c) obligations of the following agencies which are not guaranteed by the United States
of America: (i) participation certificates or debt obligations of the Federal Home Loan Mortgage
Corporation; (ii) consolidated system-wide bonds and notes of the Farm Credit Banks
(consisting of Federal Land Banks, Federal Intermediate Credit Banks and Banks for
Cooperatives); (iii) consolidated debt obligations or letter of credit-backed issues of the Federal
Home Loan Banks; (iv) mortgage-backed securities (excluding stripped mortgage securities
which are valued greater than par on the portion of unpaid principal) or debt obligations of the
Federal National Mortgage Association; or (v) letter of credit-backed issues or debt obligations
of the Student Loan Marketing Association; provided, however, that not more than ten percent
(10%) of the proceeds of the Certificates may, in the aggregate, be invested in any such
obligations at one time; -
(d) Federal funds, unsecured certificates of deposit, time deposits and bankers
acceptances (having maturities of not more than 365 days) of banks (including the Trustee and
its affiliates) the short-term obligations of which are rated in the highest Rating Category by
Moody's S&P;
(e) deposits which are fully insured by the Federal Deposit Insurance Corporation
("FDIC");
(f) 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) rated in one of the
three highest long-term Rating Categories by Moody's and S&P;
(g) commercial paper (having original maturities of not more than 365 days) rated in the
highest Rating Category by Moody's and S&P;
(h) money market funds rated in the highest Rating Category by Moody's and S&P;
(i) repurchase agreements with
(i) any institution with long-term debt rated in one of the three highest Rating
Categories by Moody's and S&P;
(ii) with any corporation or other entity that falls under the jurisdiction of the
Federal Bankruptcy Code, provided that:
(A) the term of such repurchase agreement is less than one year or due on
demand;
(B) the Trustee (or a third party on behalf of the trustee) has possession
of the collateral;
(C) the market value of the collateral is maintained as follows:
(1) if valued daily and with a remaining maturity of (a) one year
or less, at 102%; (b) five years or less, at 105%; (c) ten years or less, at
106%; (d) fifteen years or less, at 107%; and (e) thirty years or less, at
113%;
(2) if valued weekly and with a remaining maturity of (a) one year
or less, at 103%; (b) five years or less, at 110%; (c) ten years or less, at
111%; (d) fifteen years or less, at 113%; and (e) thirty years or less, at
118%;
(3) if valued monthly and with a remaining maturity of (a) one
year or less, at 106%; Co) five years or less, at 116%; (c) ten years or less,
at 119%; (d) fifteen years or less, at 123%; and (e) thirty years or less, at
130%; and
(4) if valued quarterly and with a remaining maturity of (a) one
year or less, at 106%; Co) five years or less, at 118%; (c) ten years or less,
at 128%; (d) fifteen years or less, at 130%; and (e) thirty years or less, at
135% _
(D) failure to maintain the requisite collateral levels will require the
Trustee to liquidate the collateral as soon as practicable;
(E) the repurchase securities must be obligations of, or fully guaranteed as
to principal and interest by, the United States of America; and
(F) the repurchase securities are free and clear of any third party lien or
claim; or
(iii) with financial institutions insured by the FDIC or any broker-dealer with
"retail customers" which falls under the jurisdiction of the Securities Investors Protection
Corp. ("SIPC"), provided that
(A) the market value of the collateral is maintained as described in (ii)(C)
above;
(B) the Trustee (or a third party on behalf of the trustee) has possession
of the collateral;
(C) the Trustee has a perfected first priority security interest in the
collateral;
(D) the collateral is free and clear of any third party lien or claim and, in
the case of a broker-dealer with "retail customers" which falls under the
jurisdiction of SIPC, the collateral was not acquired pursuant to a repurchase
agreement or a reverse repurchase agreement;
(E) the repurchase securities must be obligations of, or fully guaranteed as
to principal and interest by, the United States of America; and
(F) failure to maintain the requisite collateral levels will require the
Trustee to liquidate the collateral as soon as practicable;
(j) investment agreements, including guaranteed investment contracts, of institutions
whose long-term debt or claims paying ability is rated in one of the two highest Rating
Categories by Moody's and S&P, reviewed and approved in writing by Moody's and S&P,
which permit the withdrawal of moneys in the event of a rating downgrade from such initial
rating; and
(k) the Local Agency Investment Fund of the State of California, created pursuant to
section 16429.1 of the California Government Code, to the extent the Trustee is authorized to
register such investment in its name.
"Principal Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02(b).
"Project" means the project for a Member to be financed with a portion of the proceeds
of the Bonds, as more fully described in Exhibit C attached hereto.
"Project Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3.04.
"Rating Category" means, with respect to any Permitted Investment, one of the generic
categories of rating by Moody's and S&P applicable to such Permitted Investment, without
regard to any refinement or graduation of such rating category by a plus or minus sign or a
numeral.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest payment Date, whether or not such day is a
Business Day.
"Redemption Fund" means the fund by that name established pursuant to Section 5.06.
"Registration Books" means the records maintained by the Trustee pursuant to Section
2.05 for the registration and transfer of ownership of the Bonds.
"Reserve Account" means the account by that name in the Bond Fund established
pursuant to Section 5.02(c).
"Reserve Requirement" means, as of the date of calculation, the maximum amount
obtained by totaling, for the current or any future Bond Year, the sum of: (a) the principal
amount of all Outstanding Bonds maturing in such Bond Year; and (b) the interest scheduled to
become payable during Such Bond Year on the aggregate principal amount of Bonds which
would be Outstanding in such period if the Bonds are retired as scheduled.
"Revenues" means: (a) all amounts received by the Authority or the Trustee pursuant to
or with respect to the Lease Agreements, including, without limiting the generality of the
foregoing, all of the Lease Payments (including both timely and delinquent payments, any late
charges, and whether paid from any source), prepayments and insurance proceeds, but
excluding any Additional Payments; and Co) all interest, profits or other income derived from
the investment of amounts in any fund or account established pursuant to this Indenture.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., New
York, New York, or its successors.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, NY 11530, Fax (516) 227-4171 or 4190; Philadelphia Depository Trust Company,
Reorganization Division, 1900 Market Street, Philadelphia, PA 19103, Attention: Bond
Department, Fax (215) 496-5058; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other securities
depositories as the Authority may designate in a Written Certificate of the Authority delivered
to the Trustee.
"State" means the State of California.
"Supplemental Indenture" means any indenture hereafter duly authorized and entered
into between the Authority and the Trustee, supplementing, modifying or amending this
Indenture; but only if and to the extent that such Supplemental Indenture is specifically
authorized hereunder.
"Trustee" means , a organized and existing under the
laws of the , or its successor, as Trustee hereunder as provided in Section 8.01.
"Written Certificate", "Written Reque_st" and "Written Requisition" of the Authority or the
Member mean, respectively, a written certificate, request or requisition signed in the name of the
Authority or the Member by its Authorized Representative. Any such instrument and
supporting opinions or-representations, if any, may, but need not, be combined in a single
instrument with any other' inStrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument.
Section 1.02. lnterpretatic>n.
(a) Unless the context otherwise indicates, words expressed in the singular shall include
the plural .and vice versa and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
(c) All references herein to "Articles", "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Indenture' the words "herein", "hereof",
ereby , hereunder and other words of s~milar import refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof.
-9-
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds. The AuthoritY hereby authorizes the issuance of
the Bonds, which shall constitute special obligations of the Authority, for the purpose of
providing funds to provide funding for the Project. The Bonds are hereby designated the
"Countywide Public Financing Authority (Orange County, California) 1996 Revenue Bonds."
The aggregate principal amount of Bonds initially issued and Outstanding under this Indenture
shall equal dollars ($ ). This Indenture constitutes a continuing agreement
with the Trustee and the Owners from time to time of the Bonds to secure the full payment of
the principal of and interest and premium (if any) on all the Bonds, subject to the covenants,
provisions and conditions herein contained.
Section 2.02. Terms of the Bonds. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Bond shall have more than one maturity date. The Bonds shall mature on July 1 in each of the
years and in the amounts, and shall bear interest (calculated on the basis of a 360-day year of
twelve 30-day months) at the rates, as follows:
Maturity Date Principal Interest Maturity' Date Principal Interest
(July 1) Amour~t Rate (July 1) Amourlt Rate
Interest on the Bonds shall be payable semiannually on each Interest Payment Date,
calculated based on a 360-day year of twelve (12) thirty-day months, to the person whose
name appears on the Registration Books as the Owner thereof as of the Record Date
immediately preceding each such Interest Payment Date, such interest to be paid by check of the
Trustee mailed by first class mail to the Owners at the respective addresses of such Owners as
they appear on the Registration Books; provided however, that payment of interest may be by
wire transfer in immediately available funds to an account in the United States of America to
any Owner of Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish
written wire instructions to the Trustee at least five (5) days before the applicable Record Date.
Principal of any Bond and any premium upon redemption shall be paid by check of the Trustee
upon presentation and surrender thereof at the Office of the Trustee, except as provided in
Section 2.04. Principal of and interest and premium (if any) on the Bonds shall be payable in
lawful money of the United States of America.
Each Bond shall be dated as of the date of authentication thereof and shall bear interest
from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is
authenticated after a Record Date and on or before the following Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (b) unless it is
authenticated on or before December 15, 1996, in which event it Shall bear interest from the
Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest
thereon is in default, such Bond shall bear interest from the Interest Payment Date to which
interest has previously been paid or made available for payment thereon.
Section 2.03. Transfer and Exchange of Bondg~. Any Bond may, in accordance with its
terms, be transferred on the Registration Books by the person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer, duly executed in a form approved
by the Trustee. Transfer of any Bond shall not be permitted by the Trustee during the period
established by the Trustee for selection of Bonds for redemption or if such Bond has been
selected for redemption pursuant to Article IV. Whenever any Bonds or Bonds shall be
surrendered for transfer, the Authority shall execute and the Trustee Shall authenticate and
shall deliver a new Bond or Bonds for a like aggregate principal amount and of like maturity.
The Trustee may require the Bond Owner requesting such transfer to pay any tax or' other
governmental charge required to be paid with respect to such transfer.
Any Bond may be exchanged at the Office of the Trustee for a like aggregate principal
amount of Bonds of other authorized denominations and of like maturity. Exchange of any
Bond shall not be permitted during the period established by the Trustee for selection of Bonds
for redemption or if such Bond has been selected for redemption pursuant to Article IV. The
Trustee may require the Bond Owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange.
Section 2.04. Book-Entry System. Notwithstanding any provision of this Indenture to the
contrary:
(a) At the request of the Original Purchaser, the Bonds shall be initially issued registered
in the name of "Cede & Co.," as nominee of The Depository Trust Company, the depository
designated by the Original Purchaser, and shall be evidenced by one certificate maturing on each
of the maturity dates set forth in Section 2.02 hereof to be in a denomination corresponding to
the total principal therein designated to mature on such date. Registered ownership of such
Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of The Depository Trust Company or its nominee, or 6'f any
substitute depository designated pursuant to paragraph (ii) of this subsection (a)
("substitute depository"); provided that any successor of The Depository Trust'
Company or substitute depository shall be qualified under any applicable laws to
provide the service proposed to be provided by it;
(ii) to any substitute depository designated in a written request of the Authority,
upon (i) the resignation of The Depository Trust Company or its successor (or any
substitute depository or its successor) from its functions as depository or (ii) a
determination by the Authority that The Depository Trust Company or its successor is
no longer able to carry out its functions as depository; provided that any such substitute
depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it; or
.(iii) to any person as provided below, upon (A) the resignation of The
Depository Trust CompanY or its successor (or any substitute depository or its
successor) from its functions as depository or (B) a determination by the Authority that
The Depository Trust Company or its successor is no longer able to carry out its
functions as depository; provided that no substitute depository which is not objected to
by the Authority and the Trustee can be obtained.
-11-
Co) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection
(a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee, together with a
written request of an Authorized Representative of the Authority to the Trustee, a single new
Bond shall be issued, authernticated and delivered for each maturity of such Bond then
outstanding, registered in the name of such suCcessor or such substitute depository or their
nominees, as the case may be, all as specified in such written request of an Authorized
Representative of the Authority. In the case of any transfer pursuant to paragraph (iii) of
subsection (a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee
together with a written request of an Authorized Representative of the Authority, new Bonds
shah be issued, authenticated and delivered in such denominations and registered in the names
of such persons as are requested in a written request of the-Authority provided the Trustee shall
not be required to deliver such new Bonds within a period less than sixty (60) days from the
date of receipt of such a written request of an Authorized Representative of the Authority.
(c) In the case of partial prepayment or an advance refunding of any Bonds evidencing
a. ll o.f the .,principal maturing in a particular year, The Depository Trust Company shall, at the
Authority s expense, deliver the Bonds to the Trustee for cancellation and re-registration to
reflect the amounts of such reduction in principal.
(d) The Authority and the Trustee shall be entitled to treat the person in whose name
any Bond is registered as the absolute Owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary received by the Trustee or the
Authority; and the Authority and the Trustee shall have no responsibility for transmitting
payments to, communication with, notifying or otherwise dealing with any beneficial owners of
the Bonds. Neither the Authority nor the Trustee will have any responsibility or obligations,
legal or otherwise, to the beneficial owners or to any other party including The Depository Trust
Company or its successor (or substitute depository or its successor), except for the registered
owner of any Bond.
(e) So long as all outstanding Bonds are registered in the name of Cede & Co. or its
registered assign, the Authority and the Trustee shall reasonably cooperate with Cede & Co., as
sole registered Owner, or its registered assign in effecting payment of the principal and
prepayment premium, if any, and interest due with respect to the Bonds by arranging for
payment in such manner that funds for such payments are properly identified and are-made
immediately available on the date they are due.
(f) So long as all Outstanding Bonds are registered in the name of Cede & Co. or its
registered assigns (hereinafter, for purposes of this paragraph (f), the "Owner"):
(i) All notices and payments addressed to the Owners shall contain the Bonds'
CUSIP number.
(ii) Notices to the Owner shall be forwarded in the manner set forth in the form
of blanket issuer letter of representations (prepared by The Depository Trust Company)
executed by the Authority and received and accepted by The Depository Trust
Company.
Section 2.05. gee-i~tration Books. The Trustee will keep or cause to be kept, at the Office
of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds,
which shall at all reasonable times upon reasonable prior notice be o en to ins ection '
regular business hours bv the Authorit,, ~-,-~ ,~--- ,~---,--~ - P .p. . during
- ,~ ,~,,~, r,.~ ~v~moer; ana, upon presentation for such
purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or
transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as
hereinbefore provided.
Section 2.06. Form and Execution of Bonds. The Bonds shall be signed in the name and
on behalf of the Authority with the facsimile signature of its Chairman and attested with the
facsimile signature of its Secretary, under the printed seal of the Authority, and shall be
delivered to the Trustee for authentication by it. In case any officer of the Authority who shall
have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall
have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issue, shall be as binding upon the Authority as though the individual who signed the same had
continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the
Authority by any individual who on the actual date of the execution of such Bond shall be the
proper officer although on the nominal date of such Bond such individual shall not have been
such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.07. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by
the Authority, shall be in fully registered form without coupons and may contain such reference
to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall
be executed by the Authority and authenticated by the Trustee upon the same conditions and in
substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds
it will execute and deliver definitive Bonds as promptly thereafter as practicable, and
thereupon the temporary Bonds may be surrendered, for cancellation, at the Office of the
Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an
equal aggregate principal amount of definitive Bonds of authorized denominations. Until so
exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bonds authenticated and delivered hereunder. -
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the O~ner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and
delivered to, or upon the order of, the Authority. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Authority and the Trustee
and, if such evidence be satisfactory to them and indemnity satisfactory to them shall be given,
the Authority, at the expense of the Owner of such lost, destroyed or stolen Bond, shall execute,
and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and
in substitution for the Bond so lost, destroyed or stolen (or if .any' such Bond shall have matured
or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee may
pay the same without surrender thereof). The Authority may require payment by the Owner of a
sum not exceeding the actual cost of preparing each new Bond issued under this Section 2.08
and of the expenses which may be incurred by the Authority and the Trustee in the premises.
Any Bond issued under the provisions of this Section 2.08 in lieu of any Bond alleged to be lost,
destroyed or stolen shall constitute an original additional contractual obligation on the part of
the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time
enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other
Bonds secured by this Indenture.
Section 2.09. CUSIP Numbers. The Trustee, the Authority and the Members shall not be
liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any
redemption notice. The Trustee may, in its discretion, include in any redemption notice a
statement to the effect that the C-USIP numbers on the Bonds have been assigned by an
independent service and are included in such notice solely for the convenience of the Owners
and that neither the Trustee, the Authority nor the Members shall be liable for any inaccuracies
in such numbers.
ARTICLE
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bond~;. At any time after the execution of this Indenture, the
Authority may execute and the Trustee shall authenticate and, upon the Written Request of the
Authority, deliver Bonds in the aggregate principal amount of dollars ($ ).
Section 3.02. Avvlication of Proceeds of Sale of Bonds. Upon the receipt of payment for
the Bonds on the Closfn'g Date, the Trustee shall apply the proceeds of sale thereof as follows:
(a) The Trustee shall deposit in the Interest Account the amount of $
constituting capitalized interest with respect to a portion of the debt service on the Bonds
through ,19.. .
(b) The Trustee shall deposit the amount of $
(c) The Trustee shall deposit the amount of $
constituting the full amount of the Reserve Requirement.
(d) The Trustee shall deposit the amount of $
in the Costs of Issuance Fund.
in the Reserve Account,
in the Project Fund.
Section 3.03. Establishment and Application of Costs of Issuance Fund. The Trustee
· shall establish, maintain and hold in trust a separate fund designated as the "Costs of Issuance
Fund". The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee
to pay the Costs of Issuance upon submission of Written Requisitions of the Authority stating
the person to whom payment is to be made, the amount to be paid, the purpose for which the
obligation was incurred and that such payment is a proper charge against said fund. On
January 1, 1997, or upon the earlier Written Request of the Authority, all amounts remaining in
the Costs of Issuance Fund shall be transferred by the Trustee to the Bond Fund.
Section 3.04. Establishment and Application of Project Fund. The Trustee shall
establish, maintain and hold in trust a separate fund designated as the "Project Fund." Within
the Project Fund, the Trustee shall establish, maintain and hold in trust a separate accotrnt for
each Member designated as the" Project Account," inserting in the blank the name of
the Member for whom such account is created. Amounts on deposit in the Project Fund shall be
used and withdrawn by the Trustee to pay the costs of the Project, upon the receipt from time
to time of Written Requisitions of each Member seeking payment of costs of the Project allocable
to such Member which are filed with the Trustee. Each such Written Requisition shall state the
person to whom payment is to be made, the amount to be paid and the purpose for which the
obligation was incurred. Such payments shall be made from the Project Account created for the
Member making such request. At the Written Request of a Member filed at any time with the
Trustee, the Trustee shall close the Project AccOunt allocable to such Member and shall transfer
all amounts therein to the Bond Fund as a credit to the Lease Payments to be made by such
Member.
Section 3.05. Validity of Bonds. The validity of the authorization and issuance of the
Bonds is not dependent on and shall not be affected in any way by any proceedings taken by
the Authority or the Trustee with respect to or in connection with the Lease Agreements. The
recital contained in the Bonds that the same are issued pursuant to the Constitution and laws
of the State shall be conclusive evidence of their validity and of compliance with the provisions
of law in their issuance.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption.
(a) Mandatory Redemption From Optional Prepayment of Lease Payments. The Bonds
maturing on or after July 1, , shall be subject to mandatory redemption as a whole or in
part, upon ninety (90) days written notice to the Trustee by a Member of its intention to
optionally prepay its Lease Payments, on any date on or after July 1, ____, from any available
source of funds of the Member so electing to prepay, at the following redemption prices
(expressed as a percentage of the principal amount of the Bonds to be redeemed) together with
accrued interest thereon to the date fixed for redemption:
Redemption Period Redemption Price
July 1,. through June 30, .. 102%
July 1,.. through June 30, ~ 101
July 1, ~ and thereafter 100
Any such redemption shall be in such order of maturity as the Member electing to
prepay its lease Payments shall designate (and, if no specific order of redempt/on is designated
by such Member, in inverse order of maturity); provided, however, that only Bonds in which
such Member has an interest (see Exhibit E attached hereto) may be redeemed by such
Member's election.
(b) Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Bonds
shall also be subject to redemption as a whole, or in part on a pro rata basis among maturities,
on any date, to the extent the Trustee has received title or hazard insurance proceeds or
condemnation proceeds not used to repair or replace any portion of the Leased Premises of a
Member damaged or destroyed and elected by such Member, to be used for such purpose as
provided in Section 5.08, at a redemption price equal to one hundred percent (100%) the
principal amount thereof plus interest accrued thereon to the date fixed for redemption, without
premium.
Section 4.02. Selection of Bonds for Redemvtion. Whenever provision is made in this
Indenture for the redemption of less than all of the'Bonds of a particular maturity, the Trustee
shall select the Bonds to be redeemed from all Bonds of such maturity or such given portion
thereof not previously called for redemption, by lot in any manner which the Trustee in its sole
discretion shall deem appropriate and fair. For purposes of such selection, the Trustee shall
treat each Bond as consisting of separate $5,000 portions and each such portion shall be subject
to redemption as if such portion were a separate Bond.
Section 4.03. Notice of Redemvtion. Notice of redemption shall be marled by first class
mail, postage prepaid, not less thari thirty (30) nor more than sixty (60) days before any
redemption date, to the respective Owners of any Bonds designated for redemption at their
addresses'appearing on the Registration Books, and to the Securities Depositories and to the
Information Services. Each notice of redemption shall state the date of the notice, the
redemption date, the place or places of redemption, whether less than all of the Bonds (or all
Bonds of a single maturity) are to be redeemed, the CUSIP numbers and (in the event that not
all Bonds within a maturity are called for redemption) Bond numbers of the Bonds to be
redeemed, the maturity or maturities of the Bonds to be redeemed and in the case of Bonds to
be redeemed in part only, the respective portions of the principal amount thereof to be
redeemed. Each such notice shall also state that on the redemption date there will become due
-16-
and payable on each of said Bonds the redemption price thereof, and that from and after such
redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then
surrendered. Neither the failure to receive any notice nor any defect therein shall affect the
sufficiency of the proceedings for such redemption or the cessation of accrual of interest from
and after the redemption date. Notice of redemption of Bonds shall be given by the Trustee, at
the expense of the Authority, for and on behalf of the Authority.
Section 4.04. Partial Redemption of Bond$. Upon surrender of any Bonds redeemed in
part only, the Authority shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the Bonds
surrendered.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as
aforesaid, and moneys for payment of the redemption price of, together with interest accrued to
the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption being
held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions
thereof) so called for redemption shall become due and payable, interest on the Bonds so called
for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled
to any benefit or security under this Indenture, and the Owners of said Bonds shall have no
rights in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed.
Section 4.06. purchase of Bond~. In lieu of redemption of Bonds as provided in this
Article IV, amounts held by the Trustee for such redemption may also be used on any Interest
Payment Date, upon receipt by the Trustee at least seventy-five (75) days prior to the next
scheduled Interest Payment Date of the written request of an Authorized Representative of the
Authority, for the purchase of Bonds at public or private sale as and when and at such prices
(including brokerage, accrued interest and other charges) as the Authority may in its discretion
direct, but not to exceed the redemption price which would be payable if such Bonds were
redeemed. The aggregate principal amount of Bonds of the same maturity purchased in lieu of
redemption pursuant to this Section 4.06 shall not exceed the aggregate principal amount of
Bonds of such maturity which would otherwise be subject to such redemption. Remaining
moneys, if any, shall be deposited in the Bond Fund.
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND
INTEREST
Section 5.01. Pledge and Assignment; Bond Fstnd.
(a) Subject only to the provisions of this Indenture permitting the application thereof for
the purposes and on the terms and conditions set forth herein, all of the Revenues and any other
amounts (including proceeds of the sale of the Bonds) held in any fund or account established
pursuant to this Indenture are hereby pledged to secure the payment of the principal of and
interest on the Bonds in accordance with their terms and the provisions of this Indenture. Said
pledge shall constitute a lien on and security interest in such assets and shall attach, be
perfected and be valid and binding from and after the Closing Date, without any physical
delivery thereof or further act.
Co) The Authority hereby transfers in trust, grants a security interest in 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 rights of the Authority in the Lease Agreements (except for the right to receive any
Additional Payments to the extent payable to the Authority and certain rights to
indemnification set forth therein). The Trustee shall be entitled to and shall collect and receive
all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to
be held, and to have been collected or received, by the Authority as the agent of the Trustee and
shall forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and
shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the
Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the
Authority or separately, all of the rights of the Authority and all of the obligations of the
Members under the Lease Agreements.
The assignment of the Lease Agreements to the Trustee is solely in its capaCity as
Trustee under this Indenture and the duties, powers and liabilities of the Trustee in acting
thereunder shall be subject to the provisions of this Indenture, including, without limitation, the
provisions of Article VIII hereof. The Trustee shall not be responsible for any representations,
warranties, covenants or obligations of the Authority. -
(c) Subject to Section 5.09, all Revenues shall be promptly deposited by the Trustee
upon receipt thereof in a special fund designated as the "Bond Fund" ' which the Trustee shall
establish, maintain and hold in trust; except that all moneys' received by the Trustee and
required hereunder or under the Lease Agreements to be deposited in the Redemption Fund or
the Insurance and Conde_mnation Fund shall be promptly deposited in such Funds. All
Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the
Trustee only as provided in this Indenture.
Section 5.02. Allocation of Revenues. Not later than the first Business Day preceding
each date on which prindpal of or interest on the Bonds becomes due and payable, the Trustee
shall transfer from the Bond Fund and deposit into the following respective accounts (each of
which the Trustee shall establish and maintain within the Bond Fund), the following amounts in
the following order of priority, the requirements of each such account (including the making up
of any deficiencies in any such account resulting from lack of Revenues sufficient to make any
earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any
account subsequent in priority:
(a) The Trustee shall deposit in the Interest Account an amount required to cause the
aggregate amount on deposit in the Interest Account to be at least equal to the amount of
interest becoming due and payable on such date on all Bonds then Outstanding.
Co) The Trustee shall deposit in the Principal Account an amount required to cause the
aggregate amount on deposit in the Principal Account to equal the principal amount of the
Bonds coming due and payable on such date.
(c) The Trustee shall deposit in the Reserve Account an amount, if any, required to cause
the amount on deposit in the Reserve Account to be equal to the Reserve Requirement.
Section 5.03. Application of Interest Account. All amounts in the Interest Account shall
be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as
it shall become due and payable (including accrued interest on any Bonds purchased or
redeemed prior to maturity pursuant to this Indenture).
Section 5.04. Application of Principal Account. All amounts in the Principal Account
shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at
their respective maturity dates.
Section 5.05. Avvlication of Reserve Account.
& &
(a) All amounts in the Reserve Account shall be used and withdrawn by the Trustee
solely for the purpose of (i) paying principal of or interest on the Bonds when due and payable
to the extent that moneys deposited in the Interest Account or the Principal Account are not
sufficient for such purpose, and (ii)' making the final payments of principal of and interest on
the Bonds on the date on which all Bonds shall be retired hereunder or provision made therefor
pursuant to Article X. After payment of the final payments of principal and interest on the
Bonds and payment of any amounts then owed to the Trustee, all moneys then on deposit in
the Reserve Account shall be withdrawn by the Trustee and paid to the Members, on a pro rata
basis, as a refund of overpaid Lease Payments.
Co) If, on any date, moneys on deposit in the Reserve Account, together with amounts
then on deposit in the Bond Fund, are sufficient to pay all Outstanding Bonds, including all
principal thereof, and interest thereon, the Trustee shall, at the written direction of the
Authority, transfer all amounts then on deposit in the Reserve Account, together with such
amounts in the Bond Fund, to the Redemption Fund to be applied to the redemption of the
Bonds in accordance with the provisions of Section 4.01(a). Any amounts remaining in the
Reserve Account upon payment in full of all Outstanding Bonds and all amounts then owed to
the Trustee, shall be withdrawn by the Trustee and paid to the Members, on a pro rata basis, as
a refund of overpaid Lease Payments. Any amounts on deposit in the Reserve Account in
excess of the Reserve Requirement shall be transferred to the Bond Fund.
At any time, moneys on deposit in the Reserve Account may be substituted by the
Authority with a letter of credit, surety bond, bond insurance policy or other form of guaranty
from a financial institution, the long-term, unsecured obligations of which are rated not less than
"A' by [Moody's] and [S&P], in an amount equal to the Reserve Requirement, upon
presentation to the Trustee of such letter of credit, surety bond, bond insurance policy or other
form of guaranty from a financial institution, with evidence from the Authority that such letter
of credit, surety bond, bond insui'ance policy or other form of guaranty from a financial
institution satisfies is rated not less than "A" by [Moody's] and [S&P]. Upon such substitution,
the Trustee shall transfer amounts on deposit in the Reserve Account to the Bond Fund in an
amount equal to the maximum limits or principal amount, as applicable, of such letter of credit,
surety bond, bond insurance policy or other form of guarantee.
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Section 5.06. Avplication of Redemption Fund. The Trustee shall establish and maintain
the Redemption Fund; amounts in which shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal of and premium on the Bonds to be redeemed pursuant to
Sections 4.01(a) or Co); provided, however, that at any time prior to the selection of Bonds for
redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private
sale, in accordance with Section 4.06.
Section 5.07. insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of any proceeds of insurance or eminent
domain with respect to any portion of the Leased Premises, the Trustee shall establish and
maintain a separate Insurance and Condemnation Fund, to be held and applied as hereinafter
set forth in this Section 5.07.
Co) Application of Insurance Proceeds. Any Net Proceeds of insurance against accident to
or destruction of the Leased Premises collected by a Member in the event of any such accident
or destruction shall be paid to the Trustee by such Member pursuant to Section 6.1(a) of such
Member's Lease Agreement and deposited by the Trustee promptly upon receipt thereof in the
Insurance and Condemnation Fund. Such Member shall certify to the Trustee that the Net
Proceeds, together with other available funds, will be sufficient to repair the Leased Premises
and that such repairs will be completed before the expiration of any rental interruption
insurance provided pursuant to the Lease Agreement. If such Member fails to determine and
notify the Trustee in writing of its determination, within forty-five (45) days following the date
of such deposit, to replace, repair, restore, modify or improve the affected Leased Premises,
then sUch Net Proceeds shall be promptly transferred by the Trustee to the Redemption Fund
and applied to the .rede.mption of Bonds allocable to such Member pursuant to Section 4.01(b).
so
r "~,= ,~l-,l-,**eu to me prompt replacement, repair, restoration, modification
or improvement of the damaged or destroyed portions of the Leased Premises by the affected
Member, upon receipt of Written Requisitions of the Member, as agent for the Authority, which:
(i) states with respect to each payment to be made (A) the requisition number, (B) the name and
address of the person to whom payment is due, (C) the amount to be paid and (D) that each
obligation mentioned therein ~as been properly incurred, is a proper charge against the
Insurance and Condemnation Fund, has not been the basis of any previous withdrawal; and (ii)
specifies in reasonable detail the nature of the obligation. Any balance of the proceeds
remaining after such work has been completed as certified by such Member to the Trustee shall
after payment of amounts due the Trustee be paid to such Member.
(c) Application of Eminent Domain Proceeds. If all or any part of the Leased Premises shall
be taken by eminent domain proceedings (or sold to a government threatening to exercise the
power of eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in
the Insurance and Condemnation Fund pursuant to Section 6.1(b) of the affected Member's
Lease Agreement and shall be applied and disbursed by the Trustee as follows:
(i) If such Member has not given written notice to the Trustee, within forty-five
(45) days following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for the replacement of
the affected Leased Premises or such portion thereof, the Trustee shall transfer such Net
Proceeds to the Redemption Fund to be applied towards the redemption of the Bonds
allocable to such Member pursuant to Section 4.01(b).
(ii) If such Member has given written notice to the Trustee, within forty-five (45)
days following the date on which such Net Proceeds are deposited with the Trustee, of
its determination that such Net Proceeds are needed for replacement of the affected
Leased Premises or such portion thereof, the Trustee shall pay to such Member, or to its
order, from said proceeds such amounts as such Member may expend for such repair or
rehabilitation, upon the filing of Written Requisitions of such Member as agent for the
Authority in the form and containing the provisions set forth in subsection (b) of this
Section 5.07; provided, however, that the replacement premises must be added as a
Substitute Site or a Substitute Facility pursuant to Section 8.3 of the applicable Lease
Agreement.
(d) Application of Title Insurance Proceeds. The Net Proceeds from a title insurance award
shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to
Section 6.1Co) of the affected Member's Lease Agreement and shall be transferred by the Trustee
to the Redemption Fund to be applied towards the redemption of the Bonds allocable to such
Member pursuant to Section 4.01Co).
Section 5.08. Investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments. Such investments shall be directed by the Authority pursuant to a Written Request
of the Authority filed with the Trustee at least two (2) Business Days in advance of the making
of such investments (which Written Request shall certify that the investments constitute
Permitted Investments). In the absence of any such directions from the Authority, the Trustee
shall invest any such moneys in Permitted Investments described in clause (h) of the definition
thereof. Permitted Investments purchased as an investment of moneys in any fund shall be.
deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the Bond Fund, except that interest or gain
derived from the investment of the amount in the Reserve Account shall be retained therein to
the extent required to maintain the Reserve Requirement, and except that interest or gain
derived from the investment of amounts in each account of the Project Fund shall be retained
therein and used for the purposes thereof. To the extent that any investment agreement requires
the payment of fees, such fees shall be paid from available moneys in the Bond Fund after the
deposit of moneys described in Section 5.02 (a) through (c) above. For purposes of acquiring
any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee
may act as principal or agent in the acquisition or disposition of any investment ariel may
impose its customary charges therefor. The Trustee or its affiliates may act as sponsor, advisor
or depsoitory with respect to any Permitted Investment. To the extent that any Permitted
Investment purchased by the Trustee are registrable securities such Permitted Investment shall
be registered in the name of the Trustee. The Trustee shall incur no liability for losses arising
from any investments made pursuant to this Section 5.08.
Section 5.09. Valuation and Disposition of Investments. For the purpose of determining
the amount in any fund or account, all Permitted Investments credited to such fund or account
shall be valued at the Fair Market Value thereof. Investments in funds or accounts (or portions
thereof) that are subject to a yield restriction under applicable provisions of the Code and
(unless validation is undertaken at least annually) investments in the Reserve Account shall be
valued at the cost thereof (consisting of the "present value" thereof as defined in section 148 of
the Code).
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal of and interest and premium (if any) on all the Bonds in strict conformity with the ·
terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but
only out of Revenues and other assets pledged for such payment as provided in this Indenture.
Section 6.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section 6.02 shall be deemed to limit the right
of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such
issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 6.03. Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrance upon the Revenues. and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the
pledge and assignment created by this Indenture. Subject to this limitation, the Authority
expressly reserves the fight to enter into one or more other indentures for any of its corporate
purposes, and reserves the right, to issue other obligations for such purposes.
Section 6.04. Power to Issue Bonds and Make Pledte and Assitnment. The Authority is
duly authorized pursuant to law to issue the Bonds and~ to enter in~o this Indenture and to
pledge and assign the Revenues and other assets purported to be pledged and assigned,
respectively, under this Indenture in the manner and to the extent provided in this Indenture.
The Bonds and the provisions of this Indenture are and will be the legal, valid and binding
special obligations of the Authority in accordance with their terms, and the Authority and the
Trustee shall at all times, subject to the provisions of Article VIII and to the extent permitted by
law, defend, preserve and protect said pledge and assignment of Revenues and other assets
and all the rights of the Bond Owners under this Indenture against all claims and demands of
all persons whomsoever.
Section 6.05. Accountine Records. The Trustee shall at all times keep, or cause to be
kept, proper books of record an~d account, prepared in accordance with industry standards, in
which complete and accurate entries shall be made of all transactions made by it relating to the
proceeds of Bonds, the Revenues, the Lease Agreements and all funds and accounts established
pursuant to this Indenture. Such books of record and account shall be available for inspection
by the Authority and the Members, during business hours and under reasonable circumstances.
Section 6.06. No Additional Oblitations. The Authority covenants that no additional
bonds, notes or other indebtedness shall'be issUed or incurred which are payable out of the
Revenues in whole or in part.
Section 6.07..Tax Covenant~.
(a) Private Business Use Limitation. The Authority shall assure that the proceeds of the
Bonds are not used in a manner which would cause the Bonds to be "private activity bonds"
within the meaning of section 141(a) of the Code.
Co) Private Loan Limitation. The Authority shall assure that no more than five percent
(5%) of the proceeds of the Bonds are used, directly or indirectly, to make or finance a loan
(other than loans constituting nonpurpose obligations as defined in the Code or constituting
assessments) to persons other than state or local government units.
(c) Federal Guarantee Prohibition. The Authority shall not take any action or permit or
suffer any action to be taken if the result of the same would be to cause the Bonds to be
"federally guaranteed" within the meaning of section 149Co) of the Code.
(d) No Arbitrage. The Authority shall not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the Bond proceeds which, if such action had
been reasonably expected to have been taken, or had been deliberately and intentionally taken,
on the Closing Date, would have caused the Bonds to be "arbitrage bonds" within the meaning
of section 148(a) of the Code.
(e) Rebate of Excess Investment Earnings to United States. The Authority shall take any and
all actions necessary to assure compliance with section 148(0 of the Code, relating to .the rebate
of excess investment earnings, if any, to the federal government, to the extent that such section
is applicable to the Bonds. Payment of any amounts due under such section 148(0 shall be
made by the Authority from amounts provided by the Member under Section 5.10(d) of the
Lease Agreements. In order to provide for the administration of this subsection (e), the
Authority may provide for the employment of independent attorneys, accountants and
consultants compensated on such reasonable basis as the Authority may deem appropriate.
Section 6.08. Collection of Amounts Due Under Lease Ae-reements. The Trustee shall
promptly collect all amounts due from the Members pursuant to Se Lease Agreements. Subject
to the provisions of Article VIII, the Trustee shall enforce, and take all steps, actions and
proceedings which the Trustee determines to be reasonably necessary for the enforcement of all
of its rights thereunder as assignee of the Authority and for the enforcement of all-of the
obligations of the Members under the Lease Agreements.
The Authority shall not amend, modify or terminate any of the terms of the' Lease
Agreements, or consent to any such amendment, modification or termination, without the prior
written consent of the Trustee. The Trustee shall give such written consent only if (a) in the
opinion of Bond Counsel, such amendment, modification or termination will not materially
adversely affect the interests of the Owners, or Co) the Trustee first obtains the written consent
of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding to
such amendment, modification or termination.
Section 6.09. Continuing Disclosure.
(a) The Authority shall timely supply the information required by section 6599.1 of the
California Government Code to the California Debt Advisory Commission ("CDAC"), all such
information to be supplied annually and at such other time as required by said section 6599.1
on forms to be provided by CDAC or at such other time and in such other manner as shall
comply with the provisons of said section 6599.1.
(b) The Authority hereby covenants and agrees that it will comply with and carry out all
of the provisions of the Authority Continuing Disclosure Certificate. Notwithstanding any other
provision of this Indenture, failure of the Authority to comply with the Authority Continuing
Disclosure Certificate shall not be considered an Event of Default; however, the Trustee may
(and, at the request 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 to compel performance, including
seeking mandate or specific performance by court order..
Section 6.10. Waiver of Laws. The Authority shall not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension
law now or at any time hereafter in force that may affect the covenants and agreements
contained in' this Indenture or in the Bonds, and all benefit or advantage of any such law or
laws is hereby expressly waived by the Authority to the extent permitted by law.
Section 6.11. Further A~surance$. The Authority will make, execute and deliver any and
all such further indentures, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Indenture and for the
better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided
in this Indenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Evento of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of any Bonds when and as
the same shall become due and payable, whether at maturity as therein expressed, by
proceedings for redemption, by acceleration, or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any Bonds
when and as the same shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, if such default shall have
continued for a period of sixty (60) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee;
provided, however, that if in the reasonable opinion of the Authority the default stated in the
notice can be corrected, but not within such sixty (60) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default
within such sixty (60) day period and thereafter diligently and in good faith cure such failure in
a reasonable period of time.
(d) The occurrence and continuation of an event of default under and as defined in the
Lease Agreements.
Section 7.02. Remedie~ Upon Event of Default. Upon the occurrence and continuance of
any Event of Default, then and in every such case the Trustee in its discretion may, and upon
the written request of the Owners of not less than 25% in principal amount of the Bonds then
Outstanding and receipt of indemnity to its satisfaction, and payment of its fees and expenses,
including the fees and expenses of its counsel, shall in its own name and as the Trustee of an
express trust:
(i) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights
of the Owners under, and require the Authority or the affected Member to carry out any
agreements with or for the benefit of the Owners of Bonds and to perform its or their duties
under the Act, the affected Lease Agreement, and this Indenture, provided that any such
remedy may be taken only to the extent permitted under the applicable provisions of the
affected Lease Agreement or this Indenture, as the case may be;
(ii) bring suit upon the Bonds;
(iii) by action or suit in equity require the Authority to account as if it were the trustee of
an express trust for the Owners of Bonds; or
(iv) by action or suit in equity enjoin any acts or things which may be unlawful or in
violation of the fights of the Owners of Bonds.
Upon the occurrence of an Event of Default, the Trustee shall be entitled as a matter of
right to the appointment of a receiver or receivers for the Leased Premises, and of the revenues,
income, product, and profits thereof, ex parte, and without notice, and the Authority consents
to the appointment of such receiver upon the occurrence of an Event of Default. In the case of
any receiVership, insolvency, bankruptcy, or other judicial proceedings affecting the Authority
or the affected Member, the Trustee shall be entitled to file such proofs of claims and other
documents as may be necessary or advisable in order to have the claims of the Trustee and the
Bond Owners allowed in such proceedings, without prejudice, however, to the right of any Bond
Owner to file a claim on his or her own behalf; provided, the Trustee shall be entitled to
compensation and reimbursement for the reasonable fees and expenses of its counsel and
indemnity for its reasonable expenses and liability from the Authority, the affected Member or
the Bond Owners, as appropriate.
Section 7.03. Avvlication of Revenues ond Other Funds After Default. If an Event of
Default shall occur and Se continuing, all Revenues and any other funds then held or thereafter
received by the Trustee under any of the provisions of this Indenture shall be applied by the
Trustee as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect
the interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses
of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and
about the performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds (upon
presentation of the Bonds to be paid, and stamping or otherwise noting thereon of the payment
if only partially paid, or surrender thereof if fully paid) in accordance with the provisions of
this Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, and, if the amount available
shall not be sufficient to pay in full any installment or installments maturing on the same
date, then to the payment thereof ratably, according to the amounts due thereon, to the
persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of
any Bonds which shall have become due, whether at maturity or by acceleration or
redemption, with interest on the overdue principal at the rate borne by the respective
Bonds (to the extent permitted by law), and, if the amount available shall not be
sufficient to pay in full all the Bonds, together with such interest, then to the payment
thereof ratably, according to the amounts of principal due on such date to the persons
entitled thereto, without any discrimination or preference.
Section 7.04. Trustee to Revresent Bond Owners. The Trustee is hereby irrevocably
appointed (and the successive respdctive Owners of the Bonds, by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful
attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on
their behalf such rights and remedies as may be available to such Owners under the provisions
of the Bonds, this' Indenture and applicable provisions of any law. Upon the occurrence and
continuance of an Event of Default or other occasion giving rise to a right in the Trustee to
represent the Bond Owners, the Trustee in its discretion may, and upon the written request of
the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and
upon being indemnified to its satisfaction therefor, the Trustee shall, proceed to protect 6r
enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or
other proceedings as it shall deem most effectual to protect and enforce any such right, at law
or in equity, either for the specific performance of any covenant or agreement contained herein,
or in aid of the execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the
Bonds, this Indenture or any other law; and upon instituting such proceeding, the Trustee shall
-26-
be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other
assets pledged under this Indenture, pending such proceedings. All rights of action under this
Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any proceeding relating thereto, and
any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the
Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions
of this Indenture.
Section 7.05. Bond Owners' Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable
satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee
hereunder, provided that such direction shall not be otherwise than in accordance with law and
the provisions of this Indenture, and that the Trustee shall have the right to decline to follow
any such direction which in the opinion of the Trustee would expose it to liability.
Section 7.06. Limitation on Bond Owners' Right to Sue. Notwithstanding any other
provision hereof, no Owner of any Bonds shall have the right to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy under
this Indenture, the Lease Agreements or any other applicable law with respect to such Bonds,
unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such
Owner or Owners shall have tendered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall
have failed to comply with such request for a period of sixty (60) days after such written
request shall have been received by, and said tender of indemnity shall have been made to, the
Trustee; and (e) no direction inconsistent with such written request shall have been given to the
Trustee during such sixty' (60) day period by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of
any remedy hereunder or under law; it being understood and intended that no one or more
Owners of Bonds shall have any right in any manner whatever by his or their action to affect,
disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or
to enforce any right under the Bonds, this Indenture, the Lease Agreements or other applicable
law with respect to the Bonds, except in the manner herein pro~;ided, and that all proceedings
at law or in equity to enforce any such right shah be instituted, had and maintained in the
manner herein provided and for the benefit and protection of all Owners of the Outstanding
Bonds, subject to the provisions of this Indenture.
Section 7.07. Absolute Obligation of Authority. Nothing in Section 7.06 or in any other
provision of this Indenture or in th~ Bonds contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest and
premium (if any) on the Bonds to the respective Owners of the Bonds at their respective dates
of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and
other assets herein pledged therefor, or affect or impair the right of such Owners, which is also
absolute and unconditional, to enforce such Payment by virtue of the contract embodied in the
Bonds.
Section 7.08. Termination of Proceedings. If any proceedings taken by the Trustee or any
one or more Bond Owners on account of any~vent of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Bond
Owners, then the Authority, the Trustee and the Bond Owners, subject to any determination in
such proceedings, shall be restored to their former positions and rights hereunder, severally and
respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the
Bond Owners shall continue as though no such proceedings had been taken.
Section 7.09. Remedies Not Exclusive.. No remedy herein conferred upon or reserved to
the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy or
remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative
and in addition to any other remedy given hereunder or now or hereafter existing at law or in
eqtd~ or otherwise.
Section 7.10. No Waiver of Default. No delay or omission of the Trustee or any Owner
of the Bonds to exercise any right or power arising upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein; and every power and remedy given by this Indenture to the
Trustee or the Owners of the Bonds may be exercised from time to time and as often as may be
deemed expedient.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to an Event of Default, and after the curing of all Events of
Default which may have occurred, perform such duties and only such duties as are expressly
and specifically set forth in this Indenture and no implied duties or covenants-shall be read into
this Indenture against the Trustee. The Trustee shall, during the existence of any Event of
Default (which has not been cured), exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) The Authority may remove the Trustee at any time unless an Event of Default shall
have occurred and then be continuing, and the Authority shall remove the Trustee if at any time
requested to do so by the Owners of not less than a majority in aggregate principal amount of
the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the
Trustee shall cease to be eligible in accordance with subsection (e) of this Section 8.01, or shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or its property shall be appointed, or any public officer shall take control or charge of
the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, in each case by giving written notice of such removal to the Trustee and the Member
and thereupon shall appoint a successor Trustee by an instrument in writing. Any such removal
shall be made upon at least thirty (30) days' prior written notice to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such resignation to the
Authority and the Member, and by giving the Bond Owners notice of such resignation by mail at
the addresses shown on the Registration Books. Upon receiving such notice of resignation, the
Authority shall promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or.resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. If no successor
Trustee shall have been appointed and have accepted appointment within forty-five (45-)-days
of giving notice of removal or notice of resignation as aforesaid, the Authority shall petition any
court of competent jurisdiction for the appointment of a successor Trustee, and such court may
thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.
Any successor Trustee appointed under this Indenture, shall signify its acceptance of such
appointment by executing and delivering to the Authority, to its predecessor Trustee a written
acceptance thereof, and thereupon such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts,
duties and obligations of such predecessor Trustee, with like effect as if originally named
Trustee herein; but, nevertheless at the Written Request of the Authority or the request of the
successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of
conveyance or further assurance and do such other things as may reasonably be required for
more fully and certainly vesting in and confirming to such successor Trustee all the right, title
and interest of such predecessor Trustee in and to any property 'held by it under this Indenture
and shall pay over, transfer, assign and deliver to the successor Trustee any money or other
property subject to the trusts and conditions herein set forth. Upon request of the successor
Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably
required for more fully and certainly vesting in and confirming to such successor Trustee all such
moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of
appointment by a successor Trustee as provided in this subsection, the Authority shall
promptly mail or cause the successor trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond
Owners at the addresses shown on the Registration Books. If the Authority fails to mail such
notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be marled at the expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or association
organized and doing business under the laws of any state or the United States of America or
the. District of Columbia, shall be authorized under such laws to exercise cOrporate trust
powers, shall have (or, in the case of a corporation or national banking assodation included in a
bank holding company system, the related bank holding company shall have) a combined
capital and surplus of at least' fifty million dollars ($50,000,000), and shall be subject to
supervision or examination by federal or state agency, so long as any Bonds are Outstanding. If
such corporation publishes a report of condition at least annually pursuant to law or to the
requirements of any supervising or examining agency above referred to then for the purpose of
this subsection (e), the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this
subsection (e), the Trustee shall resign immediately in the manner and with the effect specified
in this Section 8.01.
Section 8.02. Mer~er or Consolidation. Any bank or trust company into which the
Trustee may be merged o~' converted or with which it may be consolidated or any bank or trust
company resulting from any merger, conversion or consolidation to which it shall be a party or
any bank or trust company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such bank or trust company shall be eligible under subsection
(e) of Section 8.01 shall be the successor to such Trustee, without the execution or filing of any
paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liabili .ty of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall not be taken as
statements of the Trustee, and the Trustee shall not assume responsibility for the correctness of
the same, or make any representations as to the validity or sufficiency of this Indenture, the
Bonds or the Lease Agreements, nor shall the Trustee incur any responsibility in respect thereof,
other than as expressly stated herein in connection with the respective duties or obligations
herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be
responsible for its representations contained in its certificate of authentication on the Bonds.
The Trustee shall not be liable in connection with the performance of its duties hereunder,
except for its own negligence. The Trustee may become the Owner of Bonds with the same rights
it would have if it were not Trustee, and, to the extent permitted by law, may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capadty
with respect to, any committee formed to protect the rights of Bond Owners, whether or not
such committee shall represent the Owners of a majority in principal amount of the Bonds then
Outstanding.
(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, ttnless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and believed
by. it to be authorized or within the discretion or rights or powers conferred upon it by this
Indenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or both,
would constitute an Event of Default hereunder unless and until it shall have actual knowledge
thereof, or a corporate trust officer shall have received written notice thereof, at its Office.
Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or
inquire as to the performance or observance by the Authority or the Member of any of the terms,
conditions, covenants or agreements herein, under the Lease Agreements or of any of the
documents executed in connection with the Bonds, or as to the existence of an Event of Default
or an event which would, with the giving of notice, the passage of time, or both, constitute an
Event of Default. The Trustee shall not be responsible for the validity, effectiveness or priority
of any collateral given to or held by it. Without limiting the generality of the foregoing, the
Trustee shall not be required to ascertain or inquire as to the performance or observance by the
Member and the Authority of the terms, conditions, covenants or agreements set forth in the
Lease Agreements, other than the covenants of the Member to. make Lease Payments to the
Trustee when due and to file with the Trustee when due, such reports and certifications as the
Member is required to file with the Trustee thereunder.
(f) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it is not assured to its satisfaction that the
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly Or through agehts or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed with due care
by it hereunder.
(h) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of Owners pursuant to this Indenture,
unless such Owners shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which might be incurred by it in compliance with such request
or direction. No permissive power, right or remedy conferred upon the Trustee hereunder shall
be construed to impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this Indenture and
the Lease Agreements relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of Section 8.01(a), this Section 8.03 and Section
8.04 hereof.
(j) The Trustee shall not be concemed with or accountable to anyone for the subsequent
use or application of any moneys which shall be released or withdrawn in accordance with the
provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as to the
title, value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose for the use
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contemplated by the Authority or the Member of the Leased Premises In no event shall the
Trustee be liable for incidental, indirect, special or consequential damages in connection with or
arising from the Lease Agreements or this Indenture for the existence, furnishing or use of the
Leased Premises.
Section 8.04. _Right to Rely on Documcnt~. The Trustee shall be protected in acting upon
any notice, resolution,'~equest, consent, order, Certificate, report, opinion, bonds or other paper
or document believed by them to be genuine and to have been signed or presented by the proper
party or parties. The Trustee may consult with counsel, who may be counsel of or to the
Authority, with regard to legal questions, and the opinion-of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered by it hereunder
in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as
the absolute owners of the Bondg for all purposes and the Trustee shall not be affected by any
notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and established by a
Written Certificate, Written Request or Written Requisition of the Authority or the Member, and
such Written Certificate, Written Request or Written Requisition shall be full warrant to .the
Trustee for any action taken or suffered in good faith under the provisions of this Indenture in
reliance upon such Written Certificate, Written Request or Written Requisition, but in its
discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require
such additional evidence as to it may deem reasonable.
Section 8.05. Preservation and Inspection of Documcnt~. All documents received by the
Trustee under the provisions of this Indenture shall be retained by the Trustee and shall be
subject at all reasonable times to the inspection of the Authority, the Member and any Bond
Owner, and their agents and representatives duly authorized in writing, at reasonable hours
and under reasonable conditions.
Section 8.06. Comvensation and Indemnification. The Authority shall pay to the Trustee
(solely from Additional Payments) from time to time the compensation for all services rendered
under this Indenture and also all reasonable expenses and disbursements, incu?red in and about
the performance of its powers and duties under this Indenture.
The Authority shall indemnify, defend and hold harmless the Trustee against any loss,
liability or expense incurred without negligence or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this trust, including costs and
expenses of defending itself against any claim or liability in connection with the exercise or
performance of any of its powers hereunder. As security for the performance of the obligations
of the Authority under this Section 8.06 and the obligation of the Member to make Additional
Payments to 'the Trustee, the Trustee shall have a lien prior to the lien of the Bonds upon all
property and funds held or collected by the Trustee as such, except funds held in trust for the
payment of principal of or interest on particular Bonds. The rights of the Trustee and the
obligations of the Authority under this Section 8.06 shall survive the resignation or removal of
the Trustee or the discharge of the Bonds and this Indenture.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01. Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority and of the Owners of
the Bonds and of the Trustee may be modified or amended from time to time and at any time
by an indenture or indentures supplemental thereto, which the Authority and the Trustee may
enter into when the written consents of the Owners of a majority in aggregate principal amount
of all Bonds then Outstanding, shall have been filed with the Trustee. No such modification or
amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal
thereof or extend the time of payment, or change the method of computing the rate of interest
thereon, or extend the time of payment of interest thereon, without the consent of the Owner of
each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the
Owners of which is required to effect any such modification or amendment, or permit the
creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on
a parity with the lien created by this Indenture except as permitted herein, or deprive the
Owners of the Bonds of the lien created by this Indenture on such Revenues and other assets
(except as expressly provided in this Indenture), without the consent of the Owners of all of the
Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to
approve the particular form of any Supplemental Indenture, but it shall be sufficient if such
consent shall approve the substance thereof.
Co) This Indenture and the rights and obligations of the Authority, of the Trustee and the
Owners of the Bonds may also be modified or amended from time to time and at any time by a
Supplemental Indenture, which the Authority and the Trustee may enter into without the
consent of any Bond Owners, if the Trustee has been furnished an opinion of counsel that the
provisions of such Supplemental Indenture shall not materially adversely affect the interests of
the Owners of the Bonds, including, without limitation, for any one or more of the following
purposes:
(i) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed, to pledge or ~ssign
additional security for the Bonds (or any portion thereof), or to surrender any right or
power herein reserved to or conferred upon the Authority;
(ii) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained in
this Indenture, or in regard to matters or questions arising under this Indenture, as the
Authority may deem necessary or desirable, provided that such modification or
amendment does not materially adversely affect the interests of the Bond Owners, in the
opinion of Bond Counsel filed with the Trustee;
(iii) to modify, amend or supplement this Indenture in such manner as to permit
the qualification hereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect, and to add such other terms, conditions and
provisions as may be permitted by said act or similar federal statute; or
(iv) to modify, amend or supplement this Indenture in such manner as to cause
interest on the Bonds to remain excludable from gross income under the Code.
(c) The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by subsections (a) or (b) of this Section 9.01 which
materially adversely affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there shall.
be delivered to the Trustee an opinion of Bond Counsel stating, in substance, that such
Supplemental Indenture has been adopted in compliance with the requirements of this Indenture
and that the adoption of such Supplemental Indenture will not, in and of itself, adversely affect
the exclusion from gross income for purposes of federal income taxes of interest on the Bonds.
(e) Written notice of any amendment or modification made pursuant to this Section 9.01
shall be given by the Authority to any rating agency then rating the Bonds at least thirty (30)
days prior to the effective date of such amendment or modification.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental
Indenture pursuant to this Article IX, this Indenture shall be deemed to be modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the Authority, the Trustee and aH Owners of Bonds Outstanding shah thereafter be
determined, exercised and enforced hereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after
the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority
so determines shall, bear a notation by endorsement or otherwise in form approved by the
Authority and the Trustee as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose at the
Office of the Trustee or at such additional offices as the Trustee may select and designate for
that purpose, a suitable notation shall be made on such Bonds. If the Supplemental Indenture
shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the
Trustee, to any modification or amendment contained in such Supplemental Indenture, shah be
prepared and executed by the Authority and authenticated by the Trustee, and upon de_rnand
on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee,
without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation
of such Bonds, in equal aggregate principal amount of the same series and maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article IX shall not
prevent 'any Bond Owner from accepting any amendment as to the particular Bonds held by
ARTICLE X
DEFEASANCE
,Sec.!ion.10.01. Disc,harge o~ Indcntu~. Any or all of the Outstanding Bonds may be paid
by the ,,~umoriry in any ot the following ways, provided that the Authority also pays or causes
to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest and premium (if any) on
such Bonds, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, Defeasance
Obligations in the necessary amount (as provided in Section 10.03) to pay or redeem such
Bonds; or
(c) by delivering to the Trustee, for cancellation by it, all of such Bonds.
If the Authority shall also pay or cause to be paid all other sums payable hereunder by
the Authority, then and in that case, at the election of the Authority (evidenced by a Written
Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to
discharge all such indebtedness and this Indenture), and notwithstanding that any of such
Bonds shall not have been surrendered for payment, this Indenture and the pledge of Revenues
and other assets made under this Indenture with respect to such Bonds and all covenants,
agreements and other obligations of the Authority under this Indenture with respect to such
Bonds shall cease, terminate, become void and be completely discharged and satisfied. In such
event, upon the Written Request of the Authority, the Trustee shall execute and deliver to the
Authority all such instruments as may be necessary or desirable to evidence such discharge and
satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the Member all moneys
or securities or other property held by it pursuant to this Indenture which are not required for
the payment or redemption of any of such Bonds not thereto fore surrendered for such payment
or redemption.
Section 10.02. Discharge of Liability on Bond~. Upon the deposit with the Trustee, in
trust, at or before maturity, (~f money or ~ecurities in the necessary amount (as provided in
Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity
or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior
to maturity, notice of such redemption shall have been given as provided in Article IV or
provision satisfactory to the Trustee shall have been made for the giving of such notice, then all
liability of the Authority in respect of such Bonds shall cease, terminate and.be completely
discharged, and the Owners thereof shall thereafter be entitled only to payment out of such
money or securities deposited with the Trustee as aforesaid for their payment, subject, however,
to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee for cancellation by it any Bonds
previously issued and delivered, which the Authority may have acquired in any manner
whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid
and retired.
Section 10.03. Devosit of Monev or Securitieo with Trustec. Whenever in this Indenture it
is provided or permitteci that there b~ deposited with or held in trust by the Trustee money or
securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be
deposited or held may include money or securities held by the Trustee in the funds and
accounts established pursuant to this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the principal
amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of
Bonds which are to be redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as provided in Article IV or provision satisfactory to the
Trustee shall have been made for the giving of such notice, the amount to be deposited or held
shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption
date; or
Co) Defeasance Obligations, the principal of and interest on which when due will, in the
written opinion of an Independent Accountant filed with the Members, the Authority and the
Trustee, provide money sufficient to pay the principal of and interest and premium (if any) on
the Bonds to be paid or redeemed, as-such principal, interest and premium become due,
provided that in the case of Bonds which are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed Coy the terms
of this Indenture or by Written Request of the Authority) to apply such money to the payment
of such principal, interest and premium (if any) with respect to such Bonds, and (ii) the
Authority shall have delivered tb the Trustee an opinion of Bond Counsel to the effect that such
Bonds have been discharged in accordance with this Ind, enture (which opinion may rely upon
and assume the accuracy of the Independent Accountant s opinion referred to above).
Section 10.04. Unclaimed Fund~. Notwithstanding any provisions of this Indenture, and
subject to applicable provisions of State law, any moneys held by the Trustee in trust for the
payment of the principal of, or interest on, any Bonds .and remaining unclaimed for two (2)
years after the principal of all of the Bonds has become due and payable (whether at maturity
or upon call for redemption or by acceleration as provided in this Indenture), if such moneys
were so held at such date, or two (2) years after the date of deposit of such moneys if
deposited after said date when all of the Bonds became due and payable, shall be repaid to the
Authority free from the trusts created by this Indenture, and all liability of the Trustee with
respect to such moneys shall thereupon cease; provided, however, that before the repayment of
such moneys to the Authority as aforesaid, the Trustee shall (at the written request and cost of
the Authority) first mail to the Owners of Bonds which have not yet been paid,'at the add?esses
shown on the Registration Books, a notice, in such form as may be deemed appropriate by the
Trustee with respect to the Bonds so payable and not presented and with respect to the
provisions relating to the repayment to the Authority of the moneys held for the payment
thereof.
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ARTICLE )ti
MISCELLANEOUS
Section 11.0i. Liability of Authority Limited to Revenue,,-_.. Notwithstanding anything in
this Indenture or in the Bon;ds contained, the Authority shall not be required to advance any
moneys derived from any source other than the Revenues, the Additional Payments and other
assets pledged under this Indenture for any of the purposes in this Indenture mentioned,
whether for the payment of the principal of or interest on the Bonds or for any other purpose of
this Indenture. Nevertheless, the Authority may, but shall not be required to, advance for any of
the purposes hereof any funds of the Authority which may be made available to it for such
purposes.
Section 11.02. Limitation of Rights to Partie~; and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any
person other than the Authority, the Trustee, the Member and the Owners of the Bonds, any
legal or equitable right, remedy or .claim under or in respect of this Indenture or any covenant,
condition or provision therein or laerein contained; and all such covenants, conditions and
provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the
Trustee, the Member and the Owners of the Bonds.
Section 11.03. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Trustee may be established and maintained in the
accounting records of the Trustee, either as a fund or an account, and may, for the purposes of
such records, any audits thereof and any reports or statements with respect thereto, be treated
either as a fund or as an account; but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with industry standards to the extent
practicable, and with due regard for the requirements of Section 6.05 and for the protection of
the security of the Bonds and the rights of every Owner thereof. The Trustee may establish such
funds and accounts as it deems necessary t6 perform its obligations hereunder. The Trustee
shall deliver a monthly accounting to the Authority of the funds and accounts held hereunder;
provided, that the Trustee shall not be obligated to deliver an accounting for any fund or
account that has had no activity since the last reporting date and that has a balance of zero.
Section 11.04. Waiver of Notice: Requirement of Mailed Notice. Whenever in this
Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be
waived in writing by the person entitled'to receive such notice and in any such case the giving or
receipt of such notice shall not be a condition precedent to. the validity of any action taken in
reliance upon such waiver. Whenever in this Indenture any notice shall be required to be given by
mail, such requirement shall be satisfied by the deposit of such notice in the United States mail,
postage prepaid, by first class mail.
Section 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for
the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee
shall, in lieu of such cancellation and delivery, destroy such Bonds as may be allowed by law,
and at the written request of the Authority the Trustee shall deliver a certificate of such
destruction to the Authority.
Section 11.06. Sevcrability of Invalid Provisi0n~. If any one or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from
the remaining provisions contained in this Indenture and such invalidity, illegality or
unenforceability shall not affect any other provision of this Indenture, and this Indenture shall
be construed as if such invalid or illegal or unenforceable provision had never been contained
herein. The Authority hereby declares that it would have entered into this Indenture and each
and every other Section, paragraph, sentence, clause or phrase hereof and authorized the
issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 11.07. Notices. All written notices to be given under this Indenture shah be given
by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, confirmed by telephone, Co) 48 hours after deposit in the United
States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual
receipt. The Authority, the Members or the Trustee may, by written notice to the other parties,
from time to time modify the address or number to which communications are to be given
hereunder.
If to the Authority:
Countywide Public Financing Authority
20 Civic Center Plaza
Santa Ana, CA 92701
Attn: Executive Dir .ector
If to the Members:
See Exhibit B Attached Hereto
If to the Trustee:
Attn: Corporate Trust Department
Section 11.08. Evidence of Rights of Bond Owners. Any request, consent or other
instrument required or permitted by this Indenture to be signed and executed by Bond Owners
may be in any number of concurrent instruments of substantially similar tenor and shall be
signed or executed by such Bond Owners in person or by an agent or agents duly appointed in
writing. Proof of the execution of any such request, consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable by delivery,
shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and the Authority if made in the manner provided in this Section 11.08.
The fact and date of the execution by any person of any such request, consent or other
inst:mnnent or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying
that the person signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
The ownership of Bonds shah be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind
every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the
Authority in accordance therewith or reliance thereon.
Section 11.09. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent
or waiver under this Indenture, Bonds which are known by the Trustee to be owned' or held by
or for the account of the Authority or the Member, or by any other obligor on the Bonds, or by
any person directly or indirectly controlling or controlled by, or under direct or indirect common
control with, the Authority or the Member or any other obligor on the Bonds, shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination.
Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the
purposes of this Section 11.09 if the pledgee shall certify to the Trustee the pledgee's right to
vote such Bonds and that the pledgee is not a person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, the Authority or the Member or
any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.
Upon request, the Authority shall specify to the Trustee those Bonds disqualified
pursuant to this Section 11.09.
Section llil0. Money Held for Particular Bond~. The money held by the Trustee for the
payment of the interest or principal due on any date with respect to particular Bonds (Or
portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and
pending such payment, be set aside on its books and held in trust by it for the Owners of the
Bonds entitled thereto, subject, however, to the provisions of Section 10.04 hereof but without
any liability for interest thereon.
Section 11.11. Waiver of Personal Liability. No member, officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the principal of or
interest or premium (if any) on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof; but nothing herein contained shall relieve any
such member, officer, agent or employee from the performance of any official duty provided by
law or by this Indenture.
Section 11.12. Successor Is Deemed Included in All References to Predeces~od. Whenever
in this Indenture either the Authority, the Member or the Trustee is named or referred to, such
reference shall be deemed to include the successors or assigns thereof, and all the covenants and
agreements in this Indenture contained by or on behalf of the Authority, the Member or the
Trustee shall bind and inure to the benefit of the respective successors and assigns thereof
whether so expressed or not. -
n...,,~.__S_e~ch_'_o_n__l.l.13. E. xecu,tion !n ,Sever. al Coup. terpart~. This Indenture may be executed in an
.~u,~t,- ox c.ou~..terp.arts ana each or SUCh counterparts shall for all purposes be deemed to be a~
original; anct all SUCh counterparts, or as many of them as the Authority and the Trustee shall
preserve undestroyed, shall together constitute but one and the same instrument.
Section 11.14. Governine Law. This Indenture shall be governed by and construed in
accordance with the laws of the'State.
-39-
IN WITNESS WHEREOF, the Countywide Public Financing Authority, has caused this
Indenture of Trust to be signed in its name by its Chairman and attested by its Secretary, and
, in token of its acceptance of the trusts created hereunder, has caused
this Indenture of Trust to be signed in its corporate name by its officer thereunto duly
authorized, all as of the day and year first above written.
COLINTYWIDE PUBLIC FINANCING
AUTHORITY
[S E A L]
Attest:
By
Chairman
By
Secretary
, as Trustee
By
Authorized Officer
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
ORANGE COUNTY
COUNTYWIDE PUBLIC HNANCING AUTHORITY
(Orange County, California)
1996 Revenue Bond
INTEREST RATE: ] MATURITY DATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
I ORIGINAL ISSUE DATE:I, 1996 CUSIP: I
DOLLARS
The COUNTYWIDE PUBLIC FINANCING AUTHORITY, a joint powers authority duly
organized and existing under and by virtue of the laws of the State of California (the
"Authority"), for value received, hereby promises to pay to the Registered Owner specified
above or registered assigns (the "Registered Owner"), on the Maturity Date specified above
(subject to any right of prior redemption hereinafter provided for), the Principal Amount
specified above,'in lawful money of the United States of America, and to pay interest thereon in
like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the
date of authentication of this Bond unless (i) this Bond is authenticated on or before an Interest
Payment Date and after the close of business on the fifteenth day of the month preceding such
interest payment date, in which event it shall bear interest from such Interest Payment Date, or
(ii) this Bond is authenticated on or before December 15, 1996, in which event it shall bear
interest from the Original Issue Date specified above; provided, however, that if at the tir~e of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest
from the Interest, Payment Date to which interest has previously been paid or made available
for payment on this Bond, at the Interest Rate per annum specified above, payable
semiannually on July 1 and January 1 in each year, commencing January 1,1997 (collectively, the
Inte est Payment Dates ), calculated on the bas~s of a 360-day year composed of twelve 30-
day months. Principal hereof and premium, if any, upon early redemption hereof are payable
upon presentation and surrender hereof at the corporate trust office (the "Office") of
, as trustee (the "Trustee"). Interest hereon is payable by check of the
Trustee mailed to the Registered Owner hereof at the Registered Owner's address as it appears
on the registration books of the Trustee as of the close of business on the fifteenth day of the
month preceding each Interest Payment Date (a "Record Date"), or, upon written request filed
with the Trustee (at least five days prior) to such Record Date by a Registered Owner of at least
$1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available
funds to an account in the United States designated by such Registered Owner in such written
request.
This Bond is not a debt of the Cities of Brea, Buena Park, Fullerton, Garden Grove, La
Palina, Newport Beach, Orange, San Clemente, Santa Ana, Seal Beach, Stanton and Tustin (the
Exhibit A
Page 1
"Members"), Orange County, the State of California, or any of its political subdivisions, and
neither the Members, said County, said State, nor any of its political subdivisions, is liable
hereon nor in any event shall this Bond be payable out of any funds or properties of the
Authority other than the Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated as the
"Countywide Public Financing Authority (Orange County, California) 1996 Revenue Bonds"
(the "Bonds"), in an aggregate principal amount of dollars ($ ), all of like
tenor and date (except for such variation, if any, as may be required to designate varying
numbers, maturities, interest rates or redemption provisions) and all issued pursuant to the
provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code,
commencing with section 6584 of said Code (the "Bond Law"), and pursuant .to an Indenture of
Trust, dated as of July 1,1996, by and between the Authority and the Trustee (the "Indenture")
and a resolution of the Authority adopted on ,1996, authorizing the issuance of the
Bonds. Reference is hereby made to the Indenture (copies of which are on file at the office of the
Authority) and all supplements thereto for a description of the terms on which the Bonds are
issued, the provisions with regard to the nature and extent of the Revenues, and the rights
thereunder of the owners of the Bonds and'the rights, duties and immunities of the Trustee and
the rights and obligations of the Authority thereunder, to all of the provisions of which the
Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the Authority to aid in financing certain 800 MHz
communications facilities and other capital improvements.
In order to provide for the repayment of the Bonds, each Member has agreed to lease
certain real property and improvements to the Authority and to lease-back such real property
and improvements from the Authority pursuant to a lease agreement, dated as of July 1, 1996,
by and between the Authority, as lessor, and such Member, as lessee, under which such
Members, in the aggregate, have agreed to make certain lease payments to the Authority which
have been calculated to be sufficient to enable the Authority to pay the principal of and interest
and premium (if any) on the Bonds when due and payable. This Bond and the interest and
premium, if any, hereon and all other Bonds and the interest and premium, if any, thereon (to
the extent set forth in the Indenture) are special obligations of the Authority, and are payable
from, and are secured by a charge and lien on the Revenues as defined in the Inde_nture,
consisting primarily of lease payments to be made by the Members. As and to the extent set
forth in the Indenture, all of the Revenues are exclusively and irrevocably pledged in accordance
with the terms hereof and the provisions of the Indenture, to the payment of the principal of
and interest and premium (if any) on the Bonds.
The rights and obligations of the AuthOrity and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided in
the Indenture, but no such modification or amendment shall extend the fixed maturity of any
BoUnds, or reduce the amount of prindpal thereof or premium (if any) thereon, or extend the time
of payment, or change the method of computing the rate of interest thereon, or extend the time
of payment of interest thereon, without the consent of the owner of each Bond so affected.
The Bonds maturing on or before July 1, , are not subject to optional redemption
prior to their respective stated maturities. The Bonds maturing on or after July 1, , are
subject to redemption at the option of the Authority as a whole, or in part among maturities in
inverse order of maturities (or at the written request of the Authority on a pro rata basis among
maturities), on any date on or after July 1, , from any available source of funds, at the
following redemption prices (expressed as a percentage of the principal amount of the Bonds to
be redeemed) together with accrued interest thereon to the date fixed for redemption:
Exhibit A
'Page 2
Redemption Period Redemption Price.
July 1, ~ through June 30,. 102%
July 1, through June 30, 101
July 1, and thereafter 100
The Bonds are also be subject to redemption as a whole, or in part on a pro rata basis
among maturities, on any date, to the extent the Trustee has received title or hazard insurance
proceeds or condemnation proceeds not used to repair or replace any portion of the Leased
Premises of a Member damaged or destroyed and elected by such Member, to be used for such
purpose, at a redemption price equal to one hundred percent (100%) the principal amount
thereof plus interest accrued thereon to the date fixed for redemption, without premium.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by
first class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption
date to the respective owners of any Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee, but neither failure to receive such notice nor
any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption
or the cessation of accrual of interest thereon from and after the date fixed for redemption.
If this Bond is called for redemption and payment is duly provided therefor as specified
in the Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect
provided in the Indenture, but such declaration and its consequences may be rescinded and
annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Office of the Trustee, but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon registration of such transfer, a new Bond or 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. This Bond may be exchanged
at the Office of the Trustee for Bonds of the same tenor, aggregate principal amount, interest
rate and maturity, of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any
notice to the con.trary.
Unless this certificate is presented by an authorized representative of The Devosito
Trust Company, a New York cor oration "DTC" to ' ' . , . ry
P ( ), the issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist,
have happened or have been performed in due and regular time, form and manner as required
by the Bond Law and the laws of the State of California and that the amount of this Bond,
Exhibit A
Page 3
together with all other indebtedness of the Authority, does not exceed any limit prescribed by
the Bond Law or any laws of the State of California, and is not in excess of the amount of
Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have
been signed by the Trustee.
IN WITNESS WHEREOF, the Countywide Public Financing Authority has caused this
Bond to be executed in its name and on its behalf with the facsimile signature of its Chairman
and attested to by the facsimile signature of its Clerk, all as of the Original Issue Date specified
above.
COUNTYWIDE PUBLIC FINANCING
AUTHORITY
(S E A L)
Attest:
By
Chairman
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
, as Trustee
By
Authorized Signatory
Exhibit A
Page 4
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es) hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the registration books of the Trustee with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
Notice: Signature(s) must be guaranteed by a qualified Notice: The signature on this assigrtment must correspond
guarantor institution, with the name(s) as written on the face of the w~thin
Bond m' every particular without, alteration or
enlargement or any Change whatsoever.
Exhibit A
Page $
F. XHIBIT B
City of Brea
Number One Civic Center Circle, 3rd Floor
Brea, CA 92621-5758
City of Buena Park
6650 Beach Boulevard
Buena Park, CA 90620
City of Fullerton
303 West Commonwealth Avenue
Fullerton, CA 92632
City of Garden Grove
11577 Acacia Parkway
Garden Grove, CA 92640
City of La Palina
7822 Walker Street
La Palma, CA 93623
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
City of Orange
300 East Chapman Avenue
Orange, CA 92666-1591
City of San Clemente
100 Avenida Presidio
San Clemente, CA 92672
City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92701
City of Seal Beach
211 Eighth Street
Seal Beach, CA 90740
City of Stanton
7800 Katella Avenue
Stanton, CA 90680
City of Tustin
300 Centennial Way
Tustin, .CA 92680
Exhibit B
EXHIBIT C
DESCRIPTION OF THE PROJECT
City of 'Brea_:
City of Buena Park:
City of Fullerton_:
City of Garden Grovg:
City of La Palm~:
City of Newport Beach:
City of Orange_'.
City of San Clements:
City of Santa An~:
City of Seal Beach_:
City of Stantorl:
City of Tustin_:
Exhibit C
EXItmlT D
MEMBERS' PERCENTAGE OF ANNUAL DEBT SERVICE
Exhibit D
$
COUNTYWIDE PUBLIC FINANCING AUTHORITY
1996 REVENUE BONDS
BOND PURCHASE AGREEMENT
July. , 1996
Board of Directors
Countywide Public Financing Authority
c/o City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92701
Honorable Directors:
The undersigned, Stone & Youngberg LLC (the "Underwriter"), offers to enter into
this bond purchase agreement (the "Purchase Contract") with the Countywide Public Financing
Authority (the "Authority"), which will be binding upon the Authority and the Underwriter upon the
acceptance hereof by the Authority and the approval of each of the cities listed in Appendix B hereto
(with such additions or deletions from such list as are agreed to by the Purchaser) (such cities shall be
referred to herein as the "Members") pursuant to the Member Letters of Representation (as
hereinafter defined). This offer is made subject to its acceptance by the Authority by execution of
this Purchase Contract and its delivery hereof to the Underwriter on or before 4:00 p.m., California
time, on July , 1996 and, if not so accepted, will be subject to withdrawal by the Underwriter
upon written notice delivered to the Authority at any time prior to the acceptance hereof by the
Authority. All capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Indenture of Trust, dated as of July 1, 1996, (the "Indenture"), by and
between the Authority and (the "Trustee").
1. Purchase and Sale. Upon the terms and conditions and upon the basis of
representations, warranties and agreements set forth herein and in each of the Letters of
Representation, dated the date hereof and executed and delivered by the Members, a form of which is
attached hereto as Exhibit B (each a "Letter of Representation and, collectively, the "Member Letters
of Representation"), the Underwriter hereby agrees to purchase from the Authority for offering to the
public, and the Authority hereby agrees to sell to the Underwriter for such purpose, all (but not less
than all) of $. aggregate principal amount of the Countywide Public Financing Authority
1996 Revenue Bonds (the "Bonds"), at an aggregate purchase price of $ (constituting the
aggregate principal amount of the Bonds, less an Underwriter's discount of $ ). The Bonds
shall be dated the date of delivery and shall have the maturities and bear interest at the rates per
annum as set forth in Appendix A hereto. Payment for and delivery of the Bonds, and the other
actions contemplated hereby, shall take place on July _, 1'996, or such other date as may be agreed to
between the Authority and the Underwriter (the "Closing Date").
2. Authorization and Purpose. The Authority was formed pursuant to the Joint '
Exercise of Powers Agreement, dated ~, 1996, by and among the Members, and 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").
KMLYDDAN 26~82 2~7329 3
The Bonds are being issued pursuant to the Article 4 (commencing with Section 6584)
'of Chapter 5 of Division 7 of Title 1 o]? the California Government Code, and the Indenture, in order
to finance the acquisition, construction and installation of a portion of the Orange County Countywide
800 MHz communications system for the Members, and to finance capital projects for certain
Members throughout their geographic boundaries (collectively, the "Projects"). In addition, a portion
of the proceeds from the sale of the Bonds will be used (i) to pay the costs of issuance of the Bonds
and (ii) to fund the Reserve Account (as defined in the Indenture).
The Bonds shall be substantially in the form described in, and shall be issued and
secured under the provisions of, the Indenture. The Authority, as lessee, shall enter into a Site and
Facility Lease, dated July 1, 1996, with each of the Members, as lessors, pursuant to which the
Authority shall' lease certain real property and facilities from such Member (each a "Site Lease" and,
collectively, the "Site Leases"). Each Member shall lease such real property and facilities back from
the Authority pursuant to individual Lease Agreements, each dated July 1, 1996, by and between the
Authority, as the lessor, and each such Member, as lessee (each a "Lease Agreement" and
collectively, the "Lease Agreements"). The Bonds and interest thereon shall be secured by the lease
payments due and payable by each of the Members pursuant their respective Lease Agreements. The
lease payments due to the Authority pursuant to the terms of the Lease Agreements have been
calculated to be sufficient, in the aggregate, to enable the Authority to pay the principal of and
interest and premium, if any, on the Bonds with due and payable. The Bonds shall be subject to
redemption as provided in the Indenture.
3. Public Offering. The Underwriter agrees to make a bona fide Public offering
of all the Bonds initially at the public offering prices (or yields) set forth on Appendix A attached
hereto and by this reference incorporated herein. Subsequent to the initial public offering, the
Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in
connection with the marketing, of the Bonds. The Bonds may be offered and sold to certain dealers at
prices lower than such initial public offering prices.
4. Delivery of the Letters of Representation and' the Official Statement. At
the time of acceptance hereof by the Authority, the Authority shall cause to be delivered to the
Underwriter a Letter of Representation from each of the Members. As soon as practicable, and no.
later than seven (7) business days after its acceptance hereof, the Authority shall deliver to the
Underwriter (i) one copy of the Official Statement relating to the Bonds (which, together with all-
appendices attached thereto and such amendments or supplements thereto as shall be approved by the
Underwriter and the Authority, is hereinafter called the "Official Statement"), manually executed on
behalf of the Authority by its Chairman or other officer of the Authority duly authorized by the
Authority, and (ii) such reasonable number of certified or conformed copies of the foregoing as the
undersigned may request in order to comply with Rule 15c2-12 of the Securities and Exchange
Commission ("Rule 15c2-12'j), applicable Municipal Securities Rulemaking Board rules and other
regulatory requirements relating to the issuance and sale of the Bonds.
The Authority hereby authorizes the use of the Official Statement in connection with
the public offering and sale of the Bonds. The Authority also consents to the use by the Underwriter
prior to the date hereof of the Preliminary Official Statement of the Authority dated July _, 1996
relating to the Bonds (which, together with all appendices thereto, is herein called the "preliminary
Official Statement'') in connection with the public offering of the Bonds. The Authority hereby
ratifies the use by the Underwriter of the Preliminary Official Statement, the Indenture and any other
documents or contracts to which the Authority is a party, including this Purchase Contract, and all
information contained 'therein, and all other documents, certificates, and statements furnished by the
KMLYDDAN 26982 257329 3 2
Authority to the Underwriter in connection with the transactions contemplated by this Purchase
Contract, or in connection with the offer and sale of the Bonds by the Underwriter.
The Authority represents that the Preliminary Official Statement, at the time of its
distribution by the Underwriter, was and is a "near-final" Official Statement within the meaning of
Rule 15c2-12, except for the omission of no more than the following information: the offering
price(s), interest rate(s), selling compensation, aggregate principal amounts, principal amount per
maturity, redemption provisions and delivery dates. It is an express condition of the offer of the
Underwriter made hereby that the Authority deliver the Official Statement, in a form deemed by it to
be final, within seven (7) business days of the date hereof; and the delivery of an Official Statement
executed by an authorized representative of.the Authority shall conclusively establish that the
Authority deems the document so delivered to be final. A failure of the Authority to comply with the
requirements of the preceding sentence shall entitle the Underwriter to rescind its offer hereunder.
5. Authority Representations, Warranties and Covenants. The Authority
represents, warrants and covenants to the Underwriter that:
(a) Due Organization, Existence and Authority of. Authority. The Authority is a
joint exercise of powers authority duly organized and validly existing under the Act and the laws of
the State of California (the "State"), and has, and on the Closing Date will have, full legal right,
power and authority (i) to execute and deliver this Purchase Contract, the Indenture, the Site Leases
and the Lease Agreements (collectively, the "Authority Documents"), and to approve the Official
Statement (ii) to adopt the resolutions approving the Authority Documents, the Official Statement and
the issuance and sale of the Bonds, (iii) to issue, sell and deliver the Bonds to the Underwriter as
provided herein, and (v) to carry out and consummate the transactions on its part contemplated by the
Authority Documents and the Official Statement.
Co) Due Authorization and Approval of Authority. By all necessary official
action, the Authority has duly authorized and approved the adoption or execution and delivery by the
Authority of, and the performance by the Authority of the obligations on its part contained in, the
Authority Documents, and has approved the use by the Underwriter of the Preliminary Official
Statement and the Official Statement and, as of the date hereof, such authorizations and approvals are
in full force and effect and have not been amended, modified or rescinded. When executed and
delivered by the parties thereto, the Bonds and the Authority Documents' will constitute the legally
valid and binding obligations .of the Authority enforceable against the Authority in accordance with
their respective terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors'
rights generally. The Authority has complied, and will at the Closing Date be in compliance in all
respects, with the terms of the Authority Documents.
(c) Official Statement Accurate. The information with respect to the Authority,
the Bonds and the Authority Documents in the Official Statement is, and at all times subsequent to the
date of the Official Statement up to and including the Closing Date will be, true and correct in all
material respects, and the information with respect to the Authority, the Bonds and the Authority
Documents in the Official Statement does not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(d) Consent to Amendments and Supplements to Official Statement. The
Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official
KMLYDDAN 215982 257329 3 3
Statement and will not effect or consent to any such amendment or supplement without the consent of
the Underwriter, which consent will not be unreasonably withheld. The Authority will advise the
Underwriter promptly of the institution of any proceedings known to it by any governmental agency
prohibiting or otherwise affecting the use of the Official Statement in connection with the offering,
sale or distribution of the Bonds.
(e) Agreement to Amend or Supplement Official Statement. If, at any time
within ninety (90) days after the later of the Closing Date or the end of the underwriting period (as
described below), any event occurs as a 'result of Which the Official Statement as then amended or
supplemented would include an untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements contained therein, in the light of the circumstances under
which they were made, not misleading, and, in the reasonable opinion of the Underwriter, an
amended or supplemented Official Statement should be delivered in connection with the offering or
sale of the Bonds to reflect such event, the Authority will promptly prepare, at its own expense, an
amendment or supplement which will correct such statement or omission. The phrase "end of the
underwriting period" is defined in Rule 15c2-12 as the later of such time as (i) the Authority delivers
the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an
underwriting syndicate, an unsold balance of the Bonds for sale to the public.
(f) No Breach or Default. As of the time of acceptance hereof and as of the
Closing Date, except as otherwise disclosed in the Official Statement, (i) the Authority is not and will
not be in breach of or in default under any applicable constitutional provision, law or administrative
rule or regulation of the State or the United States, or any applicable judgment or decree or any trust
agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to
which the Authority is a party or is otherwise subject, and (ii) no event has occurred and is
continuing which, with the passage of time or the giving of notice, or both, would constitute a default
or event of default under any such instrument which breach, default or event could have an adverse
effect on the ability of the Authority to perform its obligations under the Bonds and the Authority
Documents or in connection with the construction and acquisition of the Project; and, as of such
times, except as disclosed in the Official Statement, the authorization, execution and delivery of the
Bonds and Authority Documents and compliance by the Authority with the provisions of each of such
agreements or instruments does not and will not conflict with or constitute a breach of or default
under any applicable constitutional provision, law or administrative rule or regulation of the State or
the United States, or any applicable judgment, decree, license, permit, trust agreement, loan. -
agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority
(or any of its respective officers) is subject, or by which it or any of its properties are bound, nor will
any such authorization, execution, delivery or compliance result in the creation or imposition of any
lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the assets
or properties or under the terms of any such law, regulation or instrument, except as may be provided
by the Authority Documents.
(g) No Litigation. At the time of acceptance hereof and as of the Closing Date,
there is and will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, government agency, public board or body (collectively and individually, an "Action")
pending with respect to which the Authority has been served with process or to the best knowledge of
the Authority threatened, in which any such Action (i) in any way questions the formation or
existence of the Authority or the titles of the officers of the Authority to their respective offices;
(ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of any of the
Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of
and interest on the Bonds, or in any way contests or affects the validity of the Authority Documents
KMLYDDAN 215982 257329 3 ' 4
or the consummation of the transactions on the part of the Authority contemplated therebY, or contests
the exclusion of the interest on the Bonds from federal or state income taxation or contests the powers
of the Authority, or the Authority's authority to collect and use the payment due under the Lease
Agreements to pay debt service on the Bonds; (iii) which may result in any material adverse change
relating to the financial condition of the Authority; or (iv) contests the completeness or accuracy of
the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto
or asserts that the Preliminary Official Statement or the Official Statement contained any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and as of'the time of acceptance hereof and as of the Closing Date, to the
knowledge of the officer of the Authority executing this Purchase Contract, there is no basis for any
action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of
this sentence.
(h) Further Cooperation; Blue Sky. The Authority will furnish such information,
execute such instruments and take such other action in cooperation with the Underwriter as the
Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue
Sky or other securities laws and regulations of such states and other jurisdictions of the United States
as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment
under the laws of such states and other jurisdictions, and will use its best efforts to continue such
qualifications in effect so long as required for the distribution of the Bonds; provided, however, that
the Authority will not be required to execute a special or general consent to service of process or
qualify as a foreign corporation in connection with any such qualification in any jurisdiction.
(i) Bonds Issued Per Indenture. The Bonds and the Indenture conform as to form
and tenor to the descriptions thereof contained in the Official Statement. The Authority represents
that the Bonds, when issued, executed and delivered in accordance with the Indenture and sold to the
Underwriter as provided herein, will be validly issued and outstanding obligations of the Authority,
entitled to the benefits of the Indenture and the security of the pledge of the proceeds of the lease
payments due pursuant to the Lease Agreements. The Indenture creates a valid pledge of the monies
in certain funds and accounts established thereunder, including the investments thereof, subject in all
cases to the provisions of the Indenture permitting the application thereof for the purposes and on the
terms and conditions set forth therein.
(j) Consents and Approvals. All authorizations, approvals, licenses, permits,
consents, elections, and orders of or filings with any governmental authority, legislative body, 'board,
agency or commission having jurisdiction in the matters which are required by Closing Date for the
due authorization of, which would constitute a condition precedent to or the absence of which would
adversely affect the due performance by the Authority of its obligations in connection with the
Authority Documents have been duly obtained or made and are in full force and effect.
(k) No Other Bonds. Between the date of this Purchase Contract and the Closing
Date, the Authority will not offer or issue any bonds, notes or other obligations for borrowed money
secured by the lease payments due under the Lease Agreements or otherwise payable from the assets
or funds of the Authority and the Members not previously disclosed to the Underwriter.
0) No Transfer Taxes. The issuance and sale of the Bonds is not subject to any.
transfer or other documentary stamp taxes of the State or any political subdivision thereof.
KMLYDDAN 26982 257329 3 5
(m) No Adverse IRS Listing. The Authority has not been notified of any listing
or proposed listing by the Internal Revenue Service to the effect that the Authority or any Member is
a bond issuer whose arbitrage certifications may not be relied upon.
(n) Certificates. Any certificate signed by any authorized officer of the Authority
and delivered to the Underwriter in connection with the issuance and sale of the Bonds shall be
deemed to be a representation and covenant by the Authority to the Underwriter as to the statements
made therein.
(o) Bond Proceeds. The Authority will apply the proceeds of the Bonds in
accordance with the Indenture.
(p) Covenants and Cooperation. The Authority will faithfully perform and abide
by all of' its covenants and undertakings contained in the Bonds and Indenture, as the same may be
amended from time to time, until such time as the Bonds have been paid in full or monies have been
set aside in an amount sufficient to pay all then outstanding Bonds at maturity Or to the date of
redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any.
(c0 Tax-exempt Status. The Authority shall not take or omit to take, as ig
appropriate, any action which would adversely affect the exclusion from gross income under federal
tax law of the interest on the Bonds or which would cause-the Bonds to become arbitrage bonds under
Section 148 of the Code and the regulations thereunder.
(r) Continuing Disclosure. The Authority and each of the' Members will
undertake, pursuant to separate Continuing Disclosure Certificates (as defined herein), to provide
annual reports and notices of certain events to certain information repositories. A description of this
undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Final
Official Statement. The Authority will promptly prepare and distribute, and will cause each of the
Members to promptly prepare and distribute, all documents and/or reports as required now or in the
future to be prepared and distributed pursuant to the Continuing Disclosure Certificates.
6. The Closing. At 9:00 a.m., Pacific time, on July _, 1996 (the "Closing
Date"), or at such other time or on such earlier or later business day as shall have been mutually
agreed upon by the Authority and the Underwriter, (i) the Authority will deliver the Bonds in ' _
definitive form in to the Depository Trust Company in New York, New York, or such other place as
the Authority. and the Underwriter shall mutually agree upon, and (ii) the Authority will deliver the
closing documents hereinafter mentioned at the offices of Jones Hall Hill & White, A Professional
Law Corporation, San Francisco, California or another place to be mutually agreed upon by the
Authority and the Underwriter. The Underwriter will accept delivery and pay the purchase price of
the Bonds as set forth in Section 1 hereof in federal funds payable to the order of the Authority or its
designee. These payments and deliveries, together with the delivery of the aforementioned
documents, are herein called the "Closing." The Bonds will be delivered in such denominations and
deposited in the account or accounts specified by the Underwriter pursuant to written notice delivered
not later than five (5) business days prior to the Closing.
7. Closing Conditions. The Underwriter has entered into this Purchase Contract.
in reliance upon the representations and covenants herein and the performance by the Authority of
their obligations hereunder, both as of the date hereof and as of the date of the Closing. The
Underwriter's obligations under this Purchase Contract are and shall be subject to the following
additional conditions:.
KMLYDDAN 26982 2.~73'29 3 6
(a) Authority Bring-DoWn Representations. The representations and covenants of
the Authority contained herein shall be true and correct at the time of the Closing, as if made on the
Closing Date.
· (b) Members Bring-Down Representations. The representations and covenants of
each of the Members contained in such Member's Letter of Representation shall be true and correct at
the time of the Closing, as if made on the Closing Date.
(c) Executed Agreements and Performance Thereunder. At the time of the
Closing, (i) the Authority Documents shall be in full force and effect and shall not have been
amended, modified or supplemented except with the written consent of the Underwriter, (ii) there
shall be in full force and effect such resolutions (collectively, the "Authorizing Resolutions"), as, in
the opinion of Jones Hall Hill & White, A Professional Law Corporation ("Bond Counsel"), shall be
necessary in connection with the transactions on the part of the Authority contemplated by this
Purchase Contract, the Official Statement and the Authority Documents, (iii) the Authority shall
perform or have performed its obligations required or specified in the Authority Documents to be
performed at or prior to Closing, and (iv) the Official Statement shall not have been supplemented or
amended except as otherwise may have been agreed to in writing by the Underwriter.
(d) No Default. At the time of the Closing, no default shall have occurred or be
existing under this Purchase Contract, the Authorizing Resolutions or the Authority Documents, and
the Authority shall not be in default in the payment of principal or interest on any of its bonded
indebtedness which default shall adversely impact the ability of the Authority to .make payments on
the Bonds.
(e) Closing Documents. At or prior to the Closing, the Underwriter shall have
received each of the documents required under Section 8 below.
(f) Termination Events. The Underwriter shall have the right to terminate this
Purchase Contract, without liability therefor, by written notification to the Authority if at any time at
or prior' to the Closing:
(i) any event shall occur which causes any statement contained in the
Official Statement to be materially misleading or results in a failure of the Official
Statement to state a material fact necessary to make the statements in the Official
Statement, in the light of the circumstances under which they were made, not
misleading; or
(ii) the' marketability of the Bonds or the market price thereof, in the
opinion of the Underwriter, has been materially adversely affected by an amendment
to the Constitution of the United States or by any legislation in or by the Congress of
the United States or by the State, or the amendment of legislation pending as of the
date of this Purchase Contract in the Congress of the United States, or the
recommendation to Congress or endorsement for passage (by press release, other form
of notice or otherwise) of legislation by the President of the United States, the
Treasury Department of the United States, the Internal Revenue Service or the
Chairman or ranking minority member of the Committee on Finance of the United
States Senate or the Committee on Ways and Means of the United States House of
Representatives, or the proposal for consideration of legislation by either such
Committee, or the presentment of legislation for consideration as an option by either
KMLYDDAN 215982 257329 3 7
such Committee, or by the staff of the Joint Committee on Taxation of the Congress
of the United States, or the favorable reporting for passage of legislation to either
House of the Congress of the United States by a Committee of such House to which
such legislation has been referred for consideration, or any decision of any Federal or
state court or any ruling or regulation (final, temporary or proposed) or official
statement on behalf of the United States Treasury Department, the Internal Revenue
Service or other federal or State authority materially adversely affecting the federal or
State tax status of the Authority, the interest on bonds or notes or obligations of the
general character Of the Bonds or the market price of the Bonds; or
(iii) legislation shall be enacted by the Congress of the United States, or a
decision by a court of the United States shall be rendered, or a stop order, ruling,
regulation or official statement by, or on behalf of, the Securities and Exchange
Commission or any other governmental agency having jurisdiction of the subject
matter shall be issued or made to the effect that the issuance, offering or sale of
obligations of the general character of the Bonds, or the issuance, offering or sale of
the Bonds, including all underlying obligations, as contemplated hereby or by the
Official Statement, is in violation or would be in violation of, or that obligations of
the general character of the Bonds, or the Bonds, are not exempt from registration
under, any provision of the federal securities laws, including the Securities Act
of 1933, as amended and as then in effect, or that the Indenture is required to be
qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or
(iv) additional material restrictions not in force as of the date hereof shall
have been imposed upon trading in securities generally by any governmental authority
or by any national securities exchange which restrictions materially adversely affect
the Underwriter's ability to market the Bonds; or
(v) a general banking moratorium shall have been established by federal
or State authorities; or
(vi) the United States has become engaged in hostilities which have
resulted in a declaration of war or a national emergency or there has occurred any
other outbreak of hostilities or a national or international calamity or crisis, financial
or otherwise, the effect' of such outbreak, calamity or crisis on the financial markets
of the United States, being such as, in the reasonable opinion of the Underwriter,
would affect materially and adversely the ability of the Underwriter to market the
Bonds (it being agreed by the Underwriter that there is no outbreak, calamity or crisis
of such character as of the date hereof); or
(vii) there shall be in force a general suspension of trading on the New.
York Stock Exchange.
8. Closing Documents. At or prior to the Closing, the Underwriter shall
receive the following documents:
(a) Bond Opinion. An approving opinion of Bond Counsel, dated the date of the
Closing and substantially in the form included as Appendix C to the Official Statement, together with
a letter from such counsel, dated the date of the Closing and addressed to the Underwriter, to the
KMLYDDAN 26982 257329 3 8
effect that such opinion addressed to the Authority may be relied upon by the Underwriter to the same
extent as if it were addressed to the Underwriter;
(b) Supplemental Opinion. A supplemental opinion of Bond Counsel, addressed
to the Underwriter, in form and substance acceptable to counsel for the UnderWriter, and dated the
date of the Closing, to the following effect:
(i) the Bonds conform as to form and tenor to the description thereof
contained under the caption "THE BONDS" (other than" - Debt Service Schedule")
in the Official Statement, and the statements contained in the Official Statement under
the captions "THE BONDS" (except for any information concerning The Depository
Trust Company or its book-entry system), "SECURITY FOR THE BONDS" (other
than" - Estimated Debt Service Schedule"), "TAX MATTERS, .... APPENDIX A -
Summary of Principal Legal Documents" and "APPENDIX C - Form of Bond
Counsel Opinion," insofar as such statements purport to summarize certain provisions
of the Act, the Bonds, the Indenture or applicable provisions of the United States
Internal Revenue Code of 1986, as amended, present an accurate summary of such
provisions; and
(ii) the Bonds are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Indenture is exempt from qualification
pursuant to the Trust Indenture Act of 1939, as amended;
(c) Opinion of Authority Counsel. An opinion, dated the Closing Date and
addressed to the Underwriter, of the Authority Counsel, substantially in the form set forth in
Appendix D hereto;
(d) ..Opinion of Counsel to Each Member. An opinion, dated the Closing Date
and addresged to the Underwriter, of the City Attorney for each of the Members, substantially in the
form of Appendix E hereto;
(e) - Opinion of Counsel to Trustee. An opinion, dated the Closing Date and
addressed to the Underwriter, of , as counsel to the Trustee, substantially in
the form of Appendix F hereto;
(f) Opinion of Counsel to Underwriter. An opinion, dated the Closing Date and
addressed to the Underwriter, of Cox, Castle & Nicholson, as counsel to the Underwriter, concerning
such matters as the Underwriter may request;
(g) Closing Certificate of Trustee. A certificate of the Trustee, dated the Closing
Date, substantially in the form of Appendix G hereto;
(h) Arbitrage Certificate. An arbitrage certificate executed by the Authority and
satisfactory in form and substance to Bond Counsel and the Underwriter;
(i) Continuing Disclosure Certificates of Authority. A Continuing Disclosure'
Certificate substantially in form and' substance as set forth in Appendix E to the Official Statement,
executed by an authorized officer of the Authority;
· KMLYDDAN 2691r2 237329 3 9
(j) Continuing Disclosure Certificates of the Members. A Continuing Disclosure
Certificate substantially in form and substance as set forth in Appendix F to the Official Statement,
executed by an authorized officer of each of the Members;
(k) Certificate of the Authority Regarding the Preliminary Official Statement. A
certificate of the Authority, dated the date of the Preliminary Official Statement, signed by a duly
authorized representative of the Authority, to the effect that:
(i) the Preliminary Official Statement distributed in connection with the
Bonds is in "near final" form within the meaning of Rule 15c2-12;
(ii) the Authority will cooperate with the Underwriter in transforming the
Preliminary Official Statement into a final Official Statement; and
(iii) the Authority will cause a sufficient quantity of'final Official
Statements to be delivered to the Underwriter within seven (7) business days after the
execution of this Purchase Contract so as to allow the Underwriter to comply with iS
continuing obligations under said Rule 15c2-12;
(1) Official Statement. One copy of the Official Statement manually executed on
behalf of the Authority by its Chairman or another officer of the Authority duly authorized by the
Authority, and such reasonable number of certified or conformed copies of the foregoing as the
Underwriter may request in order to comply with Rule 15c2-12, applicable Municipal Securities
Rulemaking Board rules and other regulatory requirements relating to the issuance and sale of the
Bonds;
(m) Authority and Member Resolutions. One copy of (i) each resolution of the
Authority relating to the Authority Documents, the transactions contemplated thereby, formation of
the Authority and issuance of the Bonds, certified by the Secretary of the Authority (ii) each
resolution of each of the Members relating to the applicable Letter 6f Representation, Site Lease and
Lease Agreement (collectively, the "Member Documents") and the transactions contemplated thereby,
the formation of the Authority, the issuance of the Bonds and such Members participation in the
financing, certified by the City Clerk of the applicable Member;
(n) Form 8038-G. Evidence that the federal tax information form 8038-G has
been executed by the Authority;
(o) CDAC Report of Final Sale. A copy of the Report of Final Sale required to
be delivered to the California Debt Advisory Commission pursuant to Section 8855(g) of the
California Government Code;
(p) Bond Insurance. A financial guaranty bond by
insuring the payment of principal and interest on the Bonds;
(the "Insurer")
(q) Opinion of Counsel to Insurer. An opinion of counsel to the Insurer in form
and substance satisfactory to the Underwriter;
(r) Rating. A rating on the Bonds effective on the Closing Date of at least "_"
by Moody's Investors Service and "__" by Standard & Poor's Rating's Services;
KIVlLYDDAN 215982 2~7329 3 10
(s) Additional Documents. Such additional legal opinions, certificates,
instruments and other documents as the Underwriter or its counsel may reasonably deem necessary;
and
(t) Transcripts. Two transcripts containing the documents listed in this Section,
together with any other documents relating to the authorization and issuance of the Bonds.
If the Authority shall be unable to satisfy the conditions contained in this Purchase
Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this
Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter or the
Authority shall be under further obligation hereunder, except as further set forth in Section 9 hereof.
9. Costs and Expenses.
(a) The Underwriter shall be under no obligation to pay, and the Authority shall
pay or cause to be paid from any legally available funds, the following expenses incident to the
issuance of the Bonds and performance of the Authority's obligations hereunder: (i) the costs of the
preparation and printing of the Bonds, (ii) the fees and disbursements of (a) Jones Hall Hill & White,
A Professional Law Corporation, as Bond Counsel and Authority Counsel and Co) any party acting as
counsel to the Members; (iii) the cost of preparation, printing and mailing of the Preliminary Official
Statement and final Official Statement and any supplements and amendments thereto, including a
reasonable number of copies thereof for distribution by the Underwriter; and (iv) the fees and
disbursements of accountants, advisers and any other experts or consultants retained by the Authority,
including the fees and expenses of the Trustee.
(b) The Underwriter shall pay the following expenses: (i) all advertising expenses
in connection with the public offering of the Bonds; (ii) the CDAC fee; and (iii) all other expenses
incurred by the Underwriter in connection with its public offering and distribution of the Bonds,
including the fees and expenses of its counsel, except as noted in Section 9(a) above.
10. Indemnification.
(a) The Authority agrees, to the extent permitted by law, to indenmify and hold
harmless the Underwriter and its officers and employees and each person who controls the _
Underwriter within the meaning of Section 15 of the Securities Act of 1933 (as an "Indemnified
Person") from and against any losses, claims, damages or liabilities, joint or several, to which any
Indemnified Person may become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of, or are based upon, the misstatement or omission or alleged
misstatement or omission to state a material fact in the Official Statement necessary to make the
statements therein under the caption "THE AUTHORITY" not misleading, and will reimburse each
Indemnified Person for any legal or other expenses reasonably incurred by such Indemnified Person
in investigating, defending or preparing to defend any such action or claim; provided, however, that
the Authority shall nOt be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of, or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in the Official Statement in reliance upon and in conformity with written
information furnished by or on behalf of any Indemnified Person, or any information furnished with
respect to the Underwriter specifically for inclusion therein.
Co) Promptly after receipt by an Indemnified 'Person under paragraph (a) of this
Paragraph of notice of the commencement of any action, such Indemnified Person shall, if a claim in
KMLYDDAN ~lr2 237329 3 11
respect thereof is to be made against the AuthOrity under such paragraph, notify the Authority in
writing of the commencement thereof. In case any such action shall be brought against any
Indemnified Person, and such Indemnified Person shall notify the Authority of the commencement
thereof, the Authority shall be entitled to participate in and, to the extent that either wishes, to assume
the defense thereof, with counsel satisfactory to such Indemnified Person, and after notice from the
Authority to such Indemnified Person of its election so to assume the defense thereof, the Authority
shall not be liable to such Indemnified Person under such paragraph for any legal or other expenses
subsequently incurred by such Indemnified Person in connection with the defense thereof other than
reasonable costs of any investigation; provided, however, that if the named parties to any such action
(including any impleaded parties) include the Indemnified Person and the Authority, and the
Indemnified Persons reasonably conclude that there may be one or more legal defenses available to
them which are different from or additional to those available.to the Authority, the Indemnified
Persons shall have the right to select separate counsel (acceptable to the Authority) to assume such
legal defense and to otherwise participate in the defense of such action on behalf of the Indemnified
Persons; provided, further, however, that the Authority shall not, in connection with any one such
action or separate but substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than one separate firm of
attorneys at any point in time for the Indemnified Persons.
(c) The Underwriter agrees to indemnify and hold harmless the Authority and its
officers and employees to the same extent as the indemnity from the Authority to the Indemnified
Persons described in paragraph (a) of this paragraph, but only with respect to information contained
in the Official Statement under the caption "UNDERWRITING." In case any action shall be brought
against the Authority with respect to which indemnity may be sought against the Underwriter, the
Underwriter shall have the rights and duties given to the Authority, and the Authority shall have the
rights and duties given to the Underwriter, by paragraph Co) of this Section.
11. Notices. Any notice or other communication to be given to the Authority
under this Purchase Contract may be given by delivering the same in writing to the Authority at City
City of Santa Ana, 20 Civic Center Plaza, Santa Ana, California 92701, Attention: Executive
Director.
Any notice or other communication to be given to the Underwriter under this
Purchase Contract may be given by delivering the same in writing to Stone & Youngberg LLC,_4350
La Jolla Village Drive, Suite 840, San Diego, California 92122.
12. Entire Agreement. This Purchase Contract is made solely for the benefit of
the Authority and the Underwriter (including their respectiVe successors and assigns), and no other
person shall acquire or have any right hereunder or by virtue hereof. All of the Authority's
representations, warranties and agreements contained in this Purchase Contract shall remain operative
and in full force and effect regardless of (i) any investigations made by or on behalf of the
Underwriter, or (ii) delivery of any payment for the Bonds pursuant to this Purchase Contract. The
agreements contained in this paragraph and in paragraph 13 shall survive any termination of this
Purchase Contract.
13. Survival of Representations and Warranties. All representations and
warranties of the parties made in, pursuant to or in connection with this Purchase Contract shall
survive the execution and delivery of this Purchase Contract, notwithstanding any investigation by the
parties. All statements contained in any certificate, instrument or other writing delivered by a party
KJV~DAN 26982 2~7329 3 12
to this Purchase Contract or in connection with the transactions contemplated by this Purchase
Contract constitute representations and warranties by such party under this Purchase Contract.
14. Counterparts. This Purchase Contract 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.
15. Severability. In case any one or more of the provisions contained herein
shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof.
16. Governing Law. The validity, interpretation and performance of this
Purchase Contract shall be governed by the laws of the State of California.
17. No Assignment. The rights and obligations created by this Purchase Contract
shall not be subject to assignment by the Underwriter or the Authority without the prior written
consent of the other party hereto.
STONE & YOUNGBERG LLC
By:
Principal
Accepted as of the date
first stated above:
COUNTYWIDE PUBLIC FINANCING
AUTHORITY
By:
Executive Director
KMLYDDAN 2698'2 257329 3 13
APPENDIX A
Maturity Date
(July 1)
Principal
Amount
Interest
Rate
Price or
Yield
KMLYDDAN 26992 2.57'329 3 A-1
APPENDIX B
LIST OF THE MEMBER CITIES
City of Brea
Number One Civic Center Circle, 3rd Floor
Brea, CA 92621-5758
Attn: Mr. Lawrence D. Hurst, C.P.A.
Financial Services Director
(714) 990-7675
FAX: (714) 990-2258
City of Buena Park
6650 Beach Boulevard
Buena Park, CA 90620
Atto: Mr. Greg Beaubien
Finance Director
(714) 562-3710
FAX: (714) 562-3599
City of Fullerton
303 West Commonwealth Avenue
Fullerton, CA 92632
Aa-n: Mr. Chris Meyer
Director of Administrative Services
(714) 738-6350
FAX: (714) 738-6758
City of Garden Grove
11222 Acacia Parkway
Garden Grove; CA 92640
Attn: Mr. Anthony Andrade
Controller
(714) 741-5060
FAX: (714) 741-5205
City of La Palma
7822 Walker Street
La Palina, CA 93623
Atto: Ms. Olivia Silverio
Director of Finance
(714) 523-8470
FAX: (714) 523-2141
City of Orange
300 East Chapman Avenue
Orange, CA 92666-1591
Atto: Ms. Helen Bell
Finance Director
(714) 744-2238
FAX: (714) 744-2245
City of San Clemente
100 Avenida Presidio
San Clemente, CA 92672
Attn: Ms. Cynthia Pendleton
Finance Director
(714) 361-8341
FAX: (714) 361-8285
City of Santa Aha
20 Civic Center Plaza
Santa Ana, CA 92701
Attn: Mr. Roderick R. Coloma
Executive Director/Treasurer
(714) 647-5420
FAX: (714) 647-5414
City of Seal Beach
211 Eighth Street
Seal Beach, CA 90740
Attn: Mr. Keith R. Till
City Manager
(310) 341-2527
FAX: (310) 4314067
City of Stanton
7800 Katella Avenue
Stanton, CA 90680
Atta: Ms. Denise Bates
Administrative Services Manager
(714) 379-9222 x226
FAX: (714) 890-1443
City of Tustin
300 Centennial Way
Tustin, CA 92680
Attn: Mr. Ronald A. Nault
Finance Director/City Treasurer
(714) 573-3061
FAX: (714) 832-0825
KMLYDDAN 26982 257329 3 B-1
APPENDIX C
LETTER OF REPRESENTATION
[LETTERHEAD OF THE MEMBER CITY]
July _, 1996
[Date of BPA]
Stone & Youngberg LLC
4350 La Jolla Village Drive
Suite 840
San Diego, California 92122
Countywide Public Financing Authority
c/o City of Santa Ana
20 Civic Center Plaza
Santa Ana, California 92701
Re: Countywide Public Financing Authority 1996 Revenue Bonds
Dear Ladies and Gentlemen:
The Countywide Public Financing Authority (the "Authority") and the undersigned
City (the "Member") propose to enter into a Lease Agreement to be dated as of July 1, 1996 (the
"Lease Agreement") and a Site and Facility Lease to be dated as of July 1, 1996 (the "Site Lease") to
provide security for the Bonds (as hereinafter defined), which are being issued to finance the
acquisition, construction and installation of a portion of the Orange County Countywide 800 MHz
communications system as described in the Official Statement (hereinafter mentioned), and to finance
certain capital improvements of the members of the Authority (the "Members") throughout the
geographic boundaries of such Members (collectively, the "Project"). Pursuant to a Bond Purchase
Agreement between Stone & Youngberg LLC (the "Underwriter") and the Authority, dated the date
hereof (the "purchase Contract"), the Underwriter proposes to purchase the Countywide Public -
Financing Authority 1996 Revenue Bonds in the amount stated in the Purchase Contract (the
"Bonds"). This Letter of Representation is being delivered pursuant to the Purchase Contract and all
capitalized terms not defined herein shall have the meanings given to such terms in the Purchase'
Contract.
In order to induce you to enter into the Purchase Contract and to permit the
Underwriter to make a public offering of the Bonds therein contemplated, the Member hereby
represents, warrants, covenants and agrees as follows, the provisions of paragraphs (a) through (1)
being true as of the date hereof:
(a) Due Organization, Existence and Authority_ of the Member. The Member is
duly organized and validly existing as a [general law][chartered] city and municipal corporation of the '
State of California (the ".State"), and the Member has, and on the Closing Date will have, the full
legal right, power and authority to (i) execute and deliver its Member Documents and to approve the
Official Statement and the l-,._~,mse Contract, (ii).perform its obligatlurrg and engage in the
transactions contemplated by the Member Documents, the Purchase Agreement and the Official
Statement, (iii) to adopt the resolutions approving its Member Documents, the Official Statement and
the Purchase Contract.
(b) Due Authorization and Approval by the Member. By all necessary action, the
Member has duly authorized and approved the execution and delivery by the Member of, and the
performance by the Authority of the obligations on its part contained in its Member Documents, the'
Official Statement and the Purchase Contract and, as of the date hereof, such authorization and
approvals are in full force and effect and have not been amended, modified or rescinded. When
executed and delivered by the respective parties thereto, its Member Documents will constitute the
legal, valid and binding obligations of the Member enforceable against the Member in accordance
with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency
or other laws affecting enforcement of creditors' rights.
(c) Use of the Official Statement. The Member hereby authorizes the use of the
Official Statement in connection with the public offering and sale of the Bonds. The Member also
consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement
of the Authority, dated July _, 1996, relating to the Bonds (which, together with all appendices
thereto, is herein called the "Preliminary Official Statement") in connection with the public offering of
the Bonds. The Member hereby ratifies the use by the Underwriter of the Preliminary Official
Statement, its Member Documents and any other documents or contracts to which the Member is a
party and all information contained therein, and all other documents, certificates, and statements
furnished by the Member to the Underwriter in connection with the transactions contemplated by the
Purchase Contract, or in connection with the offer and sale of the Bonds by the Underwriter.
The Member represents that the Preliminary Official Statement (excluding those
portions of Appendix B to the Preliminary Official Statement that describe the other Members of the
Authority), at the time of its distribution by the Underwriter, was and is a "final" Official Statement
within the meaning of Rule 15c2-12, except for the omission of no more than the following
information: the offering price(s), interest rate(s), selling compensation, aggregate principal amounts,
principal amount per maturity, redemption provisions and delivery dates. In addition, the Member
will cooperate with the Underwriter in transforming the Preliminary Official Statement into a final
Official Statement.
(d) Official Statement Accurate. At the date of execution by the Member of-this
Letter of Representation, the statements contained in the Preliminary Official Statement, dated July _,
1996 and the Official Statement, dated the date hereof relating to the Bonds (excluding the
information contained in Appendix B to the Preliminary Official Statement and Official Statement that
describes the other Members of the Authority), is true and correct in all material respects for the
purposes for which their use is or was authorized; and such statements (excluding the information
contained in Appendix. B to the Preliminary Official Statement and the Official Statement that
describes the other Members of the Authority) do not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements made in such sections in light of
the circumstances under which they are or were made, not misleading. Neither this Letter of
Representation nor any other document, certificate or written statement furnished to the Underwriter
or the Authority by or relating to the Member contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein or therein, under the
circumstances under which they are or were made, not misleading.
(e) Consent~m Amendments and Supplement to the'~d'cial Statement' The
Member shall not participate in the issuance of any amendment of or supplement to the Official
Statement to which, after having been furnished with a copy, the Underwriter shall object in writing
or which shall be disapproved by its counsel.
(f) Agreement to Assist in the Amendment or Supplement of the Official
Statement. If, at any time within ninety (90) days after the later of the Closing Date or the end of the
underwriting period, any event relating to or affecting the Member, the real property and facilities
subject to the Site Lease and the Lease Agreement, or its portion of the Project shall occur as a result
of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the
Official Statement in order to make the Official Statement not misleading in the light of the
circumstances existing at the date of Closing, the Member will whatever steps are necessary to assist
the Authority in preparing and furnishing to the Underwriter an amendment or a supplement to the
Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will
amend or supplement the Official Statement so that it will not contain an untrue Statement of a
material fact or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not
misleading. The Underwriter shall promptly notify the Authority of the end of the underwriting
period.
(g) No Breach or Default. As of the time of acceptance hereof and as of the
Closing Date, except as otherwise disclosed in the Official Statement, (i) the Member is not and will
not be in breach of or in default under any applicable constitutional provision, law or administrative
rule or regulation of the State or the United States, or any applicable judgment or decree or any trust
agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to
which the Member is a party or is otherwise subject, and (ii) no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both, would constitute a default or event
of default under any such instrument which breach, default or event described under (i) or (ii) of this
subparagraph could have an adverse effect on the ability of the Member to perform its obligations
under its Member Documents or in connection with the construction and acquisition of the Member's
portion of the Project; and, as of such times, except as disclosed in the Official Statement, the
authorization, execution and delivery of its Member Documents and compliance by the Member with
the provisions of each of such agreements or instruments does not and will not conflict with or
constitute a breach of or default under any applicable constitutional provision, law or administrative
rule or regulation of the State or the United States, or any applicable judgment, decree, license,
permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other -
instrument to which the Member (or any of its respective officers) is subject, or by which it or any of
its properties are bound, nor will any such authorization, execution, delivery or compliance result in
the creation or imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the assets or properties or under the terms of any such law, regulation or
instrument, except as may be provided by its Member Documents.
(h) No Litigation. At the time of acceptance hereof and as of the Closing Date,
there is and will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, government agency, public board or body (collectively and individually, an "Action")
pending with respect to which the Member has been served with process or to the best knowledge of
the officer of the Member executing this Letter of Representation, threatened, in which any such
Action (i) in any way questions the formation or existence of the Member or the titles of the officers
of the Member to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin
the issuance or delivery of any of the Bonds or its Member Documents, or the payment or collection
KMLYI)DAN 26982 25T329 3 C-3
of any amounts pledged or l~,--ffe pledged to pay the principal of and 'l~erest on the Bonds, or in any
way contests or affects the validity of its Member Documents or the consummation of the transactions
on the part of the Member contemplated thereby, or contests the exclusion of the interest on the
Bonds from federal or state income taxation or contests the powers of the Member, or the Member's
authority to make the payments due under its Lease Agreement; (iii) which may result in any material
adverse change relating to the financial condition of the Member; or (iv) contests the completeness or
accuracy of the Preliminary Official Statement or the Official Statement or any supplement or
amendment thereto or asserts that the Preliminary Official Statement or the Official Statement
contained any untrue statement of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in .the light of the circumstances under
which they were made, not misleading; and as of the time of acceptance hereof and as of the Closing
Date, to the knowledge of the officer of the Member execUting this Letter of Representation, there is
no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i)
through (iv) of this sentence.
(i) Consents and Approvals. All authorizations, approvals, licenses, permits,
consents, elections, and orders of or filings with any governmental authority, legislative body, board,
agency or commission having jurisdiction in the matters which are required by Closing Date for the
due authorization of, which would constitute a condition precedent to or the absence of which would
adversely affect the due performance by the Member of its obligations in connection with its Member
Documents have been duly obtained or made and are in full force and effect.
(j) Opinions and Certificates Required for Closing. The Member will deliver all
opinions, certificates, letters and other instruments and documents reasonably required by the
Underwriter and this Letter of Representation. Any certificate of the Member delivered to the
Underwriter shall be deemed a representation and warranty by the Member to the Underwriter as to
the statements made therein.
(k) Indemnification.
(i) The Member agrees, to the extent permitted by law, to indemnify and
hold harmless the Underwriter and the Authority and their respective officers and employees and each
person who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933
(as an "Indemnified Person") from and against any losses, claims, damages or liabilities, joint or
several, to which any Indemnified Person may become subject insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of, or are based upon, the misstatement or -
omission or alleged misstatement or omission to state a material fact in the Official Statement
necessary to make the statements therein under the caption not misleading, and will reimburse each
Indemnified Person for any legal or other expenses reasonably incurred by such Indemnified Person
in investigating, defending or preparing, to defend any such action or claim; provided, however, that
the Member shall not be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of, or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in the Official Statement in reliance upon and in conformity with written
information furnished by or on behalf of any indemnified .Person, or any information furnished with
respect to the Underwriter specifically for inclusion therein.
(ii) Promptly after receipt by an Indemnified Person under paragraph (i)
of this Paragraph of notice of the commencement of any action, such Indemnified Person shall, if a
claim in respect thereof is to be made against the Member under such paragraph, notify the Member
in writing of the commencement thereof. In case any such action shall be brought against any
Indemnified Person, and such l~,¢mnified Person shall notify the Memb._~of the commencement
thereof, the Member shall be entitled to participate in and, to the extent that either wishes, to assume
the defense thereof, with counsel satisfactory to such Indemnified Person, and after notice from the
Member to such Indemnified Person of its election so to assume the defense thereof, the Member
shall not be liable to such Indemnified Person under such paragraph for any legal or other expenses
subsequently incurred by such Indemnified Person in connection with the defense thereof other than
reasonable costs of any investigation; provided, however~ that if the named parties to any such action
(including any impleaded parties) include the Indemnified Person and the Member, and the
Indemnified Persons reasonably conclude that there may be one or more legal defenses available to
them which are different from or additional to those available to the Member, the Indemnified
Persons shall have the right to select separate counsel (acceptable to the Member) to assume such
legal defense and to otherwise participate in the defense of such action on behalf of the Indemnified
Persons; provided, further, however, that the Member shall not, in connection with any one such
action or separate but substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than one separate firm of
attorneys at any point in time for the Indemnified Persons.
The representations, warranties, agreements and indemnities contained herein shall
survive the Closing under the Purchase Contract and any investigation made by or on behalf of the
Authority or the Underwriter or any such director, officer or any such contrOlling person of any
matters described in or related to the transactions contemplated hereby and by the Purchase Contract,
the Official Statement and the Member Documents.
This Letter of Representation shall be binding upon and inure solely to the benefit of.
the Underwriter, the Authority, the Member and any such member, officer, director or any such
controlling person, and their respective personal representatives, successors and assigns, and no other
person or firm shall acquire or have any right under or by virtue of this letter agreement.
This Letter of Representation 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, which shall be governed by
laws of the State of California.
~A~ 2~2 2~mO ~ C-5
If the forego,~~ is in accordance with the understandiWg of the Authority and the
Underwriter of the agreement between us, kindly sign and return to the Member the enclosed
duplicate of this letter agreement whereupon this will constitute a binding agreement between us in
accordance with the terms hereof.
[Print Name of Member]
By.
Title:
Accepted and confirmed as of
the date first above written:
STONE & YOUNGBERG LLC
By
Principal
COUNTYWIDE PUBLIC FINANCING AUTHORITY
By
Executive Director
APPENDIX D
FORM OF OPINION OF AUTHORITY COUNSEL
[LETTERHEAD OF AUTHORITY COUNSEL]
Stone & Youngberg LLC
4350 La Jolla Village Drive
Suite 840
San Diego, California 92122
Re:
Ladies and Gentlemen:
Countywide Public Financing Authority 1996 Revenue Bonds
We have acted as Counsel to the Countywide Public Financing Authority (the
"Authority"), in connection With. the issuance by the Authority of the Countywide Public Financing .
Authority 1996 Revenue Bonds. This opinion is provided pursuant to Section 8(c) of that certain
Bond Purchase Agreement, dated July _, 1996 (the "Purchase Contract"), by and betWeen the
Authority and Stone & Youngberg LLC, as underwriter. Capitalized terms used herein and not
otherwise def'med shall have the meanings ascribed to them in the Purchase Contract.
1. The Authority is duly organized and validly existing as a joint exercise of
powers authority under the laws of the State of California, including the Act, and the Authority has
the power to enter into the Authority Documents and issue the Bonds;
.
The Official Statement has been duly apProved by the Authority;
3. The resolution of the Authority approving and authorizing the issuance of the
Bonds and the execution and delivery of the Authority Documents has been duly adopted at a meeting
of the governing body of the Authority which was called and held pursuant to law and at which a
quorum was present acting throughout;
4. The Authority Documents have been duly authorized, executed and delivered
by the Authority and constitute the legal, valid and binding obligation of the Authority, enforcea~e in
accordance with its terms, except as enforcement thereof 'may be limited by bankruptcy, insolvency or
other laws affecting enforcement of creditors rights, or by the application of equitable principles if
equitable remedies are sought;
5. The execution and delivery of the Authority Documents and the approval of
the Official Statement and compliance with the provisions thereof under the circumstances
contemplated thereby, do not and will not in any material respect conflict with or constitute on the
part of the Authority a violation or breach of, or default under, any agreement or other instrument to
which the Authority is a party or by which it is bound or any existing law or regulation to which the
Authority is subject;
6. No authorization, approval, consent or other order of the State of California
or any other governmental authority or agency within the State of California other than the governing
KMLYDDAN 2698'2 257329 3 D-1
body of the Authority, is req~,red for the valid authorization, execution and delivery by the .Authority
of the Authority Documents and the approval of the Official Statement;
· 7. To the best of such counsel's knowledge, there is no action, suit, proceeding
or investigation at law or in equity before or by any court, public board or body, pending or, to such.
counsel's knowledge threatened, against or affecting the Authority, which would adversely impact the
Authority's ability to complete the transactions described in and contemplated by the Official
Statement or in any way contesting or affecting the validity of the authority Documents of the
transactions relating to the Authority's financing program as described in the Official Statement
wherein an unfavorable decision, ruling or finding would adversely affect the validity and
enforceability of the Authority Documents; and
8. The information contained in the Official Statement under the captions "THE
AUTHORITY" and "LITIGATION" (to the extent such information therein relates to the Authority)
is correct in all material respects and does not contain any untrue or misleading statement of a
material fact or omit a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
Respectfully submitted,
APPENDIX E ..~..~
FORM OF OPINION OF CITY ATTORNEY
[LETTERHEAD OF CITY ATTORNEY OF EACH MEMBER]
Stone & Youngberg LLC
4350 La Jolla Village Drive
Suite 840
San Diego, California 92122
Re: Countywide Public Financing Authority 1996 Revenue Bonds
Ladies and Gentlemen:
We have acted as City Attorney for to the City of (the "City"), which
City is a member of the Countywide Public Financing Authority (the "Authority"), in connection with
the issuance by the Authority of the Countywide Public Financing Authority 1996 Revenue Bonds.
This opinion is provided pursuant to Section 8(d) of that certain Bond Purchase Agreement, dated
July _, 1996 (the "Purchase Contract"), by and between the Authority and Stone & Youngberg LLC,
as underwriter. Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Purchase Contract.
1. The City is duly organized and validly existing as a [general law] [chartered]
city and municipal corporation of the State of California (the "State").
2. The representations of the City set forth in (i) the Letter of Representation, (ii)
the Site Lease and (iii) the Lease Agreement are, as to all matters of law, true and accurate in all
material respects on and as of the date hereof as though made on such date. The Letter of
Representation, Site Lease and the Lease Agreement are referred to herein as the "City Documents."
3. The resolutions adopted by the City Council of the City (the "Council")
approving the City's (i) participation in the Authority, (ii) authorizing the issuance of the Bonds, and
(iii) approving the execution and delivery of the City Documents were duly adopted at meetings of the
Council, which were called and held pursuant to law and with all public notice required by law-and at
which a quorum was present and acting throughout; and such resolutions are in full force and effect
and have not' been modified, amended or rescinded as of the date hereof.
4. The City has full right and lawful authority to execute and deliver the City
Documents; the City Documents have been duly authorized, executed and delivered by the City; and
the City Documents are legal, valid and binding obligations of the City enforceable in accordance
with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or limiting creditors' rights generally
and by the principles of equity if equitable remedies are sought.
5. The execution and delivery of the City Documents and the approval of the
Official Statement and the Purchase Contract, and compliance by the City with the provisions thereof,
under the circumstances contemplated thereby, do not and will not in any material respect conflict
with or constitute on the part of the City a breach of or default under any agreement or other
instrument applicable to or b'mding upon the City, or any existing law, regulation, court order or:
consent decree to which the City is subject.
6. The Official Statement has been duly executed and delivered on behalf of the
Authority by an authorized officer of the City.
7. Except as stated in the Official Statement, there is no action, suit, proceeding
or investigation before or by any court, public board or body pending with respect to which the City
has been served with process or, to my knowledge, threatened wherein an unfavorable decision,
ruling or finding would: (a) affect the creation, organization, existence or powers of the City or the
Authority, or the titles of their respective officers or the Council members or Board of Directors to
their respective offices; (b) enjoin or restrain the issuance, sale and delivery of the Bonds, the
delivery of the City Documents and the pledge of lease payments under the Lease Agreement or the
pledge of the assets as security for the lease payments; (c) in any way question or affect any of the
rights, powers, duties or obligations of the City with respect to the City Documents, the moneys and
assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Bonds; (d)
in any way question or' affect any authority for the issuance of the Bonds, or the validity or
enforceability of the Bonds or the City Documents; or (e) in any way question or affect the
transactions contemplated by the Purchase Contract or the Official Statement, or any activity relating
to the portion of the Project to be financed 'by the Bonds.
8. The information contained in the Official Statement under the captions "THE
MEMBERS AND THE LEASED PREMISES, .... THE PROJECT" (to the extent the matters therein
relate to the Member), "LITIGATION" and "APPENDIX B - "Information Concerning Members and
Description of Leased Premises" (to the extent the matters therein relate to the Member) is correct in
all material respects and does not contain any untrue or misleading statement of a material fact or
omit a material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Respectfully submitted,
ro~r~^N x082 2~7329 3 E-2
APPENDIX F
FORM OF OPINION OF 'COUNSEL TO TRUSTEE
[LETTERHEAD OF TRUSTEE COUNSEL]
Stone & Youngberg LLC
4350 La Jolla Village Drive
Suite 840
San Diego, California 92122
Re: Countywide Public Financing Authority 1996 Revenue Bonds
Ladies and Gentlemen:
I have acted as counsel to , as trustee (the "Trustee") under that
certain Indenture of Trust, dated as of July 1, 1996 (the "Indenture"), by and between the Trustee and
the Countywide Public Financing Authority (the "Authority"), in connection with the issuance by the
Authority of its 1996 Revenue Bonds (the "Bonds"). This opinion is provided pursuant to Section _
of that certain Bond Purchase Agreement, dated July __, 1996 (the "purchase Contract"), by and
between the Authority and Stone & Youngberg LLC, as underwriter. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Purchase Contract.
1. The Trustee has been duly organized and is validly existing and in good
standing as a [state banking corporation/national banking association] with full corporate power to
undertake its obligations under the Indenture.
2. The Trustee has duly authorized, executed and delivered the Indenture and' by
all proper corporate action has authorized the acceptance of its obligations thereunder.
3. Assuming the due authorization, execution and delivery by the Authority, the
Indenture constitutes the legally valid and binding agreement of the Trustee, enforceable against the
Trustee in accordance with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally.
4. The Bonds have been validly authenticated and delivered by the Trustee ia
accordance with the terms of the Indenture.
5. No authorization, approval, consent or other order of any governmental entity
or regulatory authority having jurisdiction over the banking and trust activities of the Trustee that has
not been obtained is or will be required for the valid authorization, execution and delivery of the
Indenture by the Trustee or .the performance by the Trustee of its obligations under the Indenture.
6. The execution and delivery of the Indenture, and compliance with the
provisions thereof, will not conflict with or constitute a breach of or default under, the Trustee's
duties or obligations under any law, administrative regulation, court decree, resolution, charter, by-
laws, agreement, instrument or commitment applicable to or binding upon the Trustee.
Respectfully submitted,
APPENDIX G
FORM OF CLOSING CERTIFICATE OF TRUSTEE
The undersigned, on behalf of (the "Trustee"), hereby
makes the following certifications pursuant to Section 8(g) of the Bond Purchase Agreement, dated
July m, 1996 (the "Purchase Contract"), by and between the Countywide Public Financing Authority
(the "Authority") and Stone & Youngberg LLC, as underwriter. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Purchase Contract.
1. I am a duly authorized officer of the Trustee and as such I am familiar with
the facts herein certified and authorized and qualified to certify the same.
2. The Trustee has been duly organized and is validly existing and in good
standing as a [state banking corporation/national banking association] with full corporate power to
undertake its obligations under the Indenture.
3. The Trustee has duly authorized, executed and delivered the Indenture and by
all proper corporate action has authorized the acceptance of its obligations thereunder.
4. The Bonds have been validly authenticated and delivered by the Trustee in
accordance with the terms of the Indenture.
5. Pursuant to the Indenture, the Trustee will apply the proceeds from the Bonds
to the purposes specified in the Indenture.
6. No authorization, approval, consent or other order of any governmental entity
or regulatory authority having jurisdiction over the banking and trust activities of the Trustee that has
not been obtained is or will be required for the valid authorization, execution and delivery of the
Indenture by the Trustee or the performance by the Trustee of its obligations under the Indenture.
7. The execution and delivery of the Trustee Agreement, and compliance with
the provisions thereof, will not conflict with or constitute a breach of or default under, the Trustee's
duties or obligations under any law, administrative regulation, court decree, resolution, charter, by-
laws, agreement, instrument or commitment applicable to or binding upon the Trustee.
8. The Trustee is duly authorized to accept the obligations created by the
Indenture and to authenticate the Bonds pursuant to the terms thereof, and the Trustee has
authenticated and delivered the Bonds in accordance with the terms of the Indenture.
Dated: [Closing Date]
By:
Title:
KIVILYDDAN 26992 257329 3 G-1
PRELIMINARY OFFICIAL STATEMENT DATED
,1996
NEW ISSUE: FULL BOOK-ENTRY,
RATINGS:
Standard & Poor's:" '"
Moody's:" "
(See "RATINGS" herein)
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California,
Bond Counsel, subject, however, w certain qualifications described herein, under existing law, the interest on the
Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax
preference for purposes of the-federal alternative minimum tax imposed on individuals and corporations, although
for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken
inw account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is
exempt from California personal income taxes. See "TAX MA~RS" herein..
8
COUNTYWIDE PUBLIC FINANCING AUTHORITY
1996 Revenue Bonds
Dated as of: Date of Delivery
Due: July 1, as shown below
The above-captioned bonds (the "Bonds") are being issued by the Countywide Pubhc Financing Authority
(the "Authority"), a joint exercise of powers authority estabhahed by the Cities of Brea, Buena Park, Fullerton,
Garden Grove, La Palma, Newport Beach, Orange, San Clemente, Santa Aha, Seal Beach, Stanton and Tustin
(collectively, the "Members"), in accordance with the provisions of Article 1 through 4 (commencing with Section
6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Act"). The Bonds will be
delivered as fully registered bonds without coupons, and when delivered, will be registered in the name of Cede
& Co., as nominee of the Depository Trust Company, New York, New York ("DTC"). See "THE BONDS - Book-
Entry Only System" herein.
Payment of the principal of and interest and premium, if any, on the Bonds will be made by
, Los Angeles, California, as trustee (the "Trustee") to DTC, which will in turn remit such
principal and interest (and p~emium, if any) to its participants for subsequent dispersal to beneficial owners of the
Bonds, as described herein. Interest on the Bonds is payable semiannually on each January 1 and July 1,
commencing January 1, 1997. Principal of any Bond and any premium upon redemption will be paid by check of
the Trustee upon presentation and surrender thereof at the corporate trust office of the Trustee in Los Angeles,
California.
The Bonds are subject to mandatory redemption as described herein under the captions "THE
BONDS - Mandatory Redemption from Optional Prepayment of Lease Payments" and "- Special Mandatory
Redemption."
The Bonds are being issued and delivered pursuant to an Indenture of Trust, dated as of July 1, 1996 (the
"Indenture"), by and between the Authority and the Trustee, and in accordance with the provisions of Article 4 of
the Act (the "Bond Law'). The proceeds from the sale of the Bonds will be used by the Authority (i) to provide
financing for the portions of a County-wide communications system within Orange County allocable to certain of
the Members and to finance other capital projects for certain Members within their respective geographical
*preliminary, subject to change.
GMGEDDES ~ ~ 3
boundaries (collectively, the 'Project'), (ii) to fund a Reserve Account, and Cfii) to pay the costs of issuance of the
Bonds. In order to provide for the repayment of the Bonds, each Member has agreed to lease certain real property
and improvements (collectively, the 'Leased Premises") to the Authority pursuant to separate Site and Facility
Leases, each dated as of July 1, 1996 between the Authority, as lessee, and each Member, as lessor (the "Site
Leases"), and to lease back said ~ Premises from the Authority pursuant to separate Lease A~eements, each
dated as of July 1, 1996 between the Authority, as lessor, and each Member, as lessee (the "Lease Agreements").
Pursuant to the Lease Agreements, each Member has aEreed to pay installments of rent for the Leased Premises
to the Authority (the "Lease Payments") which have been calculated to be sufficient, in the aggregate, to enable the
Authority to pay the principal of and interest and premium, if any, on the Bonds when due and payable. See
"DEBT SERVICE FOR THE BONDS" and "APPENDIX A - Sumnm~ of Principal Legal Documents - The Lease'
Agreements" herein.
Payment of the principal of and interest on the Bonds when due will be guaranteed by a municipal bond
insurance policy to be issued by (the "Insurer") concurrently with the delivery of the
Bonds. See "MUNICIPAL BOND INSURANCE POLICY" herein.
[IN~ LOGO]
.
~,
The Bonds are special obligations of the Authority payable solely from the revenues pledged under the
Indenture as described herein, consisting primarily of the Lease Payments. The Lease Payments are subject to
abatement under certain circumstances as described herein. See 'SECURITy. FOR ~ BONDS - Lease
Payments' and 'RISK FACTORS - Abatement' herein.
Each Member has covenanted under its respective Lease Agreement that it will take such action as may
be necessary to include its Lease Payments in its budgets during the term of its Lease Agreement and to make the
necessary annual appropriations therefor. Neither the Bonds nor the obligation of each Member to make Lease
Payments constitutes an obligation of such Member for which such Member is obligated to levy or pledge any form
of taxation or for which such Member has levied or pledged any form of taxation. The Authority has no taxing
power. Neither the Bonds nor the obligation of each Member to make Lease Payments under its Lease Agreement
constitutes a debt of such Member, Orange County, the State of California or any of its political subdivisions within
the meaning of any constitutional or'statutory debt limitations or restrictions.
MATURITY SCI-I~DUL~
Due Principal Interest Due Principal Interest
(July 1) Amount Rate Price (J'ulv 1) Amount Rate
· Price
· THIS COVBR PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. 1T
IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT
TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.
._
GMGEDDI~ 26982 257002 3 : : '
The Bonds will be offered when, as and if delivered to and received by the Underwriter, subject to the
approval of their validity and the legality of the Lease Agreements by' Jones Hall Hill & White, A' Professional Law
Corporation, San Francisco, California, Bond Counsel, and certain other conditions. Certain matters will be passed
upon for the Underwriter by Cox, Castle & Nicholson, LLP, Los .Angeles, California, for the Authority by
, and for each Member by its City Attorney. It is anticipated that the Bonds will be available
for delivery to The Depository'Trust Company in New York, New York on or about July ,1996.
Dated: ,1996
Stone & Youngberg LLC
GMGI~:DDi~ :269112 257002 3
No dealer, broker, salesman or other person has been authorized by the Stone & Youngberg LLC
(the "Underwriter'), the Authority or the Members to give any information or to make any
. representations other than those contained herein, and if given or made, such other information and
representations must not be relied upon as having been authorized by the any of the foregoing. This
Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there be
any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make
such offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts Or matters of opinion,
whether or not expressly so described herein, are intended solely as such and are not to be construed as
a representation of facts.
The information set forth herein has been furnished by the Authority and the Members from
sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and
is not to be construed as a representation by .the Underwriter. The information and expressions of
opinion herein are subject to change without notice, and neither the delivery of this Official Statement
nor any sale made hereunder shall, under any circumstances, create any implication that there has been
no change in the affairs of the Authority or the Members since the date hereof.
This Official Statement is submitted in connection with the sale of securities referred to herein
and may not be reproduced or used, as a whole or in part, for any other purpose. The Authority and the
Members have covenanted to provide secondary market disclosure regarding certain information and
events which may occur over the life of the Bonds.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER~LI_OT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS
AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN. TIlE
PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HE~F AND SAID PUBLIC
OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT,
AND THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE. '
COUNTYWIDE PUBLIC FINANCING AUTHO~
Authority Board
[TO BE PROVIDED BY AUTHORITY]
Authority Staff
[FO BE PROVIDED BY AUTHORITY]
SPECIAL SERVICES
Bond Counsel
Jones Hall Hill & White,
A Professional Law Corporation
San Francisco, California
Trustee
[TO FOLLOW]
Financial Advisor
Public Financial Management, Inc.
Newport Beach, California
Underwriter's Counsel
Cox, Castle & Nicholson, LLP
Los Angeles, California
TABLE OF CONTENTS
SUMMARY .................................................... m
INTRODUCTION ................................................ 1
·
THE AUTHORITY ................... 2
THE BONDS ................................................... 2
General Provisions ........................................... 2
Book-Entry Only System ....................................... ~
Mandatory Redemption from Optional Prepayment of Lease Payments ........... 5
Special Mandatory Redemption ................................... 6
Notice of Redemption ......................................... 6
Selection of Bonds for Redemption . .' ............. ................... 6
Purchase of Bonds in Lieu of Redemption ..... ....................... 7
Transfer and Exchange of Bonds ................................... 7
Bonds Mutilated, Lost, Destroyed or Stolen ............................ 7
SECURITY FOR THE BONDS ' 8
Lease Payments ....... . ...................................... 8
Reserve Account ............................................ 8
Covenant to Budget and Appropriate ................................ 9
No Additional Bonds .......................................... 9
MUNICIPAL BOND INSURANCE POLICY ............................... 9
ESTIMATED SOURCES AND USES OF FUNDS ............................ 10
DEBT SERVICE FOR THE BONDS ..................................... 10
RISK FACTORS ................. : ............................... 11
No Full Faith and Credit ....................................... 11
Financial Condition of Members ................................... 11
Abatement .................................... ' ............ 12
Limited Recourse on Default ..................................... 12
Loss of Tax Exemption ........................................ 12
Constitutional Limitations on Taxation and Appropriation ................... 13
THE MEMBERS AND THE LEASED PREMISES ............................ 15
General; Leased Premises ....................................... 15
General Funds; Economic and Statistical Data .......................... 15
Sales Tax Revenues ........................................... 16
Assessed Valuation and Tax Collection .... : .......................... 16
The Teeter Plan ............................................. 17
Other Tax Revenues .......................................... 18
THE PROJECT
TAX MATTERS
RATINGS
UNDERWRITING
CONTINUING DISCLOSURE'
LITIGATION
CERTAIN LEGAL MATTERS
MISCELLANEOUS ....................................... . ........ 21
APPENDIX A - Summary of Principal Legal Documents '.. ~ ..... ' · .............. A-1
APPENDIX B - Information Concerning Members and DeScription of Leased Premises ..... B-1
APPENDIX C Proposed Form of Bond Counsel Opinion ....................... C-1
APPENDIX D - Specimen Municipal Bond Insurance Policy ...................... D-!
APPENDIX E - Form of Authority Continuing Disclosure Certificate ................. E-1
APPENDIX F - Form of Member Continuing Disclosure Certificate ................. F-1
SUMMARY
~ following information is furnished solely to provide limited introductory information
regar&'ng the Bonds and does not purport to be comprehensive. All such information is qualified in
. its entirety by reference to the mo~ detailed des'criptions appearing in this Official Statement, including
the appen&'ces hereto. All capitalized terms used in this Official Statement not otherwise defined shall
have the meanings ascribed to them in the Indenture. The definitions of certain of such terms are set
forth in Appendix A hereto.
Issuer:
The Bonds are being issued by the Countywide Public Financing Authority (the
"Authority"). See ~THE AUTHORITY" herein.
Security:
The Bonds are special obligations of the Authority payable solely from revenues
pledged under the Indenture, consisting primarily of Lease Payments made by
the Cities of Brea, Buena Park, Fullerton, Garden Grove, La Palina, Newport
Beach, Orange, San Clement,, Santa Aaa, Seal Beach, Stanton and Tustin (the
~Members~), under Lease Agreements between the Authority and each of the
Members. The Members' Lease Payments are subject to abatement under
certain circumstances as described herein. See "SECURITY FOR THE
· BONDS" and "APPENDIX A - Summary of Principal Legal Documents"
herein.
Payment of the principal of and interest on the Bonds will be further secured by
a municipal bond insurance policy issued by
See ."MUNICIPAL BOND INSURANCE POLICY" herein.
Purpose:
Proceeds from the sale of the Bonds will be used by the Authority (i) to provide
financing for the Project, (ii) to fund the Reserve Account, and (iii) to pay the
costs of issuance of the Bonds. See "THE PROJECT" herein.
Redemption:
Mandatory Redemption from Optional Prepayment of Lease Payments. The
Bonds maturing on or after July 1, .. are subject to mandatory redemption
as a whole or in part on any date on or after July 1, ,' from the optional
prepayment of Lease Payments by a Member under its Lease Agreement, at the
redemption prices described herein, together with accrued interest thereon to the
date fixed for redemption. See "THE BONDS - Redemption - Mandatory
Redemption from Optional Prepayment of Lease Payments" herein.
Special Mandatory Redemption. The Bonds are subject to redemption as a
whole or in part on any date, to the extent the Trustee has received title or
hazard insurance proceeds or condemnation proceeds not used to repair or
replace any portion of the Leas6d Premises of a Member damaged or destroyed
and elected by such Member to be used for such purpose as provided in the
Indenture, at a redemption price equal to one hundred percent (100%) of the
principal amount thereof plus interest accrued thereon to the date fixed for
redemption, without premium. See "THE BONDS - Redemption- Special
Mandatory Redemption" herein.
..0
111
Form and
Denominations:
· Registration:
payment of Principal
and Premiums:
Interest Payments:
Delivery:
Legal Matters:
The Bonds are being issued in fully registered form, without coupons, in
denominations of $5,000 or any integral multiple thereof.
The Bonds will be initially registered in the name of Cede & Co., as nominee
for The Depository Trust Company, New York, New York, which will act as
securities depository for the Bonds. See 'THE BONDS - Book-Entry Only
System' herein.
Payment of the principal of the Bonds and any premium upon redemption will
be paid by check of the Trustee upon presentation and surrender thereof at the
corporate trust office of the Trustee in Los Angeles, California.
Interest on the Bonds is payable semiannually on each January 1 and July 4,
commencing January 1, 1997 (each, an "Interest Payment Date").
'~,
Delivery of the Bonds is expected to be made on or about July ,1996 at The
Depository Trust Company in New York, New York.
Legal matters incident to the authorization and issuance of the Bonds are subject
to the opinion of Jones Hall Hill & White, A Professional Law Corporation, San
Francisco, California, Bond Counsel, concerning the Bonds, the Indenture, the
Lease Agreements and certain tax matters. The opinion of Bond Counsel will
be substantially in the proposed form set forth in Appendix C attached hereto.
Certain other matters will be passed upon for the Underwriter by Cox, Castle
& Nieholson, LLP, Los Angeles, California, for the Authority by
and for each.Member by its City Attorney. See "TAX
MATYERS," ' CERTAIN LEGAL MATTERS' and "APPENDIX C - Proposed
Form of Bond Counsel Opinion" herein.
COUNTYWIDE PUBLIC FIN~CING AUTHORITY
1996 Revenue Bonds
INTRODUCTION
This Introduction is subject in all respects to the more complete information contained elsewhere
in this Official Statement, and the offering of the Bonds to potential investors is made only by means
of the entire Official Statement. Tertns used in this Official Statement and not otherwise defined shall
have the meanings ascribed to them in the Indenture. The definitions of cetWdn of such terms are set
forth in Appendix A hereto.
The purpose of this Official Statement is to provide certain information concerning the issuance
by the Countywide Public Financing Authority (the "Authority") of its Countywide Public Financing
Authority 1996 Revenue Bonds (the "Bonds") in an aggregate principal amount of $ *. The
Bonds are being issued pursuant to an Indenture of Trust, dated as of July 1, 1996 (the "Indenture"), by
and betWeen the Authority and , as trustee (the "Trustee").
The Authority was established pursuant to a joint exercise of powers agreement among the
Members, which include the Cities of Brea, Buena Park, Fullerton, Garden Grove, La Palina, Newport
Beach, Orange, San Clemente, Santa Ana, Seal Beach, Stanton .and Tustin. See "THE AUTHORITY"
herein.
The proceeds from the sale of the Bonds will be used by the Authority (i) to provide financing
for the portions of a County-wide communications system within Orange County allocable to certain of
the Members and to finance other capital projects for certain Members within their respective
geographical boundaries (collectively, the "Project"), (ii) to fund a Reserve Account, and (iii) to pay the
costs of issuance of the Bonds. In order to provide for the repayment of the Bonds, each Member has
agreed to lease certain real property and improvements (collectively, the "Leased Premises") to the
Authority pursuant to separate Site and Facility Leases, each dated as of July 1; 1996 betWeen the
Authority, as lessee, and each Member, as lessor (the "Site Leases"), and to lease back said Leased
Premises from the Authority pursuant to separate Lease Agreements, each dated as of July 1, 1996
betWeen the Authority, as lessor, and each Member, as lessee (the "Lease Agreements"). Pursuant to
the Lease Agreements, each Member has agreed to pay installments of rent for the Leased Premises to
the Authority (the "Lease Payments") which have been calculated to be sufficient, in the aggregate, in
both time and amount, to enable the Authority to pay the principal of and interest and premium, if any,
on the Bonds when due and payable. Pursuant to the Indenture, the Authority has assigned to the
Trustee, for the benefit of the owners of the Bonds, certain of its rights under the Lease Agreements,
including its right to receive and enforce payment of the Lease Payments to be made by the respective
Member. See "SECURITY FOR THE BONDS" and "APPENDIX A - Summary of Principal Legal
Documents - Lease Agreements" herein:
Pursuant to the Lease Agreements, each Members has covenanted that it will take such action as
may be necessary to include all its Lease Payments in its budgets and to make the necessary annual
appropriations therefore. The Lease Payments to be made by each Member are subject to abatement
during any period in which the Leased Premises are not available to such Member for use and occupancy
*Pre~, subject to change.
due to damage, destruction or title defect. See "SECURITY FOR THE BONDS - Covenant to Budget
and Appropriate," "RISK FACTORS - Abatement" and "APPENDIX A - Summary of Principal Legal
Documents - Lease Agreements" herein.
Neither the Bonds nor the obligation of each Member to make Lease Payments constitutes an
obligation of such Member for which such Member is obligated to levy or pledge any form of taxation
or for which such Member has levied or pledged any form of taxation. The Authority has no taxing
power. Neither the Bonds nor the obligation of each Member to make Lease Payments constitutes a debt
of such Member, Orange County (the "County"), the State of California (the "State"), or any political
subdivisions thereof, and does not constitute an indebtedness within the meaning of any constitutional or
statutory debt limitation or restriction.
A summary of the principal legal documents relating to this financing is contained in Appendix A~
information concerning the Members and a description of the Leased Premises are presented in Appendix
B; the proposed form of Bond Counsel's legal opinion is set forth in Appendix C; a specimen of the
municipal bond insurance policy is set forth in Appendix D; and the forms of Continuing Disclosure
Certificates for the Authority and for the Members are set forth in Appendix E and Appendix F,
respectively.
The Authority was established in accordance with the provisions of Article 1 through 4
(commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code
(the "Act"), and pursuant to the terms of that certain Joint Exercise of Powers Agreement, dated as of
, 1996, by and among the Authority and each of the Members. Under the Act, the
Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and
other obligations of, or making loans to, public entities, including the Members, and to provide financing
for the public capital improvements of public entities, including the Members.
The governing body of the Authority is comprised of twelve (12) Directors, appointed by the
governing bodies of each Member. Each Director shall hold office until the governing body of the
related Member appoints a successor. The principal office of the Authority is located at City of Santa
Ana, 20 Civic Center Plaza, Santa Ana, California 92701.
THE BOHDS
General Provisions'
The Bonds will be issued, sold, authenticated and delivered pursuant to Article 4 of the Act (the
"Bond Law") in the aggregate principal amount of $ *. The Bonds will be dated the date
of delivery thereof and will mature on July 1 in each of the years .and in the amounts, and will bear
interest at the annual rates, as shown on the cover page hereof.
*Pre 'hminary, subject to change.
Interest on the Bonds is payable semiannually on each January 1 and July 1, commencing January
1, 1997 (each, an "Interest Payment Date"), calculated based on a 360-day year comprised of twelve(12)
thirty-day months, to the person whose name appears on the registration books maintained by the Trustee
as the registered owner thereof as of the fifteenth (15th) calendar day of the month preceding each Interest
Payment Date, whether or not such day is a business day (each, a "Record Date"). Interest on the Bonds
will be paid by check of the Trustee. mailed by first class mail to the registered owners at the respective
addresses of such owners as they appear on the registration books of the Trustee as of the applicable
Record Date; provided, however, that payment of interest may be made by wire transfer in immediately
available funds to an account in the United States of America to any registered owner of Bonds in the
aggregate principal amount of $1,000,000 or more who shall furnish written wire instructions to the
Trustee at least five (5) days before the applicable Record Date. The Bonds will bear interest from the
Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated after
a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest
from such Interest Payment Date, or (ii) it is authenticated on or before December 15, 1996, in which
event it shall bear interest from July 1, 1996; provided, however, that if, as of the date of authentication
of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date
to which interest has previously been paid or made available for payment thereon.
Principal of any Bond and any premium upon redemption will be paid by check of the Trustee
upon presentation and surrender thereof at the corporate trust office of the Trustee in Los Angeles,
California.
The Bonds will be issued in fully registered form, without coupons, registered in the name of The
Depository Trust Company, New York, New York CDTC") or its nominee. DTC will act as securities
depository for the Bonds. Purchases of beneficial interest in the Bonds will be made in book-entry form
only in denominations of $5,000 or any integral multiple thereof. So long as the Bonds are held in the
book-entry system of DTC, all payments of principal, interest and premium, if any, will be made by the
Trustee to DTC as the registered owner of the Bonds. For a more complete discussion of DTC and its
book-entry system, see "Book-Entry Only System" below.
Book-Entry Only System
The information in this section concerning DTC and DT¢'s book-entry system is based solely on
information provided by DTC. Accordingly, no representations can be made by the Authority 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 will act as securities depository for the Bonds. The Bonds will, when issued, be payable
to Cede & Co. (DTC's partnership nominee). One or more fully registered Bond will be issued for each
maturity of Bonds and will be deposited with DTC.
DTC is a limited-purpose trus~ company organized under the laws of the State of New York, a
"banking organization" within the meaning of the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds securities that its participants CDTC
Participants") deposit with DTC. DTC also facilitates the settlement among DTC .participants of
securities transactions, such as 'transfers and pledges, in deposited securities 'through electronic
computerized book-entry changes in accounts of DTC Participants, thereby elimina~ting the need for
physical movement of securities certificates. DTC Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations (the "Direct Participants").
DTC is owned by a number of its Direct Participant and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the
book-entry system is also available to others such as banks, securities brokers and dealers and trust
companies that clear through or maintain a custodial relationship with a DTC Participant, either directly
or indirectly (the "Indirect Participants"). The rules applicable to DTC and its Direct and Indirect
Participants are on file with the Securities and Exchange Commission.
Purchases of the Bonds under the DTC System must be made by or through Direct Participants,
which will receive a credit balance in the records of DTC. The ownership interest of each actual
purchaser of each Bond CBeneficial Owner"). is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmation providing details of the
action, as well as periodic statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds
will be accomplished by entries made by DTC and, in mm, by the DTC Participants who act on behalf
of the Beneficial Owners. Beneficial Owner will not receive certificates representing their ownership
interest in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all the Bonds deposited by Direct Participants with DTC arc
endorsed in the name DTC's partnership nominee, Cede & Co. The deposit of the Bonds with DTC and
their endorsement in the name of Cede & Co. effect no change in beneficial ownership, DTC has no
knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the
Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial
Owners. The DTC Participants will remain responsible for keeping account of their holdings on behalf
of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered owner of the Bonds. If less
than all of the Bonds having the same maturity date(s) are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such Bonds to be redeemed.
So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references
herein to the holders or registered owners of the Bonds will mean Cede & Co. and will not mean the
Beneficial Owners of the Bonds.
Principal of, premium, if any, and interest on the Bonds will be paid to DTC. Upon receipt of
moneys, DTC's current practice is to immediately credit the accounts of the DTC participants in
accordance with their respective holdings shown on the records of DTC uniess DTC has reason to believe
that it will not receive payment on the payment date. Payments by DTC Participants and Indirect
Participants to Beneficial Owners will be governed by standing instructions and customary practices, as
is now 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 DTC Participant or Indirect Participant and not of DTC or
the Authority, subject to any statutory and regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the Authority, disbursement of such
payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its service as a securities depository with respect to the Bonds
at any time by giving reasonable notice to the Authority. Under such circumstances, in the event that
a successor securities depository is not obtained, Bond certificates are required to be printed and
delivered.
The Authority may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor securities depository). In that event, Bond certificates will be printed and delivered in
accordance with the terms of the Indenture.
The Authority does not have any responsibility or obligation to DTC Participants, to the persons
for whom they act as nominees, or to any other person who is not shown on the registration books as
being a registered owner of the Bonds, with respect to (i) the accuracy of any records maintained by DTC
or any DTC Participant, (ii) the payment by DTC or any DTC Participant of any amount in respect of
the principal of, premium, if any, or interest on the Bonds, (iii) any consent given or other 'action taken
by DTC as registered owner, or (iv) any other purpose. The Authority cannot and does not give any
assurances that DTC, DTC Participants or others will distribute payments of principal of or interest on
the Bonds paid to DTC or its nominee, as the registered owner, or any notices to the Beneficial Owners
or that they will do so on a timely basis or will serve and act in a manner described in this Official
Statement. The Authority is not responsible or liable for the failure of DTC or any DTC Participant to
make any payment or give any notice to a Beneficial Owner with respect to the Bonds or any error or
delay relating thereto.
Mandatory Redemption 'from Optional Prepayment of Lease Payments
The Bonds maturing on or.after July 1, ~ are subject to mandatory redemption as a whole or
in part upon ninety (90) days written notice to the Trustee by a Member of its intention to optionally
prepay its Lease Payments, on any date on or after July 1, , from any available source of funds of
the Member so electing to prepay, at the following redemption prices (expressed as a percentage of the
principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date fixed
for redemption:
Redemption Period
_
Redemption Price
July 1, ~ through June 30, ~ 102 %
July 1, ' through June 30, ~ 101%
July 1, __ and thereaRer 100%
Any such redemption shall be in such order of maturity as the Member electing to prepay its
Lease Payments shall designate (and, if no specific order of redemption is designated by such Member,
in inverse order of maturity); provided, however, that only Bonds in which such Member has an interest
(see the percentage table under the caption ~DEBT SERVICE FOR THE BONDS" herein) may be
redeemed by such Member's election.
Special Mandatory Redemption
The Bonds are also subject to redemption as a whole, or in part on a pro rata basis among
maturities, on any date, to the extent the Trustee has received title or hazard insurance proceeds or
condemnation proceeds not used to repair or replace any portion of the Leased Premises of a Member
damaged or destroyed and elected by such Member to be used for such purpose as provided in the
Indenture, at a redemption price equal to one hundred percent (100%) of the principal amount of the
Bond to be redeemed, plus interest accrued thereon to the date fixed for redemption, without premium.
Notice of Redemption
Notice of redemption must be mailed by first-class mail, postage prepaid, not less than thirty (30)
nor more than sixty (60) days before any redemption date, to the respective registered owners of any
Bonds designated for redemption at their addresses appearing on the registration books kept by the
Trustee, and to the Securities Depositories and Information Services in accordance with the terms of the
Indenture. Each notice of redemption must state the date of the notice, the redemption date, the place
or places or redemption, whether less than all of the Bonds (or all Bonds of a single maturity) are to be
redeemed, the CUSIP numbers and (in the event that not all Bonds within a maturity are called for
redemption) Bond numbers of the Bonds to be redeemed, the maturity or maturities of the Bonds to be
redeemed and in the case of Bonds to be redeemed in part only, the respective portions of the principal
amount thereof to be redeemed. Each such notice must also state that on the redemption date there will
become due and payable on each of said Bonds the redemption price thereof, and that from and after such
redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then
surrendered. Neither the failure to receive any notice nor any.defect therein will affect the sufficiency
of the proceedings for such redemption or the cessation of accrual of interest from and after the
redemption 'date.
Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the redemption of less than all of the Bonds of
a particular maturity, the Trustee will select the Bonds to be redeemed from all Bonds of such maturity
or such given portion thereof not previously called for redemption,' by lot in any monner which the
Trustee in its sole discretion deems appropriate and fair. For purposes of such selection, the Trustee will
treat each Bond as consisting of separate $5,000 portions and each such portion will be subject to
redemption as if such portion were a separate Bond. -
Purchase of Bonds in Lieu of Redemption
In lieu of redemption of Bonds as described above, amounts held by the Trustee for such
redemption may also be used on any Interest Payment Date, upon receipt by the Trustee at least seventy-
five (75) days prior to the next scheduled Interest Payment Date of a written request of the Authority,
for the purchase of Bonds at public or private sale as and when and at such prices (including brokerage
fees, accrued interest and other charges) as the Authority may in its discretion direct, but not to exceed
the redemption price which would be payable if such Bonds were redeemed. The aggregate principal
amount of Bonds of the same maturity purchased in lieu of redemption as described in this paragraph may
not exceed the aggregate principal amount of Bonds of such maturity which would otherwise be subject
to such redemption.
Transfer and Exchange of Bonds
Any Bond may, in accordance with its terms, be transferred on the Trustee's registration books
by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender
of such Bond to the Trustee for cancellation, accompanied by delivery of a written instrument of transfer,
duly executed in a form acceptable to the Trustee~ Transfer of any Bond will not be permitted by the
Trustee during the period established by the Trustee for selection of Bonds for redemption or if such
Bond has been selected for redemption pursuant to the Indenture. Whenever any Bond or Bonds shall
be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver
a new Bond or Bonds for a like aggregate principal amount in authorized denominations and of like
maturity. The Trustee may require the Bond owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer.
Any Bond may be exchanged at the corporate trust office of the Trustee in Los Angeles,
California, for a like aggregate principal amount of Bonds of other authorized denominations and of like
maturity. Exchange of any Bond shall not be permitted during the period established by the Trustee for
selection of Bonds for redemption or if such Bond has been selected for redemption pursuant to the
Indenture. The Trustee may require the BOnd owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange.
The foregoing provisions relating to the transfer and exchange of Bonds are not applicable to the
transfer and exchange of any Beneficial Owner's interests in the Bonds so long as the Bonds are held in
the book-entry system described above.
Bonds Mutilated, Lost, Destroyed or Stolen
If any Bond shall become mutilated, the Authority, at the expense of the registered owner of said
Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor
in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. Every mutilated Bond so surrendered to the Trustee must be canceled by it and
destroyed. If. any Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be
submitted to the Authority and the Trustee and, if such evidence is satisfactory to them and indemnity
satisfactory to them shall be given, the Authority, at the expense of the owner of such lost, destroyed or
stolen Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like
tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall
have matured or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee
may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The
Authority may require payment by the owner of a sum not exceeding the actual cost preparing each new
Bond issued under the Indenture and of the expenses which may be incurred by the Authority and the
Trustee in the preparation, execution, authentication and delivery thereof. Any Bond issued in lieu of
any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual
obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen
be at any time enforceable by anyone, and shall be entitled to the benefits of the Indenture with all'other
Bonds secured by the Indenture.
SECURITY FOR THE BONDS
Lease Payments
;... The Bonds are special obligations of the Authority payable from revenues pledged under the
Indenture, consisting primarily of Lease Payments, and from certain funds held under the Indenture.
Lease Payments are. to be made by the Members from yearly appropriations which are payable out of any
source of legally available funds. The Members have covenanted under their respective Lease
Agreements to make such yearly appropriations. See "Covenant to Budget and Appropriate" below and
"APPENDIX A - Summary of Principal Legal Documents - Lease Agreements" herein. The Lease
Payments to be made by each Member are subject to abatement during any period in which the Leased
Premises are not available to such Member for use and occupancy due to damage, destruction Or title
defect; as described herein under "RISK FACTORS - Abatement." Neither the full faith and credit nor
the taxing power of the Members, the County or the State is pledged to the payment of the Bonds or the
Lease Payments. The Authority has no taxing power. The Authority has assigned its right under each
Lease Agreement to receive Lease Payments and other amounts payable thereunder to the Trustee for the
benefit of the owners of the Bonds.
Reserve Account
A portion of the proceeds from the sale of the Bonds will be deposited into the Reserve Account
in an amount equal to the Reserve Requirement (as defined below). In addition, the Trustee is required
under the Indenture to deposit a portion of the Lease Payments into the Reserve Account, to the extent
such Lease Payments are not required to be deposited into the Interest Account or the Principal Account,
as may be required to maintain therein an amount equal to the Reserve Requirement. Amounts in the
Reserve Account will be used and withdrawn by the Trustee solely for the purpose of (i) paying the
principal of or interest on the Bonds when due and payable to the extent that moneys deposited in the
Interest Account or the Principal Account are not sufficient for such purpose, and (ii) making the final
payments of principal of and interest on the Bonds on the date on which all Bonds shall be retired under
the Indenture or provision is made therefor.
The term "Reserve Requirement" means, as of the date of calculation, the maximum amount
obtained by totaling, for the current or any further Bond Year, the sum of: (a).the principal amount of
all outstanding Bonds maturing in such Bond Year, and (b) the interest scheduled to become payable
during such Bond Year on the aggregate principal amount of Bonds which would be outstanding in such
period, if the Bonds are retired as scheduled. Any amounts on deposit in the Reserve Account in excess
of the Reserve Requirement will be transferred to the Bond Fund.
Covenant to Budget and Appropriate
Pursuant to each Lease Agreement, the applicable ~Member has covenanted to take such ,action as
may be necessary to include all of its Lease Payments due under the Lease Agreement in each of its
budgets during the term of the Lease Agreement, and to make the neceisary annual appropriations for
all such Lease Payments. Each Member has agreed under its respective Lease Agreement that the
covenants contained therein, including the covenant described in the preceding sentence, constitute
ministerial duties of the Member imposed by law, and it shall be the duty of each and every public
official of the Member to take such action and do such things as.are required by law in the performance
of the official duty of such official to enable the Member to carry out and perform such covenants.
No Additional Bonds
Pursuant to the Indenture, the Authority has covenanted that no additional bonds, notes or other
indebtedness shall be issued or incurred which are payable out of the revenues securing the payment of
the Bonds.
MUNICIPAL BOND INSURANCE POLICY
[TO BE PROVIDED BY INSURER]
ESTIMA~ SOURCES AND USES OF FUNDS
The following table presents the estimated sources and uses of Bond proceeds (excluding accrued
interest, which will be deposited into the Interest Account).
Sources of Funds:
Principal Amount of Bond
Less: Original Issue Discount
Less: Underwriter's Discount
Total Sources
Uses of Funds:
Costs of Issuance Fund~
Reserve Account
Project Fund
Total Uses $
~ Costa of issuance include an amount equal to $ , repreaenting the premium paid for tho municipal bond insurance
policy. Other costs of issuance will include printing costs for the Bonds mad thc preliminezy and final Official Statements, fees and
expenses of thc Trustee end ira counsel, fces and e~cnscs of Bond Counscl end coumcl to thc Authority, end certain othcr costs
ea~ciated with thc issuance and delivcry of the Bonds.
DEBT SERVICE FOR THE BONDS
The following table sets forth the debt service requirements for the Bonds:
[TO BE PROVIDED BY UNDERWRITER]
The Lease Payments have been calculated to be sufficient, in the aggregate, to enable the
Authority to pay the principal of and interest and premium, if any, on the Bonds when due and payable.
The following table sets forth the percentage of debt service covered by each Member's Lease Payments:
[TO BE PROVIDED BY UNDERWRITER]
10
RISK FACTORS
The following factors, along with all other information in this Official Statement, should be
considered by potential investors in evaluating the Bonds. However, the factors described below are
not purported to constitute an exhaustive listing of the risks which may be relevant to an investment
decision. In addition, the order in which the following factors are presented is not intended to reflect
the relative importance of any such risks.
No Full Faith and Credit
The Bonds are payable solely from the revenues pledged under the Indenture, which consist
primarily of the Lease Payments to be made by the Members under their respective Lease Agreements,
together with certain moneys on deposit in the funds and accounts held by the Trustee under the
Indenture. The Members have not pledged their full faith and credit to the payment of Lease Payments,
and the obligations of the Members to make Lease Payments do not constitute obligations of the Members
for which the Members are obligated to levy or pledge any form of taxation or for which the Members
have levied or pledged any form of taxation. Moreover, the obligation of each Member to make Lease
Payments does not constitute a debt or indebtedness of such Member, the County, the State, or any
political subdivision thereof, within the meaning of any constitutional or statutory debt limitation or
restriction. The Authority has no taxing power.
Each Member has covenanted in its Lease Agreement that, for so long as the applicable Leased
Premises are available for its use, it will make the necessary annual appropriations within its budget for
its Lease Payments. However, the obligation to pay Lease Payments under each Member's Lease
Agreement is a general unsecured obligation of such Member. Such Member has the capability to enter
into other obligations which may constitute additional charges against its general revenues and thereby
adversely affect the availability of funds to make Lease Payments.
Financial Condition of Members
Many of the Members are heavily dependent on intergovernmental revenues from the State and
the federal government, Which sources of revenue may themselves be dependent on the transferring
government's budgetary and financial condition. In addition, property and other forms of taxation
comprising an additional significant source of revenue for many Members are subject to statutory and
constitutional limitations which may impede their growth and availability for Member expenditures. In
particular, if any Member were to exceed or to approach exceeding its appropriations limit described in
Article XIIIB of the California Constitution, such Member could choose to fund other expenditures to the
exclusion of the Lease Payments. See "Constitutional Limitations on Taxation and Appropriation" below
for a discussion of certain California constitutional and statutory provisions imposing limitations on the
taxing and appropriation powers of California political subdivisions. See "THE MEMBERS AND THE
LEASED PREMISES" and "APPENDIX B - Information Concerning the Members and Description of
Leased Premises" for certain general, financial and economic information relating to the Members.
No Member has covenanted to pay the Lease Payments of any other Member or to make up any
deficit in the payment to registered owners of the Bonds which occurs by reason of another Member's
nonpayment; provided, however, that moneys in the Reserve Account will be used for such purpose, if
available. For this reason, one Member's default in the payment of its Lease Payments will cause a
11
default in the payments of principal of and interest on the Bonds in the event that moneys in the Reserve
Account are insufficient to make up the deficit caused by such nonpayment.
Abatement
The Lease Payments under each Lease Agreement will be abated during any period in which, by
reason of damage, destruction or title defect (other than by eminent domain, as discussed below), there-
is substantial interference with the applicable Member's use and occupancy of all or any portion of its
Leased Premises. The amount of such abatement will be agreed upon by the Member and the Authority
such that the resulting Lease Payments represent fair consideration for the use and occupancy of the
remaining usable portions of the Leased Premises. Such abatement will continue for the period
commencing with such damage or destruction and ending with the substantial completion of the work of
repair or reconstruction. In the event of any such damage or destruction, the applicable Lease Agreement
will continue in full force and effect and each Member has waived any right to terminate the Le~e
Agreement by virtue of any such damage, destruction or title defect.
Pursuant to each Lease Agreement, if all of the applicable Leased Premises is taken permanently
under the power of eminent domain or sold to a government threatening to exercise the power of eminent
domain, the term of the Lease Agreement will cease with respect to such Leased Premises as of the day
possession shall be so taken. If less than all of the Leased Premises is taken permanently, or if all of the
Leased Premises or any part thereof is taken temporarily under the power of eminent domain, (i) the
Lease Agreement will continue in full force and effect and will not be terminated by virtue of such taking
and the parties waive the benefit of any law to the contrary, and (ii) there will be a partial abatement of
Lease Payments in an amount to be agreed upon by the Member and the Authority such that the resulting
Lease Payments for such Leased Premises represent fair consideration for the use and occupancy of the
remaining usable portion of such Leased Premises.
Limited Recourse on Default
Pursuant to each Lease. Agreement, the Trustee, as assignee of the Authority thereunder, may
exercise any and all remedies available pursuant to law in the event the applicable Member defaults on
its obligations to make its Lease Payments, including the right of entry or re-entry upon the Leased
Premises; provided, however, that neither the Trustee nor the Authority will have the right, under any
circumstances, to (i) accelerate the Lease Payments or otherwise declare any Lease Payments not then
in default to be immediately due and payable, or (ii) to terminate the Lease Agreement, or (iii) to cause
the fee interest or the leasehold interest of the Member in the Leased Premises to be sold, assigned or
otherwise alienated. Moreover, if a court were to conclude that the Leased Premises are essential to basic
governmental functions of a Member or that the applicable Lease Agreement provided the Authority or
the Trustee with impermissible control over property of such Member, it is unlikely that such court would
permit the exercise of the remedy of re-entry specified in the applicable Lease Agreement. See
"APPENDIX A - Summary of Principal Legal Documents - The Lease Agreements" herein.
Loss of Tax Exemption
Interest on the Bonds could become included in gross income for purposes of federal income
taxation retroactive to the date the Bonds were issued and delivered as a result of acts or omissions of
the Authority or a Member in violation of their respective covenants in the Indenture and the Lease
Agreements. Should such an event of taxability occur, the Bonds are not subject to a mandatory
12
redemption and will remain outstanding until maturity or until redeemed under one of the redemption
provisions contained in the Indenture. See "TAX MATTERS" herein.
Constitutional Limitations on Taxatibn and Appropriations
Article XIIIA
On June 6, 1978, California voters approved Proposition 13, a statewide initiative relating to the
taxation of real property, which added Article XIIIA to the California Constitu~on. Among other things,
Article XIIIA: (a) limited ad valorem property taxes on all real property to one percent (1%) of the full
cash value of the property; Co) exempted existing voter-approved bonded indebtedness from the one
percent limitation; (c) defined "full cash value" as the county assessor's appraised value of real property
as of April 1, 1975, adjusted by changes in the Consumer Price Index at a rate not to exceed two percent
(2%) per y~ar; (d) permitted establishment of a new "full cash value" when there is new construction or
a change in ownership; (e) permitted the re,assessment, up to the April 1, 1975 value, of property which
was not current on the 1975-76 assessment roll; (f) required counties to collect the one percent prope~'ty
tax and to "apportion according to law to the districts within the counties"; (g) prohibited neW ad valorem
taxes on real property, or sales taxes, or transaction taxes on the sale of real property; (h) permitted the
imposition of special taxes by local agencies, other than those prohibited, by a two-thirds vote of the
"qualified electors" of such agencies; and (i) required a two-thirds vote of all members of both houses
of the Legislature for any changes in State taxes which would result in increased revenues.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base
in the event of declining property values caused by damage, destruction or other factors and to provide
that there would be no increase in the "full cash value" base in the event of reconstruction of property
damaged or destroyed in a disaster.
On June 18, 1992, in Nordlinger v. Hahn, (1992), 112 S.Ct. 2326, the United States Supreme
Court held that the tax scheme imposed by Article XIIIA does not violate the Equal Protection Clause
of the United States Constitution. The Court stated, among other things, that (i) the State has a legitimate
interest in local neighborhood preservation, continuity and stability, and consequently may decide to
structure its tax system to discourage rapid turnover in ownership of homes and businesses, and (ii) the
State may legitimately conclude that a new owner at the time of acquiring his or her property does not
have the same reliance interest warranting protection against higher taxes as does an existing owner.
Notwithstanding the Nordlinger ruling, however, there can be no assurance that Article XIIIA will not
be challenged on other constitutional grounds in the future.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIIIA. Under current law, local agencies are no longer permitted to levy directly any ad valorem
property tax. The 1% property tax is automatically levied annually by the county and distributed
according to a formula among using agencies. The formula apportions the tax roughly in proportion to
the relative shares of taxes levied prior to 1978. Any special tax to pay voter-approved indebtedness is
levied in addition to the basic 1% property tax.
In the general election held November 4, 1986, voters of the State of california approved two
measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 amends Article
13
XIIIA to provide that the terms ~purchased" and %hange of ownership," for purposes of determining full
cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property
between spouses, and (2) the principal residence and the first $1,000,000 of other property between
parents and children.
Proposition 60 amends Article XIIIA and allows persons age 55 or older to transfer the lower
assessed value of their current residence to another newly purchased residence of equal or lesser Value.
For the exemption to apply, the new residence must be located in the same county and be purchased
within two years after the sale of the previous residence. Proposition 60, as such, has no direct State or
local fiscal effect unless the county board of supervisors passes an ordinance implementing it.
Proposition 62
On November 4, 1986, an initiative statute ("Proposition 62 ") was adopted by the voters of the
State which (i) requires that any tax for general governmental purposes imposed by local governmental
entities be approved by resolution or ordinance adopted by. a two-thirds vote of the governmental entity's
legislative body and by a majority vote of the electorate of the governmental entity, (ii) requires that any
special tax (defined as taxes levied for other than general governmental purposes) imposed by a local
governmental entity be approved by a two-thirds vote of the voters within that jurisdiction, (iii) restricts
the use of revenues from a special tax to the purposes or for the service for which the special tax .was
imposed, (iv) prohibits the imposition of ad valorem taxes on real property by local governmental entities
except as permitted by Article XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on
the sale of real property by local governmental entities, and (vi) requires that any tax imposed by a local
governmental entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two
years of the adoption of the initiative or be terminated by November 15, 1988.
Various provisions of Proposition 62 were declared unconstitutional at the appellate court level.
On September 28, 1995, the California Supreme Court, in Santa Clara COunty Local Transportation
Authority v. Guardino, upheld the constitutionality of the portion of Proposition 62 requiring a two-thirds
vote in order for a local government or district to impose a special tax, and by implication upheld a
'parallel provision requiring a majority vote in order for a local government or district to impose any
general tax.
The Members may have imposed taxes which either are or could be subject to the Guardino
decision. See the discussions with respect to each Member in Appendix B hereto under the headings for
each Member entitled "Special Taxes."
Appropriation Limitation - Article XIIIB
On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann
Initiative, which added Article XIIIB to the California Constitution. On June 5, 1990, the voters
approved Proposition 111, which amended Article XIIIB in certain respects. Under Article XIIIB, as
amended, State and local governmental agencies in the State, as well as the State itself, are subject to
annual ~appropriation limits~ that limits the ability to spend' certain monies which are called
"appropriations subject to limitation~ in excess of the appropriations limit imposed. "Appropriations
subject to limitation~ are authorizations to spend "proceeds of taxes," which consist of property tax
revenues, certain state subventions and certain other funds, including proceeds from regulatory licenses,
user charges or other fees to the extent that such proceeds exceed "the cost reasonably borne by such
14
entity in providing the regulation, product or service." No limit is imposed on appropriations of funds
which are not "proceeds of taxes," such as appropriations for debt service on indebtedness existing or
authorized before January 1, 1979, or subsequently authorized by the voters, appropriations required to
comply with mandates of courts or the federal government, reasonable user charges or fees and certain
other non-tax funds.
Generally, annual adjustments reflect changes in California per capita personal income (or, at the
entity's option, changes in assessed value caused by local nonresidential new construction), population
and services provided by these State and local governmental entities. Among other provisions of Article
XIIIB, if the revenues of such entities in any fiscal year and the following fiscal year exceed the mounts
permitted to be spent in such years, the excess would have to be returned by revising tax rates or fee
schedules over the subsequent two years. The appropriations limit and actual appropriation for fiscal year
1994/95 for each Member is set forth in "APPENDIX B - Information Concerning Members and
Description of Leased Premises."
Ballot Initiatives
Article XIIIA, Article XIIIB, Proposition 58 and Proposition 60 were all adopted pursuant to
measures qualified for the ballot pursuant to California's constitutional initiative process. From time to
time, other initiative measures could be adopted by California voters. The adoption of any such initiative
might place limitations on the ability of each Member to collect property tax revenues.
THE MEMBERS AND THE LEASED PREMISES
General; Leased Premises
The Members include the Cities of Brea, Buena Park, Fullerton, Garden Grove, La Palma,
Newport Beach, Orange, San Clemente, Santa Ana, Seal Beach, Stanton and Tustin. The Board of
Directors of the Authority is comprised of members from the governing bodies of each of the Members.
In order to provide for the repayment of the Bonds, each Member has agreed to lease its Leased
Premises to the Authority pursuant to its Site Lease, and to lease back said Leased Premises from the
Authority pursuant to its Lease Agreement. For a more detailed description of each Member and its
respective Leased Premises, see ~APPENDIX B - Information Concerning Members and Description of
Leased Premises" herein.
General Funds; Economic and Statistical Data
Set forth in Appendix B hereto are summaries of fmancial statements for the General Fund of each
Member. The General Fund is a budget unit specifically defined under California law which serves as
the main financing instrument for general governmental activities in California cities, towns, counties and
school districts. Also set forth in Appendix B is certain economic and statistical information pertaining
to each Member.
15
Sales Tax Revenues
Sales tax revenues constitute a significant source of revenues for each of the Members. Sales
taxes are collected from each business engaged in retail sales in California (except for exempt items) and
distributed by the State Board of Equalization (the "SBE") to the jurisdiction where the sale took place.
Estimated advance payments are made monthly for the three months of each quarter folloWed by clean-up
payments which adjust for actual Collections. Each quarter's estimate is based upon the previous year's
sales tax collections, as well as general economic trends determined by the SBE. Increases in sales taxes
based upon new development are not fully reflected in quarterly estimates until a full calendar year after
the opening of the new development for retail business. Sales taxes collected from merchants with no
permanent place of business (i.e., certain vendors, construction contractors, etc.) are accumulated to a
County-wide or State-wide (for out-of-state businesses) pool and distributed to cities and counties in
proportion to their collections from sales tax payers.
With limited exceptions, the sales taxes imposed upon business transactions in California cities
are subject to the sales tax levied statewide by the State. The California Legislature could change the
transactions and items upon which the State-wide tax and the sales and use tax are imposed. Any such
change or amendment could have an adverse effect on sales tax revenues in each of the Members.- The
Members are not aware of any proposed legislative change which could have an adverse effect on~ Sales
tax revenues.
·
Appendix B includes a summary of taxable sales transactions for the Members since 19901' The
value and volume of taxable transactions are dependent on a variety of market and economic factors.
Some of these factors include the level of inflation affecting the price of goods and services, the rate of
population growth in the general market area, the characteristics of the specific retail developments within
a given city, the market service areas of the respective developments, mobility and disposable incomes
of the consumers within the market areas, any planned and proposed retail developments existing and
planned competitive retail establishments outside of a city.
Assessed Valuation and Tax Collections
Taxes are levied for each fiscal year on taxable real and personal property which is situated in
the Member city as of the preceding January l, at the completion of new construction or when a change
in ownership occurs. For assessment and collection purposes, property is classified either as "secured,"
"unsecured" or "supplemental" and is listed accordingly on separate parts of the assessment roll. :::The
· "secured roll" is that part of the assessment roll containing State-assessed public utilities property, and
property the taxes on which are secured by a lien on real property sufficient, in the opinion of the county
assessor, to secure payment of'the taxes. Other property is assessed on the "unsecured roll" except
properties classified as "supplemental" which include property on which construction has been completed
or for which a change of ownership has occurred during the fiscal year ...... '~ .... .~. · .~
Property taxes on the secured roll are due in two installments, on November 1 and February 1
of the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively,
and a 10% penalty attaches to any delinquent payment.. In addition, property on' the secured roll with
r~pect to which taxes are delinquent is declared tax-defaulted on or about June 30 of the fiscal year.
Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquent penalty,
plus a redemption penalty of 1.5 % per month to the time of redemption. If taxes are unpaid for a period
16
of five (5) years or more, the property is deeded to the state and then is subject to auction sale by the
county tax collector.
Property taxes on the unsecured roll are due as of January 1 and become delinquent, if unpaid,
on August 31. A 10% penalty attaches to delinquent unsecured taxes, and an additional penalty of 1.5%
per month begins to accrue November 1. The taxing authority has four ways of collecting unsecured
personal property taxes: (1) a civil action against the taxpayer, (2) filing a certificate in the office of the
county clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (3) filing of a certificate of delinquency for recordation in the county recorder's office, in order
to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property,
improvements or possessory interest belonging or assessed to the assessee.
Property taxes on the supplemental roll are due in accordance with the provisions for payment
set forth in the California Revenue and Taxation Code. State law provides exemptions from ad valorem ·
property taxation for certain classes of property including, but not limited to, churches, colleges, non-
profit hospitals and charitable institutions.
The California Community Redevelopment Law authorizes redevelOpment agencies to receive the
allocation of tax revenues resulting from increases in assessed valuations of properties within designated
project areas. In effect, the other local taxing authorities realize tax revenues from such properties only
,on the base year valuations which are frozen/it the time a redevelopment project area is created. The
tax revenues which result from increases' in assessed valuations flow to the redevelopment areas.
Generally, funds must be spent within the redevelopment areas in which the tax increment revenues were
generated, and may only be spent on projects which qualify under California Community Redevelopment
Law.
Summaries of assessed valuations, secured tax charges and delinquencies for each Member are
included in Appendix B.
The Teeter Plan
[IF NOT ALL MEMBERS ARE ON THE TEETER PLAN, A LIST WILL BE PROVIDED]
Sections 4701 through 4717 of the California Revenue and Taxation Code permit counties to use
a method of apportioning taxes (commonly referred to as the "Teeter Plan") whereby all local agencies
receive from such counties 100% of their respective share of the amount of secured ad valorem taxes
levied, without regard to actual collections of the taxes levied. The Teeter Plan was instituted by the
County in 19__ and remains in effect unless and until the County Board of Supervisors in its discretion
orders its discontinuance. As long as the Teeter Plan continues in the County, the Members are, in
effect, guaranteed the full amount of their respective share of the amount of secured ad valorem property
taxes levied.
, .
~ The County Auditor-Controller makes a preliminary calculation of seCUred tax revenues' in early
August each year. The Members are allocated 100% of their respective secured taxes based on'this
calculation. The Members are held harmless from tax delinquencies as a result of the 100% Payment
and, conversely, receives no adjustments for redemption payments.' The unsecured taxes are allOcated
based on actual collections of unsecured taxes. A one-time adjustment for changes in the tax roll is niade
in the following year.
17
The County's cash position is protected by a special fund, known as the Tax Losses Reserve
Fund, which is generated from the collection of penalties, .interest and other charges on County-wide
delinquent taxes and special assessments, as well as other cash reserves. In the event proceeds from the
sale of tax-deeded property are insufficient to pay the full amount of delinquent taxes, the County
Treasurer may draw on its Tax Losses Reserve Fund to make up the deficiency. Section 4?03 of the
California Revenue and Taxation Code allows any county to draw down the Tax Losses Reserve Fund
to a balance equal to 3 % of the total of all taxes and assessments levied on its secured roll for that year
if the secured tax delinquency has been 3 % of the total or less for the preceding three consecutive years.
After utilizing this procedure, if the county incurs a rate of secured tax delinquency that eXCeSS 3 % of
the total of all taxes and assessments levied on its secured roll, the Tax Losses' Reserve Fund must
accumulate to a balance equal to ~ % of the total of all taxes and assessments levied on the secured roll
for that fiscal year and remain at that level until the county experiences three consecutive years in which
the secured tax delinquency rate is under 3 %. A recent history of the CountY tax levies, delinquencies
and the Tax Losses Reserve Fund cash balances for the past five fiscal years is set forth in the following
table:
Fiscal
Year
1990/91
1991/92
1992/93
1993/94.
1994/95
ORANGE COUNTY
Secured Levies and Reserve Fund Balance
Fiscal Years 1990/91 through 1994/95
Secured Property Current Levy % Current Levy
Tax Levies Delinq. (6/30) Delinq. (6/30)
_
Tax Losses Reserve
Fund Balance (6/30)
$. $ . % $
Other Tax Revenues
In general, cities may adopt measures imposing taxes on certain local activities, such as hotel
occupancy and utility consumption taxes. See "RISK FACTORS - Constitutional and Statutory Limits
on Taxes and Appropriations - Proposition 62" for a discussion of certain limitations' imposed upon the
imposition of such taxes. '
THE PROJECT
The Project is comprised of (i) various capital improvements to be financed by each Member
within its jurisdiction, and (iii) a County-wide coordinated communications system (the "Communications
System") designed to support and facilitate all public safety and public, works radio communications
throughout the County. Construction of the Communications System will cost an estimated
$ , and will be directed by Motorola Communications and Electronics, Inc.
· . .
18
("Motorola"). The Communications System has been planned as an 81-channel, 800 MHz radio
COmmunications system enabling mutual cross-COmmunications among 100 city and County law, public
works and fire operations. Once installed and implemented, the Project is expected to be the largest
multi-user, multi-owned radio system in the world.
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco,
California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the
interest on the Bonds is excluded from gross inCOme for federal inCOme tax purposes and such interest
is not an item of tax preference for purposes of the federal alternative minimum tax imposed on
individuals and COrporations, provided, however, that, for the purpose of COmputing the alternative
minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken
into account in determining certain income and earnings.'
The opinions set forth in the preceding paragraph are subject to the condition that the Authority
and the. Members COmply with all requirements of the Internal Revenue Code of 1986 (the "Code") that
must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or COntinue to
be, excluded from gross inCOme for federal inCOme tax purposes. The Authority and the Members have
COvenanted to COmply with each such requirement. Failure to COmply with certain of such requirements
may cause the inclusion of such interest in gross inCOme for federal inCOme tax purposes to be retroactive
to the date of issuance of the Bonds.
In the further opinion of Bond Counsel, interest on .the Bonds is exempt from California personal
inCOme taxes.
Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual
or receipt of interest on, the Bonds may have federal or state tax consequences other than as described
above. Bond Counsel expressed no opinion regarding any federal or state tax consequences arising with
respect to the Bonds other than as expressly described above.
RATINGS
Standard & Poor's Ratings Group and Moody's Investors Service have assigned their municipal
bond ratings of" "and" ," respectively, to the Bonds with the understanding that upon delivery
of the Bonds a municipal bond insurance policy insuring the payment when due of the principal and
interest with respect to the Bonds will be issued by . Such ratings reflect only
the views of such organizations, and an explanation of the significance of such ratings may be obtained
from such rating agencies: Standard & Poor's Ratings Group, 25 Broadway, New York, New York
10004, (212) 208-8000, and Moody's Investors Service, 99 Church Street, New York, New York, 10007
(212) 553-0300. Generally a rating agency bases its credit rating on the information and materials
furnished to it and on investigations, studies and assumptions of its own. There is no assurance that such
rating will continue for any given period of time or that the rating will not be revised downward or
withdrawn entirely' by such. rating agency, if in the judgment of such rating agency circumstances so
warrant. Any such downward revision or withdrawal of the ratings may have an adverse effect on the
market price of the Bonds. Neither the Authority nor the Members have any obligation to notify the
19
BondJaolders of any actual or threatened reduction or withdrawal of ratings assigned to the BOnds, or to
take any action required to maintain such ratings.
UNDERWRITING
The Bond will be purchased by Stone & Youngberg'LLC (the "Underwriter"). The Underwriter
has agreed to purchase the Bonds at an Underwriter's discount of $ . The purchase contract
pursuant to which the Bonds are being purchased by the Underwriter (the "Purchase Contract") provides
that the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the
Underwriter to make such purchase is subject to certain terms and conditions set forth in said Purchase
Contract.
The Underwriter has advised the Authority that it intends to make a public offering of the Bonds
at the prices set forth on the cover page hereof. The Underwriter may offer and sell Bonds to certain
dealers and others at prices or yields different from the prices or yields stated on the cover page of this
Official Statement. In addition, the offering prices or yields may be changed from time to time by the
Underwriter.
Although the Underwriter expects to maintain a secondary market in the Bonds after the initial
offering, no guarantee can be made that such a market will develop or be maintained by the Underwriter
or others. Thus, purchasers should be prepared to hold their Bonds to maturity or prior redemption.
CONTINUING DISCLOSURE
The Authority has covenanted for the benefit of holders and beneficial owners of the Bonds to
provide certain financial information and operating data relating to the Bonds by not later than six months
following the end of the Authority's fiscal year (which currently, ends on June 30), commencing with the
report for the 1996-97 fiscal year (the "Annual Report"), and to provide notices of the occurrence of
certain enumerated events, if material. The Annual Report will be filed by the Authority with each
Nationally Recognized Municipal Securities Information Repository, and with the appropriate State
information depository, if any. The notices of material events will be filed by the Authority with the
Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any).
The specific nature of the information to be contained in the Annual Report or the notices of material
events is set forth in "APPENDIX E - Form of Authority Continuing Disclosure Certificate." These
covenants have been made in order to assist the Underwriter in complying with Securities and Exchange
Commission Rule 15c2-12(b)(5) (the "Rule").
Each Member has covenanted for the benefit of holders and beneficial owners of the Bonds to
provide certain financial information and operating data relating to such Member .by not later than six
months following the end of the Member's fiscal year (which currently ends on June 30), commencing
with the report for the 1996-97 fiscal year (the "Annual Report"). The Annual Report will be filed by
each Member with each Nationally Recognized Municipal Securities Information Repository, and with
the appropriate State information depository, if any. The specific nature of the information to be
contained in the Annual Report is set forth in "APPENDIX F - Form of Member Continuing Disclosure
Certificate." These covenants have been made in order to assist the Underwriter in complying with the
Rule.
2O
LITIGATION
, as counsel to the Authority, and the City Attorney for each Member, will
issue opinions in connection with the issuance of the Bonds to the effect that there is no action, suit or
proceeding known to the Authority or the applicable Member, as appropriate, to be pending or
threatened, restraining or enjoining the execution or delivery of the Bonds, the Indenture of the Lease
Agreements, or in any way contesting or affecting the validity of the foregoing or any proceeding of the
'Authority or the Members taken with respect to any of the foregoing.
CERTAIN LEGAL MATTERS
Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond
Counsel, will render an opinion with respect to the validity and enforceability of the Indenture and as to
the validity of the Bonds. The proposed form of such opinion is attached hereto as Appendix C.
Certain legal matters will be passed upon for the Underwriter by Cox, Castle & Nicholson, LLP,
Los Angeles, California, for the Authority by . , and for each Member by its City
Attorney.
MISCELLANEOUS.
The purpose of this Official Statement is to supply information to prospective buyers of the
Bonds. Quotations from and summaries and explanations of the Bonds, the Indenture and the Lease
Agreements contained herein do not purport to be complete and reference is made to said documents for
full and complete statements of their provisions.
Appropriate Authority and Member officials, acting in their official capacity, have reviewed this
Official Statement and have determined that as of the date thereof the information contained herein is,
to the best of their knowledge and belief, tree and correct in all material respects and does not contain
an untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made, not misleading. The
appropriate Authority and Member officials will execute certificates to this effect upon delivery of the
Bonds.
This Official Statement and its distribution have been duly authorized and approved by the
Authority and the Members.
COUNTYWIDE PUBLIC FINANCING AUTHORITY
By: /s/
21
APPENDIX A
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
[TO BE PROVIDED BY BOND COUNSEL]
Aol
INFORMATION CONCERNING THE MEMBERS AND
DESCRIPTION OF LEASED PREMISES
CITY OF BREA
General
Location and Government. The City of Brea ("Brea") encompasses 10.7 square miles and is
located at the northern end of the County, just south of the Los Angeles County line. It is approximately
25 miles southeast of downtown Los Angeles, 15 miles north of Santa Aha, the County Seat, and 22
miles inland of the Pacific Ocean. Neighboring communities include the Cities of Fullerton, Placentia,
'La Habra and Yorba Linda.
Brea is a general 1aw city and was incorporated in 1917, the eighth city to be incorporated in the
County. Brea has a Council-Manager form of municipal government. The City Council appoints the
City Manager who is responsible for the day-to-day administration of city business and the coordination
of all city departments. The City Council is Composed of five members elected bi-annually at large to
four.-year alternating terms. The Mayor is selected by the City Council from among its members. Under
the 1995/96 fiscal year budget, Brea employs a staff of approximately 328 full-time employees and 101
part-time employees under the direction of the City Manager, including 76 full-time equivalent contract
police services personnel to the City of Yorba Linda and three full-time equivalent contract recreation
services personnel to the City of Diamond Bar.
Community Services and Facilities. Brea provides police and fire protection,, emergency
paramedics, sewer maintenance, water, trash collection, street sweeping, park maintenance and building
inspection, and cooperates with the County in the provision of flood control services.
Educational services are provided to Brea residents by several school districts, including the Brea-
Olinda, Fullerton, Yorba Linda and La Habra Unified School Districts. Available schools include six
elementary schools, three parochial schools, one junior high school, one high school and one public
continuation high school. In addition, there are several colleges and universities in nearby Fullerton,
including California State University (Fullerton), FUllerton Community College, Western State University
College of Law and Southern California College of Optometry.
Health facilities for the City include the Brea Community Hospital with 162 beds, a staff of 278
physicians, a 24-hour emergency service and adjacent medical office buildings housing 38 physicians or
physician's groups. There are also numerous professional service offices in Brea for medical doctors,
dentists, optometrists, chiropractors and podiatrists, as 'well as St. Jude's Medical Center in nearby
Fullerton.
Police and Fire Protection. The City of Brea Police Department consists of 101 sworn, 167 non-
sworn and 58 volunteer personnel. It provides a full range of police services for the communities of Brea
and Yorba Linda, whose daytime population exceeds 150,000, and whose combined residential population
is 95,000. Brea has provided police services to its neighboring City of Yorba Linda for over 25 years.
B-1
Besides the traditional efforts of the Police Services Department to respond to calls for services
to enforce laws and investigate traffic and crime-related issues, the department has recently implemented
Community-Oriented Policing and Problem Solving (COPPS) throughout Brea and Yorba Linda.
The Brea Fire Department consists of 45 sworn and 19 non-sworn personnel delivering 24-hour
emergency response services to the residential and business community of Brea. The Fire Services
Department consists of three divisions, including administrative, fire suppression and paramedics, and
fire prevention. Brea has four fire stations that include the deployment' of one paramedic engine, one
ladder truck company, one quick attack engine and one Battalion Commander. The Fire Department
responds to a wide variety of critical situations, including fires, explosions, hazardous materials incidents,
medical emergencies, accidents and miscellaneous public assistance requests.
Transportation. The Orange Freeway (State Highway 57), a major north-south corridor, and
Imperial Highway (State Highway 90), a major east-west corridor, both cross centrally through Brea.
Brea is also within minutes of the Pomona Freeway (State Route 60), the Riverside Freeway (State Route
91) and the Santa Aha Freeway (Interstate 5).
Air cargo and passenger flight services are provided at the John Wayne Airport, 25 miles
southeast of Brea, Ontario International Airport, 22 miles northeast of Brea, Los Angeles International
Airport, 48 miles west of Brea, and the Long Beach Municipal Airport, 17 miles southwest of Brea.
Commercial and passenger rail services are provided by Union Pacific, Southern Pacific,
Atchison, Topeka and Santa Fe Railway Co., and Amtrak lines. Trucking services are provided through
numerous common and contract carriers.
Utilities. Brea provides its citizens with four utilities, including water, sewer, street sweeping
and refuse collection. Brea purchases its water from Municipal Water District of Orange County (a
Metropolitan Water District member) and California Domestic Water Company (a private water company
in which Brea owns stock). Brea contracts with Taormina Industries (Brea Disposal, Inc.) to collect,
recycle and dispose of residential and commercial refuse. Sewer and street sweeping activities are
performed by Brea staff.
Additionally, other utility services are provided to Brea residents and businesses by: Southern
California Edison (electric), Southern California Gas Company, Pacific Bell (telephone) and Century
Cable Company (cable television).
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the building
permit activity in the City from 1991 through 1995.
B-2
New Residemial
Single Valuation
Multiple Valuation
Alterations/Additions
Total
New Non-Residemial
Commercial
Industrial
Other
Alterations/Additions
Total
Total Building Valuations
No. of Single Units
No. of Multiple Units
Total Units
CITY OF BREA
CONSTRUCTION ACTIVITY.
(1991 through 1995)
(O00,s Omitted)
1991 1992 .!993 1994 1995
$ 0 $19,410 $5,259 $2,930
433 324 1,263 3,422
.2,346 2,116 1,349 913
$2,779 $21,850 $7,871 $7,265
$1,664
4,782
183
12,233
$18,862
$ 421 $ 1,484 $11,809
43 0 0
'1,187 179 690
7,790 12,163 .7,796
$9,440 $13,826 $20,295
$13,453
0
· 2,453
$15,906
$4,777
0
0
5,876
$10,653
$21,642 $31,290 $21,697 $27,559 $27,222
102 45 20 91
2 1_~ 51 _QO
104 58 71 91
Source: City of Brea.
B-3
Employment. The principal employers within Brea, their product or service and the number of
employees are shown in the table below.
CITY OF BREA
PRINCIPAL EMPLOYERS
Company
Product or Service
Employees
Beckman Instruments, Inc.
Bank of America
Capital Group
Kirkhill Rubber Co.
Albertson's Distribution Ctr.
Harte-Harks Communications
Brea-Olinda USD
CNA Insurance
Mercury Insurance Company
ITT Hartford
Clinical Instruments 1,100 +
Banking 1,000 +
Finance 900
Rubber and Plastic Components 700
Retail Food 671
Publishing 625
School District 600
Insurance 600
Insurance 600
Insurance 450
Source: City of Brea Chamber of Commerce
B-4
Retail Sales. Brea has experienced a steady increase in retail sales growth. For the period from
1989 to 1993, Brea experienced an increase of 32.1% 'in retail sales transactions. 1995 retail sales data
is available through the second quarter only.
CITY OF BREA
Taxable Retail. Sales Data
(000's omitted)
1990 through 1995
Apparel Stores $ 57,909
General Merchandise Stores 152,278
Drug Stores 2,449
Food Stores 28,624
Packaged Liquor Stores 2,064
Eating and Drinking Places 57,305
Home Furnishings and
Appliances 16,715
Building Materials and Farm
Implements 9,089
Auto Dealers and Auto
Supplies 14,587
Service Stations 17,950
Other Retail Stores ,86,404
Total Retail Outlets 445,334
All Other Outlets 232,190
Total All Outlets $677,524
Source: Stale Board of Equalization
First two quarters of data through June 30. 1995.
1995o)
$ 60,615 $ 66,936 $ 67,820 $ 80,935 $ 19,674
166,187 182,974 194,512 205,495 47,779
2,223 3,166 2,966 2,875 1,100
33,146 28,687 23,798 22,105 5,939
1,993 1,952 1,826 1,838 1,838
63,946 63,854 63,675 66,178 18,462
27,131 29,833 35,497 57,388
14,247
8,208 6,485 7,635 4,034 1,145
13,333 13,384 11,107 14,050 4,075
21,390 21,978 19,920 18,838 5,116
95,444 J00,098 99,371 ~8,079 ~
493,616 519,347 528,127 561,815 142,699
207,361 228.743 771,086 329,376 ,85,813
$700,977 $748,090 $799,213 $891,191 $228,512
Population.
The table below summarizes population information for Brea since 1986.
POPULATION SUMMARY
CITY OF BREA
1986 through 1995
Yea___y.r Population
1986 32,899
1987 32,951
1988 32,690
1989 33,516
1990 32,944
1991 32,950
1992 33,528
1993 34,001
1994 34,587
1995 35,122
Source: City of Brea Financial Services Department
General Fund
The following tables summarize information taken from Brea's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3) fiscal years:
B-6
CITY OF BREA
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets and Other Debits
Assets:
Cash and investments
Restricted assets Cash
Due from County
Receivables: Taxes
Accounts receivable
Interest
Notes
Other
Due from other funds
Due from other governments
Advances to component units
$ 216,371
$ 4,099,003 $ 6,223,248 5,434,506
424,099
79,330 60,718 117,854
60,394 167,339 75,448
397,896 355,566 182,690
99,355 0 0
380,222 1,031,703 186;544
1,585,406 991,583 822,380
1,255,765 2,146,771 2,757,982
2,366,575 2,297,573 2,226,500
Total Assets and Other Debits
$,!0,323,946 $13,274,501 $12,444,374
Liabilities, Equi _ty and Other Credits
Liabilities:
Accounts payable
Accrued liabilities
Interest payable
Deposits payable
Deferred Revenue
Due to other funds
Notes payable
$ 676,469 $ 743,260 $ 862,972
511,214 624,288 487,027
137,541' 195,000 217,973
255,698 224,506 219,671
427,526 1,047,236 147,601
1,650,466 1,620,836 2,269,046
3,950,000 6,000,000 5,200,000
Total Liabilities
?~608,914 10,455,126 9,404,290
Equity and Other Credits:
Fund Balances:
Reserved
Unreserved (designated) .
Unreserved (undesignated)
Total Equity and Other Credits
2,505,859 2,384,950 2,887,226
85,284 96,482 152,858
123,889 337,943 · 0
2,715,032 2,819,375 3,040,084
Total Liabilities, Equity and Other Credits
$10 323 946 $13,274,50~1.. $12,444,374~
Sollr~e.'
City of Brea comPrehensiVe Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual financial
reports are available from the City of Brea, and investors are encouraged to review the entire reports, including the
notes therein, before making an investment decision with respect to the Bonds.
Excludes a balance of approximately $5,100,000 transferred 'to the Risk Management Fund. Brea may, with the approval of
its City Council, transfer these moneys back to the General Fund.
B-7
CITY OF BREA
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
Revenues: Taxes
Licenses and permits
Imergovernmental
Charges for services
Fines and forfeitures
Revenue from use of money and property
Other
Total Revenues
1992-93 1993-94 1994-95
$14,315,864 $15,356,227 $15,709,595
278,128 294,704 245,019
1,319,356 1,411,447 1,289,878
6,152,731 6,870,885 6,885,207
334,858 314,954 322,870
873,026 880,249 658,070
1,559,375 1,034,679 1,279,88~'
24,833,338 26,163,145 26,390,521
Expenditures:
Current:
General government
Public safety
Development services
Community services
Maintenance services
Capital outlay
Debt service:
Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
4,218,797 4,385,244 4,702,800
14,766,237 15,770,960 16,162,163
1,755,156 1,850,532 1,803,168
2,254,164 2,174,260 2,136,506
2,268,977 2,282,474 2,266,639
368,246 280,629 481,610
137,541
25,769,118
80,769
330,841
27,164,709
111,676
363.114
28,027,676
(935,780) (1,001,564) (1,637,155)
Other Financing Sources (Uses):
Operating transfers in~
Operating transfers out
Total Other Financing Sources (Uses)
600,000 1,110,000 1,213,443
(7.525) (4,092) (458,582)
592,475 1,105,908 754,861
Excess (Deficiency) of Revenues and
Other Sources Over (Under)
Expenditures and Other Uses
(343,305)
Fund Balances At Beginning Of Year (As Restated) 3,058,337
Fund Balances At End Of Year $2 715 032
104,344 (882,294)
2,715,031, 3,922,3782
$2 819 375 $~
Source:
City of Brea Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1~ -95; the annual financial
reports, are available from the City of Brea, and investors are encouraged to review the entire reports, including the
notes therein, before making an investmem decision with 'respect to the Bonds.
Generally represent transfers from Brea's' other governmental and enterprise fund groups to compensate the General Fund for
expenditures incurred on behalf of those funds.
Includes a restatement of the July 1, 1994 fund balance due to an accounting principle change pertaining to Governmental
Accounting Standards Board (GASB) Statement No. 22 - Taxpayer Assessed Taxes, effective for years beginning after June 12,
1994.
B-8
Sales Tax Revenues. The revenue from sales tax provided approximately 39.5 % of Brea's total
lOcal tax revenues in 1995. The following table presents information concerning the value of taxable
retail sales in Brea since 1990.
Year Ended 12/31
CITY OF BREA
Taxable Retail Sales
1990-1995
Taxable Sales
1990 $677,524,000
1991 700,977,000
1992 748,090,000
1993 '799,213,000
1994 891,191,000
1995(1) 228,512,000
Source: State Board of Equalization.
12) First two quarters of data through June 30, 1995
The table below shows sales tax revenues for Brea for the last 5 years and the projected sales tax
revenues for the 1995/96 Fiscal Year.
CITY OF BREA
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1990 Through June 30, 1996
Fiscal Year
Sales Tax Revenues
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96o)
$ 7,484,212
7,686,394
8,143,897
8,600,037
9,695,536
10,485,677
11,232,000
Source: City of Brea
(~) Projected
B-9
Property Tax Revenues
The total assessed valuation of the property within the City for the fiscal year 1994-95 was
$3,414,136,175. The total appropriations limit adopted by the City for fiscal year 1995-96 was
$30,885,878, and the actual appropriations for the' same period was $17,293,675.
The City receives funds annually from the State based upon a percentage of'property taxes
collected within the County computed on the City's respective assessed valuation, and a statutory system
of annual appropriations. The table below presents the assessed valuation of property within the City for
the past five fiscal years.
CITY OF BREA
Assessed Valuations
Fiscal
Year Local Secured Utility Unsecured
1990-91 $ 2,655,565,412 $ 816,944 $ 412,482,326
1991-92 2,805,021,930 853,594 447,028,547
1992-93 2,954,338,096 571,999 .423,558,338
1993-94 3,017,139,915 5,100,785 368,561,969
1994-95 2,996,049,403 11,752,936 406,333,836
Total Before Total After
Rdv. Increment Rdv. Increment
$3,068,864,682 $1,563,061,901
3,252,904,071 1,636,254,641
3,378,468,433 1,690,673,360
3,390,801,669 1,734,047,608
3,414,136,175 1,749,104,813
Source: Orange County Auditor - Controller's Office
The table below presents the City's property tax valuation and collection experience for the last
five fiscal years.
CITY OF BREA
Property Tax Levies and Collections
Last Five Fiscal Years
Amount Percentage
Fiscal Secured Delinquent Delinquent
Year Tax Charge June 30 June 30
1990-91 $3,492,146 $145,822 4.18 %
1991-92 3,572,235 160,728 4.50
1992-93 3,362,922 144,943 4.31
1993-94 2,762,301 ~ N/A
1994-95 2,783,979a~ o~ N/A
Source: City of Brea General Fund only, including ParaTax Override.
(') Through an agreement with the County, effective for fiscal years beginning 1993/94, the City will receive 100% of its secured
property tax levy in the year levied.
a~ Includes $21,678 in secured property taxes collected by County of Orange, that were withheld from the City of Brea as of June
~30, 1995, because of the County bankruptcy. The City has filed a claim for the funds in Federal Court and expects to receive
approximately $16,250 or 75 % of the withheld taxes by September 30, 1996. Recovery of the remaining 25 % is subject to.litigation
that the County is pursuing against Merrill Lynch, KPMG Peat Marwick and others.
B-10
Summary of Significant Accounting Policies
Brea's financial statements have been prepared in conformity with generally accepted accouming
principles (GAAP) as applied to government units. The Governmental Accouming Standards Board
(GASB) is the accepted standard-setting body for establishing govemmemal accounting and financial
reporting principles.
City Budget
The City follows these procedures in establishing the budgetary data reflected in the general
purpose financial statements:
.
In May, the City Manager submits to the city Council a proposed operating budget for
the fiscal year commencing July 1. The operating budget includes proposed expenditures
and the means of financing them.
Public hearings are conducted at City Council meetings to obtain taxpayer comments.
3. During July the budget is adopted by Council action.
.
The City' Manager is authorized to transfer funds appropriated with respect to those
classifications designated as other services and materials and supplies within the same
department. The City Manager may transfer appropriated funds from any classification
within other expenditure categories to the capital outlay classification within the same
department only, however, any revisions that alter the total expenditures of any
department must be approved by the City Council. For budgeting purposes, the General
Fund is composed of several departments while all other budgeted funds are considered
a single department.
.
Formal budgetary imegration is employed as a management control device during the
year for the government.al funds.
.
Legally adopted budgets for all governmental funds are established on a basis consistent
with generally accepted accouming principles. Budgeted amounts are as originally
adopted and as further amended by the City Council.
.
Supplemental amendments were made during the year and have been reflected in the
financial statemems, resulting in an increase of general fund appropriations in the amount
of $362,397.
Direct and Overlapping Bonded Debt
The following table contains information on Brea's direct and overlapping bonded indebtedness
as of June 30, 1996.
B-II
CITY OF BREA
Direct and Overlapping Bonded Debt
[TO FOLLOW]
Investment Policy
Brea annually adopts an investment policy. The most recent modifications adopted by the City
Council on February 7, 1996, are in compliance with newly adopted state legislation and in a number of
areas are more restrictive than state requirements. The Policy 'requires that an investment report be
submitted monthly to the City Council. In June of 1995· the Council established an Investment Advisory
committee that meets on a monthly basis. It is a six-member advisory body that includes one Council
Member· a Brea resident· the elected City Treasurer, Assistant City Manager, Financial Services Director
and Revenue Manager.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under Brea's Site
Lease and Lease Agreement:
Brea Fire Station//3 is located at 400 North Kraemer Boulevard in the City of Brea. It is a single
story building of masonry construction. The building consists of approximately 8,500 square feet divided
into areas housing fire apparatus, offices for company administration, living quarters for fire fighters, and
a training classroom which also serves as a community meeting room. The structure has won national
acclaim for design for the architectural firm of Wolf, Lang & Christopher, and is one of Brea's landmark
buildings.
The station was built in 1985 at a cost of $1,300,000. It was occupied in 1986. It currently
houses three units; Engine Company #3, Truck Company #1 and the Battalion Commander. The above
compliment is filled by seven (7) personnel per shift for a total of twenty-one (21) fire fighters.
' Based upon an apPraisal dated
been valued at $
· conducted by
· the station has
B-12
CITY OF BUENA PARK
[TO FOLLOW]
':;.
B-13
CITY OF FULLERTON
General
Location and Government. The City of Fullerton CFullerton") is located in the northern portion
of Orange County, approximately 23 miles south of downtown Los Angeles with Long Beach on the .
southwest,' Pomona and Ontario on the northeast, Riverside on the east and major Orange County cities
to the south. Fullerton, founded in 1887 and incorporated in 1904, is the fifxh largest city in Orange
County and is accessible by three major freeways and the railroad. Fullerton is 22.2 square miles in size,
150 feet above sea level, and 17 miles from the ocean.
Fullerton is a general law city, deriving its power from acts of the State legislature. Fullerton
is governed by a non-partisan, five-member City Council elected to serve staggered four-year terms. The
City elections are consolidated with the Statewide general elections held in November of even-numbered
years. The City Council appoints the City Manager, City Attorney, and City Treasurer, as well as
members of the various commissions, boards and other citizen advisory groups, ensuring a broad base
of citizen input into the City's decision-making process.
Community Services and Facilities, Police and Fire Protection. Fullerton provides the full range
of municipal services contemplated by statute or charter. This includes public safety (police and fire),
highways and streets, sanitation, water utility and airport, culture and recreation, public improvements,
planning and general administrative and support services.
Fullerton is a major center of higher education in the County. California State University,
Fullerton, located in Fullerton and is one of the 19 campuses of the California State Universities and
offers more than 85 degree programs at both undergraduate and graduate levels. The campus is located
on a 225-acre site, has about 700 full-time instructional personnel and an enrollment of about 25,000.
Fullerton Junior College, also located in the City, was the first junior college in California and has been
in operation since 1913. The North Orange County Community College District is also headquartered
in the City and operates its Fullerton Campus with an enrollment of 20,000.
Fullerton is served by many overlapping school districts, although educational services are
provided primarily by the City. Elementary School District and the City Union High School District.
Other school districts serving portions of Fullerton are Anaheim Elementary, Anaheim Union High
School, Brea-Olinda Unified, Buena Park Elementary, La Habra Elementary and Placentia Unified.
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the building
permit activity in Fullerton from 1990 through 1994.
B-14
CITY OF FULLERTON
CONSTRUCTION ACTIVITY
(1990 through 1994)
(000's omitted)
.1990 1991 1992 1993 1994
Residential
New Single-Dwelling $3,717 $2,204 $2,080 $6,493 $17,764
New Multi-Dwelling 6,900 1,144 2,615 '4,868 0
Alterations/Additions 10.432 5,897 14.620 6,875 .4,874
Total $21,049 $9,245 $19,315 $18,236 $32,638
Non-Residential
:'New Commercial $12,275 $6,439 $6,276 $445 $688
New Industrial 0 0 79 0 740
Other 1,206 968 514 9,123 2,445
Alterations/Additions .!0,841 .10,241 22,197 5,433 11,052
Total Non-Residemial $24,321 $17,648 $29,065 $15,001 $14,925
Total Valuation $45,370 $26,894 $48,381 $33,238 $37,563
No. of Dwelling Units
Single-Dwelling 23 20 13 31 89
Multiple Units .107 20 25 63 O
Total Units 130 40 38 94 89
Source: Economics Sciences Corporation
Employment. The major manufacturing businesses in Fullerton include Hughes Aircraft,
Beckman Instruments, Hunt-Wesson, Hewlett Packard, Day Runner, and Kimberly-Clark Corporation.
Non-manufacturing major employers are California State University, Fullerton;St. Jude Medical Center
(both located near subject neighborhood); Fullerton College; Fullerton Union High School District; and
the City governmental offices. The median household income is $41,921, while the median family
income is estimated to be $48,604 (1990 census). Fullerton is generally a bedroom community with
commuters traveling to Los Angeles County and within Orange County for employment.
B-15
The principal employers within FullertOn, their product or service and the number of employees
are shown in the table below.
CITY OF FULLERTON
PRINCIPAL EMPLOYERS
October, 1995
Company
Manufacturing
Hughes Electronics Division
Beckman Instruments
Hunt Wesson Foods
Kaynar Manufacturing Co.
Kimberly-Clark
1,400
1,250
1,100
640
525
Non-Manufacturing
Cal State University, Fullerton
St. Jude Medical Center
Fullerton College
Fullerton Joint Union High School District
City of Fullerton
Hewlett-Packard
2,650
1,700
1,060
1,040
600
600
Source: City of Fullerton
Population/Housing. Since the 1990 census, Fullerton's population is estimated to have grown
by approximately 8.74%. The County's population is estimated to have expanded by approximately
7.11% during the same interval. According to the City of Fullerton Office of Public Information, the
population estimate for Fullerton as of the beginning of 1995 was 123,692 with 44,099 households. This
equates to an average household size of 2.80 which is typical for Orange County. Per City statistics, the
housing diversity is approximately 50% single family detached, 8% single family attached; 40% multi-
family housing; and 2% mobile homes. The high multi-family is expected due to the five colleges in
Fullerton with the major college being California State University, Fullerton. Older housing is located
south of Commonwealth with smaller two and three-bedroom homes. North of Commonwealth and as
you move toward the hills, the homes are larger, newer, and well maintained. Two of the neighborhoods
are built around golf courses. The following table sets forth the population growth for Fullerton since
1950.
B-16
CITY OF FI~LERTON
POPULATION SUMMARY
1980 through 1995
,Year population
1980 101,900
1990 111,737
1991 115,563
1992 117,424
1993 118,000
1994 121,500
1995 123,692
Source: U.S. Bureau of the Census 'and State of California Employmem Development Department Estimates
General Fund
The following tables summarize information taken from Fullerton's audited financial stat6ment
regarding .its General ~und Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3) fiscal years.
B-17
CITY OF FULLERTON
COMPARATIVE BALANCE SHEET
Fiscal Years 1993 through 199~
1993 1994 1995
Assets and Other Debits
Cash and investments '
Receivables: Taxes
Accounts receivable
Other accrued revenue receivable
Notes
Due from other funds
Advances to other funds
Inventory
Total Assets and Other Debits
$13,089,515 $12,432,531 $13,885,900
236,422 245,388 146,216
556,109 322,621 1,450,607
1,209,944 5,392,768 3,295,542
4,950 3,300 1,650
1,338,223 1,153,224 1,3'11,292
933,588 710,545 483,888
350,464 311,094. 250,081
$17 719 215
$20 571 471
Liabilities and Fund Balance
Liabilities:
Accounts payable
Other accrued liabilities
Deferred Revenue
Notes payable
Advance from other funds
Total Liabilities
$20,825,176
$1,020,205 $1,229,67.5 $918,728
2,792,207 3,455,171 4,007,540
-0- 2.331,293 -0-
4,750,000 5,000,000 4,500,000
457,900 366,320
Equity and Other Credits:
Fund Balances:
Reserved for encumbrances
Reserved for advance to Brea Dam
recreational facilities
Reserved for inventory
Reserved for notes receivable
Reserved for long-term receivables
from County of Orange
Unreserved:
Designated for self-insurance
Designated for subsequent year
expenditures
Designated for emergencies
Designated for unexpected
financial losses
Designated for natural
disasters
8,562,412 12,474,03~9 9,792,578
135,646 115,371 42,262
933,588 710,545 483,888
350,464 311,094 250,081
3,300 1,650 -0-
-0- -0- 1,003,853
523,926 454,808 -0-
4,250,206 · 3,574,631 5,723,205
259,673 229,333 829,309
1,200,000 1,200,000 1,200,000
1,500,000 1,500,000 1,500,000
Total Equity and Other Credits 9,156,803
Total Liabilities, Equity and Fund Balance $17 719 215
8,097,432 11,032.598
$20 571 471 $~
Source:
City of Fullerton Comprehensive Annual Financial Reports, Fiscal Y6ars 1992-93, 1993-94, 1994-95; the annual
financial reports are available from the City of Fullerton, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-18
CITY OF FULLERTON
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
Fiscal Years 1992-93, through 1994-95
Revenues: Taxes
Licenses and permits
Pines and forfeitures
Investment income
Prom other agencies
Charges for services
Other
1992-93 1993-94 1994-95
$29,147,269 $30,370,165 $30,894,720
767,825 834,162 892,048
823,718 717,724 579,729
1,922,540 1,661,581 1,754,272
4,160,243 4,794,685 4,279,480
4,998,268 5,490,211 5,642,003
1,796,493 94,480 2,945,670
Total Revenues
EXPenditures:
General government:
City council
City manager
City clerk
City attorney
Finance and treasury
Personnel
Maintenance
Other
Total general government
Public safety:
Police
Fire
Total public safety
Public works
Community development
Human and leisure
Sanitation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses):
Proceeds from other long-term debt
Operating transfers in
Operating transfers out
Total Other Financing Sources (Uses)
43,616,356
165,736
920,153
278,630
196,253
1,071,823
401,033
3,863,958
6,897,586
16,209,427
8,078,633
24,288,060
3,690,959
1,767,665
4,990,720
326,233
43,963,008 46,987,922
128,064 134,687
947,158 886,987
259,120 294,211
210,720 236,718
1,220,552 1,270,819
369,859 357,900
4,019,021 2,748,844
2,148,739 693,268
9,303,233 6,623,434
17,171,154 17,304,239
8,053,657 8,095,399
25,224,811 25,399,638
3,521,736 4,348,067
1,449,557 1,550,140
5,012,372 4,807,252
331,220 551,876
41,961,223 44,842,929 43,280,407
1,655,133 (879,921) 3,707,515
176,188
11,861,873 11,065,580 9,716,794
(10,604,335) (11,421,218) (10,489,143)
1,257,538 (179,450) (772,349)
Excess of Revenues and
Other Sources Over (Under)
Expenditures and Other Uses
2,912,671 (1,059,371) 2,935,166
Fund Balance - July 1 6,244,132 9,156,803 8,097,432
Fund Balance- June 30 ' · $9,156,803 ~ $11,032,598
Source: City of Fullerton Comprehensive Annual Financial R~ree note on previous page.
B-19
Assessed Values
The following table sets forth the assessed and estimated actual values of taxable property within
Fullerton for the last ten fiscal years:
ASSESSED AND ESTIMATED ACTUAL VALUES OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Total Assessed &
Fiscal Common Public Unsecured Est, imated Full
Year Property_. Utility* Valuation Market Valuation
1986 $3,447,895,893 $86,501,050 $262,042,382 $3,796,439,325
1987 3,791,3321471 93,876,990 316,974,240 4,202,183,701
1988 4,077,021,251 103,717,110 285,132,707 4,465,871,068
1989 4,379,034,075 13,489,758 318,297,944 4,710,821,777
1990 4,777,560,499 4,808,987 349,657,462 5,132,026,948
1991 5,078,492,695 4,688,817 369,297,694 5,452,479,206
1992 5,368,799,051 5,008,602 422,249,940 5,796,057,593
1993 5,633,310,098 6,037,054 407,056,590 6,046,403,742
1994 5,757,256,168 6,902,040 351,952,416 6,116,110,624
1995 5,758,455,945 5,071,849 304,794,654 6,068,322,448
(1) Source: Orange County Assessor
*Due to change in state law, starting in 1989, the State Board of Equalization is no longer assessing public utility property on a
sims basis. As a result, property tax revenues for milities increased slightly for the City of Fullerton. Property tax for utilities
is now based upon a county wide assessment, and allocated on a pro ram basis. Assessed values shown for public utilities now
include only non-operating, non-unitary property and railroad property.
Property Tax Valuation
The table below presents Fullerton's property tax valuation and collection experience for the last
five fiscal years.
CITY OF FULLERTON
Property Tax Levies and Collections
Last Five Fiscal Years
Total Total % of Outstanding
Fiscal Currem' Current Levy Delinquent
Year Levy Collections Collected Taxes
1991 $11,196,842
1992 11,634,417
1993 10,835,687
1994 9,704,237
1995 8,654,595
% of
Delinquent
Taxes to
Total Levy_
$10,681,925 95.40% $514,917 4.60%
10,915,382 93.82 719,035 6.18
10,198,323 94.12 637,364 5.88.
9,233,657 95.15 470,580 4.85
8,327,051 96.22 327,544 3.78
B-20
Largest Taxpayers
The largest taxpayers in Fullerton are engaged in a variety of activities including electronic
equipment manufacturing, food processing, paper fabricating and medical supplies manufacturing.
Although the industrial base is well diversified, Fullerton's major concentration of property owners work
in the electrical equipment and electronics sector. About 1,600 acres in Fullerton are industrially zoned,
with less than 100 acres vacant. The following table sets forth information concerning Fullerton's top
ten property taxpayers.
Taxpayer(I)
CITY OF FULLERTON
Top Ten Secured Property Taxpayers
1995
Type of Business
1995
Assessed
Valuation
Percent
of Total
Ratio to
Total City
Assessed
Valuation
Hughes Aircraft Co.
Beatrice & Hunt-Wesson Foods, Inc.
Kimberly Clark Co.
Beckman Instruments, Inc.
Corecare III
Catellus Development Corp.
Bonita Properties
Sunclipse, Inc.
Alexander Haagen Properties
Richard Joseph Battaglia Trust
Source: Orange County Assessment Rolls
(1) Excludes government and tax-exempt property owners.
Radar elecu'onics manufacturer
Food processing plant
Paper products manufacturer
Medical supplies manufacturer
Senior housing care facility
Real estate development company
Industrial properties
Manufacturing
Commercial properties
Rental properties
TOTALS
$429,601,594
159,770,937
97,213,484
72,863,186
48,704,469
37,659,422
34,553,479
26,982,604
26,900,000
24~900,000
$959,149,175
44.79%
16.66
,/
10.14
7.60
5.08
3.93
3.60
2.81
2.80
2.59
7.08%
2.63
1.60
1.20
.80
.62
.57
.45
.44
.41
15.80%
B-21
Labor Force and Employment
The following table sets forth Fullerton's annual employment statistics and the number of persons
employed in the different divisions in the County.
ORANGE COUNTY MSA
Wage and Salary Employment by Industry,
Civilian Labor Force, Employment and Unemployment(l)
Calendar Year Averages: 1990-1994
1990 1991 1992 1993 1994
Total, all industries 1,178.9 1,151.1 1,133.2 1,122.7 1,133.9
Agriculture 6.6 7.4 7.2 7.3 7.5
Nonagricultural employment 1,172.4 1,143.7 1,126.0 1,115.4 1,126.4
Manufacturing
Nondurable goods 69.3 69.3 69.5 68.5 69.5
Durable goods 174.7 160.1 150.8 138.7 136.5
Mining 1.2 1.3 1.1 .9 1.0
Construction 57.2 51.1 47.7 44.5 46.9
Transportation & Public Utilities 36.4 36.5 35.4 36.7 38.8
Trade
Wholesale 81.4 79.3 79.2 76.7 78.8
Retail 217.6 203.9 201.5 201.0 202.1
Finance, Insurance & Real Estate 96.0 94.2 94.4 93.8 94.3
Services 312.6 319.1 318.3 326.9 329.5
Government(2) 126.1 128.7 127.4 127.8 128.9
Civilian Labor Force 1,350,600 1,313,100 1,328,500 1,316,900 1,342,100
Employed 1,301,800 1,244,500 1,240,700 1,228,200 1,264,200
Unemployed . 48,800 68,600 87,800 88,700 77,900
County Unemployment Rate 3.6 % 5.2 % 6.6 % 6.7 % 5.8 %
State Unemployment Rate 5.6 % 7.5 % 9.1% 9.2 % 8.6 %
(1)
(2)
Sine Employment Development Department.
Average annual figures. Employment is reported by place of work and excludes persons who are self-employed, unpaid family workers~ domestics,
volunteers and workers involved in labor disputes.
Includes all civilian governmental en-~loyees regardless of activity in which engaged.
B-22
Orange County Bankruptcy
Orange County filed for bankruptcy for protection from creditors under Chapter 9 of the Federal
Bankruptcy Code on December 6, 1994. The bankruptcy was due to the County's highly leveraged
speculative investment fund of approximately $7.5 billion reportedly losing approximately 22% of its
value. Fullerton had $18 million invested in the fund of which approximately $14 million has been
repaid. The bankruptcy of the County has not interfered with the fiscal obligations of Fullerton.
Economic Indicators - Orange County
The April, 1995 unemployment rate for Orange County was estimated at 5.3 percent versus the
national average of 5.5 percent (March 1995). During the recent recession the unemployment rate peaked
at 7.4% in July, 1993. Traditionally, Orange County has had a lower unemployment rate compared to
the nation_al average.
Summary of Significant Accounting Policies
The Financial Reporting Entity:
Fullerton is a general law city governed by an elected five-member city council. As required by
generally accepted accounting principles, these financial statements present the City of Fullerton (the
· primary government) and its component units. The component units discussed below are included in the
City's reporting entity because of the significance of their operational or financial relationship with the
City. These entities are legally separate from each other. However, the City of Fullerton elected
officials have a continuing full or partial accountability for fiscal matters of the other entities. The
financial reporting entity consists of.' (1) the City (2) organizations for which the City is financially
accountable and (3) organizations .for which the nature and significance of their relationship with the City
are such that exclusion would cause the City's financial statements to be misleading or incomplete.
An organization is fiscally dependent on the primary government if it is unable to adopt its
budget, levy taxes or set rates or charges, or i~sue bonded debt without approval by the primary
government. In a blended presentation, component units' balances and transactions are reported in a
manner similar to the balances and transactions of the City. Component units are presented on a blended
basis when the component units governing body is substantially the same as the City's or the component
unit provides services almost entirely to the City.
Blended Component Units:
FULLERTON REDEVELOPMENT AGENCY
The Fullerton Redevelopment Agency was activated in June 1973 by the City of Fullerton. The
primary purpose of the Agency is to eliminate blighted areas by encouraging development of residential,
commercial, industrial, recreational and public facilities. The City's Councilmembers appoint the Agency
directors, designate management, and have full accountability for the Agency's fiscal matters. The
Agency's financial data and transactions are included with the debt service fund type, capital projects fund
type, general fixed assets account group, .and, general long-term debt account group.
FULLERTON LIBRARY BUILDING AUTHORITY
The Fullerton Library Building Authority was created on November 17, 1970, through a joint
exercise of powers agreement between the City of Fullerton and the County of Orange. The Authority
B-23
was created for a period of 50 years or until all revenue bonds issued by the Authority shall have been
paid in full. The Authority's purpose is for the acquisition of sites and to acquire, construct, maintain,
operate and lease public library buildings and related facilities. The Authority is governed by a
commission of five members, three appointed by the City's Councilmembers and two appointed by the
Orange County Board of Supervisors. Fullerton has a partial oversight responsibility but it se~
management, is able to significantly influence operations, and has full accountability for fiscal affairs.
The Authority's financial data and transactions are included with the debt service fund type, general fixed
assets account group, and general long-term debt account group.
PARKING AUTHORITY OF THE CITY OF FULLERTON
The City of Fullerton formed the Parking Authority of the City of Fullerton on February 1, 1972,
for the purpose of constrUcting parking facilities on sites provided by the City: The City Councilmembers
appoint all five members to the Authority's governing commission, designate management, and have full
accountability for fiscal matters. The Authority's financial data and transactions are included in the
Parking Facilities Enterprise Fund.
NORTHWEST AIRPORT AREA CORPORATION
The Northwest Airport Area Corporation was formed on November 19, 1971 as a non-profit
corporation having five members. The Corporation was formed for the purpose of rendering assistance
to the City of Fullerton by leasing to the City any asset acquired or improvements to the City's municipal
airport. The Corporation by-laws specify that no individual may become a member unless approved by
the City of Fullerton, hence, the City Councilmembers have significant influence over the Corporate
operations. In addition, upon dissolution of the Corporation, its assets and liabilities are to be distributed
to the City. The Corporation's financial data and transactions are included in the Airport Enterprise
Fund.
Complete financial statements of the individual component units can be obtained from the
Administrative Services department or the City Clerk's office at:
City of Fullerton City Hall
303 West Commonwealth Avenue
Fullerton, California 92632
B -24
CITY OF GARDEN GROVE
General
Location and Government. The City of Garden Grove ("Garden Grove") is located in central
Orange County approximately twenty-five miles southeast of downtown Los Angeles. It is the fourth
largest city in Orange County and the nineteenth largest in the State of California.
Garden Grove has a Council-Manager form of government with the Mayor elected at large for
a two-year term and four council members elected at large for four-year staggered terms. The current
council consists of Mayor Bruce Broadwater, Mayor Pro-Tem Mark Leyes, and Councilmen Ho Chung,
Tony lngegneri, and Bob Dinsen.
Community Services and Facilities, Police and Fire Departments, Transportation and Utilities.
Garden Grove is a full-service city which provides police, fire, paramedic, street maintenance, park
maintenance, water, recreation, traffic/transportation, public improvements, planning, zoning and general
administrative services.
Also included in the City'S overall operations are the Garden Grove Agency for Community
Development, Garden Grove Housing Authority, City of Garden Grove Library Corporation, and the
Garden Grove Cable Corporation. Garden Grove operates its own Water Utility.
Economic Growth and Development
The 1994-95 fiscal year featured some of the most significant events in the financial history of
the region. The year began in an ordinary way with the economy attempting to position itself for a turn-
around in an environment of rising interest rates. As the year progressed, interest rates began rising with
greater intensity, and by late November 1994 were considerably higher than they were at the start of the
fiscal year in July. Financial stress began to build rapidly in the highly leveraged investment portfolio
of the County of Orange as the combination of margin calls and increases in the cost of borrowed funds
precipitated a liquidity crisis. The crisis quickly escalated as investors in the pool began to demand
withdrawal of their funds. On December 6, 1994, the County of Orange and the Orange County
Investment Pools filed bankruptcy petitions under Chapter 9 of the Bankruptcy Code. This had the effect
of temporarily freezing the investment of all entities which had funds in the pool. The City of Garden
Grove had never invested in the pool because the policies and practices followed did not conform to the
City's investment policy or its goals and objectives. Although Garden Grove was not involved in the
major problem of having to bare the burden of any investment losses, there still were many side issues
in being located in a County which is undergoing the bankruptcy process.
When the bankruptcy was declared the unapportioned property tax funds contained pre-petition
cash which had not yet been allocated to the various taxing entities, including the City of Garden Grove.
The bankruptcy process allowed for the development of an allocation method for these funds, and in
January 1995 the bankruptcy court directed the release of a portion of these pre-petition taxes with all
remaining shares to be distributed when court approval is received. Garden Grove has a claim in
bankruptcy court in the amount of $824,769 for property taxes. This amount has been recorded as taxes
receivable and deferred revenue in the General Fund, Speci.al Revenue Funds, Debt Service Funds, and
Capital Projects Funds. There are similar financial issues in other County-wide shared projects such as
the Orange County 800 Megahertz Communication System. These issues will be resolved during the
1995-96 fiscal year, however, all funds at issue in the bankruptcy process have either been reserved out
of available fund balances or recorded as deferred revenues and are unavailable for 1995-96 fiscal year
appropriatiOns.
B-25
Aside from the impact of the County bankruptcy, Garden Grove continued to manage the effects
of the long term recession which appeared to be in its final phase as the end of the 1994-95 fiscal year
approached. Certain factors remained negative such as the collection ratio of 96.1 percent of the property
tax levy for the year. This was the lowest collection ratio in the last 10 years. The amount of total
property tax collected was $7,193,444 which was lower than the previous year by $152,666 and the
lowest since the 1988-89 fiscal year. The number of new building permits declined by 13 percent and
the estimated valuation of new construction declined by 28 percent, to the lowest amount in the last 18
fiscal years. There were some positive signs such as the drop in unemployment from 5.9 percent the
previous year to 5.5 percent in the current year. In addition, median family income rose from $43,530
in 1993-94 to $44,406 in 1994-95 which resulted in a 2 percent increase.
As in the other fiscal years during the decade of the 1990s, it was anticipated that it would be
necessary to implement significant expenditure controls in order to achieve a strong year and financial
position. The controls used were a hiring freeze and non-labor expenditure controls for all contractual,
commodities, and capital outlay expenditures. Even minor expenditure categories were impacted, for
example, all employees are now required to pay the full cost of travel, lodging, and all expenses for
conference attendance for overnight conferences with the exception of the conference registration fee.
The results of expenditure control activities hax~e been very significant, particularly when it is realized
that the budget was based on very conservative assumptions. The following summarizes the magnitude
of the expenditure savings:
General Fund Budgeted Expenditures
General Fund Actual Expenditures
'Savings
$47,171,032
$42,147,79Q
$ 5,023,242
Percent of Planned Budget Saved = 10.6%
Expenditure controls were focused on General Fund activities, however, many of the control
processes and polices had similar effects on expenditures throughout all of Garden Grove's funds. If
combined, General, Special Revenue, and Capital 'Projects funds budget versus actual expenditures are
compared, after deducting capital outlay expenditures so that a true operating expenditures comparison
can be made, the same pattern of savings can be seen. Consider the following comparison:
GENERAL, SPECIAL REVENUE, AND CAPITAL PROJECTS FUNDS
Budgeted Expenditures
Actual Expenditures
Savings
$72,049,998
$64,527,013
$ 7,522,985
Percent of Planned Budget Saved = 10.4%
The' effects of expenditure control measures were more than enough to offset revenue shortfalls
in the General Fund and resulted in a more favorable year and "actual" fund balance as compared to the
"budgeted" fund balance. This is shown in the following statutory:
·
YEAR END GENERAL FUND - "FUND BALANCE"
Fund Balance Budgeted
Fund Balance Actual
Net Improvement
$5,523,457
9,205,410
$3,681,953
B-26
Despite these favorable trends, it is also becoming apparent that additional actions are necessary
for budget balancing in the furore. This is illustrated when the General Fund operating revenues and
transfers are compared to General Fund operating expenditures. Operating expenditures have capital
outlay removed to obtain a more concise determination of the on-going or recurring balancing problems.
Consider the following summary of actual operating revenues and transfers as compared to expenditures
for the 1994-95 fiscal year:
GENERAL FUND OPERATIONS
Actual Operating Revenues
Actual Operating Expenditures
Operating Deficiency
Less: On-going Golf Course Operating
Transfer to the General Fund
Net Operational Deficiency ·
$37,156,788
39.910,799
$ 2,754,011
500,000
$ 2,254,011
· In order to bridge the operational gap between funds available and funds reqUired, services offered
and service delivery systems are going to be analyzed to improve cost effectively. This includes greater
possible use of Joint Powers Authorities for Inter-City sharing of community services, and a reprioritizing
of certain services delivered at the present time.
Although significant challenges exist, Garden Grove has been able to close the year with a
substantial General Fund balance and remains in a strong financial position. The current fund balance
has only been exceeded once, by the fund balance in the preceding fiscal year.
The financial outlook for next year calls for a modest recovery in the economy with improved
retail sales and lower unemployment. The financial uncertainty of the Orange County bankruptcy should
stabilize with a steady "financial healing" process well underway in the latter part of the fiscal year.
Inflation should remain at a low rate which will allow for a continuation of moderate interest rates. Of
special importance during the next year, will be the results of a final ruling on the applicability of
Proposition 62. The court will determine whether Proposition 62, 'which requires a vote of the people
for all new taxes and tax increases and enacted by a general law city will be valid, and what date would
be the effective date of the proposition. The initial ruling, issued September 28, 1995, indicated that the
Proposition would be held to be valid. This will be completed when the final ruling is issued in
December 1995. Depending on the final ruling, Garden Grove could have an issue to resolve
surrounding a change in the Business Tax Ordinance in 1991 and two increases which occurred to the
Transit Occupancy Tax. At this time, it is uncertain as to the outcome or the possible financial impact
to the City.
The long term outlOok is mOstly positive as" long'as economic Challenges are met with new
solutions to service delivery systems. There will be greater information sharing with other jurisdictions
and the private sector to get the job done. These changes are already underway, with positive results.
Although growth rates will be slow, including pOpulation, there will be a steady shift to quality
condominium infill projects. There will also be a high priority giVen to greater development of the City's
industrial and commercial prospects to assist in the transition from a residential bedroom community to
a community with a more balanced economy.
. .
Major Initiatives ·
For the Year.· The major initiatives for the yea~ centered around continued development of bond
financed major public improvement projects, completion of the..General Plan Update and. continued
B-27
implementation of the Community Policing Program. The following is an overview of these projects and
activities:
1. Major Public Improvement Projects. During the previous fiscal year, when bond market
financing terms became very favorable, Garden Grove was able to match up the market positiOn with its
need for funds to finance major public improvement projects. Bond proceeds were received from three
bond issues summarized as follows:
a. Tax Allocation Bonds of $62,000,000 used to refund previous bond issues in 1979
and 1986 for $32,140,000 with the balance going to fund projects.
b. Certificates of Participation in the amount of $15,645,000 used to purchase and
rehabilitate two mobile home parks.
c. Water Revenue Bonds of $20,495,000 needed to provide funds for the
improvement of water storage and distribution facilities.
The Major Tax Allocation Bond project is the widening of Trask Avenue between Brookhurst and
Newhope Streets, including new freeway access ramps for the Garden Gr6ve Freeway. This project
allows for expansion of the Garden Grove Auto Center and provides storm drain improvements on Trask
Avenue. During the year, site acquisitions proceeded in an expeditious manner, with major construction
scheduled for next year. Another major prOject was the purchase of the Orange County Transit District
Authority building with funding for remodeling the facility in order to convert it to a new City Hall. The
building was acquired and was still undergoing remodeling on June 30, 1995. As a subsequent event,
the remodeling was completed on schedule November 9, 1995, and the new City Hall opened for business
on November 14, 1995.
The Certificate of Participation project was completed during the year. The mobile home parks
'had been acquired the previous fiscal year and rehabilitated during the 1994-95 fiscal year. The project
included improvements to the water supply system, the clubhouse, playground facilities for children, and
the roads within the park.
The Water Revenue Bond projects included replacement of the Lampson Reservoir with a new
facility with increased storage capacity from 2 million gallons to 5 million gallons; and the addition of
a 5 million gallon storage tank and booster station at the Trask Reservoir. During the year, engineering
design was underway and it is anticipated that the work will be completed by December 1996.
2. General Plan Update. Garden Grove had undertaken a multi-year project to update the
General Plan. The previous plan no longer adequately addressed the neighborhood issues and various
City priorities because too much time had elapsed since the last update 'was done. The update process
involved the entire community including Survey on the type of land uses the residents wanted to see in
the City relating to recreation, commercial and entertainment, community appearance issues, parks and
infrastrueture~- The plan was finalized during the 1994-95 fisca! year and is currently in operation.
3. CommUnity Policing." The transition to .c°mmunity Policing began in september 1992.
The implementation of this program resulted in a major change to the way' in which the Police
Deparunent approached its duties. Community Policing requires the Police Department, the community,
and the public and private agencies to work together in problem solving such that the feeling of public
safety and security is improved. As in the previous year, the Police .Department developed specific
neighborhood patrol areas or "beats" which facilitate maximum interaction 'and cooperation between
Police personnel and members of the community to enhance problem solving efforts. Results of this
B-28
program have been outstanding, and there has been a drop in crime rates throughout the City, particularly
in the high crime areas. During the year many special problem solving meetings were held with citizens
in various high-density apartment neighborhoods with excellent results.
For the Future. One of the major challenges will be to provide adequate infrastructure for the
purpose of enhancing mobility and relieving congestion. This will be done in an environment of intense_'
competition for economic development opportunities. The economic recovery should provide a modest
boost for this process.
Garden Grove will search for opportunities with other governmental entities as well as the private
sector to deliver more cost-effective services that are more sensitive to the needs of the people within the-
community. The task of matching on-going revenues with on-going expenditures will continue to be a
major challenge and opportunity. If that can be achieved, it will be possible to allocate non-recurring
revenues to "one time" capital outlay expenditures.
Employment. The principal employers within Garden Grove, their prodUct or service and the
assessed valuation are shown in the table below.
CITY OF GARDEN GROVE
TOP TEN EMPLOYERS
BY ASSESSED EVALUATION
Company
Product or Service
1994
Assessed
'Valuation
% of Total
Assessed
Valuation
Fujita Corp..
Gateway Prop.
Swedlow, Inc.
American Medical
HUghes Lyon
ALPS Electronics
AIR Industries
CHOE, KYONG-SUN
Mead Corp.
.SANYO Foods Corp.
Total
General Mdse/Retail
Property Mgt./Hotel
Manufacturing/Plastics
Medical Center/Hospital
General Mdse/Retail '
Manufacturer/Computer
Access
Manufacturer/Aircraft
Fasteners
General Mdse/Retail
Manufacturer/Stationery
Food Processor
TOTAL EMPLOYED: 31,212
$ 48,115,463
47,262,610
37,719,839
31,389,904
29,657,876
28,070,657
17,462,652
14,712,670
12,450,936
11,713,371
$278,555,978
0.98
0.97
0.77
0.64
0.61
0.57
0.36
0.30
0.25
0.24
5.69
B-29
Population. The table below summarizes population and income for Garden Grove since 1986.
POPULATION SUMMARY
CITY OF GARDEN GROVE
Population and Income 1986-1995
Median
Family Unemployment
Fiscal Year Population Income Rate
General Fund
1986 132,766 $33,230 4.7
1987 134,141 34,264 3.7
1988 134,306 36,141 3.3
1989 134,801 39,933 3.1
1990 135,485 42,400 3.2
1991 143,050 41,398 5.4
1992 148,065 45,077 6.7
1993 149,700 43,504 6.6
1994 151,800 43,530 5.9
1995 153,824 44,406 5.5
The following tables summarize information taken from the City's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund
Balances for the past three (3) fiscal years:
B-30
CITY OF GARDEN GROVE
GENERAL FUND COMPARATIVE BALANCE SHEETS
JUNE 30, 1992-93 through 1994-95
Assets
Cash and investments
Taxes receivable
Accounts receivable
Accrued interest receivable
Reimbursemem agreement receivable
Deposits
Total assets
Liabilities and Fund Balance
Liabilities: Accounts payable
Other accrued liabilities
Refundable deposits
DUe to other funds
Deferred revenue
Loans payable
Total liabilities
Fund Balance:
Reserved:
Reserved for encumbrances
Reserved for reimbursement
agreemem receivable
Reserved for continuing projects
Unreserved:
Designated for subsequent years'
expenditures
1992-93 1993-94 1994-95
$ 5,529,118 $12,599,321 $ 9,814,316
1,070,605 950,368 1,111,641
426,091 277,332 441,192
253,698 263,681 235,133
2,726,172 2,771,519 2,821,611
42,063 42,062 42,062
$16,904,283 $14,465,955
$1,890,455 $ 834,175 $1,871,914
924,113 2,609,740 1,232,345
503,538 617,585 512,268
- - 2,676
18,502 11,408 169,665
1,098,288 1,471,677 1,471,677
4,434,896 5,544,585 5,260,545
411,871 292,968 1,156,907
2,726,172 2,771,519 2,821,611
1,709,746 4,049,160 2,775,286
765,062 4,246,051 2,451,606
Total fund balances
5,612,851 11,359,698 9,205,410
Total liabilities and fund balances
$10,047,747
$16,904,283
$14,465,955
Source: City of Garden Grove Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94, 1994-95; the annual
financial reports are available from the City of Garden Grove, and investors are encouraged to review the entire reports,
including the notes therein, before making an investement decision with respect to the Bonds.
B-31
CITY OF GARDEN GROVE
GENERAL FUND STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCE
FOR THE YEARS ENDED JUNE 30, 1992-93 through 1994-95
1994-95 1993-94
Revenues:
Taxes
Licenses/Permits
Fines/Forfeits/Penalties
From Use of Money/Property
Charges/Current Services
From Other Agencies
Other
Total Revenues
Expenditures:
Current:
Fire
Police
Traffic Safety
Public Right of Way
Drainage
Community Buildings
Community Services
Parks/Greenbelts
Community Plan/Development
Municipal Support
1992-93
$22,640,426 $22,986,957 $14,380,083
470,544 488,334 392,607
691,377 691,595 460,043
1,224,407 1,114,548 828,718
5,461,721 5,468,826 4,913,428
5,881,798 5,913,924 458,675
786,515 371,085 611,350
,$37,156,788 $37,035,269
9,159,104 9,145,136 348,002
18,704,376 17,936,516 11,047,841
451,863 372,997 415,551
2,990,718 3,107,827 3,375,521
39,477 5,272 31,709
1,675,662 1,494,676 1,613,790
709,101 711,868 772,185
402,582 294,229 338,408
1,792,387 1,408,909 1,609,025
3,907,417 3,664,968 3,584,185
Capital Outlay:
Traffic Safety
Public Right of Way
Community Buildings
Debt Service:
Principal Retirement
Interest/Fiscal Charges
- 13,725 22,986
28,341 126,501 2,039
2,208,650 19,957 -
62,845 - 51,855
15,267. 16,085 18,833
Sollrce:
Total Expenditures
Excess '(deficiency) of Revenues Over
Expenditures
Other Financing Sources:
Excess (deficiency) of Revenues &
Other Financing Sources over
Expenditures
Fund Balance at Beginning of Year
$42,147,790 $38,318,666 $23,231,930
(4,991,002) (1,283,397) (1,187,026)
2,836,714 7,030,244 1,754,157
(2,154,288) 5,746,847 567,131
11,359,698 5,612,851 5,045,720
Fund Balance at End of Year $9,205,410 $11,359,698 $5,612,85!
City of Garden Grove Comprehensive Annual Financial Reports; see source note on previous page.
B-32
.'
Sales Tax Revenues. The revenue from sales tax provided approximately 33.4% of Garden
Grove's total local tax revenues in 1995. The following table presents information concerning the value
of taxable retail sales in Garden Grove since 1990.
CITY OF GARDEN GROVE
Taxable Retail Sales Data
1990 through 199~
1990 1991 1992 1993 1994 1995
1,142,952 1,046,437 999,671 992,258 989,806 485,160'
Source: City of Garden Grove.
'1995 includes the first two quarters only
Property Tax Revenues
The total assessed valuation of the property within Garden Grove for the fiscal year 1994-95 was
$4,898,034,270. The total appropriations limit adopted by Garden Grove for fiscal year 1995-96 was
$49,603,100 and the actual appropriations for the same period was $25,566,400.
Garden Grove receives funds annually from the State based upon a percentage of property taxes
collected within the County computed on the City's respective assessed valuatign, 'and a statutory system
of annual appropriations. The table below presents the assessed valuation of property within Garden
Grove for the past five fiscal years.
CITY OF GARDEN GROVE
Assessed Valuations
Total Before Total After
Fiscal Year Local Secured Utili _ty Unsecured Redevelopmem Redevelopment
1990-91 4,917,423,755 903,639 378,301,239 5,296,628,633 4,358,807,353
1991-92 5,195,686,427 1,060,151 466,740,874 5,663,487,452 4,660,185,590
1992-93 5,460,472,012 914,265 487,905,340 5,949,291,617 4,954,228,462
1993-94 5,542,753,086 898,911 400,493,309 5,944,145,306 4,888,230,929
1994-95 5,528,471,115 791,702 385,782,186 5,915,045,003 4,898,034,270
1995-96 5,418,100,690 817,397 386,350,553 ' 5,805,268,640 4,834,132,979
Source: County of Orange - Assessed Valuations
B-33 ,
The table below presents Garden Grove's property tax valuation and collection experience for the
last five fiscal years.
CITY OF GARDEN GROVE
.Property Tax Levies and Collections
Last Ten Fiscal Years
Ratio of
Outstanding Delinquent Taxes
Fiscal Total Delinquent to Total
Year Tax Levied Taxes Tax Levy
1986 $5,593,399 $187,277 3.3
1987 6,158,089 227,641 3.7
1988 6,644,623 210,779 3.2
1989 7,113,344 203,822 2.9
1990 8,039,759 297,401 3.7
1991 8,581,567 387,700 4.5
1992 8,975,314 427,433 4.8
1993 8,562,861 435,642 5.1
1994 7,422,786 272,199 3.7
1995 7,482,224 265,742 3.6
In implementing Article XIIIa of the State Constitution, the Revenue and Taxation Code provides for a
single Basic Tax Rate Levy for County/City/School/Special Districts and other rates necessary to retire
bonded and other indebtedness.
Source: Orange County Property Tax Ledger, Garden Grove Controller's Office.
Summary of Significant Accounting Policies
Garden Grove's aCCounting records for general government operations are maintained on the
modified accrual basis, with revenues being recorded when available and measurable, and expenditures
being recorded when the services or goods are received and the fund liabilities are incurred. Accounting
records for Garden Grove's Proprietary Funds are maintained on the accrual basis. Under the accrual
basis, revenues are recognized when earned, and expenses are recognized when incurred.
In developing Garden Grove's accounting system, consideration is given to the adequacy of
intern_al accounting controls. Internal accounting controls are designed to provide reasonable, but not
absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or
disposition; and (2) the reliability of financial records for preparing financial statements and maintaining
accountability for assets. The concept for reasonable assurance recognizes that: (1) the cost of control
should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires
estimates and judgments by management.
B-34
All imernal comrol evaluations occur within the above fr ~axnework. We believe that Garden
Grove's internal accounting controls adequately safeguard assets and provide reasonable assurance of
proper recording of t-mancial transactions.
Budgetary control is maintained at the program level. Encumbrances of estimated purchase
amounts are made prior to the release of purchase orders to vendors. Open encumbrances are reported
as reservations of fund balance at June 30, 1995.
B-35
Direct Overlapping Bonded Debt
The following table comains information on Garden Grove's direct and overlapping bonded
indebtedness as of June 30, 1995.
CITY OF GARDEN GROVE
Direct and Overlapping Bonds and Debt
June 30, 1995
1994-95 Assessed Valuation: $4,898,034,270 (after deducting $1,017,010,733 redevelopmem incrememal
valuation)
Direct and Overlapping Bonded Debt:
% Applicable Debt 6/30/95
Orange County
Orange County
Orange County
Orange County
Orange County
Orange County
Orange County
Building Authorities
Pension Obligations
Transit Authority
Flood Control District
Sanitation District//2 Certificates of Participation
Sanitation District//3 Certificates of Participation
Orange County Water District Certificates of Participation
Municipal Water District of Orange County Water Facilities Corporation
Metropolitan Water District
Coast Community College District Certificates of Participation
Rancho Santiago Community College District Certificates of Participation
Orange Unified School District Certificates of Participation
Huntington Beach Union High School District Certificates of Participation
City of Garden Grove Certificates of Participation
Garden Grove Sanitary District Certificates of Participation
City of Garden Grove 1915 Act Bonds
TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT
Less: Orange County Transit Authority (80% self-supporting)
3.092% $ 18,243
3.092 8,978,673
3.092 9,895,637
3.092 652,412
3.088 33,814
6.030 8,309,279
10.253 13,323,860
4.926 10,239,676
4.721 4,160,853
0.605 3,792,775
6.732 935,301
5.103 49,754
1.288 .163,447
1.610 17,791
100. 15,645,000
87.365 3,590,702
100. 595,000
$80,402,217(1)
521,930
10,239,676
4,160,853
$65,479,758
Orange County Water District Certificates of Participation (100% self-supporting)
MWDOC Water Facilities Corporation (100 % self-supporting)
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT
(1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations
Ratios to Assessed Valuation:
Direct Debt ($15,645,000) ......................................
Total Gross Debt .................................................
Total Net Debt ....................................................
0.32%
1.64%
1.34%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95 · $1,103
Source: California Municipal Statistics, Inc.
B-36
Investment Policy'
.Under provisions of Garden Grove's investment policy, and in accordance with Section 53601
of the California Government Code, Garden Grove may invest in the following types of investments:
Repurchase Agreements
Securities of the U.S. Government and its Agencies
Banks Acceptances
Certificates of Deposit
Commercial Paper
California Local Agency Investment Fund (LAIF)
Passbook Savings Accounts
Negotiable Certificates of Deposit
Although negotiable certificates of deposits are allowed under the California Government Code,
this type of investment is currently not utilized. Garden Grove's investment policy does not allow the
borrowing of funds to purchase investmems on margin through reverse repurchase agreemems.
Local Agency Investment Funds (LAIF). The LAIF is a special fund of the California State
Treasury through which local governments may pool investments. Investments in LAIF are highly liquid,
as deposits can be converted to cash within twenty-four hours without loss of imerest. Included in
LAIF's investment portfolio are certain derivative securities in the form of structured notes and asset-
backed securities. LAIF's and Garden Grove's exposure to credit, market or legal risk is not available.
Repurchase Agreements. Throughout the year, Garden Grove utilizes overnight repurchase
agreemems for temporary investment of City funds. Such repurchase agreemems are used daily, but
generally do not exceed two percent of Garden Grove's investment pOrtfolio.
B-37
CITY OF LA PALMA
[TO FOLLOW]
B-38
CITY OF NEWPORT BEACH
General
Location and Government. The City of Newport Beach ("Newport Beach") is located in the
County, approximately 75 miles north of San Diego, 15 miles north of Long Beach and 50 miles south
of Los Angeles.
Newport Beach is a charter city and was incorporated on September 1, 1906. Newport Beach
has a Council-Manager form of municipal government established pursuant to its municipal charter on
January 7, 1955. The City Council appoints the City Manager who is responsible for the. day-to-day
administration of city business and the coordination of all city departments. The City Council is
composed of five members elected bi-annually at large to four-year alternating terms. The Mayor is
selected by the City COUncil from among its members. Under the 1995/96 fiscal year budget, Newport
Beach employs a staff of approximately full-time employees and part-time employees under the
direction of the City Manager.
Community Services and Facilities. Newport Beach provides police and fire protection, trash
collection and library service.
Educational services are provided to Newport Beach residents by several school districts,
including the , and Unified School Districts. Available schools
include 18 elementary schools, 4 high schools and a combination of 15 community and 4-year colleges,
universities and vocational schools all located within a 15-mile radius.
Health facilities for the Newport Beach include the Hoag Memorial Hospital with ~ beds and
a staff of ~ active and consulting physicians. There are also 5 general, medical and dental clinics
also available.
Transportation. Four main freeways access the City - Interstate 405 and State Highways 55, 73
and 1 (Pacific Coast Highway). The John Wayne Orange County Airport is the closest airway service
with Greyhound bus service and Amtrak Train station to serve as the ground transportation needs.
B-39
Economic Growth and Development
HouSing, Commercial and Industry, Development. The following table summarizes the building
permit activity in the City from 1991 through 1995.
CITY OF NEWPORT BEACH
CONSTRUCTION ACTIVITY
(1991 through 1995).
1991 1992 1993 1994 1995
New Residential
Single Valuation $16,216 $16,596 $13,798 $ 3,989
Multiple Valuation 4,636 4,238 2,322 766
Alterations/Additions 19,601 19,102 19,468 5,117
Total $40,453 $39,937 $35,588 $9,872
New Non-Residential
Commercial/Industrial $1,243 $ 533 $1,963 $ 959
Other 4,781 1,699 1,419 382
Alterations/Additions ' 14,781 25,112 18,200 8,661
Total $20,805 $27,344 $21,582 $10,002
Total Building Valuations $61,258 $67,280 $57,170 $19,874
No. of Single Units 63 54 46 11
No. of Multiple Units 38 48 24 6
Total Units 101 102 70 17
Source: City of Newport Beach.
Employment. The principal employers within Newport Beach, their product or service and the
number of employees are shown in the table below.
CITY OF NEWPORT BEACH
PRINCIPAL EMPLOYERS
Company Product or Service Employees
[TO BE PROVIDED BY NEWPORT BEACH]
Source: City of Newport Beach.
Retail Sales.
[TO BE PROVIDED BY NEWPORT BEACH]
B-40
Population. The City's population, as of January 1, 1994 was 69,300 according to the California
Demographic Research Department. A historical summary of the City's population is reflected below,
which shows population trends for Newport Beach.
CITY OF NEWPORT BEACH
Population
1980 ...................... 62,556
1988 ...................... 66,327
1989 ...................... 66,684
1990 ...................... 66,736
1991 ................... 67,214
1992 ................... 68,005
1993 ................... 68,784
1994 ................... 69,300
Source: City of Newport Beach/California Demographic Research Department
Income.
[TO BE PROVIDED BY NEWPORT BEACH]
B-41
General Fund
The following tables summarize information taken from the City's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3) fiscal years:
CITY OF NEWPORT BEACH
GENERAL FUND. BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
Assets and Other Debits
Cash and investments (Note 2)
Accounts receivable and accrued revenues
Lease Receivable
Due from other governments
Due from other funds (Note 11)
Deposits with other agencies
Inventories of materials and supplies, at cost
Restricted assets - cash and investments (Note 2)
Other assets
Total Assets and Other Debits
.
Liabilities, Fund Equity and Other Credits
'1992-93 1993-94 1994-95
$ 7,891,530 $ 9,550,506 $ 9,106,602
2,734,179 1,540,425 1,084,732
1,796,812,
428,500
365,185
48,433
1,699,'979 2,429,237
2,164,438 1,366,962
157,054 198,441
4,515,000
13,321 13,500
$ 13,264,639 $15,125,723 $ 18,437,909
Liabilities:
Accounts payable and accrued liabilities
Accrued payroll
Due to other funds (Note 11)
Deferred revenue
Due to bondholders (Note 5)
Due to others
Deposits
Deferred compensation (Note 7)
Long-term debt (Notes'4 and 20)
$ 1,098,635 $ 2,013,424 $1,717,922
2,593,140 1,067,316 1,700,579
297,336 296,871
46,749
1,455,369 1,816,829 1,785,998
Total Liabilities
Fund Equity and Other Credits:
Fund balances (Note 13):
Reserved
Unreserved, designated
Unreserved, undesignated
5,193,893 5,194,905 $9,953,662
1,946,131 1,326,023 2,739,819
6,124,615 8,604,795 5,744,428
Total Fund Equity and Other Credits
8,070,746 9,930,818 8,484,247
Total Liabilities, Fund Equity and Other
Credits
$13,264,639 $ 15,125,723 $ 18,437,909
City of Newport Beach Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual financial reports are
available from the City of Brea, and investors are encouraged to review the entire repons, including the notes therein, before making an investment
decision with respect to the Bonds..
B-42
CITY OF NEWPORT BEACH
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Revenues:
Taxes $32,836,366 $39,809,139 $39,719,830
Licenses, fees and permits 831,197 881,774 1,112,873
Intergovernmental revenue 4,033,218 3,980,889 7,113,785
Charges for services 3,526,268 4,970,181 4,884,630
Fines, forfeitures and penalties 75,188 2,527,815 3,067,817
Revenue from use of money and property 3,296,411 4,297,327 5,067,329
Contributions 211,242 534,483 144,340
Other . 267,076 1,040,844 360,652
Total Revenues 45,076,966 58,042,452 61,471,256'
Expenditures:
Current:
General government 4,359,857 4,607,009 5,152,151
Public Safety 30,706,655 32,156,176 33,163,911
Public works 12,779,215 15,018,898 14,382,640
Community development 2,996,534 2,836,241 2,930,048
Libraries 5,457,065 5,722,113
Community services
Parks, beaches and recreation
Capital expenditures 4,505,458 6,093,891 5,568,817
Debt service:
Principal retirement (Note 4) 379,521 290,781 294,530
Interest and fiscal charges 65,547 43,737 184,907
Total Expenditures 55,792,787 66,503,798 67,399,117
Excess (Deficiency) of Revenues Over
(Under) Expenditures
(10,715,821) (8,461,346) (5,927,861)
Other Financing Sources (Uses):
Operating transfers in
Operating transfers out
Proceeds from long-term debt (Note 4)
Proceeds from sale of fixed assets
7,257,363 5,832,397 5,296,022
(4,269,953) (357,966) (875,820)
91,983 116,682 53,865
92,684 1,027,130 7,223
Total Other Financing Sources (Uses)
3,172,077 6,618,243 4,481,290
Excess (Deficiency) of Revenues and
· Other Sources OVer (Under)
Expenditures and Other Financing Uses
(7,543,744) (1,843,103) ( 1,446,571 )
Fund Balances, July 1,
15,614,490 11,773,921 9,930,818
Fund Balances, June 30,
$8,070,746 $9,930,818 $8,484,247
City of Newport Beach Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95i the annual financial reports are
available from the City of Brea, and investors are encouraged to review the entire reports, including the notes therein, before making an investment
decision with reapect to the Bonds.
B43
Sales Tax Revenues
The revenue from sales tax provided approximately 29 % of the _City's total local tax revenues in
1995. The following table presents information concerning the value of taxable retail sales in the City
since 1990.
CITY OF NEWPORT BEACH
Taxable Retail Sales
1990-1995
Year Ended 6/30
Taxable Sales
1990 $ 1,052,382,000
1991 934,676,000
1992 929,067,200
1993 969,860,500
1994 1,036,188,800
1995 1,213,886,700
Source: City of Newport Beach.
Property Tax Revenues
The total assessed valuation of the property within the City for the fiscal year 1994-95 was
$11,571,090,370. The total appropriations limit adopted by the City for fiscal year 1994-95 was
$57,644,188, and the actual appropriations for the same period was $41,450,527.
The City receives funds annually from the State based upon a percemage of property taxes
collected within the County computed on the City's respective assessed valuation, and a statutory system
of annual appropriations. The table below presents the assessed valuation of property within the City for
the past five fiscal years.
CITY OF NEWPORT BEACH
Assessed Valuations
Fiscal Total Before Total After
Year Local Secured Utility Unsecured Rdv. Increment Rdv. Increment
1990-91 $10,013,611,946 $575,220 $894,916,739
1991-92 10,385,400,896 354,820 990,044,079
1992-93 10,876,014,710 354,820 866,157,889
1993-94 10,991,614,135 354,820 704,736,499
1994-95 10,929,761,077 354,820 640,974,473
$10,909,103,905 $10,909,103,905
11,375,799,795 11,375,799,795
11,742,517,419 11,742,517,419
11,696,705,454 11,696,705,454
11,571,090,370 11,571,090,370
Source: City of Brea.
B-44
The table below presents Newport Beach's property tax valuation and collection experience for
the last five fiscal years.
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Five Fiscal Years
Amount Percentage
Fiscal Secured Delinquent Delinquent
Year Tax Charge June 30 June 30
1990-91 $21,031,117 $433,571 2.14
1991-92 21,516,647 504,000 2.32
19fi2-93 18,859,889 536,760 2.77
1993-94 17,870,028 526,026 3.00
1994-95 _.__
Source: County of Orange Auditor Controller's Office
Summary of Significant Accounting Policies
The financial statements for Newport Beach are prepared in accordance with generally accepted
accounting principals ("GAAP") as applied to government units. The Governmental Accounting
Standards Board ("GASB") is the accepted standard-setting body for the establishing governmental
accounting and financial reporting principles.
City Budget
The following procedures are utilized by the City in establishing the budgetary data reflected in
its audited financial statements:
During April, the City Manager submits to the City Council a proposed operating budget for the
fiscal year commencing the following July 1. The operating budget includes proposed expenditures and
the means of financing them. Public hearings are conducted at The City Council meetings to obtain
taxpayer comments. Public hearings are conducted at City Council meetings to obtain taxpayer
comments. Prior to July 1, the budget is legally adopted through passage of an appropriation resolution.
Budgets are adopted on an annual basis consistent with generally accepted accounting principles
for all governmental funds except the Air Quality Management District Fund (special revenue fund) and
the Capital Improvement Fund (capital project fund). See Note 14 for the budget basis to GAAP
reconciliation. The modified accrual basis of accounting is employed in the preparation of the budget.
The budget is formally integrated into the accounting system and employed as a management
control device during the year.
B45
The City Manager is authorized to transfer budget amounts between accounts within a fund.
Transfers of appropriations between funds or transfers other than those authorized above may be made
only by the authority of the City Council. The legal level of budgetary control is the fund level. Total
fund expenditures may not exceed total fund budgeted amounts without approval from the City Council.
At fiscal year-end, budget appropriations lapse. Incomplete capital project budget appropriations
are re-budgeted in the following fiscal year by council action and are included in the revisions noted
aboVe. Projects that are not started during the budget year are reevaluated in the following year.
Encumbrances represent commitments related to unperformed contracts for goods and services.
The City utilizes an encumbrance system as a management control technique to assist in controlling
expenditures. Under this system, encumbrance accounting for the expenditure of funds is recorded in
order to indicate outstanding commitments and is employed in the governmental fund types.
Encumbrances outstanding at year end are reported as reservations of fund balances since they do not
constitute expenditures or liabilities. Encumbrances and their related budgets are honored in the
subsequent year to fulfill these commitments and are presented as revisions to the original adopted budget.
Direct and Overlapping Bonded Debt
The following table contains information on the City's direct and overlapping bonded indebtedness
as of April 30, 1996.
CITY OF NEWPORT BEACH
Direct and Overlapping Bonded Debt
[TO FOLLOW]
Investment Policy
Under the provisions .of the City's investment policy, and in accordance with Section 53601 of the
California .Government Code, the City may deposit and invest in the following:
Securities of the U.S. Government, or its agencies;
Certificates of Deposit (or Time Deposits);
Bankers Acceptances;
Local Agency Investment Demand Deposit (State Pool);
Repurchase Agreements and Reverse Repurchase Agreements;
Passbook Savings Account Demand Deposits;
Small BusineSs Administration Loans;
Commercial paper;
Negotiable Certificates of Deposit;
County Investment Pools;
Medium Term Corporate Notes;'
Asset/Investment Management Agreements;
..
Description of Leased Premises
[TO FOLLOW]
B46
CITY OF ORANGE
General
· Location and Government. The City of Orange ("Orange") encompasses 23.6 square miles and
is located in the central portion of the County, approximately 32 miles southeast 'of Los Angeles.
Orange is a general law city and was incorporated on April 6, 1888. Orange operates under the
council-manager form of government. Five City Council .members, including the Mayor, are elected at
large. The Mayor is elected to serve a two year term. Council members serve alternating four year
terms. A City Manager is appointed by the City Council and Mayor to administer daily affairs of Orange
and to implement policies established by the City Council. The City Treasurer and City Clerk are elected
at large, serving four year terms. Under the: 1995/96 fiscal year budget, Orange employs a staff of
approximately 643 full-time employees and 319 part-time employees under the direction of the City
Manager.
Community Services and Facilities. The City provides a fulI range of services for its citizens.
These services include police, fire, paramedic, library, recreation and parks, planning and development,
street improvements and lighting, and general administration. The City also operates a water utility and
provides for refuse collection and sanitation. In addition, the City provides aid to its citizens in the form
of residential and commercial rehabilitation loans and economic development programs. The City
contracts with a private non-profit agency to operate its senior citizen center.
Educational services are provided through Orange Unified School District, which is comprised
of 24 elementary schools, 7 junior high schools and 4 high schools. There is one community college in
the City and one university. In addition, there are a number of private schools, including: seven
parochial schools, one high school for boys, one Lutheran high school, and three other private schools.
Orange has 4 general hospitals with a combined total bed capacity of 1,313, with an approximate
combined total of 1,500 physicians/surgeons on staff. There are 71 dentists, 16 optometrists and 25
chiropractors. Additionally, there are 53 churches, 3 libraries, 3 daily newspapers, 2 weekly newspapers,
1 monthly newspaper, 2 TV cable systems, 29 banks, 17 savings and loans, and 15 parks located within
Orange.
Water is supplied by the City of Orange Public Works Department. Sewage treatment and
disposal is provided by the Sanitation District of Orange County and the City of Orange. Southern
California Gas Company supplies natural gas and electric power is provided by Southern California
Edison Company. Telephone service is available through Pacific Bell and major long distance carriers.
Orange has 147 sworn police, officers, 43 crossing guards and is licensed for 50 reserve officers.
The Police Department has 30 marked units and 13 motorcycles. Orange also has 119 firemen, 7 fire
stations, 10 pumpers, 3 trucks and 3 rescue ambulances.
Transportation. Orange has access to five main freeways. The freeways include: the Garden
Grove Freeway, the Costa Mesa Freeway, the Orange Freeway, the Riverside Freeway and the Santa Ana
Freeway.
B-47
There are five airports that serve Orange. The Los Angeles International Airport is the largest
and is served by every major commercial and cargo airline. The four other airports are the John Wayne
Airport, Fullerton Airport, Ontario International Airport and Long Beach Airport.' Local bus
transportation is available through Orange County Transportation Authority and Metropolitan
Transportation Authority. Rail service is provided by Santa Fe Railway, Southern Pacific, Metrolink and
Amtrak.
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the building
permit activity in Orange from 1991 through 1995.
CITY OF ORANGE
CONSTRUCTION ACTIVITY
Residential
(1991 through 1995)
Commercial
Miscellaneous
Fiscal Number Number Number
Year of Permits Value of Permits Value of Permits Value
1991 1415 22,202,864 593 66,003,371 369 3,610,580
1992 1546 41,476,003 648 40,877,430 242 1,550,579
i993 1419 26,449,315 614 20,095,093 164 915,428
1994 ' 1575 50,026,986 770 27,622,567 635 40,000
1995 1436 86,935,105 721 17,691,990 544 63,801
' Reduction in miscellaneous permit valuation beginning in 1994 reflects a revised classification of certain permits into residential
and commercial categories.
Source: City of Orange Building and Safety Division, Community Development Department.
Employment. The principal employers within Orange, their product or service and the number
of employees are shown in the table below.
CITY OF ORANGE
PRINCIPAL EMPLOYERS
Company
Product or Service
Employees
U.C.I. Medical Center
St. Joseph Hospital
Orange County Transportation Authority
Children's Hospital of Orange County
Orange Unified School District
TRW Information Systems & Services
Western National Group
Chapman University ~: '
Long Beach Bank
Gateway Educational Products
Source: City of Orange Economic Development Department.
General/Surgical Hospital
General Medical/Surgical Hospital
Transportation Agency
Specialty Hospital
Education ~:
Information Services
Property Management
Higher Education
Banking
Educational Materials
3,000
1,936
1,633
1,405
1,400
1,100
1,000
1,000
882
715
B48
Retail Sales. The following table summarizes the taxable sales within Orange by category for
the calendar year 1990 through 1994:
CITY OF ORANGE
SUMMARY OF TAXABLE SALES BY CATEGORY
CALENDAR YEARS 1990-1994
Sales (In thousands of dollars)
Apparel Stores
General Merchandise
Drug Stores
Food Stores
Packaged Liquor Stores
Eating and Drinking Places
Home Furnishings and Appliances
Building Materials and Farm Tools
Auto Dealers and Supplies
Service Stations
Other Retail Stores
Subtotal: Retail Stores
All Other Outlets
Total: All Outlets
Source: State Board of Equalization
1990 1991 1992
$~ 58,717 $ 54,126 $ 49,627
168,944 146,467 133,370
18,741 19.030 21,686
63,827 74,183 85,601
12,909 12,397 12,496
130,099 128,053 126 ~ 873
74,004 63,744 56,938
113,484 102,046 113,121
234,422 193,704 203,740
94,431 83,614 85,881
222,799 221,867 205,661
1,192,377 1,099,231 1,094,994
1993
$ 45,333
128,887
20,099
60,341
11,482
125,540
58,675
120,411
203,993
82,607
206,758
1,064,126
1994
$ 40,759
133,777
20,476
60,585
10,939
124,191
66.522
136,395
213,641
73,894
185,940
1,067,119
601,124 598,904 568,637 523,364 521,075
,$1,793,501 ..$1.698,135 $1,663.631 $1.587.490 ~
Population. The table below summarizes population information for Orange, since 1986.
POPULATION SUMMARY
CITY OF ORANGE
1986 through 1995
Year Population
1986 101,639
1987 103,264
1988 104,945.
1989 106,358
1990 107,712
1991 112,709
1992 114,489
1993 116,259
1994 117,956
1995 120,078
Sources: Population - State of California, Department of Finance
B-49 '
General Fund
The following tables summarize information taken from the audited financial statements of Orange
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3). fiscal years:
CITY OF ORANGE
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets
Cash and investments
ReceiVables (net of allowance for
estimated uncollectibles):
Accounts
Taxes
Interest
Inventories
Due from other funds
Restricted assets:
Cash and investments with fiscal agent
Total Assets
$10,316,960
$26,684,107
$17,593,396
1,783,089 1,140,876 736,472
212,582 1,564,758 1,427,656
171,166 464,152 491,416
96,159 96,064 88,888
12,000 851,411 370,476
10,000 10.000 10,000
$12,601,956 $30,811,368 $20,718,300
Liabilities and Fund Balance.
Liabilities:
Accounts payable
Accrued expenses
Deposits payable
Due to other agencies
Deferred Revenue
Matured interest payable
Tax and revenue anticipation notes payable
Total Liabilities
$1,036,100 $1,139,167 $1,241,222
2,890,795 2,854,722 1,827,941
11,627 55,331 30,849
45 2,216
26,870 38,421 69,505
300,000
10,000,000
3,965,437 14,387,641 3.171.733
Fund Balance:
Reserved
Inventories
Encumbrances
Unreserved:
Undesignated
Total fund balance
Total liabilities and fund balance
96,159 96,064 88,888
325,510 607,554 425,730
8,214,850 . 15,720,10.9. 17,031,953
8,636,519 16,423,727 17,546,571
$12,601,956 $30,811,368 $20,718~300
SourcA~:
City of Orange Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from the City of Orange, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-50
CITY OF ORANGE
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
Revenues:
Taxes
Franchise fees
Licenses and Permits
Revenues from use of money
Revenues from other agencies
Charges for service and fees
Fines and forfeitures
Other revenues
1992-93 1993-94 ~1994-95
$30,199,080 $27,611,710 $29,703,669
1,255,263 1,620,570 1,827,260
2,215,862 2,839,884 3,233,308
772,761 2,376,724 1,933,970
4,486,390 4,655,114 4,543,501
4,453,244 5,306,914 5,236,119
815,594 492,996 972,640
1,799,785 1,005,884 1,730,423
Total Revenues
$45,997,979 $45,909,796 $49,180,890
Expenditures:
Current:
General governmem
Public safety
Public works
Community developmem
Parks and library
Capital outlay
$ 6,563,557 $5,396,728' $ 5,511,725
29,856,965 28,815,180 29,658,284
3,641,307 2,291,678 3,637,887
1,924,726 1,639,978. 1,686,909
7,890,525 6,581,188 6,522,391
199,346 156,309 166,056
Total Expenditures
50,076,426 44,881,061 47,183,252
Excess of Revenues Over
Expenditures
(4,078,447) 1,028,735 1,997,638
Other Financing Sources (Uses):
Operating transfers (in)
Loss on investment
Operating transfers (out)
Forgiveness of debt
473,000
0
(5,696)
(1,250,000)
6,758,473
(874,794)
Total Other Financing Sources (Uses)
Excess of Revenues and
Other Financing Sources Over Expenditures
and Other Financing Uses
(782,696) 6,758,473 (874,794)
(4,861,143) 7,787,208 1,122,844
Fund Balance, beginning
Fund Balance, ending
13,497,662 8',636,519- 16,423,72.7..
$ 8,636,519 $16,423,72.7 $17,..___546,571
Source:
City of Orange Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from the City of Orange, and investors are encouraged to review the emire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-51
Sales Tax Revenues
The revenue from sales tax provided approximately 23.4% of the total local tax revenues for
Orange in 1995. The following table presems information concerning the value of taxable retail sales in
Orange since 1990.
CITY OF ORANGE
Taxable Retail Sales
1990-1995
Year Ended 12/31
Taxable Sales
(in thousands)
1990 $1,793,501(1)
1991 1,698,135(1)
1992 1,663,631(1)
1993 1,587,490(1)
1994 1,588,194(1)
1995 1,913,284(2)
Source: (1) State Board of Equalization through the City of Orange.
(2) Municipal Resource Consultants through the City of Orange.
Property Tax Revenues
The total assessed valuation of the property within Orange for the fiscal year 1994-95 was
$7,563,913,657. The total appropriations limit adopted by Orange for fiscal year 1994-95 was
$59,437,744, and the actual appropriations for the same period were $37,040,310.
B-52
The City receives funds annually from the State based upon a percentage of property taxes
collected within the County computed on the respective assessed valuation of Orange, and a statutory
system of annual appropriations. The table below presents the assessed valuation of property within
Orange for the past five fiscal years.
CITY OF ORANGE
Assessed Valuations
(Fiscal Year 1990-91 through 1994-95)
Fiscal
Year Local Secured Utility Unsecured
1990-91 $6,283,502,551 $18,194,685 601,273,141
1991-92 6,702,279,667 14,373,993 647,219,265
1992-93 6,987,713,016 15,985,550 619,985,887
1993-94' 7,081',924,004 16,516,078 630,595,364
1994-95 7,0~_ 5,175,938 17,140,563 501,597,156
Source: Orange County Office of Auditor-Controller.
Total
Assessed Value
6,902,970,377
7,363,872,925
7,623,684,453
7,729,035,446
7,563,913,657
Total After
Rdv. Increment
827,634,383
927,414,569
942,459,352
987,478,129
924,693,924
The table below presents the property tax valuation and collection experience for Orange for the
last five fiscal years.
CITY OF ORANGE
Property Tax Levies and Collections
Last Five Fiscal Years
Fiscal
Year
Amount Percentage
Secured Delinquent Delinquent
Tax Charge June 30 June 30
1990-91 $11,386,918 $520,686
1991-92 11,669,651 558,018
1992-93 10,837,030 534,302
1993-94 9,569,692 344,620
1994-95 9,596,960 336,581
4.6%
4.8
4.9
3.6
3.5
Source: City of Orange
Summary of Significant Accounting Policies
The financial statements for Orange are prepared in accordance with generally accepted
accounting principles ("GAAP") as applied to government units. The Governmental Accounting
Standards Board CGASB") is the accepted standard-setting body for establishing governmental accounting
and financial reporting principles.
B-53
City Budget
The following procedures are utilized by the City in establishing the budgetary data reflected in
its audited financial statements:
Annual budgets are adopted by July 1 of each year on a basis consistent With generally accepted
accounting principles for all governmental funds. The budget is monitored to ensure compliance with
legal provisions embodied in the appropriated budget as approved or amended by the 'City Council and
City of Orange Redevelopment Agency Board throughout the year. Department heads are responsible
for monitoring their department's appropriated budget. The legal level of budgetary control is at the
department level. Management may make budget transfers betWeen line items within a particular
department; however, transfers between departments or between funds or overall increases in the budget
require Council approval.
Direct and Overlapping Bonded Debt
The following table contains information on the City's direct and overlapping bonded indebtedness
as of April 30, 1996.
CITY OF ORANGE
Direct and Overlapping Bonded Debt
[TO FOLLOW]
Investment Policy
The City Council has established an Investment Advisory Committee and an Investment Advisory
Committee. The Investment Advisory Committee consists of three members of the community with
expertise in financial management: The members are appointed by the City Council and serve for a two
year term. This committee's purpose is to independently review the City's investments to determine their
consistency with the City's Investment Policy's principal objectives of safety, liquidity and yield,
respectively. The Committee meets and reports to the City Council quarterly.
The Investment Oversight Committee consists of the City Treasurer, Director of Finance and the
City Manager or his/her designee. This Committee's purpose is to review reports to the City Council
from the Investment Advisory Committee and prepare responses as required. They meet and report to
the City Council quarterly. Their reports to the Council summarize their meetings and the
recommendations of the Investment Advisory Committee. Their reports also contain an unedited copy
of the Investment Advisory Committee's quarterly report.
B-54
Orange makes investments only in accordance with the provisions of California Government Code
Section 53600 et seq.. Authorized investments include:
United States Treasury Bills, Notes, Bonds and Strips;
United States Government Agency issues;
Banker's Acceptances;
Commercial Paper;
Medium T~nn Notes;
Negotiable Certificates of Deposit;
Repurchase Agreements;
Local Agency Investment Fund;
Non-Negotiable Certificates of Deposit; and
Mutual Funds.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under the Orange
Site Lease and Lease Agreement:
City Hall complex located at 300 E. Chapman Avenue. The property covers one square block
on Chapman between Grand and Center and includes three (3) buildings of approximately 45,000 square
feet. The approximate value of this asset is $5,437,833.
B-55
CITY OF SAN CLEMENTE
General
Location and Clitnate. The City of San Clemente ("San Clemente") is located between the
Pacific Ocean and the Cleveland National Forest in southern Orange County. 'It is Orange County's
southern population center and borders San Diego County.
The climate in San Clemente is mild, tempered by cool sea breezes and typified by short, mild
winters and long, dry summers. The average annual rainfall is less than ten inches, and 342 days per
year.are "sunny". Fog is a common occurrence during the early summer, but the City is smog-free.
Average temperatures range from 50 degrees to 90 degrees Fahrenheit in the summer and from 40
degrees to 80 degrees 'Fahrenheit in the winter; and the average annual temperature is 70 degrees
Fahrenheit.
Population. The 'following table provides population census for the years 1986 through 1995 and
certain other demographic information.
Year
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
CITY OF SAN CLEMENTE
Population
1986 through 1995
Population
31,966
34,780
37,501
39,103
40,400
42,150
43,172
44,150
43,050
46,764
Source: State Department of Finance
Recreation. Community recreational facilities include the following: The Ole Hanson Beach
Club consisting of 1,950 square feet of ocean view terrace, kitchen facilities, and a 160,000 gallon
swimming pool; an 8,000 square foot community center which includes an auditorium, stage, three
meeting/activity rooms, and full kitchen; a 1,830 square foot senior citizens center with meeting/activity
space; approximately 99 acres of city parks' and landscape area. San Clemente also has an 18 hole
municipal golf course.
B-56
General Fund
The following tables summarize information taken from the audited financial statements of San
Clemente regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and
Changes in General Fund Balances for the past three (3) fiscal years:
CITY OF SAN CLEMENTE
GENERAL FUND BALANCE SHEET
Fiscal. Years 1992-93 through 1994-05
Assets and Other Debits
Cash and investments
Receivables:
Taxes
Accounts
Accrued interest
Due from other governments
Due from other funds
Restricted loans receivable
Receivables from the County of Orange
Total Assets and Other Credits
Liabilities, Equi _ty and Other Credit.~
Liabilities:
Accounts payable
Accrued wages
Accrued expenses
Deferred revenue
Deposits
Total Liabilities
Fund Balances:
Reserved:
Reserved for encumbrances
Reserved for annexation fees
Reserved for property taxes receivable
Reserved for receivable from County of Orange
Reserved for loans receivabl6
, '
Reserved for employee computer purchase loan
program
Designated:
DeSignated for civic center relocation
Designated for contingencies
Unreserved -- undesignated
Total Fund Balances
Total Liabilities and Fund Balances
1992-93
$2,191,918
421,761
493,527
412,168
202,497
403,467
51,461
0
$4,176,799
$ 634,214
1,050,997
98,980
0
784,140
2.568.337
267,750
19,997
0
0
51,461
100,000
11,744 '
509,640
648,870
1,609,462
$4,177,799
1993-94
$ 845,732
494,305
362,907
760,937
320,988
1,091,904'
54,324
0
$1,108,601
246,796
0
31,871
966,255
2,353,523
92,850
19,688
0
0
54,324
~5,676
629,640'
735.396
1,577,574
$3,931,097
1994-95
$1,100,716
449,223
525,660
430,651
587,473
784,051
56,989
14,750
,$3,949,513
'$ 701,357
229,142
13,795
741.700
.1,685,994
154,372
19,688
121,372
14,750
56,989
43,011
779,640
1.073.697
2,263,519
$3,949,513
B-57
CITY OF SAN CLEMENTE
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Fiscal Years 1992-95 through 1994-9~
Revenues: Taxes
Licenses and permits
Fines and forfeitures
Interest and rentals
Intergovernmental revenues
Charges for services
Other
Total Revenues
Expenditures:
Current:
General government
Public safety
-Community development
Beaches, parks and recreation
Debt service:
Principal retiremem
Interest and fiscal charges
Total Expenditures
Excess (Deficit) of Revenues Over
Expenditures
Other Financing Sources (Uses):
Proceeds from debt issue
Operating transfers in
Operating transfers out
Total Other Financing SOUrces (Uses)
Excess (Deficit) of Revenues and
Other Financing Sources Over
Expenditures and Other Financing Uses
· Fund Balances At Beginning Of Year
Residual Equity Transfer
Fund Balances At End Of Year
1992-93 1993-94 1994-95
$10,828,223 $10,544,737 $10,497,654
1,002,183 1,221,550 1,241,700
419,220 411,407 466,855
746,462 762,045 694,617
1,947,351 2,062,877 1,738,416
1,912,561 2,045,314 4,316,686
69,532 242,760 572,223
16,925,532 17,290.690 19,528,149
5,816,453 2,796,335 3,147,790
10,054,680 9,710,204 10,536,590
4,369,337 4,130,440 4,730,787
1,538,312 1,543,125 1,581,230
29,050 15,494
2,958 510
21,810,790 18,196,108 19,996,397
(4,885,258) (905,418) (468,248)
2,888,815
2,182,390 1,752,000
(375,000) (877,470)
1,478,450
(445,400)
4,696,214 874,530 , 1,033,05Q
(189,044) (30,888) 564,802
1,797,506 1,608,462 .~ 1,577,574
0 · 0 ' 121,143
B-58
Source: City of San Clemente Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-9S; the
annual financial reports are available from the City of San Ciemente, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-59
Taxable Sales
The following table demonstrates the ~umber of business permits and taxable sales in San
Clemente.
CITY OF SAN CLEMENTE
Taxable Transactions
(in thousands)
1990-1994
Taxable Number of
Year Transactions Permits
1994 $252,007 1,702
1993 240,778 1,650
1992 239,462 1.,572
1991 224,399 1,488
1990 249,178 1,491
Source: State Board of Equalization
Property Tax Revenues
CITY OF SAN CLEMENTE
Assessed Valuations
Below is a table which indicates the secured, unsecured and total assessed valuations for San
Clememe for the fiscal years 1987/88 through 1994/95.
Secured Unsecured Total Assessed
Fiscal Year Valuation Valuation Valuation
1987/88 $2,093,544,895 $48,028,632 $2,141,573,527
1988/89 2,326,136,060 50,839,166 2,376,975,226
1989/90 2,793,232,059 54,607,161 2,847,839,220
1990/91 3,311,439,114 94,882,047 3,406,321,161
1991/92 3,608,001,936 86,203,718 3,694,205,654
1992/93 3,798,925,260 90,813,671 3,889,738,931
1993/94 3,824,766,146 78,495,718 3,903,261,864
1994/95 3,747,441,434 83,527,107 3,830,968,541
Source: Orange County Assessor's Office
B-60
CITY OF SAN CLEMENTE
Property Tax Levies and Collections (1)
Last Ten Fiscal Years
Total Current Percent Delinquent Total
Fiscal Tax Tax of Levy Tax Tax
Year Levy Collections Collected Collections Collections
1985-1986 $3,109,376 $3,054,094 98.22% $164,722 $3,218,816
1986-1987 3,951,275 3,776,861 95.58% ' 147,461 3,924,322
1987-1988 4,460,330 4,294,775 96.29% 170,410 4,465,185
1988-1989 5,009,599 4,852,937 96.87% 191,262 5,044,199
1989-1990 7,063,728 6,891,007 97.55% 103,563 6,994,570
1990-1991 8,117,463 7,908,582 97.43% 94,775 7,993,357
1991-1992 8,752,304 8,476,007 96.84% 127,358 '8,603,365
1992-1993 8,347,482 8,109,948 97.15% 196,319 8,306,267
1993-1994 7,682,770 7,632,856 99.55% 169,463 7,802,319
1994-1995 7,684,744 7,366,500 95.86% 147,408 7,713,908
Percent of
Total Tax
Collections
to Tax Levy
103.55 %
99.31%
100.11%
100.69%
99.02%
98.47%
98.30%
99.51%
101.56%
97.78%
Outstanding
Delinquent
Taxes
$ 55,282
133,819
140,941
148,967
263,202
368,1 04
437,013
419,999
281,254
325,655
Percent of
Delinquent
Taxes to
Tax Levy
1.77%
3.40%
3.16%
2.97%
3.73%
4.53%
4.99%
5.03 %
3.66%
4.24%
Som'ce: Orange County Auditor Cemroiler's Office.
(1) Data for City of San Clemente only. 1915 Act Bonds (SPREAD Assessment) are not included.
CITY OF SAN CLEMENTE
Tax Levy and Tax Collec0,'on
1988 through 1995
Below is a chart which indicates the tax levy and collection records for the City fwm the 1987/88 thwugh 1994/95 fiscal years.
Fiscal Year
Percent of Levy Collected
Total Tax Collections
To Tax Levy
1988 96.29% 100.11
1989 96.87 100.69
1990 97.55 99.02
1991 97.43 98.47
1992 96.84 98.30
1993 97.15 99.51
1994 99.35 101.56
1995 95.86 97.78
Source: City of San
B-61
CITY OF SAN CLEMENTE
Largest Taxpayers
The ten largest taxpayers in San Clemente as shown for the 1994/95 secured tax roll are as
follows:
% of Total
Type of 1995 Assessed Assessed
Taxpayer Business Valuation Valuation
Samaritan Health System
Oceanview Plaza Development
Marblehead
Arvida, JMB Partners
T-Pac Investments, Inc.
LH Venture #1
Pico Plaza Associates
Overstreet, Monte
LHC Investments
Richmond American
Hospital $ 29,303,226 0:76
Commercial 18,332,994 0.48
Real Estate 18,142,593 0.47
Real Estate 13,567,000 0.35
Real Estate 11,083,886 0.29
Real Estate 6,710,000 0.18
Commercial 6,044,329 0.16
Commercial 6,000,000 0.16
Real Estate 5,723,524 0.15
Real Estate 5,359,883 0.14
$120,267,435 3.14
Source: Orange County Assessor's Office
B-62
Summary of Significant Accounting Policies
The financial statements for San Clemente are prepared in accordance with generally accepted
accounting principles ("GAAP") as applied to government units: The Governmental Accounting
Standards Board ("GASB") is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles.
City Budget
The following procedures are utilized by San Clemente in establishing the budgetary data
reflected in its audited financial statements:
1. In May, the City Manager submits to the City Council a proposed operating
budget for the fiscal year commencing July 1. The operating budget includes proposed expenditures
and the means of financing them.
.
Public hearings are conducted at City Council meetings to obtain taxpayer
comments.
3. Prior to July 1, the budget is adopted by Council action.
4. The City Manager is authorized to transfer funds between major expenditure
categories within departments. However, any revisions that alter the total appropriations of any
department must be approved by the City Council. For budgeting purposes, the General Fund is
composed of several departments while all other budgeted funds are considered a single department.
5. Formal budgetary integration is employed as a management control device
during the year for the governmental funds.
6. Budgets for the governmental funds are adopted on a basis substantially
consistent with generally accepted accounting principles. Budgeted amounts are as originally adopted
and as further amended by the City Council. The General, Special Revenue, and Capital Projects
Funds have legally adopted budgets as well as the Negocio Building and Redevelopment Debt Service
Funds.
7. Encumbrance accounting, under which purchase orders, contracts and other
commitments for the expenditure of monies are recorded in order to reserve that portion of the
applicable appropriation, is employed as an extension of formal budgetary integration in the General
Fund, Special Revenue Funds and Capital Projects Funds. Unexpended appropriations of the
governmental funds automatically lapse at the end of the fiscal year. Encumbrances at year end are
recorded as a reserve of fund balance and then are reappropriated the following year by City Council
action.
Direct and Overlapping Bonded Debt
The following table contains information on San Clemente's direct and overlapping bonded
indebtedness as of April 30, 1996.
B-63
CITY OF SAN CLEMENTE
Direct and Overlapping Bonded Debt
[TO FOLLOW]
Investment Policy
[TO FOLLOW FROM SAN CLEMENTE]
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under the
Orange Site Lease and Lease Agreement:
[TO FOLLOW FROM SAN CLEMENTE]
CITY OF SANTA ANA
General
Location and Government. The City of Santa Ana ("Santa Ana"), county seat of Orange County
and one of the oldest communities in Southern California, is located 33 miles southeast of Los Angeles,
20 miles east of the Ports of Los Angeles and Long Beach, 10 miles inland from the Pacific Ocean, and
90 miles north of San Diego. It encompasses an area of approximately 27 square miles and lies on
generally level land at an elevation of 135 feet above sea level.
Santa Ana was established by William H. Spurgeon in 1869. It was incorporated on June 1, 1886
and reorganized under a City Charter in 1888. Santa Ana has served as the county seat since the
formation of Orange County in 1889.
Numerous government offices have taken advantage of Santa Ana's central location and position
as county seat. City, county, state and federal offices are conveniently located in the multi-government
Civic Center in the heart of Santa Ana. A strong industrial base undergirds the local economy.
In 1952, the voters approved a charter which established a council-manager form of government.
The six-member City Council and Mayor are elected at large. The current members of the City Council
and the expiration of their terms in office are summarized below:
CITY OF SANTA ANA
City Council
Council Member
Term Expiration
Miguel A. Pulido, Mayor
Robert L. Richardson, Mayor Pro Tem
Tony Espinoza, Councilmember
Thomas E. Lutz, Councilmember
Patricia A. McGuigan, Councilmember
Lisa Mills, Councilmember
Ted R. Moreno, Councilmember
1996
1998
1998
1996
1998
1996
1996
The City Council appoints the City Manager, who acts in the capacity .of chief eXecutive officer,
and this post is held by David N. Ream. Santa Ana's full time employees numbered 1,595 as of
March 31, 1996, of which 606 were assigned to the Police Department and 282 to the Fire Department.
The Fire Department operates 10 stations and Santa Ana has a class 1 fire insurance rating.
· _ ,
Community Services and Facilities. Santa Ana is served by various school districts.
Approximately 75 percent of the city is in the Santa Ana Unified School District and approximately 25
percent is in the Garden Grove Unified School District. Portions are also located in the orange Unified
School District, Tustin Elementary and Tustin High School Districts. There are 30 public elementary
schools, 7 intermediate and junior high schools, 4 high schools, 2 continuation high schools, and 1 Special
school for the handicapped.
..
.
B-65
Rancho Santiago Community College, Santa Ana Campus, established in Santa Ana in 1915,
offers two-year academic programs leading to the Associate in Arts degree and a variety of technical
training programs. Also located in Santa Ana is California Coast University, with an enrollment of over
4,000, which offers a variety of undergraduate degree programs.
The University of California Irvine was opened in 1965 on a 1,510 acre campus a short distance
south of Santa Ana. California State University, Fullerton opened in 1959 and has a 225 acre campus
five miles north of Santa Arm.
Other institutions of higher learning in Orange County are Chapman College in Orange; Pacific
Christian College, Fullerton; Pepperdine Educational Center and USC-Orange County, in Irvine, satellite
campuses of Pepperdine University and University of Southern California, respectively; Southern
California College, Costa Mesa; West Coast University, Orange; and Western State University College
of Law in Fullerton; plus the following 2-year community colleges: Cypress Community College;
Fullerton Community College; Golden West College; Orange Coast College; and Saddleback College.
Santa Ana has four major hospitals: Western Medical Center, Coastal Communities Hospital,
Santa Ana Medical Center and Doctors Hospital. Santa Ana operates a main public library with two
branches and a bookmobile service. Orange County maintains a law library in Santa Ana.
The Orange County Register is a daily morning and evening newspaper serving all of Orange
County. Seven other daily newspapers and several weekly and semi-weekly papers are published in the
County. The Los Angeles Times publishes an Orange County edition. One AM radio station and two
FM stations are located in Santa Ana. Residents of Santa Ana receive radio and television broadcasting
serving the Metropolitan Los Angeles Area. Santa Ana owns and operate a cable television station
KCTY.
The mild climate of Orange County makes possible a wide range of recreational opportunities for
residents and visitors. Along the County's Pacific Coast shoreline are five state beaches and parks, five
municipal beaches and five county beaches. There are two small craft facilities in Newport Harbor. A
third small craft facility is located in Sunset Harbor in Huntington Beach, and a fourth is at Dana Point.
Nearby recreational facilities include the world famous Disneyland, Knott's Berry Farm and Mission San
Juan Capistrano.
In Santa Ana, there are two golf courses, numerous parks, the Santa Ana Zoo and the Bowers
Museum. Anaheim Stadium, home of the California Angels baseball team, is six miles north of the city.
Camping facilities are available in the Cleveland National Forest and at the County's O'Neill and
Featherly Parks, all close to Santa Ana.
·
Police and Fire Protection. The Santa Ana Police Department provides effective police services
to the Santa Aha Community through the use Of community oriented policing, and the integration of
modern technology and training of police personnel. The department has 606 full-time employees
'including 405 Sworn positions working out of 5 stations throughout Santa Ana.' ·
The Santa Ana Fire Department has enabled Santa Ana to maintain a class I fire insurance rating
· by providing an efficient response force capable of providing effective control of hazards within the
community, and rescue and advanced life support to Santa Ana businesses and residents.. The department
B-66
has 282 full-time employees including 249 sworn positions working out of 10 stations throughout Santa
Ana.
Transportation. Santa Ana is located within the hub of the intersection of four major freeways.
The Santa Ana Freeway (Interstate 5) provides_direct access to downtown Los Angeles and connects with
the San Diego Freeway (Interstate 405) southeast of Santa Ana. The Garden Grove Freeway provides
east-west circulation along the northern city limits, linking the San Diego, Santa Ana and Newport
Freeways. 'The Newport Freeway skirts the eastern city limits, providing access to the Newport Beach
area.
Rail freight serVice is provided by the Santa Fe Railway and the Southern Pacific Company.
Amtrak provides passenger service to San Diego to the south and Los Angeles and all other points to the
north and east. Overland bus service is provided by Trailways Bus System and Greyhound Bus Lines.
Southern California Rapid Transit District offers bus transportation throughout the four county Southern
California Metropolitan area. Orange County Transit District provides bus serVice between Santa Aha
and other Orange County cities. Most major truck lines serve Santa Ana.
.
Orange County Airport is located two miles south of Santa Ana. Los Angeles International
Airport is approximately 30 miles northeast of Santa Ana adjacent to the San Diego Freeway. :~ i
Santa Ana is within 20 miles of the Ports of Los Angeles and Long Beach, both readily accessible
via freeway. '~
Utilities. Water serVice to the community is provided by the City of Santa Ana's Water
Enterprise. The approximately 46,000 customer connections rely on local groundwater for 75 % of the
water supply and 25 % from the Metropolitan Water District. Santa Ana owns and operates a total of 17
wells located within the city limits with a total capacity of 64.3 million gallons per day. The city
maintains ~?.~. miles of water mains, 8 reserVoirs, and 27 booster pumps. The reserVoirs have a
combined capacity of 45 million gallons.
Electric service in Santa Ana is provided by Southern California Edison. Natural gas service is
provided by the Southern California Gas Company. Telephone service is provided by Pacific Bell.
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the building
permit activity in the City from 1991 through 1995..
B-67
Building Valuations
Residential
Single Valuation
Multiple Valuation
Alterations/Additions
Total
Non-Residemial
Commercial Valuation
Industrial Valuation
Other
Alterations/Additions
Total Nonresidemial
Total Building Valuations
Units DeVeloped
Single Family Units
Multiple Family Units
Total Units
CITY OF SANTA ANA
Building Permit Activity (a)
(Valuations in Thousands of Dollars)
1991 1992 1993
1994
1995
$ 4,054 $ 4,545 $9,502 $ 167 $ 783
1,195 519 0 0 0
8,350 7,548 5,950 3,162 ,,3,718
$13,599 $12,612 $15,452 $3,329 $4,501
$73,231 $ 9,977 $38,503 $ 5,625 $14,823
1,034 0 1,256 1,282 1,526
2,038 665 ,.1,941 320 17,803
39,272 41,175 27,903 30,510 37,725
$111,575 $51,817 $69,603 $37,737 $71,877
$129,174 $ 64,429 $85,055 $41,066 $76,378
29 37 74 3
43 43 74 '3 '
7
(a) Figures may not add due to rounding
Source: Economic Sciences Corporation, Emeryville, California
City of Santa Ana
B-68 ,
Employment. Santa Ana is part of the Anaheim-Santa Ana Metropolitan Statistical Area. Set
forth below are two tables presenting certain information relating to employment and unemployment in
the Anaheim-Santa Ana Metropolitan Statistical Area.
Orange County Metropolitan Statistical Area
Estimated Wage and Salary Employment
Civilian Labor Force, Employment, and Unemployment(a)
1990-1994 Annual Averages
Total, All Industries
..1990 .1991 !992 ..1993 .1994
1,178,900 1,151,100 1,133,200 1,124,000 1,133,900
Total Farm(b) 6,600 7,400 7,200 6,700 7,500
Total Nonfarm 1,172,400 1,143,700 1,126,000 1,117,300 1,126,400
Goods Producing 302,300 282,000 267,500 253,600 253,900
Mining 1,200 1,300 1,100 900 1,000
Construction(c) 57,200 51,100 47,700 43,700 46,900
Manufacturing 244,000 229,600 218,800 209,000
Durable Goods 174,700 160,100 150,800 139,400
Nondurable Goods 69,300 69,500 68,000 69,700
Service Producing 870,000 861,700 858,500 863,700
Transportation & Public Util. 36,400 36,500 35,400 37,000
Transportation 20,100 19,600 18,900 20,300
Communications & Public Util. 16,300 16,900 16,500 16,700
Trade 299,000 283,200 .280,700 275,600
Wholesale Trade 81,400 79,300 79,200 75,600
Retail Trade 217,600 203,900 201,500 200,000
Finance, Insurance & Real Estate 96,000 94,200 94,400 92,300
Services 312,600 319,100 318,300 330,900
Government(d) 126,100 128,700 127,400 127,900
Federal Government 15,900 15,600 15,300 15,700
State & Local Government 110,300 113,100 112,100 112,200
206,000
136,500
69,500
872,500
38,800
21,800
17,000
281,000
7,800
202,200
94,300
329,500
128,900
15,500
113,400
Unemployment
Labor Force 1,343,900 1,307,000 1,316,800 1,315,600 1,342,100
Employment 1,295,400 1,238,000 '1,229,600 1,227,300 1,264,000
Unemployment 45,500 68,200 87,200 88,300 77,900
Unemployment Rate 3.6 % 5.2 % 6.6 % 6.7 % 5.8 %
(a) Does not include proprietors, the self-employed, unpaid volunteers or family works, domestic workers in
households, and persons involved in labor management trade disputes. Employment reported by place of
work.
(b) Excludes farmers and unpaid family workers.
(c) Includes employees of construction contractors and operative builders; does not include force account or
government construction workers.
(d) Includes all civilian employees of federal, state and local government regardless of the activity in which the
employee is engaged.
Note: Detail may not add to totals duc to independent rounding.
Source: California Employment Development Depamnent.
B-69
The largest employers in Santa Ana as of June 1995 are listed below:
Employers with over 500 ie. mployees
June, 1995
1000 + Employees
City of Santa Ana
County of Orange
Ingram Micro Inc.
ISS Servisystem
The Orange County Register
Santa Aha Unified School District
U.S. Federal Government
Xerox Corporation
501-100 Employees
Caltrans
Cherry Textron
Coastal Communities Hospital
Diversified Maintenance Services
Express Manufacturing
Farmers Insurance Group of Companies
ITT Cannon
Los Angeles Times
Mitsubishi Consumer Electronics
Nordstrom
Rancho Santiago College
Sabatasso Foods, Inc.
Total 1000 + Employees
500-1000 Employees
Source: City's Financial Statements
Government
Government
Electronics
Janitorial
Newspaper
Public School System
Government
Office Machines
Government
Aerospace Manufacturers
Medical
Janitorial
Electronic Components
Insurance
Electronics
Newspaper
Televisions
Department Store
Community College
Frozen Foods
8
12
B-70
Retail Sales.
The table below provides a summary of taxable sales transactions in Santa Ana from 1990
through 1995. Information with respect to 1995 sales transactions is not expected umil mid-1996, and
is therefore estimated.
CITY OF SANTA ANA
Taxable Retail Sales Data
(000's omitted)
1990 through 1995
Apparel Stores
General Merchandise Stores
Drag Stores
Food Stores
Packaged Liquor Stores
Eating and Drinking Places
Home Furnishings and Appliances
Building Materials and Farm Implements
Auto Dealers and Auto Supplies
Service Stations
Other Retail Stores
1990 .1991 1992 1993
141,880
194,766
34.355
136.983
19.339
201010
108257
149947
201435
135.285
283.699
145,726 144,337
197,807 204,435
34,640 38,655
146,631 149,968
18,580 17,017
190,687 180,866
102,555 93,478
151,823 136,320
187,366 185,234
126,172 134,400
267,714 285,254
136629
208110
35,825
118,999
14,231
185998
101,304
155,532
178.948
123.612
285,208
Total Reta~Ouflets 1,606,956 1,569,701 1569,964 1,544,396 1,567,424
All Other Outlets 912,306 925,141 995,863 1,018,044 1,073,333
Total AllOuflets 2,519,262 2,494,842 2,565,827 2,562,440 2,640,757
Source: State Board of Equalization
(1) First two quarters of data through June 30, 1995.
1994 1995 (1)
137,011 59,977
209,049 94,223
32,816 13,142
109,082 55,602
12,652 5,939
186,443 95,727
110,000 52,843
164,008 85,700
199,686 106,074
121,419 62,027
285,258 132,502
763,756
574,531
1,338,287
Population. Santa Ana's 1995 population was estimated at 311,491 by the State Departmem
of Finance. This is a 6% increase over the 1990 Census count. Following ~e U.S. Census and State
Department of Finance data for Santa .Ana for the last ten years:
City of Santa Ana
Population Sununary
Year
Population
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
226,400
227,400
231,460
237,348
292,077
300,256
304,900
308,379
310,417
311,491
B-71
years'
Income. The following table summarizes per capita income levels in Santa Ana for the last 10
City of Santa Ana
Per Capita Income
Year Per Capita Income
1986 $ 11,509
1987 12,634
1988 12,454
1989 12,526
1990 12,650
1991 ' 12,783
1992 10,019
1993 10,291
1994 10,571
1995 10,646
General Fund
The following tables summarize information taken from Santa Ana's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3) fiscal years'
{2M(i~I)D~ ~! 269~'1 B-72
CITY OF SANTA ANA
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
Assets
1995 1994 1993
Cash and investments
Cash and investments with fiscal agents
Receivables (net of allowance for uncollectibles):
Taxes ·
Accrued revenues
Due from other funds
Deposits"
$ $ 1,154,904 $ 12,279,233
40,112~577 82,239,202
3,776,338 2,824,718 4,354,018
4,207,477 4,322,295 2,791,515
30,000 30,000
$ 48,126,392 $90,571,119 $ 21,873,757
Total assets
Liabilities, Equity and Other Credits
Liabilities:
Accounts payable
Due to other funds
Deferred revenues
Deposits
$ 801,181 $ 968,689 $ 4,863,462
2,456,501 462,453 5,653,548
1,636,468 1,068,030 2,328,101
30,000 30,000
Total Liabilities
41924,150 2,529,172 12,845,111
Fund equity:
Fund balance:
Reserved:
For encumbrances and continuing appropriation 38,355,694
For non-current investment 13,341,121
Unreserved:
Designated for authorized projects
Undesignated (8,494,573)
84,856,588 1,997,745
3,185,359 7,030,901
Total fund equity
43,202,242 88,041,947 9,028,646
Total Liabilities, Equity and Other Credits
$48,126,392 $90,571,11__~__..~9 .~ $21,873,75~7
Source:
·
City of Santa Aha, Comprehensive Annual Financial Repons, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual financial
reports are available from Santa Ana and investors are encouraged to review the entire reports, including the notes therein, before
making an invesunent decision with respect to the Bonds.
:
~ B-73
GMGI~DD~S 26~2 269331
CITY OF SANTA ANA
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
Revenues: Taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeits
Use of money and property
Miscellaneous
Total revenues
1995 1994 1993
$76,298,420 $75,285,574 $75,547,804
1,995,525 2,052,746 1,995,338
12,524,992 12,407,436 11,312,149
9,522,233 9,121,928 6,826,477
2,567,859 2,818,962 1,951,036
2,094,480 2,763,185 3,201,653
5,622,781 5,122,198 7,621,877
110,626,290 109,572,029 108,456,334
Expenditures:
Current:
General Government
Human Resoumes
Finance and Management Services
Museum
Library
Recreation and Community Services
Fire Department
Police Department
Planning.& Building
Public Works
Total current expenditures
3,984,773 3,779,097 3,818,854
1,235,872 1,297,969 1,486,559
3,645,421 3,450,288 3,754,701
1,478,360 1,442,350 1,398,202
3,612,261 3,752,902 3,834,518
8,857,085 8,893,105 9,672,682
25,191,835 25,746,214 25,666,937
54,812,692 55,163,082 58,471,397
7,317,725 8,408,999 9,622,188
5,657,685 7,226,112 9,664,101
115,793,709 119,160,118 127,390,139
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total Expenditures
843,873 3,616,943 9,478,043
1,308,540 1,282,217 1,363,307
121,527 572,318 194,137
118,067,649 124,631,596 13'8,425,626
Deficiency of revenues
over expenditures
(7,441,359) (15,059,567) (29.969.292)
Other Financing Sources (uses):
Proceeds from Police Lease Revenue Bonds
Capital lease arrangement
Operating transfers in
Operating transfers out
Total Other Financing Sources (uses)
92,741,401
299,924 301,975 2,836,210
17,584,224 14,269,438 16,913,664
(55,231,008) (13,239,946) (10.670.941)
(37,346,860) 94,072,868 9,078,933.
Excess (deficiency)of revenues and
other financing sources over expenditures
and other financing uses
(44,788,219) 79,013,301 (20,890,359)
Fund balance - beginning
Equity transfers in
Equity transfers out
Fund Balance - Ending
88,041,947 . 9,028,646 22,519,005
7,400,000
(51,486)
$ 43 202 242 $ 88 041 947 $~
Sollrce:
City of Santa Ana, Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
f'mancial reports arc available from Santa .ama and investors are encouraged to review the entire reports, including the notes
therein, before making an investment decision with respect to the Bonds.
Sales Tax Revenues. The revenue from sales tax provided approximately 40.49 % of Santa Ana's
total local tax revenues in Fiscal Year Ended June 30, 1995. The following tables present information
concerning the value of taxable retail sales and sales tax revenues in Santa Ana since 1990.
City of Santa Ana
Taxable Retail Sales (in thousands of dollars)
1990-1995
Year Ended 12/31
Taxable Sales
1990 2,519,262
1991 2,494,842
1992 2,565,827
1993 2,562,440
1994 2,640,757
1995 1,338,287
Source: City of Santa Ara, State Board of Equalization
(1) First two quarters of data through June 30, 1995.
CITY OF SANTA ANA
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1990 through June 30, 1996
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96'
$ 30,301,641
28,625,927
28,417,147
29,272,161
30,281,627
31,016,779
32,092,345
Source: City of Santa Ana
*Projected
Property Tax Revenues
The total assessed valuation of the property within Santa Ana for the fiscal year 1994-95 was
$11.031 billion. The total appropriations limit adopted by Santa Ana's fiscal year 1994-95 was
$362.16 million and the actual appropriations subject to the limit for the same period was $73.9
million.
Santa Ana receives funds annually from the State based upon a percentage of property taxes
collected within the County computed on Santa Ana's respective assessed valuation, and a statutory
system of annual appropriations. The table below presents the assessed valuation of property within
Santa Ana for the past five fiscal years.
City of Santa Ana
Assessed Valuations
(In Millions)
Fiscal Local
Year Secured UtiliW Unsecured
1990-91 $ 7,350 $ 7 $755
1991-92 7,720 6 802
1992-93 7,800 7 829
1993-94 7,971 7 828
1994-95 7,908 6 694
Total Before
Rdv. Increment
$ 8,112
8,528
8,836
8,806
8,608
Total After
Rdv. Increment
$10,699
11,251
11,641
11,451
11,031
Source: City of Santa Arm CAFR, County of Orange Assessor
The table below presents Santa Ana's property tax valuation and collection experience for the
last ten fiscal years.
City of Santa Ana
Property Tax Levies and Collections
Last Ten Fiscal Years
Fiscal
Year
Ending
June 30
1986
1987
1988
1989'
1990
1991
1992
1993
1994
1995
(1)
(2)
Percentage Delinquent Ratio Total
Tax Tax Current Collected Tax Total
.Rate Levied Collection Currently Collection Collection (1)
(2) $14,399,736 $13,817,709 96.0% $ 345,391 $ 14,163,100 98.4%
(2) 15,957,490 15,101,451 94.6% 450,551 15,552,002 97~5%
(2) 16,887,343 16,411,151 97.2% 741,785 17,152,936 101fi%
(2) 18,563,060 '17,521,630 94.4% 916,506 18,438,136 993%
(2) 20,341,732 19,012,022 93.5 % 725,869 19,737,891 97.0%
(2) 21,649,324 19,819,687 91.5% 782,162 20,601,849 95.2%
(2) 22,658,964 21,092,648 93.1% 807,428 21,900,076 96.7%
(2) 20,451,119 18,608,999 91.0% 976,850 19,585,849 95.8%
(2) 17,394,840 16,480,858 94.7% 1,719,517 18,200,375 10~fi%
(2) 16,388,236 15,568,903 95.0% 213,795 15,782,698 963%
Excludes Business Inventories and Homeowner's Exemptions, and Redevelopment Tax Increment.
Proposition 13 eliminated the property tax rate for cities exclusive of voted bond issiaes for which a rate may be
established for debt service. The City of Santa Ana has no such debt at June 30, 1995.
Ci~ of Santo Aha
County of Orange Assessor
Summary of Significant ACcOunting Policies
Santa Ana's financial statements have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to goVernment units. The Governmental Accounting
Standards Board (GASB)'is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles.
City Budget
The following procedures are utilized by santa Ana in establishing the budgetary data reflected
in its audited financial statements:
General Budget Policies, Encumbrances, and Budgeta~ Basis of Accounting
Santa Ana and its component units' fiscal year begins on July 1 of each year and ends the
thirtieth day of June the following year. On or before the fifteenth of June of each year, the City
Manager submits to the City Council a proposed budget for the next ensuing fiscal year based on a
detailed financial plan prepared by the heads of the various offices, agencies and departments of Santa
Aha and its component units. Upon receipt of the proposed budget, the Council may make
modifications with the affirmative vote of at least a majority of its members. Before adoption of the
budget, the Council holds a public hearing wherein the public is given an opportunity to be heard,
after which the Council may make any revisions deemed advisable. On or before the thirty-first day
of July, the City Council adopts the budget as amended by the affirmative vote of at least a majority
of its members. Upon final adoption, the budget is in effect for the ensuing fiscal year and becomes
the authority for the various offices, agencies, and departments to expend subject to controls
established by the City Charter. At any meeting after the adoption of the budget, the City Council
may amend or supplement the budget by affirmative vote of at least two-thirds of the members so as
to authorize the transfer of unused balances appropriated for one purpose to another purpose, or to
appropriate available revenue not included in the budget. Where appropriations are made to offices,
departments, or agencies for more than One activity or program, "appropriations" are considered in
the aggregate with respect to total expenditures authorized for that office, department or agency within
each fund, limited to purposes for which the revenues of such funds are to be spent. The City
Manager is authorized to make revisions among the items included in such appropriations if, in his
opinion, such revisions are necessary and proper. During the fiscal year, all budget and supplemental
amendments were necessary and made in a legally permissible manner.
Annual budgets are legally adopted for the General Fund, Proprietary Fund Types, and certain
SpeCial Revenue Funds including special gas tax, civic center and centennial park maintenance,
housing authority, housing authority issuer fee, air quality improvement, and parking structure
management. In addition, project and grant-length budgets are approved for some Special Revenue
Grant Funds and Capital Projects Funds as a planning device and for financial and management
control purposes. Monthly budgetary reports are' prepared to effect control through fiscal
management.
Budgets are prepared on a modified accrual basis that varies from generally accepted accounting
principles wherein provisions are made to treat encumbrances as budgeted expenditures in the year
of the commitment to purchase. Encumbrances outstanding at year-end are reported as reservations
of fund balances since they do not constitute expenditures or liabilities. All annual appropriations
lapse at fiscal year-end to the extent that they have not been expended or lawfully encumbered.
Expenditures may not legally exceed appropriations at the departmental level in the Governmental
Fund Types, except that some Special Revenue Grant Funds and Capital Projects Funds are maintained
at the project level.
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative),
Santa Ava is restricted as to the amount of annual appropriations from proceeds of taxes; and if
proceeds of taxes exceed allowed appropriations, the excess must be returned to the taxpayers through
revised tax rates or fee schedules within the next two years. For the fiscal year ended June 30, 1995,
proceeds of taxes did not exceed related appropriations.
B-78
GMGEZ)Dk"n 26982 269331
Direct and Overlapping Bonded Debt
The following table 'contains information on Santa Ana's direct and overlapping bonded
indebtedness as of June 30, 1996.
CITY OF SANTA ANA
Direct and Overlapping Bonded Debt
[TO FOI~LOW]
Investment Policy
Santa Ana annually adopts an investment policy which is intended to outline the policies for
prudent investment of idle City funds by providing guidelines for suitable investments while
· maximizing the efficiency of the City's Cash Management Program.
Under the direction of the Executive Director, Finance and Management Services Agency, the
responsibility for the day to day investment of the City's funds is delegated to the Treasury Manager
only. The investment policy applies to all financial assets of the city and are pooled in an actively
managed portfolio.
The City's Cash Management Program is designed to accurately monitor and forecast
expenditures and revenues, thus enabling the investment of funds to the fullest extent possible.
Maturities are matched as close as possible to coincide with cash requirements. Length of maturities
is based on consideration of the yield curve and estimate of future interest rate movement.
The investmen~ policies and practices of the City of Santa Ana are based upon Federal, State
and Local law and prudent money management. The primary goals of these policies are:
1. To assure compliance with all Federal, State and Local laws governing the investment
of monies.
o
To protect the principal monies of the City.
3. To generate the maximum amount of investment income within the parameters of this
Statement of Investment Policy and the Investment Portfolio Guidelines.
·
The statement of investment policy is available at the Treasury Division of Santa Ana's Financial
and Management Services Agency.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under Santa Ana's
Site Lease and Lease Agreement:
_
[TO FOLLOW]
CITY OF SEAL BEACH
General
Location and Government. The City of Seal Beach ("Seal Beach") encompasses 11.97 square
miles and is located on the coast of northwestern Orange County. It is about 27 miles southeast of
Los Angeles and Seven miles from the Port of Long Beach. Neighboring communities include
Huntington Beach, Westminster, Los Alamitos and Long Beach.
Seal Beach,' incorporated in 1917, has operated under a City Charter since 1964. The Seal
Beach is governed and administered under a council-manager form of government. The five member
City Council is elected by district to serve four-year alternating terms. The Mayor and Mayor Pro
Tempore are elected by the Council from among its members for one-Year terms. The City Clerk is
also elected. The City Attorney and City Manager are appointed by the City Council. Under the
1995/96 budget fiscal year budget, Seal Beach employs a staff of approximately 103 full-time
employees, 40 part-time employees, and 40 seasonal part-time under the direction of the City
Manager.
Community Services and Facilities. Seal Beach was originally established bemuse of its
attractiveness as a seaside resort and recreation area. While the character of Seal Beach has undergone
change during the last decade from resort community to a stable residential community, recreation is
still an important factor in the local economy. Seal Beach estimates more than 3,000,000 visitors are
attracted to the one mile City-owned ocean recreational area each year. For the convenience and
accommodation of these visitors, Seal Beach maintains a 1,860 foot municipal pier, and a beach park
with picnic facilities. Swimming and surfboarding are popular sports and are conducted under the
supervision of municipal lifeguards.
At the southern end of Seal Beach, the Orange County Harbor District has developed the
Aquatic Regional Park, which provides an eight lane landing ramp capable of accommodating up to
500 boats per day, parking for 200 cars and boat trailers, and overnight space for 500 house trailers.
The aquatic park provides public beach and picnic facilities for 2,800 people, public fishing floats,
and boat rentals, fueling docks, and berths for recreational boating.
Education. The City of Seal Beach is served, by two high schools and one elementary schgol
district. Most of Seal Beach is also within the Coast Community College District. The district
operates three colleges within Orange County. The 122-acre Huntington Beach Campus (Golden West
College), which began classes in 1966, is approximately eight miles from Seal Beach.
~ . .
Orange County has five community colleges and eight institutions granting degrees for four-year
or graduate courses of study. The schools are: University of California at Irvine; California State
University, Fullerton; Chapman College, Orange; Southern California College, Costa Mesa; West
Coast University, Orange; Western State University, Santa Aha; and Pepperdine University, Santa
Ana, A nmnber of colleges and universities are also' located in the adjacent' area of southern Los
Angeles County~ including the California State University at Long Beach.'/ ' ~'~ .: :' '
B-80
Police and Fire Protection. The City of Seal Beach Police Department consists of 33 sworn,
12 non-sworn, 20 reserve officers, and 30 volunteers. It provides a full range of police services for
a residential population of 26,800. Besides the traditional efforts of the Police Department to respond
to calls for service to enforce laws, investigate traffic and crime-related issues, the department
oversees the privatization contract for the City Jail. The City has comracted with a private contractor
to provide the day-to-day operation of the detention facility. The facility has 30 beds available for
·
low risk, work furlough offenders and has contracts with local municipalities, Federal and State
agencies. The City of Seal Beach contracts with the Orange County Fire Authority for fire protection
services.
Lifeguard Services. The City of Seal Beach Lifeguard Department consists of two full-time,
and 35 part-time seasonal lifeguards. In addition to providing basic life-saving functions, the
Lifeguards provide advanced first aid and life support .services and operate a lifeguard rescue boat;
effect rescues of disabled water craft; provide marine safety and first aid instruction to approximately
. 150 "junior lifeguards" each summer and approximately 30 beginning surfers in the "surf class", and
provide rescue and transportation to sick and injured marine animals.
Transportation. The San Diego, San Gabriel and Garden Grove Freeways intersect within the
city limits, and the City is bisected by State Route 1 (Pacific Coast Highway). Existing freeways
provide excellem access to all north, south and eastern poims. Regularly scheduled airline service is
available at the Long Beach Airport, Orange County Airport and Los Angeles Imernational Airport;
each. of which is less than 45 minutes driving time from Seal Beach.
Western Greyhound Lines provides long distance passenger and package express service from
Seal Beach. Local bus service is provided by the Southern California Rapid Transit District, Long
Beach Transportation Company and Orange County Transit District.
Utilities. Electricity in the City is provided by Southern California Edison Company and,
natural gas, by Southern California Gas Company. GTE serves the City. Sewage collection and
treatment facilities are provided by Orange County Sanitation District No. 3 and refuse collection is
furnished by a private contractor. The City provides 75 % of its own water and purchases 25 % from
Metropolitan Water District of Orange County.
Economic Growth and Development
The following table summarizes the population growth in Seal Beach from 1987 through 1996.
POPULATION SUMMARY
CITY OF SEAL BEACH
1987 through 1996
1987 27,400
1988 27,329
1989 27,364
1990 27,347
1991 25,095
1992 25,487
1993 26,031
1994 26,053
1995 26,795
1996 26,366
General Fund
The following tables summarize information taken from Seal Beach's audited financial
statements regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and
Changes in General Fund Balances for the past three (3) fiscal years:
CITY OF SEAL BEACH
GENERAL FUND BALANCE SHEET
Years Ending 1992-93 through 1994-95
1992-93 1993-94 1994-95
Assets And Other Debits
Cash and investments
Cash with fiscal agent
Receivables
Taxes
Grants
Accrued revenue
Due from other funds
Due from Redevelopment Agency funds
Due from PERS
Restricted assets:
Cash and investments
Deferred compensation
Amount available in debt service fund
Amount to be provided for payment of long-term debt
Total Assets and Other Debits
Liabilities and Fund Equity
$ 186,611 $ 319,698 $ 2,897,277
- 2,061,828 -
338,628 518,755 558,674
549,467 41,946 13,660
3,887 301,047 396,888
215,000 - -
194,432 317,481 327,822
153,128 276,103
$ 1,488,025 $ 3,713,883 $ 4,470,424
Liabilities:
Accounts payable
Accrued liabilities
Deposits
Due to other funds
Deferred revenue
Payable from restricted assets:
Accrued revenue bond interest
Deferred compensation
Revenue bonds payable
Tax allocation bonds payable
Compensated absences payable
Loan payable, City
Other long-term liabilities
Total Liabilities
$ 252,326 $ 115,140 $ 269,470
211,408 197,753 390,563
575,872 - -
409,432 318,028 241,574
1,449,038 .$ 2,755,749 $ 3,001,607
Fund Equity:
Retained earnings:
Reserved
Unreserved
Fund balance:
Reserved
Unreserved-designated
Total Fund Equity
Total Liabilities and Fund Equity
276,103
2271900 -
38,987 730,234 1,192,714
38,987 958,134 1,468,817
$1,488,025 $ 3,7.~13,883 $ 4,470,42~4
Source: City of Seal Beach Comprehensive Annual Financial Reports, Fiscal Years 1992-93,1993-94 and 1994-95; the annual financial reports are available
from Seal Bcach and investors are encouraged to review the entire reports, including the notes therein, before making an investment decision with respect
to the Bonds.
CITY OF SEAL BEACH
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
Revenue Categories:
Property Tax
Sales & Use Tax
License & Permits
Imergovernmental Revenue
Charges for Services
Fines, Forfeitures and Penalties
Use of Money & Property
Other
Other Taxes
Administrative Reimbursements
1992-93 1993-94 1994-95
$3,010,650 $2,732,832 $2,586,294
1,310,841 1,282,318 1,467,179
610,517 647,084 548,005
938,861 1,196,312 1,017,493
1,718,314 1,613,571 1,538,707
543,033 560,376 590,069
429,019 309,465 525,476
111,204 196,312 134,858
2,393,276 4,205,603 4,708,309
402,070 287,158 287,140
Revenue Total
$11,567,785 $13,033,031 $13,403,530
Expenditure Categories:
General Governmem
Public Safety/Protection
Public Works
Comm./Econ. Development
Health/Welfare/Human Services
Self Insurance Program
Capital Outlay
Debt Service - PrinCipal
Debt Service - Interest
Transportation
Expenditure Total
$1,458,559 $1,382,905 $1,414,076
5,886,174 5,022,931 6,335,909
792,473 1,109,206 1,218,593
496,639 600,857 628,231
1,185,290 1,121,138 1,223,261
886,870 942,820 742,047
62,562 71,651 56,770
137,003 93,613 91,084
96,658 61,828 95,876
450,060
$11,452,288
$11,406,949
$11,805,847
Other Sources (Uses):
Operating Transfers In
Operating Transfers Out
$254,469 $1,106,035 $210,000
(602,140) (1,812,969) (1,297,000)
Total Other Sources (Uses)
($347,871) ($706,934) ($1,087,000)
Beginning Fund Balance
Residual Equity Transfer
Ending Fund Balance
271,161 38,987 958,135
$38,987 $958,135 $1,468,818
Source: City of Seal Beach Comprehensive Annual Financial Reports; see source note on previous page.
Sales Tax Revenues. The revenue from sales tax provided approximately 11% of the City's
total local tax revenues in 1995. The following table presents information concerning the value of
taxable retail sales in Seal Beach since 1989.
CITY OF SEAL BEACH
Trade Outlets and Taxable Sales
1989-1993
Year
Outlets Taxable Sales
1989
1990
1991
1992
1993
583 $103,231
595 111,749
557 113,874
589 115,877
599 113,485
Source: This is the latest information available at the City
Property Tax Revenues.
The total assessed valuation of the property within the City of Seal Beach for the fiscal year 1994-
95 was $1,865,791,748. The total appropriations limit adopted by the City for the fiscal year 1994-95
was $10,602,624 and the actual appropriations subject to the limitation for the same period was
$3,572,262.
Fiscal Year Local
Secured
CITY OF SEAL BEACH
Assessed Valuations
1990-91 through 1994-95
Utility Unsecured
Total Before
RDA Inc.
Total After
RDA Inc.
1990/91 1,599,211,470 1,483,720 61,136,941 1,741,323,418 1,661,832,131
1991/92 1,690,798,436 1,679,740 84,760,065 1,864,432,281 1,777,238,241
1992/93 1,750,478,335 1,679,740 87,872,367 1,929,723,320 1,840,030,442
1993/94 1,803,474,767 1,679,740 69,607,452 1,963,204,372 1,874,761,959
1994/95 1,804,388,399 1,679,740 59,723,609 1,955,464,745 1,865,791,748
Fiscal
Year
Total
Tax Levy
CITY OF SEAL BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Percent of
Percent of Delinquent Total Tax
Current Tax Levy Tax Total Tax Collections
Collections Collected Collections Collections to Levy
1990-91
1991-92
1992-93
1993-94
3,281,385
3,412,851
3,132,185
2,793,380
2,687,857
Soun:e: Orange Courtly Tax Ledger
3,163,792 95.4 41,971 3,205,763 97.7
3,222,612 94.4 117,204 3,339,816 97.9
2,963,680 94.6 134,603 3,098,263 98.9
2,693,054 96.4 144,220 2,837,274 101.6
2,617,716 97.4 112,311 2,730,027 101.6
Building Activity. [TO FOLLOW]
Employment. As of April 1995, the California Employment Development Department estimates
that the adjusted civilian labor force for residents of the City was 10,600 of whom 10,200 were
employed. The unadjusted unemployment rate as of March, 1995 was 3.3 %.
The US Naval Weapons Station which employs 1,100 civilians and 225 military personnel is
located in the City. The station has its own docking and vessel loading facilities in a protected deep water
harbor~ Rockwell International Corporation currently employs approximately 2300 full-time personnel
and is also located in the City.
Project Improvements. It is the City's intent to finance the 800 MHz improvement project along
with refurbishing the beach rest rooms located under the Seal Beach Pier. Additionally, the City is
looking at alternative parking which would include parking meters, automation and beautification of the
two beach lots. This would include installing new light standards and replacement of existing fixtures,
automated parking systems, and parking meters. There is also a potential land purchase. Details can be
provided at a later date.
Summary of Significant Accounting Policies. Seal Beach's financial statements have been
prepared in conformity with generally accepted accounting principles (GAAP) as applied to government
units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles.
City Budget. The City follows these procedures in establishing the budgetary data reflected in
the general purpose financial statements:
1. In May, the City Manager submits to City Counsel a proposed budget for the fiscal year
commencing July 1. The operating budget includes proposed expenditures for the means of financing
them.
2. Public Hearings are conducted at City Council meetings to obtain taxpayer comments.
3. During the latter part of June or early July, the budget is adopted by Council action.
4. The City Manager is authorized to transfer funds appropriated with respect to those
classifications designated as other services, 'materials and supplies, within the same department. The City
Manager may transfer appropriated funds from any classification within other expenditures categories to
the capital outlay classification within the same department only, however, any revisions that alter the
total expenditures of any department must be approved by the City Council. Budget figures used in the
financial statements are the final adjusted amounts.
5. Formal budgetary integration is employed as a management control device during the year
for the governmental funds.
Direct and Overlapping Bonded Debt
[TO FOLLOW]
Investment Policy
Seal Beach annually adopts an Investment Policy. The Policy currently requires the investment
report on a monthly basis, which is more restrictive that the State quarterly requirement.
Description of Leased Premises
The property involved is the site of the Police Headquarters located at 911 Seal Beach Boulevard.
The building is approximately 22,000 s~quare feet of masonry noncombustible material. It houses all
police activities within the City and a jail facility with a holding capacity of 32 prisoners.
The police station was built in 1978 at a cost of $1,325,000. It currently houses 33 sworn and
12 non-sworn employees, 20 reserve officers and 30 volunteers.
Based upon an appraisal dated September 14, 1994, conducted by Valuation Resource
Management, Inc., the station has been valued at $2,303,105.
CITY OF STANTON
General
Location and Government. The City of Stanton ("Stanton") was incorporated as a general law
city in May, 1956. It consists of 3.1 square miles in Central Orange County, California. Nearby cities
include Anaheim, Buena Park, Garden Grove, Cypress and La Palma. Stanton is approximately 25 miles
southeast of Los Angeles and 9 miles northwest of Santa Ana.
Stanton is operated under the Council-Manager form of government. The City Council is
comprised of five members elected at large on a staggered basis for a term of four years. The City
Manager is appointed by the City Council and has the responsibility of administering municipal services
in accordance with the policies and annual budget adopted by the City Council.
Community Services and Facilities. Stanton's Cultural Arts and Recreation Center is the focal
point of services provided to the community. Many events are coordinated from this site including
cultural, theatrical, recreational and senior activities. Other recreational facilities operated by Stanton
include six parks and public tennis courts.
Stanton residents are served by the Savanna Unified School District, the Magnolia Unified School
District and the Garden Grove Unified School District. Additional educational services are provided at
Cypress College, a junior college located in the adjacent city of Cypress.
The library is a part of the Orange County Public Library System. Other attractions within the
area include Disneyland, Knott's Berry Farm, Adventure City Children's Theme Park, Anaheim Stadium
and the Orange County Performing Arts Center. Regional recreational areas include beach resorts, 10
miles to the south, and mountain resorts, 70 miles to the east.
Stanton provides building inspection, planning, code enforcement, parking control, public facility
and street maintenance and recreational services. Street sweeping and trash disposal are provided with
contracted services.
Police and Fire Protection. Police and fire services are provided by contracts with the Orange
County Sheriff's Department and the Orange County Fire Authority, respectively.
Transportation. Stanton enjoys easy freeway access, located between four freeways. The Garden
Grove Freeway, State Route 22, runs east-west and passes just south of Stanton. The San Gabriel River
Freeway, Interstate 605, runs north-south and is to the west of Stanton. The Santa Ana Freeway,
Interstate5, runs in a northwest-southeast course to the east. The Artesia Freeway, State Route 91, runs
east-west about two and a half miles north. State Highway 39 (Beach Boulevard) runs through the center
of Stanton.
Air cargo and passenger flight services are provided at Los Angeles International Airport, 30'
miles west, which is served by all major airlines; Long Beach Airport, 10 miles west; and John Wayne
Airport in Orange County, 15 miles southeast. These airports all provide regional service. Fullerton
Municipal Airport, 7 miles north, also provides freight service as well as commuter service to Los
Angeles International Airport.
Local bus transportation is provided by the Orange County Transportation Authority (OCTA).
A line of the Southern California Rapid Transit District (SCRTD) also serves Stanton to link Stanton with
the larger metropolitan area. In addition to regular bus service, OCTA also provides Dial-A-Ride
service.
Commercial and passenger rail services are provided at stations in both Fullerton (15 minutes
away) and Santa Ana (25 minutes away).
Utilities. Stanton provides sanitary sewer services to its residents. Other utility service providers
include electrical power by Southern California Edison Company, natural gas by Southern California Gas
Company, local telephone services by Pacific Bell and GTE and water services by Southern California
Water Company. A small portion of the city receives sewer services from the Garden Grove Sanitary
District. Stanton cooperates with the County of Orange for flood control services.
Economic Growth and Development
.... Housing, Commercial and Industrial Development. The following table summarizes the building
permit activity in Stanton from 1991 through 1995.
CITY OF STANTON
CONSTRUCTION ACTIVITY
(1991 through 1995)
(000's omitted)
Construction Permits
Fiscal Residential Commercial
Year _g. Value ff. Value
Miscellaneous
Value
1991 62 $2,267 72 $2,575
1992 11 1,637 17 5,217
1993 37 1,423 50 5,407
1994 31 1,035 33 1,149
1995 51 21,771 101 2,441
Source: City of Stanton, Development Services Department, Building Division.
344
98
354
423
695
1,239
1,084
1,270
1,103
2,013
o.o~D~ ~,~ ~,, B-89
Employment. The principal employers within Stanton, their product or service and the
number of employees are shown in the table below.
CITY OF STANTON
PRINCIPAL EMPLOYERS
(June 30, 1995)
Company
Product or Service
Employees
CR&R, Inc.
Boyd's
Smith's Food & Drugs Centers, Inc.
Food 4 Less
Sam's Club
Robinson Prezioso, Inc.
HomeBase
All Metals Processing
Detector Systems, Inc.
Adventure City
Waste Disposal
Automotive, Industrial
Grocery Store
Grocery Store
Discount Retailer
General Building Contractor
Lumber, Building Materials
Fabricated Metal Products
Electrical Equipment
Amusement Park
350
198
180
175
167
155
128
125
82
80
Source: City of Stanton, Administrative Services Department, Business Licenses.
GMGEDDES 26982 26~31
B-90
Retail Sales. The following table sets forth a summary of the taxable sales within Stanton
for the calendar years 1990 through 1994.
1990
Apparel Stores $1,035
General Merchandise *
Drag Stores 3,930
Food Stores 20,100
Packaged Liquor Stores 1,567
Eating and Drinking Places 23,448
Home Furnishings and
Appliances 1,965
Building Materials and Farm
Tools
Auto Dealers and Supplies
Service Stations
Other Retail Stores
Total Retail Outlets '
All Other Outlets
Total All Outlets
Source: State Board of Equalization
CITY OF STANTON
Taxable Retail Sales Data
(000's omitted)
1990 through 1994
,,,1991 1992 1993 1994
$ 2,873 $ 2,567 $ 1,906 $ 1,968
36,154 36,661 30,815 22,868
19,583 17,648 14,229 14,812
2,154 2,457 2,304 2,384
23,914 22,508 22,525 22,788
1,601 2,188 2,079 2,555
40,638 34,993 32,863 32,739 30,923
6,177 5,979 5,501 4,005 2,955
16,638 15,716 17,610 15,925 15,902
55,454 26,466 23,030 24,415 25,850
170,952 169,433 163,033 150,942 143,005
73,773 57,513 50,861 ,,52,490 57,071
$244,725 $226,946 $213,89~4 $203,43~2 $200,076
* Sales omiued because their publication would result in the disclosure of confidential information. These amounts are included with 'Other Retail Stores.'
Population. The table below summarizes population information for Stanton since 1986.
POPULATION SUMMARY
CITY OF STANTON
1986 through 1995
Year Population
1986 27,679
1987 28,119
1988 28,284
1989 28,353
1990 30,491
1991 30,818
1992 31,367
1993 31,978
1994 32,229
1995 32,404
Source: State of California, Department of Finance.
General Fund
The following tables summarize information taken from Stanton's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3) fiscal years:
CITY OF STANTON
GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
Assets
Cash and investmems
Receivables:
Accounts
Interest
Taxes
Due from other governments
Prepaid items
Due from other funds
Total Assets
Liabilities and Fund Balance
Liabilities:
Accounts payable
Accrued liabilities
Deferred revenue
Total Liabilities
Fund balance:
Reserved for:
Encumbrances
Long-term receivable
Redevelopment agency commitment
Unreserved; undesignated
Total Fund Balance
Total Liabilities and Fund Balance
1992-93
$2,051,368
30,697
95,487
217,020
374,017
30,992
$ 202,238
72,084
372,917
647 239
1993-94
$3,039,203
45,189
105,576
720,569
323,428
12,467
26,053
$4,272,485
$203,455
40,127
322.328
265,910
850,000
,2,856,575
1994-95
$3,313,160
103,906
124,339
778,402
540,087
179
103,587
$4,963,660
$403,368
37,170
,,,333,502
774 040
18,875
206,585
850;000
3,114,250
2,152,342 3,706,575 4,189,620
$2,799,581 ~ $4,963,660
Source: City of Stanton Comprehensive Annual Financial Repons, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial reports are available from the City of Stanton, and investors are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
CITY OF STANTON
COMBINED STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES
Fiscal Years 1992-93 through 1994-95
1992-93 1993-94 1994-95
Revenues:
Taxes and assessments
Licenses and permits
Intergovernmental
Charges for services
Fines and' forfeitures
Interest income
Rental income
Contribution from developers
Miscellaneous
$4,539,827 $5,901,156 $5,845,286
205,149 172,165 260,674
1,158,087 1,163,477 1,222,680
75,528 67,500 58,024
171,551 165,849 205,793
135,162 147,035 203,602
695,993 810,240 928,732
625,000
96,789 216,165 103,701
Total Revenues
7,078,086 8,643,587. 9,453,492
Expenditures:
Current:
General government
Public safety
Urban Development
Health and welfare
Highways and streets
Culture and recreation
Total Expenditures
1,028,497 1,080,318 1,300,139
6,011,205 6,185,134 6,611,461
279,699 236,019 292,816
329,478 112,152
8,950 320,411 293,900
144,753 150,559 182,131
7,802,582 8,084,593 8,680,447
Excess of Revenues
Over Expenditures
(724,496) (558,994) (773,045)
Other Financing Sources (Uses):
Operating transfers in
Operating transfers out
Total Other Financing Sources (Uses)
742,336 672,496 685,000
(71.263) (72.990) (75,000)
67'1.073 599,506 610,000
Excess of Revenues and
Other Sources Over
Expenditures and Other Uses
Fund Balance, Beginning, Restated
Equity Transfer
Fund Balance, Ending
(53,423) 1,158,500 1,383,045
2,205,765 2,548,075. 3,706,575
(900,000)
$2 152 342 $3,706,575 '$4 189 620
City of Stanton Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual
financial repo~ts are available from the City of Stanton, and investors 'are encouraged to review the entire reports,
including the notes therein, before making an investment decision with respect to the Bonds.
B-94
GMGEDDE$ 26~2 269331
Sales Tax Revenues. The revenue from sales tax provided approximately 39 % of Stanton's total '
local tax revenues in 1995. The following table presents information concerning the value of taxable
retail sales in Stanton since 1990.
Year Ended 12/31
CITY OF STANTON
Taxable Retail Sales
1990-1995
Taxable Sales
1990 $244,725,000
1991 226,946,000
1992 213,894,000
1993 203,432,000
1994 200,076,000
1995
Source: State Board of Equalization.
The table below shows sales tax revenues for Stanton for the last 5 years and the projected sales
tax revenues for the 1995/96 Fiscal Year.
CITY OF STANTON
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1990 Through June 30, 1996
Fiscal Year
Sales Tax Revenues
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96m
Source: City of Stanton.
~) Projected
Property Tax Revenues
The total assessed valuation of the property within Stanton for the fiscal year 1994-95 was
1,094,257,111. The total appropriations limit adopted by Stanton for fiscal year 1994-95 was
$14,155,782 and the actual appropriations for the same period was $6,731,909.
Stanton receives funds annually from the State based upon a percentage of property taxes collected
within the County computed on Stanton's respective assessed valuation, and a statutory system of annual
appropriations. The table below presents the assessed valuation of property within Stanton for the past
five fiscal years.
CITY OF STANTON
Assessed Valuations
Fiscal
Year
Total Before Total After
Local Secured Utility Unsecured Rdv. Increment Incremental AV Rdv Increment
1990-91 $ 917,481,414 $5,788,667 $70,924,973 $ 988,406,387 $149,530,239 $838,826,148
1991-92 960,487,061 8,570,197 92,594,300 1,053,081,361 151,812,345 901,269,016
1992-93 1,006,164,287 4,451,167 97,798,130 1,1'03,962,417 147,371,535 956,590,882
1993-94 1,038,721,628 4,435,792 93,702,876 1,136,860,296 184,381,929 951,905,367
1994-95 1,018,884,613 5,248,116 70,127,496 1,094,260,225 157,581,789 936,708,436
Source: Orange County Auditor - Controller's Office.
The table below presents Stanton's property tax valuation and collection experience for the last
five fiscal years.
CITY OF STANTON
Property Tax Levies and Collections
Last Five Fiscal Years
Amount Percentage
Fiscal Secured Delinquent Delinquent
Year Tax Charge June 30 June 30
1990-91 $1,276,571 $ 58,678 4.60%
1991-92 1,341,550 65,064 4.85
1992-93 1,239,186 57,806 4.66
1993-94 1,044,644 (~) N/A
1994-95 1,039,320 (~) N/A
Sou rce:
(i)
County of Orange Auditor - Controller.
Beginning with fiscal year 1993-94, Stanton elected the Teeter Plan for property tax distribution in which the city receives
the entire secured levy in the current fiscal year, whether paid or not, and the County retains the penalties and interest
on delinquent taxes when paid.
Summary of Significant Accounting Policies
Stanton's financial statements are prepared in accordance with the accounting principles
promulgated by the Governmental Accounting Standards Board (GASB), and in accordance with the
industry audit guide, Audits of State and Local Government Units, prepared by the American Institute
of Certified Public Accountants.
City Budget
Stanton adopts an annual budget prepared on the modified accrual basis of accounting. The City
Manager is required, under Stanton Municipal Code Section 2.08.050, to prepare and submit to the City
Council the annual budget of Stanton and administer it after adoption. Legally, expenditures may not
exceed total appropriations at the fund level. The City Manager is authorized to transfer budgeted
amounts within the accounts of any fund; however, any revisions between funds must be approved by
the City Council. Prior year appropriations lapse unless they are encumbered at year end or
reappropriated through formal budget process.
Direct and Overlapping Bonded Debt
The following table contains information on Stanton's direct and overlapping bonded indebtedness
as of June 30, 1996.
CITY OF STANTON
Direct and Overlapping Bonded Debt
[TO FOLLOW]
Investment Policy
Stanton's written investment policy is reviewed annually by the City Treasurer and the City
Council to ensure its consistency with the overall objectives of preservation of principal, liquidity, and
return, and its relevance to current law, financial and economic trends, and to meet the needs of Stanton.
As a general law city, Stanton operates its pooled idle cash investments under the "Prudent Investor"
standard as described in Section 53600.3 of the California Government Code. The objective of the
investment portfolio is to meet the short and long term cash flow demands of Stanton. To achieve this
objective, the portfolio is structured to provide safety of principal and liquidity, while then providing a
return on investments.
Description of Leased Premises
The following real property and improvements constitute the Leased Premises under Stanton's
Site Lease and Lease Agreement:
Police Station building, approximately 8,041 square feet, which is currently under lease to the
Orange County Sheriff's Department which whom Stanton contracts for police services. The Police
Station is located at 11100 Cedar Street in the City of Stanton near the corner of Beach Boulevard and
Katella Avenue (APN//131-091-49).
Based upon an appraisal dated
has been valued at $
, conducted by
, the Police Station
CITY OF TUSTIN
General
Location and Government. The City of Tustin is a general law city incorporated in 1927. It
is located in Central Orange County at the intersection of the I//5 and SRg55 freeways, approximately
40 miles southeast of Los Angeles and 85 miles north of San Diego. The City has 98.5 miles of
streets and covers 11.1 square miles, bounded by the cities of Orange on the north, Santa Ana on the
west, and Irvine on the south.
In 1868 the City's founder, Columbus Tustin, and his partner, Nelson Oscar Stafford,
purchased 1,300 acres of Rancho Santiago De Santa Ana (originally a Spanish Land Grant). Tustin
started "Tustin City" on his portion of the property and offered lots to all who would settle on them,
and an entire block to families with several children. The orange industry began in Tustin around the
year 1875 and the City soon was surrounded by orange, apricot and walnut orchards. The orange
groves gradually took over from the other crops between 1900 and 1950, and processing citrus fruits
was the City's most important industry. Tustin grew along with all of Orange County during the
population boom of the 1960's, from a census figure of 2,006 in 1960 to 21,178 in 1970; the present
population is 63,619.
Today the City operates under a Council/Manager form of government and provides public
safety (police) services, community services, engineering services, planning services, public works,
general administrative services, and capital improvements. The Tustin Community Redevelopment
Agency was established in 1975 and works to eliminate blighted areas by encouraging the
development of residential, commercial, industrial, recreational and public facilities.
The City of Tustin employs 245 full-time personnel, 197 in classified service and 48 exempt.
Community Services and Facilities; Police and Fire Protection. There is one police station,
with 88 sworn personnel, and fire protection services are contracted with the Orange County Fire
Authority. The City also contracts for refuse, animal control and cable television services, and is
served by private utility companies for electricity, natural gas and telephone; the water utility is
operated by the City.
The Tustin Unified School District facilities consist of eleven elementary schools, four middle
schools, three high schools, an adult education site, a support services facility and an administration
center. The City has eleven public parks covering 65.7 acres, including a community center adjacent
to the City Hall, a Senior Center, and a new sports park in the Tustin Ranch area of the city,
B-98
GMGEDDE$ 269~2 ~9J31
Economic Growth and Development
Housing, Commercial and Industrial Development. The following table summarizes the
building permit activity in the City from 1991 through 1995.
CITY OF TUSTIN
CONSTRUCTION ACTIVITY
(1991 Through 1995)
(000'S omitted)
199.___~1 ,!,992
New Residential
Single Valuation
~ Multiple Valuation
Alterations/Additions
Total
$32,026,587
93,231,461
4,966,881
$130,224,929
$18,478,183
24,492,999
5,229,184
$48,200,366
New Non-Residential
Commercial $3,486,064 $7,189,605
Industrial 0 0
Other 0 0
Alterations/Additions. 10,027,940 8.001,749
Total $13,514,004 $15,191,354
Total Building Valuations $143,738,933
No. of Single Units 126
No. of Multiple Units .1,186
Total Units 1,312
$63,391,720
94
189
283
.1993
$60,405,339
7,364,709
4,874,771
$72,644,819
$6,561,582
731,212
1,948,013
6.169,933
$15,410,740
$88,055,559
305
373
!994
$68,910,287
43,400,070
5,921,643
$118,232,000
$8,661,749
0
1,204,952
13.180,171
$23,046,872
$141,278,872
427
562
989
1995
$25,812,955
18,858,548
4,362,891
$49,034,394
$2,978,117
0
864,915
15,067,437
$18,910,469
$67,944,863
158
.174
332
Source: City of Tustin
Employment. The principal employers within Tustin, their product or service, and the number
of employees are shown in the table below.
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Company
MANUFACTURING EMPLOYMENT
# of Employees Products
Steelcase 950
Silicon Systems 548
Ricoh Electronics, Inc. 296
Morton Electronics 140
Office Furniture
Integrated Circuits Mfg.
Manufacturer
Chemicals
NON-MANUFACTURING EMPLOYMENT
Marine Corps
Tustin Unified School Dis.
_ Tustin Auto Mall
City Hall
Toshiba America
Home Depot
KTBN Channel 40
(Trinity Broadcasting)
Mervyn's
IKEA
K-Mart
Price Costco
MicroCenter
Toys R Us
3,000
1,100
401
248
200
180
274
100
170
110
174
150
53
Air Station-Tustin
Education
Auto Sales
Medical Systems
Home Improvement
24-Hour Christian TV
Retail Department Store
Furniture, Household and Office
Supplies
Retail
Warehouse Sales
Computers
Toys Retail
Source: Chamber of C~mmerce
B-100
GMGI~DDI~ 26982 269331
CITY OF TUSTIN
Taxable Retail Sales Data
1991 Through 1995
Retail Stores
Apparel Stores
General Merchandise Stores
Drug Stores
Food Stores
Packaged Liquor Stores
Eating and Drinking Places
Home Furnishing and Appliances
Building Maul and Farm Implements
Auto Dealers and Auto Supplies
Service Stations
Other Retail Stores
Retail Stores Total
All Other Outlets
Totals All Outlets
Source: '1995 Data is through secmd quarter ~nly
1991 1992 1993 1994 1995'
$28,449.00 $29,072.00 $29,935.00 $32,102.00
$24,268.00 $33,527.00 $51,867.00 $71,115.00
$18,553.00 $19,272.00 $18,206.00 $18,874.00
$36,244.00 $38,664.00 $30,793.00 $30,204.00
$4,851.00 $4,883.00 $4,207.00 $4,186.00
$65,582.00 $72,238.00 $70,809.00 $78,550.00
$54,698.00 $58,795.00 $65,576.00 $71,640.00
$55,549.00 $53,599.00 $56,203.00 $54,611.00
$197,814.00 $196,672.00 $227,278.00 $239,584.00
$33,869.00 $38,122.00 $38,261.00 $39,782.00
$95,856.00 $98,516.00 $121,722.00 $166,383.00
$14 542.00
$32,345.00
$8.991.00
$14.205.00
$2.129.00
$39 619.00
$31 766.00
$26 223.00
$139,138.00
$21,972.00
$66~051.00
$615,733.00 $643,360.00 ', $714,857.00 $807,031.00 $396,981.00
$191,478.00 $187,368.00 $203,253.00 $213,314.00 $115,524.00
$1,020,345.00
$807,211.00 $830,728.00 $918,110.00
$512,505. O0
CITY OF TUSTIN
PRINCIPAL TAXPAYERS
June 30, 1995
Taxpayer
The Irvine Company
Steelcase Inc.
Catelus Developmem Corp.
Sanyo Foods
Baycrest Associates
Ricoh DeveloPment
Patrick F. Cadigan Trust
Stacy Lynn Bartlett Trust
Trinity Christian Center
AUD Corp.
MAC Pherson Properties
Type of Business
Residential and
Commercial Prop.
Manufacturing
Industrial/Commercial
Recreation
Residential
Manufacturing
Commercial
Commercial
Non-profit
Manufacturing
Retail Sales
1995
Valuation
$239,838,398
69,178,679
50,075,545
36,347,518
27,994,784
26,727,256
18,994,281
18,989,151
18,503,721
17,617,000
14,748,868
$539,015,20!,
Percemage
of Total
Valuation
7.37%
2.13
1.54
1.12
0.86
0.82
0.58
0.58
0.57
0.54
0.45
16.56%
Source: Orange County Assessor's Office
B-102
GMGEDDES 26~2 269331
Population. The table below summarizes population information for Tustin since 1986.
CITY OF TUSTIN
POPULATION SLrMMARY
1986 through 1996
Year Population
1986 40,800
1987 42,735
1988 43,111
1989 45,765
1990 46,782
1991 49,409
1992 52,145
1993 54,739
1994 57,454
1995 62,497
1996 63,619
Source: City of Tustin
The principal taxpayers, type of business and valuation as of June 30, 1995 are shown in the table
below.
General Fund
The following tables summarize information taken from Tustin's audited financial statements
regarding its General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in
General Fund Balances for the past three (3) fiscal years:
CITY OF TUSTIN
COMPARATIVE GENERAL FUND BALANCE SHEET
Fiscal Years 1992-93 through 1994-95
1992-93 .1993-94 1994-95
Assets and Other Debits
Assets:
Cash and investments
Taxes receivable
Accrued Interest Receivable
Accounts receivable
Due from other governments
Due from other funds
Prepaid expenses
TOTAL ASSETS
$11,156,282 $12,211,736 $14,191,252
760,934 1,024,412 1,403,396
210,139 123,085 212,657
197,557 123,085 212,657
17,879 102,293 52,418
38,648 28,512 199,176
- 218,356 4,980
$13,713,593 $17 279 945
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable
Due to other funds
Deposits
Deferred revenue
$1,921,383 $1,135,293 $ 2,156,450
-- 86,033 7,756
2,677,556 2,266,302 3,688,908
-- 568,878 332,93~
TOTAL LIABILITIES
4.598.939_ 4,056,506 6,186,052
FUND BALANCE:
Reserved for prepaid expenses
Unreserved:
Designated for capital outlay
Designated for self insurance
Designated for contingencies
TOTAL FUND BALANCE
218,356 204,156
3,172,071 3,371,873 3,591,043
1,304,423 1,046,138 1,304,994
3,306,006 5,020,720, 5,993,700
7,782,500 9,657.087 11.093,893
TOTAL LIABILITIES AND FUND BALANCE $12 381 439 $13 713 593
$17279 945
Source.'
City of Tustin Comprehensive Annual Financial Reports, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual financial
repotxs are available from the City of Tustin, and investors are encouraged to review the entire reports, including the notes
therein, before making an invesunent decision with respect to the Bonds.
B-104 ..
GMG~DDI~S 2t~2 269~1
CITY OF TUSTIN
Statement of Revenues, Expenditures
and Changes in Fund Balance - Budget and Actual
General Fund
Fiscal Years 1992-3 through 1994-95
Revenues:
Taxes
Sales Tax
Licenses and Permits
Other Taxes
Fines and Forfeitures
Use of Money and Property
Interest and Rentals
Intergovernmental Revenue
Charges for Services
Sales of Property
Other
1992-93 1993-94 1994-95
$ 4,803,695 $ 4,469,418 $18,623,013
9,197,751 11,048,745 ---
331,201 390,596 421,046
1,552,987 2,552,651
371,997 435,460 487,694
...... 753,151
975,905 880,076
2,189,451 2,283,986 2,482,689
1,568,677 1,520,077 1,064,018
--- 6,862 ---
785,187 673,783 995,174
21,776,851 24,315,654 24,826,785
Total Revenues
Expenditures:
Current:
General Government
Public Safety
Public Works
Community Services
Nondepartmental
2,696,374 2,649,564 2,661,555
11,595,821 12,124,822 13,146,028
6,245,346 6,028,954 7,760,414
921,328 909,834 1,217,100
773,718 735,483 392,722
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
22,232,587 22,448,657 25,177,819
(455,736) (1,866,997) (351,034)
Other Financing Sources (Uses):
Operating Transfers In
Operating Transfers Out
1,362,061 1,827,224 2,179,784
(741,415) (1.819.634) (1.512.091)
Total Other Financing Sources (Uses)
620,646 7,590 667,693
Excess of Revenues and Other Financing
Sources Over (Under) Expenditures
and Other Financing Uses
164,910 1,874,587
Fund Balances At Beginning Of Year
7,617,590 7,782,500
Fund Balances At End Of Year
$7,782,500 $9 657 087
316,659
10,777,234
$11 093 893
Source.'
City of Tustin Comprehensive Annual Financial Repons, Fiscal Years 1992-93, 1993-94 and 1994-95; the annual financial
repons are available from the City of Tustin, and investors are encouraged to review the entire reports, including the notes
therein, before making an invesunent decision with respect to the Bonds.
GMG~DD~S 269~2 269331
B-105
Sales Tax Revenues. The revenue from sales tax provided approximately 39.5 % of Brea's total local tax
revenues in 1995. The following table presents information eo.nceming the value of taxable retail sales in Brea
since 1990.
CITY OF TUSTIN
Taxable Retail Sales
1991 Through 1995
Year Ended 12/31
Taxable Sales
1991 $ 807,211
1992 830,728
1993 918,110
1994 1,020,345
19950) 512,505
Source: (1) 1995 Data is Through Second Quarrier Only
The table below shows sales tax revenues for Tustin for the last 5 years and the projected sales tax
revenues for the 1995/96 Fiscal Year.
CITY OF TUSTIN
Sales Tax Revenues
For the Fiscal Years Ended
June 30, 1991 Through June 30, 1996
Fixed Year
1991
1992
1993
1994
1995
Sales Tax Revenues
$ 9,300,457
9,178,468
9,197,751
11,048,745
11,865,910
Source: City of Tustin
Property Tax Revenues
The following tables set forth the assessed valuations of taxable property and property tax collections
for Tustin since 1990.
CITY OF TUSTIN
Assessed Valuations of Taxable Property
1990 Through 1995
Fiscal
year
1990
1991
1992
1993
1994
1995
Real
Property
$2,413,175,256
2,560,822,523
2,612,038,983
2,915,855,595
2,967,612,592
2,923,543,175
Personal
Prooertv Total
$329,176,611 $2,742,351,867
350,402,084 .,2,911,224,607
357,410,126 2,969,449,109
365,032,361 3,280,887,956
227,175,851 3,194,788,443
321,567,540 3,245,110,715
Percent
10.3%
6.2
2.0
10.5
(2.6)
1.6
Source: City of Tustin
CITY OF TUSTIN
Property Tax Levies and Collections
Last Five Fiscal Years
Fiscal
.Year
1990
1991
1992
1993
1994
1995
Total
Tax Levy,
$ 8,094,978
9,269,103
9,704,763
10,592,679
10,285,757
10,835,271
Current Tax
Collections
Delinquent
Collections
$ 7,910,339 $ 81,833
9,080,606 78,932
9,500,394 167,617
9,968,598 293,422
9,791,553 291,365
10,116,251 221,798
Total Tax
Collections
$ 7,992,172
9,159,538
9,668,011
10,262,020
10,082,918
10,338,049
Source: City of Tustin
Summary of Significant Accounting Policies
The Financial Reporting Entity. The City of Tustin was incorporated in 1927 as a 'General Law~
City governed by aa elected five-member city council. As required by generally accepted accounting principles,
these financial statements present the City of Tustin (the primary government) and its component units. The
component units discussed below are included in the City's reporting entity because of the significance of their
operational or financial relationship with the City. These entities are legally separate from each other.
However, the City of Tustin elected officials have a continuing full or partial accountability for fiscal matters of
the other entities. The fmaacial reporting entity consists of: (1) the City (2) organizations for which the City is
financially accountable and (3) organizations for which the nature and significance of their relationship with the
City are such that exclusion would cause the City's financial statements to be misleading or incomplete.
An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy
taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended
presentation, a component units' balances and transactions are reported in a manner similar to the balances and
transactions of the City. Component traits are presented on a blended basis when the component unit's
governing body is substantially the same as the City's or the component unit provides services almost entirely to
the City.
Blended Component Units. The Tustin Community RedevelOPment Agency was established October
20, 1976 pursuant to the State of California Health and Safety Code, Section 33000, entitled ~Community
Redevelopment Law~. Its purpose is to prepare and carry out plans for improvement, rehabilitation and
redevelopment of blighted areas within the territorial limits of the City of Tustin. The City provides
management assistance to the Agency, and the members of the City Council also act as the governing body of
the Agency.
The separate financial statements of the Tustin Redevelopment Agency may be obtained from the City
of Tustin Finance Department located in the Tustin Civic Center.
The City of Tustin Water Corporation was incorporated March 3, 1980 under the non-profit
corporation law of the State of California. Its purpose is to provide fmanciat assistance to the City of Tnstin by
acquiring, constructing and operating or providing for the operation of water facilities. The Corporation's
original governing' body was appointed by the City Council. The City makes annual lease payments to the
Corporation, which are used for debt service on the Corporation's bonds.
Separate financial statements for the City of Tustin Water Corporation are not issued.
Description of Funds and Account Groups: The accounts of the City are organized on the basis of
funds or account groups, each of which is considered to be a separate accounting entity. The operations of each
fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets,
liabilities, equity, revenues and expenditures. The various funds and account groups are defined as follows:
Governmental Fund Types:
The General Fund is used to account for all financial resources except those required to be accounted
for in another fund.
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
restricted by law or administrative action for specified purposes.
Debt Service Funds are used to account for the accumulation of resources for, and the payment of,
general long-term debt principal, interest, and related fiscal agent costs.
B-108
GMGEDDE$ 26982 269331
Capital Proiects Funds are used to account for the financial resources to be used for the acquisition or
construction of major capital facilities, and for the improvement, rehabilitation and redevelopment of the
Community Redevelopment Agency project areas.
Proprietary Fund Type: The Enterprise Fund is used to account for operations that are financed and
manner similar to private business enterprises. The intent of the governing body is that the costs of providing
services to the general public on a continuing basis be f'manced or recovered through user charges.
Fiduciary Fund Types: Agency Funds are used to account for assets held by the City as an agent for
individuals, other governments and other entities.
Account Groups: The General Fixed Assets Account Group is used to account for capital assets of the
City, which are long-term in nature, and used in the operation of the City, other than those capitalized in the
proprietary fund. The General Long-Term Debt Account Group is used to account for the City's outstanding
long-term obligations, other than those of the proprietary fund.
·
_~ Basis of Accounting: The accounting and financial reporting treatment applied to a fund is determined
by its measurement focus. All governmental funds are accounted for using a current financial resources
measurement focus. With this measurement focus, only current assets and current liabilities generally are
included on the balance sheet Operating statements of these funds present increases (revenues and other
financing sources) and decreases (expenditures and other financing uses) in net current assets.
·
The proprietary fund is accounted for on a flow of economic resources measurement focus. With this
measurement focus, all assets and all liabilities associated with the operation of this fund are included on the
balance sheet.
Fund equity (net total assets) is segregated into contributed capital and retained earnings components.
The proprietary fund-type operating statement presents increases (revenues) and decreases (expenses) in net total
assets.
The modified accrual basis of accounting is followed for the governmental and fiduciary fund @s
(General, Special Revenue, Debt Service, Capital Projects, and Agency Funds). Under the modified accrual
basis of accounting, revenues are recognized when they become susceptible to accrual; i.e., when they become
measurable and available to finance expenditures of the current period or soon enough thereafter to be used to
pay liabilities of the current period. The City considers property taxes as available if they are remitted within
60 days after the year end. Other revenues considered susceptible to accrual include sales tax, gas tax, motor
vehicle license fees, franchise fees, interest income and charges for services. Licenses and permits, fines and
forfeitures and other taxes are not susceptible to accrual because they are not measurable until received in cash.
Grant revenues have been recorded according to the provisions of GASB Cod. Sec. G60, whereby grant funds
earned but not received are recorded as a receivable, and grants received before the related revenue recognition
criteria have been met are reported as deferred revenues. Expenditures are recorded when the related fund .-
liability is incurred, except that principal and interest on general long-term debt is recognized when due. The
long-term liability to be paid from governmental funds' resources for accumulated unpaid vacation and
compensatory leave time is recorded in the General Long-Term Debt Account Group as it is expected to be paid
from future resources.
The accrual method of accounting is followed by the City's proprietary fund type (Enterprise Fund).
Proprietary fund types are accounted for on an ~income determination~ or ~cost of service~ measurement focus.
Accordingly, all assets and liabilities are included in their respective balance sheets, and the reported fund
equity (total reported assets, less total reported liabilities) provides an indication of the economic net worth of
the fund. Operating statements for proprietary fund types (on an income determination measurement focus)
report increases (revenues) and decreases (expenses) in determining total economic net worth. Under this
determination, unbilled service receivables are recorded at year-end.
GMGEDDI~ 26982 269331
B-109
This report has been prepared in conformance with Generally Accepted Accounting Principles (GAAP)
as promulgated by the Governmental Accounting Standards Board (GASB).
City Budget
The City follows these procedures in establishing the budgetary data reflected in the financial
statements:
The annual budget is adopted by the City Council after the holding of a hearing and provides
for the general operation of the City. The operating budget includes proposed expenditures
and the means of financing them.
.
The City Council approves total budgeted appropriations and any amendments to
appropriations throughout the year. This "appropriated budget' (as defined by GASB Cod.
Section 2400.109) covers City expenditures in all governmental funds, except for debt service
and capital improvement projects carried forward from prior years.
The City Manager is authorized to transfer budgeted amounts between departments. Actual
expenditures may not exceed budgeted appropriations at the fund level. Budget figures used in
the accompanying financial statements are the final adjusted amounts.
.
Formal budgetary integration is employed as a management control device during the year.
Commitments for materials and services, such as purchase orders and contracts, are recorded
as encumbrances to assist in controlling expenditures. Encumbrances at year end carry
forward, and are added to the following year's budgeted appropriations. However,
encumbrances at year end are reported as reservations of fund balance, as allowed by GASB
Cod. Section 1700.129d. Also, unencumbered appropriations lapse at year end.
.
Annual budgets are adopted for the General and Special Revenue Funds on a basis substantially
consistent with generally accepted accounting principles (GAAP). Accordingly, actual
revenues and expenditures can be compared with related budgeted amounts without any
significant reconciling items. Revisions to the originally adopted budget were made during the
year and have been incorporated into budgetary amounts presented within these financial
statements. No budgetary comparisons are presented for the Capital Projects, Debt Service
and Proprietary Funds, as the City is not legally required to adopt budgets for these fund
types.
Direct and Overlapping Debt
The following table sets forth the direct and overlapping debt for Tustin as of June 30, 1995:
CITY OF TUSTIN
Schedule of Direct and Overlapping Bonded Debt
June 30, 1995
1994-95 Assessed Valuation:
$3,245,110,715 (after deducting $409,373,597 redevelopment incremental
valuation)
Percent Debt as of
Applicable 6/30/95
DIRECT AND OVERLAPPING BONDED DEBT:
Orange County
Orange County General Fund Obligations
Orange County Pension Obligations
Orange County Teeter Plan Obligations
Orange County Transit Authority' ~:
Orange County Flood Control District
Metropolitan Water District
Municipal Water Dist. of O.C. Water Facilities Corp.
Saddleback Community College District Certificates of Participation
Tustin. Union School District Community Facilities District #88-1
Irvine Unified School District and Certificates of Participation
Irvine Unified School District Community Facilities District #86-1
Other School Districts and Authorities
Orange County Sanitation District #1 Certificates of Participation
Orange County Sanitation District #7 Certificates of Participation
Orange County Sanitation District #14 Certificates of Participation
Orange County Water District Certificates of Participation
East Orange County Water District Certificates of Participation
Irvine Ranch Water District Certificates of Participation
Irvine Ranch Water District Improvement Districts
City of Tustin
City of Tustin Water Corporation
City of Tustin 1915 Act Bonds
Total Gross Direct and Overlapping Bonded Debt
Less:
Orange County Transit Authority (80 % self-supporting)
MWDOC Water Facilities Corporation (100% self-supporting)
Orange County Water District Certificates of Participation
City of Tustin Water Corporation (100 % self-supporting)
2.049 % $ 12,089
2.049 11,662,375
2.049 6,337,620
2.049 3,173,950
2.049 432,339
2.050 22,448
0.401 2,513,889
3.134 2,762,151
3.710 1,549,694
100. 14,715,000
0.315 32,461
0.817 281,497
Various 2,766
0.008 4,178
12.172 3,491,046
10.104 190,561
3.021 6,279,753
27.218 691,337
9.634 5,780,400
0.917-47.985 42,690,465
100. 180,000
100. 3,250,000
100. 118,767,108
$225,045,167(1)
$ 345,871
2,762,151
6,279,753
3,250,000
Total Net Direct and Overlapping Bonded Debt:
$ 212,407,392
(1)
and non-bonded capital lease obligations.
Ratio to Assessed Valuations
Gross Direct Debt ($3,430,000)
Net Direct Debt ($180,000)
Total Gross Debt
Total Net Debt
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/95:
Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds
0.11%
0.01%
6.93%
6.55%
$0
Investment Policy
Tustin annually adopts an investmem policy. The most recent modifications adopted by the City Council on
April 1, 1996, are in compliance with newly adopted state legislation and in a number of areas are more restrictive than
State requirements. The Policy requires that an investment report be submitted quarterly to the City Council. In 1988,
the City Council established the City of Tustin Audit Committee which meets on a bi-monthly basis. It is a five member
advisory body made up of citizens appointed by the City Council. The annual review of the City's Investment Policy is
a primary function of the Committee.
DeScription of Leased PremiseS
Tustin's new Civic Center is a two story structure in a Santa Barbara Mission style architecture, with beautifully
landscaped grounds which include a wishing well. The main lobby features a picturesque fountain surrounded by
tropical plants on the porcelain tile, with sitting areas for residents to enjoy.
The Civic Center expansion's general architecture was designed by John Bates and Associates. The interior
finishings and furniture were designed by Laura McCants Interior Design and Planning. Project management was
provided by HNTB CorpOration, and the contractor for the project was Dillingham Construction, N.A.
Construction of the Civic Center improvements began in August of 1991 and the $11.4 million project was
completed in August of 1993. Improvements were financed by the Tustin Community Redevelopment Agency and
developer fee contributions from new construction in Tustin Ranch. The entire complex is approximately 69,000 square
feet, with an adjacent 59,000 square foot parking structure. The Civic Center complex is comprised of the City Hall,
Police Department, Council Chamber and the Community Center.
Based upon an appraisal conducted in 1994 by the Orange County Cities Risk Management Authority, the City
Hall complex has been valued at $13,100,000.
APPENDIX C
PROPOSED FORM OF BOND COUNSEL OPINION
[TO BE PROVIDED BY BOND COUNSEL]
C-1
APPENDIX D
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
[TO BE PROVIDED BY INSURER]
D-1
APPENDIX E
FORM OF AUTHORITY CONTINUING DISCLOSURE CERTIFICATE
[TO BE PROVIDED BY BOND COUNSEL]
E-1
APPENDIX F
FORM OF MEMBER CONTINUING DISCLOSURE CERTIFICATE
[TO BE PROVIDED BY BOND COUNSEL]
F-1
13128-01
JHHW:BDQ:kla
03/06/96
04/29/96
AFTER RECORDATION PLEASE RETURN TO:
Jones Hall Hill & White,
A Professional Law Corporation
Four Embarcadero Center, 19th Floor
San Francisco, CA 94111
Attention: Brian D. Quint, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 6103 OF THE'
CALIFORNIA GOVERNMENT CODE.
LEASE AGREEMENT
Dated as of July 1,1996
by and between the
CO~E PUBLIC FINANCING AIYl'I-IO~,
as Lessor
and the
CITY OF
as Lessee
Relating to
$
Countywide Public Financing Authority
(Orange County, California)
1996 Revenue Bonds
Section 1.1.
Section 1.2_
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND EXHIBITS
Definitions...
Exhibits "'" ............................................................................................................ 2
Section 2.1.
Section 2.2.
ARTICLE II
REPRESENTATIONS, COVEN--S AND WARRANTIES
Representations, Covenants and Warranties of the City ................................................. 4
Representations, Covenants and Warranties of Authority ............................................... 5
Section 3.1.
Section 3.2.
ARTICLE III
ISSUANCE OF THE BONDS
The Bonds ................................
Application of Advance Rental Payment ............... ~ ....................................................... 7
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
Section 4.6.
Section 4.7.
ARTICLE IV
LEASE OF LEASED PREMISES; TERM OF THIS LEASE AGREEMENT; LEASE
PAYMENTS
Lease of Leased Premises ........................................... : ............................. i .................... 8
Term of Lease .................................................................................. i ........................... 8
Lease Payments ........................................................................................................... 8
Optional Prepayment ............................ ; .......... ~. ...................................................... 9
Quiet Enjoyment ....................................................... - ............................................. i..i'~0
· Title ...........................................................................................................................
Additional Payments .................................................................................................. 10
10
Section 5:1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
Section 5.6.
Section 5.7..
Section 5.8.
Section 5.9.
Section 5.10.
Section 5.! 1.
ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS
Maintenance, Utilities, Taxes and Assessments ............................................ i ............... 12
Modification of Leased Premises .................................................................................. 12
Public Liability and Property Damage Insurance ..................................................... L.. 13
ire and Extended Coverage Insurance .................................... 13
ental Interruption Insurance .................................................. iiiiiiii.iiiiiiiiiiiiiiiiiiiiiiiiiii 13
Recordation Hereof; Title Insurance ............................................................................. 1,t
Net Proceeds of Insurance; Form of Policies ............ ~ .................................................... 1,1
Installation of Personal Property .................................................................................. 1,1
Liens .....................................................................
Tax Covenants ............................................. ' ................................................... 14
Continuing Disclosure ........ ....... '"'
ARTICLE vi
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; ABATEMENT OF LEASE
PAYMENTS
Section 6.1. Application of Net Proceeds .... ......................................................... 16
Section 6.2. Abatement of Lease Payments... ' ............ ' .............
................................................................................. 16
!
Section 7.1.
Section 7.Z
Section 7.3.
ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
Disclaimer of Warranties ............................................................................................. 17
Rights of Access ......................................................................................................... 17
Release and Indemnification Covenants ...................................................................... 17
Section 8.1.
Section 8.2.
Section 8.3.
ASSIGNMENT, LEASING AND AMENDMENT
Assignment by the Authority ...................................................................................... 18
Assignment and Subleasing by the City ..................................................................... 18
Amendment of Lease ................................................................................................. 18
Section 9.1.
Section 9.2.
Section 9.3.
Section 9.4.
Section 9.5.
Section 9.6.
Section 9.7.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Events of Default Defined ........................................................................................... 21
Remedies on Default .................................................................................................. 21
Limitation on Remedies .............................................................................................. 22
No Remedy Exclusive ................................................................................................ 22
Agreement to Pay Attorneys' Fees and Expenses ........................................................ 22
No Additional Waiver Implied by One Waiver ........................................................... 23
Trustee and Bond Owners to Exercise Rights ................................................................ 23
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
Section 10.6.
Section 10.7.
Section 10.8.
Section 10.9.
EXHIBIT A:
EXHIBIT B:
EXHIBIT C:
ARTICLE X
MISCELLANEOUS
Notices ........................................................................................... . ............................ 24
Binding Effect. ........................................................................................................... 24
Severability ................................................................................................................ 24
Net-net-net Lease ....................................................................................................... 24
Further Assurances and Corrective Instruments .......................................................... .24
Execution in Counterparts ............................................................................ ~ .............. 24
Applicable Law .......................................................................................................... 24
Authorized Representatives ........................................................................................ 25
Captions .................................................................................................................... 25
Description of the Site.
Description of the Facility.
Schedule of Lease' Payments.
-ii-
LEASE AGREIhMENT
This LEASE AGREEMENT (this "Lease Agreement"), dated as of July 1, 1996, is by
and between the COUNTYWIDE PUBLIC FINANCING AUTHORITY, a joint exercise of
powers authority organized and existing under and by virtue of the laws of the State of
California, as lessor (the "Authority"), and the CITY OF , a municipal corporation
and city organized and existing under the laws of the State of California, as lessee (the
"City");
WITNESSETH:
WHEREAS, the City is proceeding to finance its share of a countywide 800 MHz
communications system and to finance capital improvements throughout the geographic
boundaries of the City and, for the purpose of providing moneys for such purposes, the City
has leased certain real property, more particularly described in Exhibit A attached hereto and
incorporated herein as if set forth in full in this place (the "Site"), and improvements, more
particularly described in Exhibit B attached hereto and incorporated herein as if set forth in full
in this place (the "Facility')(collectively, the "Leased Premises"), to the Authority pursuant to
a Site and Facility Lease, dated as of the date hereof and recorded concurrently herewith (the
"Site and Facility Lease"), for an advance rental payment in an amount not exceeding the
current appraised value of the Leased Premises (the "Advance Rental Payment"), to be paid to
the City upon the execution and delivery of the Site and Facility Lease; and
WHEREAS, in order to raise the amount required to make the Advance Rental Payment,
the Authority has proposed to issue its Countywide Public Financing Authority (Orange
County, California) 1996 Revenue Bonds in the aggregate principal amount of $ (the
"Bonds"); and
WHEREAS, in order to provide a portion of the revenues necessary to enable the
Authority to pay debt service on the Bonds as it becomes due, the Authority has proposed to
lease the Leased Premises back to the City upon the terms and conditions set forth herein; and
WHEREAS, the Authority and the City have duly authorized the execution and delivery
of this Lease Agreement;
NOW, THEREFORE, for and in consideration of the premises and the material
covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1. Definition~. Unless the context dearly otherwise requires or unless otherwise
defined herein, the capital~:zed terms in this Lease Agreement shall have the respective meanings
specified in Section 1.01 of the Indenture (hereinafter defined). In addition, the following terms
heretofore defined in this Lease Agreement and the following terms defined in this Section 1.1
shall, for all purposes of this Lease Agreement, have the respective meanings herein specified.
"Additional Payments" means the amounts payable by the 'City pursuant to Section 4.7.
c . "City Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure
ertificate executed by the City and dated the Closing Date, as originally executed and as it
may be amended from time to time in accordance with the terms thereof.
"City's Pro Rata Portion" means the product of the total cost multiplied by a fraction, the
numerator of which is the aggregate principal amount of the Bonds issued for the benefit of the
City, and the denominator of which shall be the aggregate principal amount of' the Bonds
issued.
"Event of Default" means any of the events of default defined as such in Section 9.1.
"Facility" means those certain improvements more particularly described in Exhibit B to
the Site and Facility Lease and in Exhibit B to this Lease Agreement.
"Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending
on June 30 of the next succeeding year, or any other twelve-month period established by the
City as its fiscal year pursuant to written notice filed with the Authority and the Trustee.
"Indenture" means the Indenture of Trust dated as of July 1, 1996, by and between the
Authority and the Trustee, authorizing the issuance of the Bonds, together with any duly
authorized and executed amendments thereto.
"Lease Payment Date" means, with respect to any Interest Payment Date, the fifteenth
(15th) calendar day of the month preceding such Interest Payment Date.
"Lease Payments" means the amounts payable by the City pursuant to Section 4.3(a),
including any prepayment thereof pursuant hereto and including any amounts payable upon a
delinquency in the payment thereof.
"Leased Premises" means, collectively, the Site and the Facility.
"Net Proceeds" means amounts derived from any policy of casualty insurance or title
insurance with respect to the Leased Premises, or the proceeds of any taking of the Leased
Premises or any portion thereof in eminent domain proceedings (including sale under threat of
such proceedings), to the extent remaining after payment therefrom of all expenses incurred in'
the collection and administration thereof.
"Participating Underwriter" shall have the meaning ascribed thereto in the City
Continuing Disclosure Certificate.
"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem taxes
and assessments, if any, not then delinquent, or which the City may permit to remain unpaid
pursuant to Article V; (b) the Site and Facility Lease, this Lease Agreement, the Indenture and
any other agreement or document contemplated hereunder to be recorded against the Leased
Premises; (c) any fight or claim of any mechanic, laborer, materialman, supplier or vendor not
filed or perfected in the manner prescribed by law; and (d) easements, rights of way, mineral
rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which
exist of record and which the City certifies in writing will not materially impair the use of the
Leased Premises for their intended purposes.
-site- means that certain real property more particularly described in Exhibit A to the
Site and Facility Lease and in Exhibit A to the Lease Agreement.
"Site and Facility Lease" means the Site and Facility Lease dated as of July 1, 1996, by
and between the City as lessor of the Leased Premises, and the Authority as lessee, together
with all amendments thereto.
"State" means the State of California.
"Term of this Lease Agreement" means the time during which this Lease Agreement is in
effect, as provided in Section 4.2.
"Trustee" means
to the Indenture.
, or any successor thereto acting as Trustee pursuant
Section 1.2. Exhibit~. The following exhibits are attached to, and by this reference made
a part of, this Lease Agreement:
Exhibit A:
Exhibit B:
Exhibit C:
Description of the Site.
Description of the Facility.
Sched,ule of Lease Payments.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City. The City makes the
following covenants, representations and warranties to the Authority as of the date of the
execution and delivery of this Lease Agreement:
(a) Due Organization and Existence. The City is a municipal corporation and
city duly organized and validly existing under the laws of the State, has full legal right, power
and authority under the laws of the State to enter into this Lease Agreement and the Site and
Facility Lease and to carry out and consummate all transactions contemplated hereby and
thereby, and by proper action the City has duly authorized the execution and delivery of this
Lease Agreement and the Site and Facility Lease.
(b) Due Execution. The representatives of the City executing this Lease Agreement and ·
the Site and Facility Lease have been fully authorized to execute the same pursuant to a
resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. This Lease Agreement and the Site and
Facility-Lease have been duly authorized, executed and delivered by the City and constitute the
legal, valid and binding obligations of the City enforceable against the City in accordance with
their respective terms.
(d) No Conflicts. The execution and delivery of this Lease Agreement and the Site and
Facility Lease, the consummation of the transactions herein and therein contemplated and the
fulfillment of or compliance with the terms and conditions hereof and thereof, do not and will
not conflict with or constitute a violation or breach of or default (with due notice or the passage
of time or both) under any applicable law or administrative rule or regulation, or any applicable
court or administrative decree or order, or any indenture, mortgage, deed of trust, lease,
contract or' other agreement or instrument to which the City is a party or by which it or its
properties are otherwise subject or bound, or result in the creation or imposition of' any
prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or
assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would
have consequences that would materially and adversely affect the consummation of the
transactions contemplated by this Lease Agreement and the Site and Facility Lease, or the
financial condition, assets, properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the City or of the voters of the City, and no consent, permission, authorization,
order or license of, or filing or registration with, any governmental authority is necessary in
connecti°n with the execution and delivery of this Lease Agreement and the Site and Facility
Lease, or the consummation of any transaction herein or therein contemplated, except as have
been obtained or made and as are in full force and effect.
(f) No Litigation. There is n0 action, suit, proceeding, inquiry or investigation before or by
any court or federal, state, municipal or other governmental authority pending or, to the
knowledge of the City after reasonable investigation, threatened agaimt or affecting the City or
the assets, properties or operations of the City which, if determined adversely to the City or its
interests, would have a material and adverse effect upon the consummation of the transactions
contemplated, by or the validity of this Lease Agreement and the Site and Facility Lease, or
upon the financial condition, assets, properties or operations of the City, and the City is not in
default with respect to any order or decree of any court' or any order, regulation or demand of
any federal, state, municipal or other governmental authority, which default might have
consequences that would materially and adversely affect the consummation of the transactiOns
contemplated by this Lease Agreement and the Site and Facility Lease, or the financial
conditions, assets, properties or operations of the City.
(g) Status of Leased Premises. The Leased Premises are fully functional, operational, and in
sound condition.
Section 2.2. Revresentations, Covenants and Warranties of Authority. The Authority
makes the following c~venants, representations and warranties as the basis fo~its undertakings
herein contained:
(a) Due Organization and Existence. The Authority is a joint exercise of powers authority
duly organized and existing under and by virtue of the laws of the State; has power to enter
into this Lease Agreement, the Site and Facility Lease and the Indenture; is possessed of full
power to own and hold, improve and equip real and personal property, and to lease and lease
back the same; and has duly authorized the execution and delivery of each of the aforesaid
agreements and such agreements constitute the legal, valid and binding obligations of the
Authority, enforceable against the Authority in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this Lease Agreement,
the Site and Facility Lease and the Indenture are fully authorized to execute the same pursuant
to official action taken by the governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease Agreement, the Site and'Facility
Lease and the Indenture have been duly authorized, executed and delivered by the Authority
and constitute the legal, valid and binding agreements of the Authority with the Authority,
enforceable against the Authority in accordance their respective terms.
(d) No Conflicts. The execution and delivery of this Lease Agreement, the Site and
Facility Lease and the Indenture, the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not
and will not conflict with or constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any indenture, mortgage, deed of trust,
lease, contract or other agreement or instxument to which the Authority is a party or by which it
or its properties are otherwise subject or bound, or result in the creation or imposition of any
prohibit_ed lien, .charge or encumbrance of any nature whatsoever upon any of the property or
assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance
would have consequences that would materially and adversely affect the consummation of the
transactions contemplated by this Lease Agreement, the Site and Facility Lease and the
Indenture or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the Authority, and no consent, permission, authorization, order or license of, or
filing or registration with, any governmental authority is necessary in connection with the
execution and delivery of this Lease Agreement, the Site and Facility Lease and the Indenture,
or the consummation of any transaction herein or therein contemplated, except as have been
obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by
any court or federal, state, municipal or other governmental authority pending or, to the
knowledge of the Authority after reasonable investigat, io_n, threatened against'or affecting the
Authority or the assets, properties or operations, of the Authority which, if determined
adversely to the Authority or its interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of this Lease Agreement, the
Site and Facility Lease or the Indenture, or upon the financial condition, assets, properties or
operations of the Authority, and the Authority is not in default with respect to any order or
decree of any 6ourt or any order, regulation or demand of any federal, state, municipal or other
governmental authority, which default might have consequences that would materially and
adversely affect the consummation of the transactions contemplated by this Lease Agreement,
the Site and' Facility Lease or the Indenture or the financial conditions, assets, properties or
operations of the Authority.
A~TtCLE m
ISSUANCE OF THE BONDS
Section 3.1. The Bonci~. The Authority has authorized the issuance of the Bonds
pursuant to the Indenture in the aggregate principal amount of dollars ($.. ).
. The Authority agrees that the proceeds of sale of the Bonds shall be paid to the Trustee on the
Closing Date for deposit pursuant to the terms and conditions of the Indenture. The City hereby '
approves the Indenture, the assignment to the Trustee of the fights of the Authority assigned or
purported to be assigned thereunder, and the issuance of the Bonds by the Authority
thereunder.
Section 3.2. Application of Advance Rental Payment. On the Closing Date, the
Authority shall direct the Trustee to deposit into the Project Fund the amount of $
from the proceeds of the Bonds in accordance with section 3.02 of the Indenture and Section 4
of the Site and Facility Lease. Amounts on deposit in the Project Fund allocable to the City
shall be expended by the City upon written requisitions submitted to the Trustee for such
purpose in accordance with Section 3.04 of the Indenture.
,
ARTICLE IV
LEASE OF LEASED PREMISES; TERM OF THIS LEASE
AGREEMENT; LEASE PAYMENTS
Section 4.1. Lease of Leased Premises. The Authority hereby leases the Leased Premises
to the City, and the City hereby leases the Leased Premises from the Authority, upon the terms
and conditions set forth in this Lease Agreement.
Section 4.2. Term of Lease. This Lease Agreement shall take effect on the date hereof,
and shall end on the earlier of July 1, __ or such earlier date on which the Bonds shall no
longer be Outstanding under the Indenture. If, on July 1, , the Indenture shall not be
discharged by its terms or if the Lease Payments payable hereunder shall have been abated at
any time and for any reason, then the Term of this Lease Agreement shall be extended until
there has been deposited with the Trustee an amount sufficient to pay aH obligations due under
the Lease Agreement, but in no event shah the Term of this Lease Agreement extend beyond
July 1, .
Section 4.3. Lease P~ym~nts.
-(a) Obligation to Pay. In consideration of the lease of the Leased Premises from the
Authority hereunder and subject to the provisions of Section 6.2, the City agrees to pay to the
Authority, its successors and assigns, as rental for the use and occupancy of the Leased
Premises during each Fiscal Year, the Lease Payments (denominated into components of
principal and interest) for the Leased Premises in the respective amounts specified in Exhibit C
hereto, to be due and payable on the respective Lease Payment Dates specified in Exhibit C
hereto. Any amount held in the Bond Fund, the Interest Account or the Principal Account
allocable to the City (other than amounts resulting from the prepayment of the Lease Payments
in part but not in whole pursuant to Section 4.4) on any Lease Payment Date shall be credited
towards the Lease Payment then due and payable. The Lease Payments coming due and
payable in any Fiscal Year shall be for the use of the Leased Premises for such Fiscal Year.
Co) Effect of Prepayment. In the event that the City prepays all Lease Payments in full
pursuant to Section 4.4, together with all Additional Payments then due and payable, the City's
obligations under this Lease Agreement shall thereupon cease and terminate, including but not
limited to the City's obligation to pay Lease Payments under this Section 4.3. In the event that
the City prepays the Lease Payments in part but not in whole pursuant to Section 4.4, the
principal components of the remaining Lease Payments shall be reduced either in inverse order
of payment date or on a pro rata basis in integral multiples of $5,000, in any event as shah
correspond to the respective principal amounts of the Bonds allocable to the City remaining
after the related redemption thereof; and the interest component of each remaining Lease
Payment shah be reduced by the aggregate corresponding amount of interest which would
otherwise be payable with respect to the Bonds allocable to the City thereby redeemed pursuant
to Section 4.01(b) of the Indenture.
(c) Rate on Overdue Payments. In the event the City should fail to make any of the
payments required in this Section 4.3, the payment in default shall continue as an obligation of
the City until the amount in default shall have been fully paid, and the City agrees to pay the
same with interest thereon, from the date of default to the date of payment at the highest rate
of interest borne by any Outstanding Bond. Such interest, if received, shall be deposited in the
Bond Fund.
(d) Fair Rental Value. The Lease Payments and Additional Payments coming due and
payable in each Fiscal Year shall constitute the total rental for the Leased Premises for each
Fiscal Year and shall be paid by the City in each Fiscal Year for and in consideration of the right
of the use and occupancy of, and the continued quiet use and enjoyment of, the Leased
Premises during each Fiscal Year. The Authority and the City hereby agree and determine that
the total Lease Payments do not exceed the fair rental value of the Leased Premises. In making
such determination, consideration has been given to the obligations of the parties under ~this
Lease Agreement, the value of the Leased Premises, the uses and purposes which may be served
by the Leased Premises and the benefits therefrom which will accrue to the City and the general
public.
(e) Source of Payments; Budget and Appropriation. The Lease Payments shall be payable
from any source of available funds of the City, subject to the provisions of Section 6.2. The City
covenants to take such action as may be necessary to include all Lease Payments due hereunder
in each of its budgets during the Term of this Lease Agreement and to make the necessary
annual appropriations for all such Lease Payments. The covenants on the part of the City
herein contained shall be deemed to be and shall be construed to be ministerial duties imposed
by law and it shall be the duty of each and every public official of the City to take such action
and do such things as are required by law in the performance of the official duty of such official
to enable the City to carry out and perform the covenants and agreements in this Lease
Agreement agreed to be carried out and performed by the City. During the term of this Lease
Agreement, the City shall furnish to the Authority and the Trustee, no later than ten days
following the adoption of a budget for the current Fiscal Year, a certificate stating that the Lease
Payments due in that Fiscal Year have been included in the budget approved by the City
Council for such Fiscal Year.
(f) Assignment. The City understands and agrees that all Lease Payments have
previously been assigned by the Authority to the Trustee in trust, pursuant to Section 5.01 of
the Indenture, for the benefit of the Owners of the Bonds, and the City hereby assents to such
assignment. The Authority hereby directs the City, and the City hereby agrees, to pay all of the
Lease Payments to the Trustee at its Office.
(g) Security.Deposit. Notwithstanding any other provision of this Lease Agreement, the
City may on any date secure the payment of f. he Lease Payments for the Leased Premises in
whole or in part by depositing with the Trustee an amount of cash which, together with other
available amounts, including but not limited to amounts on deposit in the Bond Fund and the
Reserve Fund, is either (i) sufficient to pay such Lease Payments, including the principal and
interest and premium, if any, components thereof, in accordance with the Lease Payment
schedule set forth in Exhibit C, or (ii) invested in whole or in part in Defeasance Obligations in
such an?ount as will, in _the opinion of an Independent Accountant, together with interest to
accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such
Lease Payments when due hereunder or on any optional prepayment date pursuant to Section
4.4, as the City shall instruct at the time of said deposit. Said security deposit shall be deemed
to be and shall constitute a special fund for the payment of Lease Payments in accordance with
the provisions of this Lease Agreement.
Section 4.4. Ovtional Prevavment. The City shall have the option to prepay the
principal components'of the Lease' P~yments in whole, Or in part in any integral multiple of
$5,000, on any date on or after July 1, , by paying a prepayment price equal to the
aggregate principal components of the Lease Payments to be prepaid, together with a
prepayment premium equal to the premium (if any) required to be paid on the corresponding
redemption of the Bonds pursuant to Section 4.01(a) of the Indenture and together with accrued
interest to the prepayment date. Such prepayment price (except the interest portion thereof,
which shall be deposited into the Interest Account) shall be deposited by the Trustee in the
Redemption Fund to be applied to the redemption of Bonds allocable to the City pursuant to
Section 4.01(a) of the Indenture. The City shall give the Trustee written notice of its intention to
exercise its option not less than ninety (90) days in advance of the date of exercise and shall
indicate to the Trustee the order of redemption of Bonds allocable to the City shall be
redeemed, failure of such notification to authorize the Trustee to redeem Bonds in inverse order
of maturity and by lot within a maturity. Notwithstanding any such prepayment, as long as any
Bonds remain Outstanding or any Additional Payments remain unpaid, the City shall not be
relieved of its obligations hereunder as to such Bonds.
Section 4.5. Ouiet En!oyment. During the Term of this Lease Agreement, the Authority
shall provide the City with quiet use and enjoyment of the Leased Premises, and the City shall,
during such Term, peaceably and quietly have and hold and enjoy the Leased Premises without
suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease
Agreement. The Authority will, at the request of the City and at the City's cost, join in any legal
action in which the City asserts its right to such possession and enjoyment to the extent the
Authority may lawfully do so. Notwithstanding the foregoing, the Authority shall have the right
to inspect the Leased Premises as provided in Section 7.2.
Section 4.6. Title. If the City pays all of the Lease Payments and Additional Payments
during the Term of this Lease Agreement as the same become due and payable, or if the City
posts a security deposit for payment of the Lease Payments pursuant to Section 4.3(g) or
prepays the Lease Payments pursuant to Section 4.4, and if the City has paid in full all of the
Additional Payments coming due and payable as of the date of such prepayment, and
pr6vided in any event that no Event of Default shall have occurred and be continuing, all right,
title and interest of the Authority in and to the Leased Premises shall be transferred to and
vested in the City. The Authority agrees to take any and all steps and execute and record any
and all documents reasonably required by the City to consummate any such transfer of title.
Section 4.7. Additional Payments. In addition to the Lease Payments, the City shall pay
when due the following Additional Payments:
(a) The City's Pro Rata Portion of any fees and expenses incurred by the Authority in
connection with or by reason of its leasehold estate in the Leased Premises as and when the
same become due and payable; .
Co) The City's Pro Rata Portion of any reasonable compensation to the Trustee pursuant
to Section 8.06 of the Indenture for all services rendered under the Indenture and for all
reasonable expenses, charges, costs, liabilities, legal fees and other disbursements incurred in
and about the performance of its powers and duties under the Indenture;
(c) The City's Pro Rata Portion of any reasonable fees and expenses of such
accountants, consultants, attorneys and other experts as may be engaged by the Authority or
the Trustee to prepare audits, financial statements, reports, opinions or provide such other
services required under this Lease Agreement or the Indenture; and
(d) The City's Pro Rata Portion of any reasonable out-of-pocket expenses of the
Authority in connection with the execution and delivery of this Lease Agreement or the
Indenture, or in connection with the issuance of the Bonds, including any and all expenses
incurred in connection with the authorization, issuance, sale and delivery of the Bonds, .or
incurred by the Authority in connection with any litigation which may at any time be instituted
involving this Lease Agreement, the Site and Facility Lease, the Bonds, the Indenture or any of
the other documents contemplated hereby or thereby, or incurred by the Authority in connection
with the continuing disclosure certificate required to be prepared by the Authority pursuant to
Section 6.09 of the Indenture, or otherwise.incurred in connection with the administration hereof
or thereof.
ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER
MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this
Lease Agreement, as part of the consideration for the rental of the Leased Premises, all
improvement, repair and maintenance of the Leased Premises shall be the responsibility of the
City and the City shall pay for or otherwise arrange for the payment of all utility services
supplied to the Leased Premises which may include, without limitation, janitor service, security,
power, gas, telephone, light, heating, water and all other utility services, and shall pay for or
otherwise arrange for the payment of the cost of the repair and replacement of the Leased
Premises resulting from ordinary wear and tear or want-of care on the part of the City or any
assignee or lessee thereof. In exchange for the Lease Payments herein provided, the Authority
agrees to provide only the Leased Premises, as hereinbefore more specifically set forth. The City
waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such
waiver shall not limit any of the rights of the City under the terms of this Lease Agreement.
The City shall also pay or cause to be paid all taxes and assessments of any type or
nature, if any, charged to the Authority or the City affecting the Leased 'Premises or the
respective interests or estates therein; provided that with respect to special assessments or
other governmental charges that may lawfully be paid in installments over a period of years, the
City shall be obligated to pay only such installments as are required to be paid during the Term
of this Lease Agreement as and when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such
taxes, assessments, utility and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the period of such
contest and any appeal therefrom unless the Authority shall notify the City that, in the
reasonable opinion of the Authority, by nonpayment of any such items, the interest of the
Authority in the Leased Premises will be materially endangered or the Leased Premises or any
part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such
taxes, assessments or charges or provide the Authority with full security against any loss which
may result from nonpayment, in form. satisfactory to the Authority and the Trustee.
Section 5.2. Modification of Leased Premises. The City shall at its own expense, have
the right to make additions, modifications and improvements to the Leased Premises. All
additions, modifications and improvements to the Leased Premises shall thereafter comprise
part of the Leased Premises and be subject to the provisions of this Lease Agreement. SUch
additions, modifications and improvements shall not in any way damage the Leased Premises
or cause the Leased Premises to be used for purposes other than those authorized under the
provisions of State and federal law; and the City shall file with the Trustee and the Authority a
Written Certificate-of the City stating that the Leased Premises, upon completion of any
additions, modifications and improvements made thereto pursuant to this Section 5.2, shall be
of a value which is not Substantially less than the value of the Leased Premises immediately
prior to the making of such additions, modifications and improvements. The City will not
permit any mechanic's or other lien to be established or remain against the Leased Premises for
labor or materials furnished in connection with any remodeling, additions, modifications,
improvements, repairs, renewals or replacements made by the City pursuant to this Section 5.2;
provided that if any such lien is established and the City shall first notify or cause to be
notified the Authority of the City's intention to do so, the City may in good faith contest any
lien filed or established against the Leased Premises, and in such event may permit the items so
contested to remain undischarged and unsatisfied during the period of such contest and any
appeal therefrom and shall provide the Authority with full security against any loss or
forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the
Authority. The Authority will cooperate fully in any such contest, upon the request and at the
expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained throt~ghout the 2~erm of" this Lease Agreement, a standard
comprehensive general insurance policy or policies in protection of the Authority, City, and their
respective members, officers, agents, employees and assigns. Said policy or policies shall
provide for indemnification of said parties against direct or contingent loss or liability for
damages for bodily and personal injury, death or property damage occasioned by reason of the
operation of the Leased Premises. Said policy or policies shall provide coverage in the minimum
liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for
personal injury or deaths of two or more persons in each accident or event, and in a minimum
amount of $100,000 (subject to a deductible clause of not to exceed $5,000) for damage to
.property resulting from each accident or event. Such public liability and property damage
insurance may, however, be in the form of a single limit policy in the amount of $3,000,000
covering all such risks. Such insurance may be maintained as part of or in conjunction with any
other insurance coverage carried by the City, and such liability insurance may be maintained in
whole or in part in the form of self-insurance by the City, subject to the provisions of Section
5.7, or in the form of the participation by the City in a joint powers agency or other program
providing pooled insurance. The proceeds of such liability insurance shall be applied by the
City toward extinguishment or satisfaction of the liability with respect to which paid.
Section 5.4. Fire and Extended Coverage Insurance. The City shall procure and maintain,
or cause to be procured and maintained, ~'hroughout the Term of this Lease Agreement,
insurance against loss or damage to the improvements constituting a part of the Leased
Premises by fire and lightning, with extended coverage and vandalism and malicious mischief
insurance. Said extended coverage insurance, if required, shall, as nearly as.practicable, cover
loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other
hazards as are normally covered by such insurance, and shall include earthquake coverage if
such coverage is available at reasonable cost from reputable insurers in the judgment of the City.
Such insurance shall be in an amount at least equal to the lesser of (a) one hundred percent
(100%) of the replacement cost of all of the insured improvements, or Co) the aggregate principal
amount of the City's Pro Rata Portion of the outstanding Bonds. Such insurance may be
maintained as part of or in conjunction with any other insurance coverage carried by the City,
and may be maintained in whole or in part in the form of the participation by the City in a joint
powers agency or other program providing pooled insurance; provided however, that such
insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of
such'insurance shall be applied as provided in Section 6.1(a).
Section 5.5. Rental Interruvtion Insurance. The City shall procure and maintain, or cause
to be procured and maintaine~l, throughout the Term of this Lease Agreement, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the use of the
Leased Premises as a result of any of the hazards covered in the insurance required bY Section
5.4, in an amount at least equal to the maximum Lease Payments coming due and payable
during any future twelve (12) month period. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be'maintained in
whole or in part in the form of the participation by the City in a joint powers agency or other
program providing pooled insurance; provided that such insurance may not be maintained in
the form of self-insurance. The proceeds 'of such insurance, if any, shall be paid to the Trustee
and deposited in the Bond Fund, and shah be credited towards the payment of the Lease
Payments as the same become due and payable.
Section 5.6. Recordation Hereof: Title Insurance. On or before the Closing Date the City
shall, at its expense, (a) cause this Lease Agreement and the Site and Facility Lease, or a
memorandum hereof or thereof, and a memorandum of the assignment made pursuant to
Section 5.01 of the Indenture, in each case in form and substance approved by Bond Counsel, to
be recorded in the office of the Orange County Recorder, and (b) obtain a CLTA policy of title
insurance which insures the City's leasehold estate in the Leased Premises in an amount equal
to the aggregate principal amount of the Bonds allocable to the City. All Net Proceeds received
under said policy shall be deposited with the Trustee in the Redemption Fund and shall be
applied to the redemption of Bonds pursuant to Section 4.01Co) of the Indenture.
Section 5.7. Net Proceeds of InsUrance: Form of Policies. Each policy of insurance
maintained pursuant to Sections 5.4, 5.5 and 5.6 shah name the Trustee as loss payee so as to
provide that all proceeds thereunder shall be payable to the Trustee. All required insurance
policies shall be provided by a commercial insurer rated "A" or better by A.M. Best &
Company or rated in one of the two highest rating categories by Moody's and S&P (without
regard to designations of plus (+) or minus (-). The City shall pay or cause to be paid when due
the premiums for all insurance policies required by this Lease Agreement. AH such policies shall
provide that the Trustee shall be given thirty (30) days' notice of each expiration, any intended
cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be
responsible for the sufficiency or amount of any insurance or self-insurance herein required and
shall be fully protected in accepting payment on account of such insurance or any adjustment,
compromise or settlement of any loss. The City shah cause to be delivered to the Trustee
annually, no later 'than July 1 in each year, a certificate stating that aH of the insurance policies
required by this Lease Agreement are in full force and effect and identifying whether any such
insurance is then maintained in the form of self-insurance.
In the event that any insurance maintained pursuant to Section 5.3 shah be provided in
the form of self-insurance, the City shall file with the Trustee annually, within ninety (90) days
following the close of each Fiscal Year, a statement of an independent insUrance adviser
engaged by the City identifying the extent of such self-insurance and stating the determination
that the City maintains sufficient reserves with respect thereto. In the event that any such
insurance shall be provided in the form of self-insurance by the City, the City shall not be
obligated to make any payment with respect to any insured event except from such reserves.
Section 5.8. Installation of Personal Provertv. The City may, at any time and from time
to time, in its sole discretion and at its own e~per~e, install or permit to be installed items of
equipment or other personal property in or upon any portion of the Leased Premises. All such
items shall remain the sole property of the City, in which neither the Authority nor the Trustee
shall have any interest, and may be modified or removed by the City at any time provided that
the City shall repair and restore any and all damage to the Leased Premises resulting from the
installation, modification or removal of any such items. Nothing in this Lease Agreement shall
prevent the City from purchasing or leasing items to be installed pursuant to this Section 5.8
under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement,
as security for the unpaid portion of the purchase price thereof, provided that no such lien or
security interest shall attach to any part of the Leased Premises.
Section 5.9. Liens. Neither the City nor the Authority shall, directly or indirectly, create,
incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or
with respect to any portion of the Leased Premises, other than the respective rights of the
Authority and the City as provided herein and'Permitted Encumbrances. Except as expressly
provided in this Article V, the City and the Authority shall promptly, at their own expense,
take such action as may be necessary to duly diScharge or remove any such mortgage, pledge,
lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time.
The City shall reimburse the Authority for any expense incurred by it in order to discharge or
remove any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 5.10. Tax Covenants.
(a) Private Activity Bond Limitation. The City shall assure that proceeds of the Bonds are
not so used as to cause the Bonds to satisfy the private business tests of section 141(b) of the
Code or the private loan financing test of section 141(c) of the Code.
(b) Federal Guarantee Prohibition. The City shall not take any action or permit or suffer
any action to be taken if the result of the same would be to cause any of ~e Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
(c) Rebate Requirement. The City shall take any and all actions necessary to assure
compliance with section 148(0 of the Code, relating to the rebate of excess investment earnings,
if any, to the federal government, to the extent that such section is applicable to the Bonds.
(d) No Arbitrage. The City shall not take, or permit or suffer to be taken by the Trustee or
otherwise, any action with respect to the proceeds of the Bonds which, if such action had been
reasonably expected to have been taken, or had been deliberately and intentionally taken, on
the Closing Date would have caused the Bonds to be "arbitrage bonds" within the meaning of
section 148 of the Code.
(e) Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the
exclusion of interest with respect to the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income under
the Code as in effect on the Closing Date.
Section 5.11. Continuing Disclosure.
(a) The City shall timely supply the information required by section 6599.1 of the
California Government Code to the California Debt Advisory Commission ("CDAC") and to
the Authority, all such information to be supplied annually and at such other time as required
by said section 6599.1 on forms to be provided by CDAC or at such other time and in such
other manner as shall comply with the provisions of said section 6599.1.
(b) The City hereby covenants and agrees that it will comply with and carry out all of
the provisions of the City Continuing Disclosure Certificate. Notwithstanding any other
provision of this Lease Agreement, failure of the City to comply with the City Continuing
Disclosure Certificate shall not constitute an Event of Default hereunder; provided, however, that
any Participating Underwriter or any Owner or beneficial owner of the Bonds may take such
actions as may be necessary and appropriate to compel performance by the City of its
obligations under this Section 5.11, including seeking mandate or specific performance by court
order.
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
ABATEMENT OF LEASE PAYMENTS.
Section 6.1. Application of Net Proceeds.
(a) From Insurance Award. The Net Proceeds of any insurance award resulting from any
damage to or destruction of the Leased Premises by fire or other casualty shall be paid by the
City to the Trustee and shall be deposited in the Insurance and Condemnation Fund by the
Trustee and applied as set forth in Section 5.07 of the Indenture.
Co) From Eminent Domain Award. If the Leased Premises or any portion thereof shall be
taken permanently or temporarily under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Net Proceeds resulting therefrom shall
be deposited in the Insurance and Condemnation Fund and applied as set forth in Section 5.07
of the Indenture.
(c) From Title Insurance Award. The Net Proceeds of any title insurance award shall be
paid to the Trustee, deposited in the Insurance and Condemnation Fund and applied as set
forth in Section 5.07 of the Indenture.
Section 6.2. Abatement of Lease Payments,
(a) Abatement Due to Damage or Destruction. The Lease Payments shall be abated during
any period in which by reason of damage to or destruction of the Leased Premises (other than
by eminent domain which is hereinafter provided for) which causes substantial interference with
the use and occupancy by the City of the Leased Premises or any portion thereof. The amount
of such abatement shall be an amount agreed upon by the City and the Authority such that the
resulting Lease Payments represent fair consideration for the use and occupancy of the portions
of the Leased Premises not damaged or destroyed. Such abatement shall continue for the period
commencing with such damage or destruction and ending with the substantial completion of the
work of repair or reconstruction. In the event of any such damage or destruction, this Lease
Agreement shall continue in full force and effect and the City waives any right to terminate this
Lease Agreement by virtue of any such damage and destruction. There shall be no abatement of
the Lease Payments to the extent that moneys derived from any person as a result of such
damage or destanaction are available to pay the amount which would otherwise be abated or if
there is any money available in the Bond Fund or the Reserve' Fund to pay the amount which
would otherwise be abated.
(b) Abatement Due to Eminent Domain. If all of the Leased Premises shall be taken
permanently under the power of eminent domain or sold to a government threatening to exercise
the power of eminent domain, the Term of this Lease Agreement shall cease with respect to the
Leased Premises as of the day possession shall be so taken. If less than all of the Leased
Premises shall be taken permanently, or if all of the Leased Premises or any part thereof shall be
taken temporarily under the power of eminent domain, (a) this Lease Agreement shall continue
in full force and effect and shall not be terminated by virtue of such taking and the parties
waive the benefit of any law to the contrary, and CO) there shall be a partial abatement of Lease
Payments in an amount to be agreed upon by the City and the Authority such that the resulting
Lease Payments for the Leased Premises represent fair consideration for the use and occupancy
of the remaining usable portion of the Leased Premises.
ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE LEASED PREMISES, OR
ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED
PREMISES. IN NO EVENT SHALL THE AUTHORITY AND ITS ASSIGNS BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION
WITH OR ARISING OUT OF THIS LEASE, THE SITE AND FACILITY LEASE OR THE
INDENTURE FOR THE EXISTENCE, FURNIS~G, FUNCTIONING OR THE CITY'S USE OF
THE LEASED PREMISES.
Section 7.2. Rights of Access. The City agrees that the Authority and any Authorized
Representative of the Authority, and the Authority's successors or assigns, shall have the right
at all reasonable times to enter upon and to examine and inspect the Leased Premises. The City
further agrees that the Authority, any Authorized Representative of the Authority, and the
Authority's successors or assigns shall have such rights of access to the Leased Premises as maY
be reasonably necessary to cause the proper maintenance of the Leased Premises in the event of
failure by the City to perform its obligations hereunder; provided, however, that the Authority's
assigns shall not be required to cause such proper maintenance.
Section 7.3. Release and Indemnification Covenants. The City shall and hereby agrees to
indemnify and save the Authority, the Trustee and their respective officers, agents, successors
and assigns, harmless from and against all claims, losses and damages, including legal fees and
expenses, arising out of (a) the use, maintenance, condition or management of, or from any work
or thing done on the Leased Premises by the City, Co) any breach or default on the part of the
City in the performance of any of its obligations under this Lease Agreement, (c) any act or
negligence of the City or of any of its agents, contractors, servants, employees or licensees with
respect to the Leased Premises, (d) any act or negligence of any lessee of the City with respect
to the Leased Premises, or (e) the performance by the Trustee of its duties hereunder or under
the Indenture. No indemnification is made under this Section 7.3 or elsewhere in this Lease
Agreement for willful misconduct or negligence under this Lease Agreement by the Authority,
the Trustee or any of their respective officers or employees. The indemnification hereunder shall
survive removal or resignation of the Trustee, termination of this Lease Agreement or discharge
of the Bonds.
ARTICLE VIII
ASSIGNMENT, LEASING AND AMENDMENT
Section 8.1. Assim'u'nentv by the Authority. Certain rights of the Authority under this
Lease Agreement, including the right to receive and enforce payment of the Lease Payments to
be made by the City under this Lease Agreement, have been pledged and assigned to the
Trustee for the benefit of the Owners of the Bonds. pursuant to the Indenture, to which pledge
and assignment the City hereby consents. The assignment of this Agreement to the Trustee is
solely in its capacity as Trustee under the Indenture and the duties, powers and liabilities of the
Trustee in acting hereunder shall be subject to the provisions of the Indenture, including, without
limitation, the provisions of Article VIII thereof.
!
Section 8.2. Assi~m'tment and Subleasin~ bv the City. This Lease Agreement may not be
assigned by the City. The City may sublease ~he'Leased Premises or any portion thereof, but
only upon satisfaction of all of the following conditions:
(a) This Lease Agreement and the obligation of the City .to make Lease Payments
hereunder shall remain obligations of the City;
~) The City shaH, within thirty (30) days after the delivery thereof, furnish or cause to
be furnished to the Authority and the Trustee a true and complete copy of such sublease;
(c) No such sublease by the City shah cause the LeaSed Premises to be used for a
purpose other than as may be authorized under the provisions of the laws of the State; and
(d) The City shall furnish the Authority and the Trustee with a written opinion of Bond
Counsel, stating that such sublease is permitted by this Lease Agreement and the Indenture, and
will not cause the interest on the Bonds to become included in gross income for federal income
tax purposes.
Section 8.3. Amendment of Lease.
(a) Substitution of Site or Facility. The City shall have, and is hereby granted, the option
at any time and from time to time during the Term of this Lease Agreement to substitute other
land (a "Substitute Site") and/or a substitute facility or substitute facilities (a "Substitute
Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former
Facility"), or a portion thereof, provided that the City shall satisfy all of the following
requirements which are hereby declared to be conditions precedent to such substitution:
(i) The City shall file with the Authority and the Trustee an amended Exhibit A
to the Site and Facility Lease which adds thereto a description of such Substitute Site
and deletes therefrom the description of the Former Site;
(ii) The City shah fide with the Authority and the Trustee an amended Exhibit A
to this Lease Agreement which adds thereto a description of such Substitute Site and
deletes therefrom the description of the Former Site;
(iii) The City shah file with the Authority and the Trustee an amended Exhibit B
to the Site and Facility Lease which adds thereto a description of such Substitute
Facility and deletes therefrom the description of the Former Facility;
(iv) The City shall file with the Authority and the Trustee an amended Exhibit B
to this Lease Agreement which adds thereto a description of such Substitute Facility and
deletes therefrom the description of the Former Facility;
(v) The City shall certify in writing to the Authority and the Trustee that such
Substitute Site and/or Substitute Facility serve the purposes of the City, constitutes
property that is unencumbered (or the portion of such property to be to substituted is
unencumbered), subject to Permitted Encumbrances, and constitutes property which the
City is permitted to lease under the laws of the State;
(vi) The City delivers to the Trustee and the Authority evidence that the
Substitute Site and/or Substitute Facility are of equal or greater value than the Former
Site and Former Facility;
(vii) The Substitute Site and/or Substitute Facility shall not cause the City to
violate any of its covenants, representations and warranties made herein and in the
Trust Agreement;
(viii) The City shall obtain an amendment to the title insurance policy required
pursuant to Section 5.6 hereof which adds thereto a description of the Substitute Site
and deletes therefrom the description of the Former Site;
(ix) The City shall certify that the Substitute Site and/or the Substitute Facility is
of the same or greater essentially to the City as was the Former Site and/or the Former
Facility; and
(x) Notice of such consent shall be given by the City to any rating agency then
rating 'the Certificates.
(b) Release of Site. The City shall have, and is hereby granted, the option at any time and
from time to time during the Term of the Lease Agreement to release any portion of the Site,
provided that the City shall satisfy all of the following.requirements which are hereby declared
to be conditions precedent to such release:
(i) The City shall file with the Authority and the Trustee an amended Exhibit A
to the Site and Facility Lease which describes the Site, as revised by such release;
(ii) The City shall file with the Authority and the Trustee an amended Exhibit A
to this Lease Agreement which describes the Site, as revised by such release;
(iii) The City delivers' to the Trustee and the Authority evidence th_at the Site, as
revised by such release, is of a value at least equal to the value of the Site as of the
Closing Date;
(iv) The City shall obtain an amendment to the title insurance policy required
pursuant to Section 5.6 hereof which describes the Site, as revised by such release; and
(v) Notice of such consent shall be given by the City to any rating agency then
rating the Certificates.
(c) Generally. The Authority and the City may at any time amend or modify any of the
provisions of this Lease Agreement, but only (a) with the prior written consents of the Owners
of a majority in aggregate principal amount of the Outstanding Bonds, or (b) without the
consent of any of the Bond Owners, but only if such amendment or modification is for any one
or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Lease
Agreement, other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein, or in any other
respect whatsoever as the Authority and the City may deem necessary or desirable,
provided that, in the opinion of Bond Counsel, such modifications or amendments will
not materially adversely affect the interests of the Owners of the Bonds; or
(iii) to amend any provision thereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not adversely affect the
exclusion from gross income of interest on the Bonds under the Code, in the opinion of
Bond Counsel.
Written notice of any such amendment or modification shall be given by the City to
Moody's and $&P at least thirty (30) days prior to the effective date of such amendment or
modification.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Section 9.1. Events of Default Defined. The following shall be "Events of Default" under
this Lease Agreement:
(a) l=ailure by the City to pay any Lease Payment required to be paid hereunder at the
time specified herein.
(b) Failure by the City to make any Additional Payment required hereunder and the
continuation of such failure for a period of thirty (30) days.
(c) Failure by the City to observe and perform any covenant, condition or agreement on
its part to be observed or performed, other than as referred to in the preceding clauses (a) or
(b), for a period of sixty (60) days after W'ritten notice specifying such failure and requesting
that it be remedied has been given to the City by the Authority or the Trustee; provided,
however, that if in the reasonable opinion of the City the failure stated in the notice can be
corrected, but not within such sixty (60) day period, such failure shall not constitute an Event
of Default if the City shall commence to cure such failure within such sixty (60) day period and
thereafter diligently and in good faith shall cure such failure in a reasonable period of time.
(d) The filing by the City of a voluntary petition in bankruptcy, or failure by the City
promptly to lift any execution, garnishment or attachment, or adjudication of the City as a
bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an
agreement of composition with creditors, or the approval by a court of competent jurisdiction of
a petition applicable to the City in any proceedings instituted under the provisions of
applicable federal bankruptcy law, or under any similar acts which may hereafter be enacted.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section
9.1 shall have happened and be continuing, it shall be lawful for the Authority to exercise any
and all remedies available pursuant to law or granted pursuant to this Lease Agreement;
provided, however, that notwithstanding anything to the contrary herein or in the Indenture,
there shall be no right under any circumstances to accelerate the Lease Payments or otherwise
declare any Lease Payments not then in default to be immediately due and payable or to
terminate this Lease Agreement or to cause the fee interest or the leasehold interest of the City
in the Leased Premises to be sold, assigned or otherwise alienated. Each and every covenant
hereof to be kept and performed by the City is expressly made a condition and, upon the
breach thereof, the Authority may exercise any and all rights of entry and re-entry upon the
Leased Premises. The City hereby irrevocably consents to the Authority's repossession of the
Lease Premises if such an Event of Default shall occur and consents to the Authority's reletting
of the Lease Premises for the account of the City. In the event of such default and
notwithstanding any re-entry by the Authority, the City shaH, as herein expressly provided,
continue to remain liable for the payment of the Lease Payments and/or damages for breach of
this Lease Agreement and the performance of all conditions herein contained and, in any event,
such rent and/or damages shall be payable to the Authority at the time and in the manner as
herein provided, to wit:
(a) The City agrees to and shall remain liable for the payment of all Lea'se Payments and
the performance of all conditions herein contained and shall reimburse the Authority for any
deficiency arising out of the re-leasing of the Leased Premises, or, in the event the Authority is
unable to re-lease the Leased Premises, then for the full amount of all Lease Payments to the
end of the Term of this Lease Agreement, but said Lease Payments and/or deficiency shall be
payable only at the same time and in .the same manner as hereinabove provided for the
payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority
or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of
effecting such re-entry or obtaining possession of the Leased Premises or the exercise of any
other remedy by the Authority.
(b) The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact
of the City to enter upon and re-lease the Leased Premises in the event of default by the City in
the performance of any covenants .herein contained to be performed by the City and to remove
all personal property whatsoever situated upon the Leased Premises to place such property in
storage or o~er suitable place in Orange County, for the account of and at the expense of the
City, and the City hereby exempts and agrees to save harmless the Authority from any costs,
loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the
Leased Premises and the removal and storage of such property by the Authority or its duly
authorized agents in accordance with the provisions herein contained.
(c) The City hereby waives any and all claims for damages caused or which may be
caused by the Authority in re-entering and taking possession of the Leased Premises as herein
provided and all claims for damages that may result from the destruction of or injury to the
Leased Premises and all claims for damages to or loss of any property belonging to the City
that may be in or upon the Leased Premises.
(d) The City agrees that the terms of this Lease Agreement constitute full and sufficient
notice of the right of the Authority to re-lease the Leased Premises in the event of such re-entry
without effecting a surrender of this Lease Agreement, and further agrees that no acts of the
Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease
Agreement irrespective of the term for which such re-leasing is made or the terms and conditions
of such re-leasing, or otherwise.
(e) The City further waives the right to any rental obtained by the Authority in excess of
the Lease Payments and hereby conveys and releases such excess to the Authority as
compensation to the Authority for its services in re-leasing the Leased Premises.
Section 9.3. Limitation on Remedies. Notwithstanding the foregoing provisions of
Section 9.2, neither the Authority nor the Trustee shall exercise any remedies against the Leased
Premises to the extent such remedies would generate funds which are subject to such lien and
which are not available to satisfy the obligations of this Lease Agreement or the Indnture.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority is intended to be exclusive and every such remedy shall be cumulative and shall,
except as herein expressly provided to the contrary, be in addition to every other remedy given
under this Lease Agreement or now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
Authority to exercise any remedy reserved to it in this Article IX it shall not be necessary to give
any notice, other than such notice as may be required in this Article IX or by law.
Section 9.5. A~eement to Pay Attorneys' Fees and Exvenses. In the event either party to
this Lease Agreement should default under a~y of the provisions hereof and the nondefaulting
party should employ attorneys or incur other expenses for the collection of moneys or the
enforcement or performance or observance of any obligation or agreement on the part of the
defaulting party herein contained, the defaulting party agrees that it will on demand therefor
pay to the nondefaulting party the reasonable fees of such attorneys and such other eXpenses so
incurred by the nondefaulting party.
Section 9.6. No Additional Waiver Imvlied by One Waiver. In the event any agreement
contained in this Lease Agreement should be breach6d by either party and thereafter waived by
the other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
Section 9.7. Trustee and Bond Owners to Exercise Riehts. Such rights and remedies as
are given to the Authority under this Article IX have been ~ssigned by the Authority to the
Trustee under the Indenture, to which assignment the City hereby consents. Such rights and
remedies shall be exercised by the Trustee and the Owners of the Bonds as provided in the
Indenture. In the event that this Lease Agreement shall be amended pursuant to Section 8.3(b) in
connection with the issuance of additional bonds, notes, leases or other obligations, the rights
and remedies granted under this Article IX shall be exercised as well by the owners of such
bonds, notes, leases or other obligations, or by a fiduciary on their behalf, on a parity with the
Trustee and the Bond Owners.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All written notices to be given under this Lease Agreement shall be
given by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, confirmed by telephone, (b) 48 hours after deposit in the United
States mail, postage prepaid, or (c).in the case of personal delivery to any person, upon actual
receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from
time to time modify the address or number to which communications are to be given hereunder.
If to the Authority: Countywide Public Financing Authority
20 Civic Center Plaza
Santa Ana, CA 92701
Attn: Executive Director
If to the City:
If to the Trustee:
Attn:
· Attn: Corporate Trust Department
Section 10.2. Bindine Effect. This Lease Agreement shall inure to the benefit of and shall
be binding upon the Authority and the City and their respective successors and assigns.
Section 10.3. Severability. In the event any provision of this Lease Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 10.4. Net-net-net Lease. This Lease Agreement shall be deemed and construed to
be a "net-net-net lease" and the City hereby agrees that the Lease Payments shall be an
absolute net return to the Authority, free and clear of any expenses, charges or set-offs
whatsoever.
Section 10.5. Further Assurances and Corrective Instrument.~. The Authority and the
City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further instruments
as may reasonably be required for correcting any inadequate or incorrect description of the
Leased Premises hereby leased or intended so to be or for carrying out the expressed intention
of this Lease Agreement.
Section 10.6. Execution in Countervarto. This Lease Agreement may be executed in
several counterparts, each of which shall be ~m original and all of Which shall constitute but one
and the same instrument.
Section 10.7. Applicable Law. This Lease Agreement shall be governed by and construed
in accordance with the laws of the State.
Section 10.8. Aut_ho_ri_zed Representatives. Whenever under the provisions of this Lease
Agreement the approval of the Authority or the City is required, or the Authority or the City is
required to take some action at the request of the other, such approval or such request shall be
given for the Authority by an Authorized Representative of the Authority and for the City by an
Authorized Representative of the City, and any party hereto shall be authorized to rely upon
any such approval or request.
Section 10.9. Captions. The captions or headings in this Lease Agreement are for
convenience only and in no way define, limit or describe the scope or intent of any provisions or
Section of this Lease Agreement.
IN' WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed
in its corporate name by its duly authorized officers and sealed with its corporate seal; and the
City has caused this Lease Agreement to be executed in its name by its duly authorized officers
and sealed with its corporate seal, as of the date first above written.
,
COI3ixFfYWIDE PUBLIC FINANCING
AUTHORITY, as Lessor
[SEAL]
Attest:
By
Title
Secretary
CITY OF , as Lessee
Attest:
By
Title
City Clerk
NOTARY ACKNOWLEDGMENT FORMS TO BE ATTACHED
EXHIB1T A
DESCRIYI'ION OF THE SITE
Exhibit A
EXHIBITB
DESCRIPTION OF THE FACILITY
Exhibit B
SCHEDULE OF LEASE PAYMENTS
Exhibit C
13128-01 JHHW:BDQ:kla 03 / 06/96
04/29/96
CONTINUING DISCLOSURE CERTn~CATE
This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is
executed and delivered by the CITY OF (the "City") in connection with the
issuance of $ aggregate principal amount of Countywide Public Financing'
Authority (Orange County, California) 1996 Revenue Bonds (the "Bonds"). The Bonds are being
issued pursuant to an indenture of trust, dated as of July 1, 1996 (the "Indenture"), by and
between the Countywide Public Finandng Authority (the "Authority") and , as
trustee (the "Trustee"). The City covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the City for the benefit of the holders and beneficial owners of the
Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-
12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement,
which apply to any capitalized term'used in this Disclosure Certificate unless otherwise defined
in this Section 2, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and
as described in, Sections 3 and 4 of this Disclosure Certificate.
"Dissemination Agent" shall mean , or any successor Dissemination
Agent designated in writing by the City and which has filed with the City and the Trustee a
written acceptance of such designation.
"Lease Agreement" shall mean that certain Lease Agreement, dated as of July 1, 1996, by
and between the Authority and the City.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds
required to. comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time
to time.
"State Repository" shall mean any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and reco .gnized as such by
the Securities and Exchange Commission. As of the date of this Disclosure C~rtificate, there is
no State Repository.
Section 3. Provision of Annual Remorts.
(a) The City shall, or upon written direction shall cause the Dissemination Agent to, not
later than six months after the end of the City's fiscal year (currently June 30), commencing with
the report for the 1996 fiscal year, provide to each Repository an Annual Report which is
consistent with the requirements of Section 4 of this Disclosure Certificate with a copy to the
Trustee. Not later than fifteen (15) Business Days prior to said date, the City shall provide the
Annual Report to the Dissemination Agent (if other than the City). The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may
include by reference other information as provided in Section 4 of this Disclosure Certificate;
provided that 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 to the Municipal Securities Rulemaking Board and each State Repository with a
copy to the Trustee. The City shall provide a written certification with each Annual Report
furnished to the Dissemination Agent and the Trustee to the effect that such Annual Report
constitutes the Annual Report required to be furnished by the City hereunder.
Co) If the City is unable to provide to the Repositories an Annual Report by the date
required in subsection (a), the City shall send a notice to the Municipal Securities Rulemaking
Board and each State Repository in substantially the form attached as Exhibit A.
(c) 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) if the Dissemination Agent is other than the City, file a report with the City
certifying that the Annual Report has been provided pursuant to this Disclosure
Certificate, stating the date it was provided and listing all the Repositories to which it
was provided.
Section 4. Content of Annual Reports. The City's Annual Report shall contain or
incorporate by reference the following:
(a) 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 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall
be filed in the same manner as the Annual Report when they become available.
Co) Unless otherwise provided in the audited financial statements filed on or prior to the
annual filing deadline for Annual Reports provided for in Section 3 above, financial information
and operating data with respect to the City for preceding fiscal year, substantially similar to
that provided in the corresponding tables and charts in the official statement for the Bonds:
(i)
(ii) ; and
(iii) .
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
-2-
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 dearly identify each such other document so included by reference.
(c) In addition to any of the information expressly required to be provided under this
Disclosure Certificate, the City shall provide such further material 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.
Secfi,.on 5. Termination of Revortine Obligation. The Cit's obligations, undor
.Dis_cl__osure ~dertificate shall terminate ~pon tl{e legal-defeasance, priYor lvrev~'vment o-r'-~'~-~m'~
m...full. .°f all of_ the Bonds. If such termination, occurs priot to the fin~ m'atur' ity of th'e'Clt-:- 's
ot~ligations under the Lease Agreement, the City shall promptly file a notice of such occurrence
with the Municipal Securities Rulemaking Board and each State Repository with a copy to the
Trustee.
D' .Sec?.'on 6.. Dissemination Agent. The City may, from time to time, appoint or engage a
assemmation Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such Dissemination Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be . Any
Dissemination Agent may resign by providing thirty days' written notice to the City and the
Trustee.
Section 7. Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure
Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a) or 4, it may
only be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature, or status of an obligated person
with respect to the Bonds, or 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 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 either (i) is approved by holders of the 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 nationally recognized bond counsel, materially impair
the interests of the holders or beneficial owners of the 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 filed
.pursuant hereto 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 information, in order to provide information to
investors to enable them to evaluate the ability of the Ci~ 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 Municipal Securities Rulemaking Board and each State
Repository with a copy to the Trustee.
Section 8. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the City from disseminating any other information, using the means of dissemination
set forth in this Disclosure Certificate or any other means of communication, or including any
other information in any Annual Report or notice of occurrence of a Listed Event, in addition to
that which is required by this Disclosure Certificate. If the 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 Certificate, the City shah have no obligation
under this Disclosure Certificate to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
Section 9. Default. In the event of a failure of the City to comply with any provision of
this Disclosure Certificate the Trustee, at the written direction of any Participating Underwriter
or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only
to the extent moneys or other indemnity, satisfactory to the Trustee, has been furnished to the
Trustee to hold it harmless from any loss, costs, liability or expense, including fees and
expenses of its attorneys and any additional fees of the Trustee, 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 to comply with its
obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall
not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this
Disclosure Certificate in the event of any failure of the City to comply with this Disclosure
Certificate shall be an action to compel performance.
Section 10. DBti¢~, Imm~niti~ and Liabilities of Dissemination Aeent. The
Dissemination Agent and the Trustee shah have only such duties as are specifically set forth in
this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent
and the Trustee, their officers, directors, employees and agents, harmless against any loss,
expense and liabilities which they may incur arising oiat of or in the exercise or performance of
its powers and duties hereunder, including the costs and expenses (including attorneys fees) of
defending against any claim of liability, but excluding liabilities due to the Dissemination
Agent's or the Trustee's respective negligence or willful misconduct. The Dissemination Agent
shall be paid compensation by the City for its services provided hereunder in accordance with
its schedule of fees as amended from time to time and all expenses, legal fees and advances
made or incurred by the Dissemination Agent in the performance of its duties hereunder. The
Dissemination Agent and the Trustee shall have no duty or obligation to review any information
provided to it by the City and shall not be deemed to be acting in any fiduciary capacity for the
City, the Bond holders or any other party. The obligations of the City'under this Section 10 shall
survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 11. Beneficiaries. This Disclosure Certificate 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 Bonds, and shall create no rights in any other person
or entity.
Date: July .1996
CITY OF
ACKNOWLEDGED:
, as Dissemination Agent
By
Title
By
Title
EXHIBITA
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD AND EACH STATE
REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
Name of Issue:
Date of Issuance:
Countywide Public Financing Authority
$ Countywide Public Financing Authority (Orange County,
California) 1996 Revenue Bonds
July ,1996
NOTICE IS HEREBY GIVEN that the City of (the "City") has not
provided an Annual Report with respect to the above-named Bonds as required by Section 5.11
of that certain lease agreement, dated as of July 1, 1996, by and between the Issuer and the
City. The City anticipates that the Annual Report will be filed by .
Dated:
CITY OF
cc: Trustee
By
Title
14
16
19
26
28
ORDINANCE NO. 1168
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, APPROVING THE PUBLIC LEASE BACK OF CERTAIN
FACILITIES WITH THE COUNTYWIDE PUBLIC FINANCING AUTHORITY
The City Council of the City of Tustin hereby ordains as
follows:
Section 1. ADDroval of Enterinq into Lease. Pursuant to
section 54241 of the California Government Code, the City of
Tustin is hereby authorized to enter into a formal agreement with
the Countywide Public Financing Authority with respect to the
public leaseback of certain facilities and the real property on
which such improvements are situated, more particularly described
in Exhibit A attached hereto, so long as the principal amount of
the Lease Agreement does not exceed $3,100,000, so long as the
maximum annual lease payments to be paid by the City does not
exceed $420,000 and so long as the term of the Lease Agreement
does not exceed 10 years. This ordinance is subject to the
provisions for referendum applicable to the City of Tustin. This
ordinance shall be published in the manner required by law for
ordinances of the City of Tustin generally.
Section 2. Effective Date. This ordinance shall not become
effective or be in force until thirty (30) days from and after the
date of its adoption, and shall be published at least once in full
in a newspaper of general circulation published in the City of
Tustin, within 15 days after its adoption.
PASSED AND ADOPTED, at a regular meeting of the City Council
for the City of Tustin on this day of , 1996.
TRACY WILLS WORLEY, MAYOR
PAMELA STOKER, CITY CLERK
EXHIBIT A
DESCRIPTION OF LEASED PROPERTY
Civic Center Complex, located at 300 Centennial Way, Tustin,
including city hall, council chambers, community center, police
headquarters, parking structure and grade parking
13'128-01
JHHW:BDQ:kla
03/06/96
04/29/96
AFTER RECORDATION PLEASE RETURN TO:
Jones Hall Hill & White,
A Professional Law Corporation
Four Embarcadero Center, 19th Floor
San Francisco, CA 94111
Attention: Brian D. Quint, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SITE AND FACILITY LEASE
Dated as of July 1,1996
by and between the
CITY OF , as Lessor
and the
COUNTYWIDE PUBLIC FINANCING AUII-IORITY, as Lessee
Relating to
$
Countywide Public Financing Authority
(Orange County, California)
1996 Revenue Bonds
SITE AND FACILrrY LEASE
This SITE AND FACILITY LEASE, dated as of July 1, 1996, is by and between the CITY
OF , a municipal corporation and ~ city organized and existing under the laws
of the State of California, as lessor (the "City"), and the COUNTYWIDE PUBLIC FINANCING
AUTHORITY, a joint exercise of powers authority organized and existing under and by virtue
of the laws of the State of California, as lessee (the "Authority");
WITNESSETH:
WHEREAS, the City is proceeding to finance its share of a countywide 800 MHz
communications system and to finance the construction of capital improvements throughout the
geographic boundaries of the City by leasing certain real property and improvements from the
Authority pursuant to a Lease Agreement, dated as of July 1, 1996 (the "Lease Agreement");
and
WHEREAS, the City proposes to enter into this Site and Facility Lease with the
Authority as a material consideration for the Authority's agreement to lease such land and
improvements to the City;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows:
Section 1. Definitions. Unless the context clearly otherwise requires or unless otherwise
defined herein, the capitalized terms in this Site and Facility Lease shall have the respective
meanings specified in Section 1.01 of the Indenture, dated as of July 1, 1996, by and between
the Authority and , as trustee thereunder.
Section 2. Site and Facility Lease. The City hereby leases to the Authority and the
Authority hereby leases from the ~ity, on the terms and conditions hereinafter set forth, those
certain parcels of real property situated in the City of , Orange County, State of
California, more particularly described in Exhibit A attached hereto and made a part hereof
(the "Site"), and those certain improvements on the Site more particularly described in Exhibit
B attached hereto and made a part hereof (collectively, the "Facility").
Section 3. Term. The term of this Site and Facility Lease shall commence on the date of
recordation of this Site and Facility Lease in the Office of the County Recorder of Orange
County, State of California, and shall end on July. 1, , unless such term is extended or
sooner terminated as hereinafter provided. If, on July 1, , the aggregate amount of Lease
Payments (as defined in and as payable under the Lease Agreement) shall not have been paid,
or provision shall not have been made for their payment, then the term of this Site and Faci!~ty
Lease shall be extended until such Lease Payments shall be fully paid or provision made for
such payment. If, prior to July 1, , all Lease Payments shall be fully paid or provision'made
for such payment in accordance with Section 4.3 or 4.4 of the Lease Agreement, the term of this
Site and Facility Lease shall end ten (10) days thereafter.
Section 4. Advance Rental Payment.. The City agrees to lease the Site and the Facility to
the Authority in consideration of the' payment by the Authority of an advance rental payment
of dollars ($ .). The City and the Authority agree that by reason of
the sale of the Bonds and deposit of proceeds pursuant to the provisions of the Indenture, the
advance rental payment referenced in the preceding sentence shall be deemed to have been
paid.
Section 5. Purpose. The Authority shall use the Site and the Facility solely for the
purpose of leasing the Site and the Facility to the City pursuant to the Lease Agreement and for
such purposes as may be incidental thereto; provided, however, that in the event of default by
the City under the Lease Agreement, the Authority and its assigns may exercise the remedies
provided in the Lease Agreement.
Section 6. City's Interest in Site and the Facility. The City covenants that it is the owner
of fee title to the Site'and the Fadlity.
Section 7. Assi~maments and Subleases. Unless the City shah be in default under the
Lease Agreement, the Authority may not assign its rights under this Site and Facility Lease or
sublet the Site or the Facility, except as provided in the Lease Agreement, without the written
consent of the City.
Section 8. Right of Entry. The City reserves the right, for any of its duly authorized
representatives, to enter upon {he Site and the Facility at any reasonable time to inspect the
same or to make any repairs, improvements or changes necessary for the preservation thereof.
Section 9. Termination. The Authority agrees, upon the termination of this Site and
Facility Lease, to quit and surrender the Site and the Facility in the same good order and
condition as the same were in at the time of commencement of the term hereunder, reasonable
wear and tear excepted, and agrees that any permanent improvements and structures existing
upon the Site or the Facility at the time of the termination of this Site and Facility Lease shall
remain thereon and title thereto shall vest in the City.
Section 10. Default. In the event the Authority shah be in default in the performance of
any obligation on its part to be performed under the terms of this Site and Facility Lease, which
default continues for thirty (30) days following notice and demand for correction thereof to the
Authority, the City may exercise any and all remedies granted by law, except that no merger of
this Site and Facility Lease and of the Lease Agreement shall be deemed to occur as a result
thereof; provided, however, that so long as any Bonds are outstanding and unpaid in
accordance with the terms thereof, the Lease Payments assigned by the Authority to the Trustee
under the Indenture shall continue to be paid to the Trustee.
Section 11. Ouiet Eniovment. The Authority, at aH times during the term of this Site and
Facility Lease, shall peaceal~l)~ and quietly have, hold and enjoy the Site and the Facility subject
to the provisions of the Lease Agreement and the Indenture.
Section 12. Waiver of Personal Liability. All liabilities under this Site and Facility Lease
on the part of the' Authority are solely liabilities of the Authority and the City hereby releases
each and every member, director, officer, employee and agent of the Authority of and from any
personal or individual liability under this Site and Facility Lease. No member, director, officer,
employee or agent of the Authority shall at any time or under any circumstances be individually
or personally liable under this Site and Fadlity Lease for anything done or omitted to be done
by the Authority hereunder.
Section 13. Taxes. The City covenants and agrees to pay any and aH assessments of any
kind or character and also all taxes, including possessory interest taxes, levied or assessed
upon the Site and the Facility (including both land and improvements).
Section 14. Eminent Domain. In the event the whole or any part of the Site or the Facility
thereon is taken by eminent domain proceedings, the interest of the Authority shall be
recognized and is hereby determined to be the amount of the then unpaid Bonds including the
unpaid principal and interest with respect to any then outstanding such Bonds and, subject to
the provisions of the Lease Agreement, the balance of the award, if any, shall be paid to the
city.
Section 15. Use of the Proceeds. The City and the Authority hereby agree that the lease
to the Authority of the City's right, title and interest in the Site and the Facility pursuant to
Section 2 serves the public purposes of the City by providing funds to enable the City to finance
the Improvements. The City hereby agrees that the proceeds of the Bonds shall be used solely
for the purpose of paying the costs of the Improvements, to be owned, held or controlled by the
City for its public purposes, on or before the dat~ three years following the date of execution
and delivery of the Bonds, or to refinance prior obligations of the City incurred for such
purposes.
Section 16. Partial Invaliclitv. If any one or more of the terms, provisions, covenants or
conditions of this Site and FaCility Lease shall, to any extent, be declared invalid,
unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction,
the finding, order or decree of which becomes final, none of the remaining terms, provisions,
covenants and conditions of this Site and Facility Lease shall be affected thereby, and each
provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent
permitted by law.
Section 17. Notices. All notices, statements, demands, consents, approvals,
authorizations, offers, designations, requests or other communications hereunder by either party
to the other shall be in writing and shall be sufficiently given and served upon the other party if
delivered personally or if mailed by United States registered mail, return receipt requested,
postage prepaid, and, if to the City, addressed to the City in care of the . , City of
, , , CA , or if to the Authority, addressed to the
Authority in care of the Executive Director, Countywide Public Financing Authority, 20 Civic
Center Plaza, Santa Ana, CA 92701, or to such other addresses as the respective parties may
from time to time designate by notice in writing.
Section 18. Section Headings. All Section headings contained herein are for convenience
of reference only and are not intended to define or limit the scope of any provision of this Site
and Facility Lease.
Section 19. Applicable Law. This Site and Facility Lease shall be governed by and
construed in accordance with the laws of the State.
Section 20. Execution in Countervarts. This Site and Facility Lease may be executed in
any number of counterparts, each of which shall be deemed to be an original but all together
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the City and the Authority have caused this Site and Facility
Lease to be executed by their respective officers thereunto duly authorized, all as of the day
and year first above written.
CITY OF , as Lessee
Attest:
By
Title
City Clerk
COUNTYWIDE PUBLIC FINANCING
AUTHORITY, as Lessor
tS E AL]
Attest:
By
Title
Secretary
NOTARY ACKNOWLEDGMENT FORMS TO BE ATTACHED
EXHIBITA
DESCRIPTION OF THE SITE
Exhibit A