HomeMy WebLinkAboutPRELIM OFFCL STATMNT 11-20-95FRELIMXNARY OFFI~ STATEMENT DATED , 1995
In the opinion of Jo~ Hell Hill & White, · Profcasiontl Law Corporation, Bond Court.l, ba.uxl on c=~isting laws, regulations, rul~gs,
and court decisions end assuming, among othcr m~t~'s, oompILtnec with ce..rtt~ eovem.nts, intea'est on tl~ ~ A Bonds is excluded
fi-om IL'toss inoon~ for fods;ral income Utx purposes end is ea~mpt from Sta~ of CaliJ'ornia personal ineom~ ta.~es. In thc opinion of
Bond Counsel, int~t on thc Seri~ A Bonds is not · specific pr~ferenc~ itc~n for purpos~ of tl~ fecka'sJ individutl or 'corporate
alt~'nafivc minimum taxes, although Bond Coun~l observes that it is included in adjustod current eantings in e, tioula~g
corporate alternative minimum ta.x~ble income. Bond Counsel r..xprease~ no opinion ~gtrding oth~ federal income tax
oonseclu~c~s re. la. ting to thc n~.cru~ or _rec,.pt of interne on thc Series A Bonds. So; "TAX EXEM~ON" ~rein.
NEW ISSUE - BOOK-ENTRY Oh~LY
C~y ,000,000.
OF TUSTIN
R Lhnited O~i~. t!o.n.I, mp£.ov, em~ent.,Bo..nds ,.
e~se~ment instruct r~o. ~-~ (l'usun ~,ancn)
Series A
RATINGS: Moody's (to come)
(See "RATIN'GS.~ herein.)
Dated: A~ ~ Herein Price: 100% Due: Septemb~ 2, 2013
'The $43,000,000' City of Tustin Limited Obligation Improvement Bonds, Reas~~t Di~'ict No. 95-2 ~ Ranch), Sa-ica A (tbe 'Series
A Bonds') tr~ b~ing issued pursuant to the Refundi~.g Act of 1984 for 1915..h~provement Act Bond~ (the 'Act ) az~ further pursuant to a Fise. tl
Agent Agreement, ds.t~ ts of ,1995 (thc Fisctl Agent Agreement ), bctwec~ the City of Tustin (thc: 'City') ~nd Sta~~ Bank ~nd
Trust Company of Ca.omit, N.A., ts rue. el agent (the 'Fise~ Agent'), and a~v secured b~, oorta~ unpa.id rea~easments levied by the City pursu&nt
to the Act upon e~tutin pt'rech of lend within utid Retsseasment District No. 95-2 Crustm Ranch) (thc 'Reu~sment District').
Furthermore, the Series A Bonds initially have thc benefit of a~ h't~vocabl¢ dh'cot Pay l.~r of Cr~iit (the 'Lattor of Credit') issued by
KREDIETBANK N.V., New York Branch
The Letter of Credit will permit the Fiscal Agent, pursuant to the Fiscal Agent Agreement, to draw on the Lettor of Credit up to an amounl
sufficient to pay (l) thc princil~l of thc Series A Bonds wh~ duc, (2) thc puroh~c prie~ of S4~'iea A Bond~ ~ ~ purchtsed purstmnt to tenders
and that a~ not rana~cted, end (3) not leas tha~ 50 days interne a.,-.crued on thc-Series A Bonds, tU ts mor~ fully d~:~en'bed in this Officitl
S~te~nent. Thc Lettc:r of Credit cxpiz~ on September 15, 2002, or on thc etrlicr oecu~ of oe.r~in events described in this Official Statement.
Sec 'THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT- Thc'Init~ Letter of Credit' har,~, On thc frith BusineH Day
prior to thc expiration or termination of thc Letter of Credit, thc Series A Bonds will be sub.~ct to mutdatory tender for purehuc.
At their issmnce, thc Scriea A Bonds will beer intc:re~t ~t a Ds~ly ~ _,_4_~__crmined for each day az~d Payable on ~ fu"st Business Day of each
month, commencing ,1995; thereaf~r, thc Series A BOnds may bea. r inter~t ~t a Daily Rat~, a Wockly Ra~, a Montl0y Ra~, a Semi-
Annu~l l~te, a~ Extended Porte, a VIP P.~c, or a Fixed Rets, ts determined from time to time in -_ecorclanec with thc Fisctl Agent Agreement.
Thc maximum interne rate on thc Series A Bonds is thc le. sscr of thc ~gheat rs~ tllowed for thc Series A Bonds by Cz. lifornia law from time to
time in effect or thc rate used to compute thc amount avaib, blc for drawing under thc l..e~r of Credit to pay interne (curtly 12%).
Thc Series A Bonds arc subject to mandatory and optional redemption by thc City before maturity, to mandat~ry purchase under ccrt~i:
circumsttnee~, end under cerutin cireumsumeea wi]J bc purctmsed on thc demand ofthch' Owncrs, u described in th~ Official Statement. Sec 'THE
SERIES A BONDS - Redemption,' 'THE SERIFS A BONDS - Manda~ry Purchtsc,' and 'THE SERIFS A BONDS - Tenders."
Thc Sc~ie~ A Bonds will be issuablc u fully r~gi~tered bonds in deno~tions of $100,000 or a~y int~grtl multiple thcrenf (cxeelx one bond in
an odd amount, if necessary), and ~ continue ts such while thc Series A Bonds bear interest ~ a Dnily R,u~, Wee~y Ra~, Monthly R~tc, or
VIP R,u~. While thc Series A Bonds bear interest at a Semi-Annual R~tc, Extended Ra~ or F~xed Rate, thc Series A Bonds will be issuablc in
denomin~ons of $5,000 or thy integntl multiple thcrenf.
·
Thc Series A Bonds initially ~ be r~gister~ in thc name of C.~c & Co., u nominee of'Thc Depository Trust Company, New York, New York
('DTC"), which wi.U act ts Bond D~?. sitory for thc Scrie~ A Bonds. Purchasers of interests in thc Seri~ A BOnds will not _r~__'.vc physictl delivery
of bond oertifie~tea, except u described hcr~in. Individutl pur~hues of inu:reats in thc Series A BOnds initia~y will be n~dc in book-entry form
only in thc authorized denomiz~tions. Ownership inure, au in thc Series A BOnds, end U~nsfers thereof, wi~ be rc~orded in book-entry form by
Ptrticipants (u defined her~in), and thc interests of l~rticiptnts ~ 'be r~.,o~ed in book-entry form by DTC, ts deacribod h~. Payment of
inter~t on and principtl, r~emption price and, with reapect to tendered Series A Bonds, purckue price of the ~ A Bonds, will be rrmdc by
thc Fi~.~ Agent fi'om funds avs~J~blc under thc Fiscal Agent A~'oc~nent, u cleaeribed herc~n, to C. edc& Co., ts ~gistez~ owner of thc ~
A Bonds, to be subs~luenfly disbursed to thc Participants u further deacribod herein. Sec "I'HE S~ A BONDS - Book-Entry System' herein.
Neither the faith and credit nor the taxing power of the City, the State of California or any ~ subdlvis~on tbermf, ineiudi~ the County
of Ora~e, is pledged to the payment of the Ser~ A Bonds.
~ cov~ page contnins informttion for n:fcrenec only. It is not a sunmm-y of this iuu~. Investors must ~ t~ entiz~ Off~is.l Sta~ment in
order to rna~ an informed investment 6cession about thc ~ A Bonds.
Thc Series A Bonds trc offered, whao, ts end i~ i~sued ~nd acoqx~ by thc Undcrwri~r, subject to &pprovaJ u to their vtlidity by Jone~
n Hell Hill & White, a Professional Law Corporation, San Fru~c~, Caroms, Bond Comuci, a.~ subject to oerttin other oo6ditions.
~ ~ lcgtl n~tters wU] be. ~used upon for thc Underwriter by its cotmscl, Orrick, Hcrrington & Sutol]~fc, Sam Francisco,
"' Ca/ifom~, and for thc Cnty by Rourkc, Woodruff & SpradUn, a Profeasiona.l Corporation, Ortngc, Cal~orni~. It is
tnticiptted t~t thc Series A Bonds will be avti~blc for delivery in book-entry form in New York, New York, on or about ,1995. '
PaineWebber Incorporated
patecl ,1995
.~ * Pr~~, subject to change.
$F2-37856.4 40r/9-5=/.s.q4- 11/07/95
The information contained in this Official Statement (which includes the Appendices)
has been obtained from the City, Kredietbank N.V., New York Branch (the "Letter of Credit
Bank") and other sources deemed reliable. No representation is made, however, as to the
accuracy or completeness and such .information, and nothing contained in this Official
Statement is, or shall be relied upon as, a promise or representation by the PaineWebber
Incorporated (the "Underwriter'). This Official Statement is submitted in connection with
the sale of the securities described in it and may not be reproduced or used, in whole or in
part, for any other purpose. The information contained in this Official Statement is subject
to change without notice and neither the delivery of this Official Statement nor any sale made
by means of it shall, under any circumstances, create any implication that there have not
been changes in the affairs of the City or the Letter of Credit Bank since the date of this
Official Statement.
No dealer, salesman or any other person has been authorized by the City, the Letter
of Credit Bank or the Underwriter tO give any information or to make any representation
other than as contained in this Official Statement in connection with the offering described in
it and, if given or made, such other information or representation must not be relied upon as
having been authorized by any of the foregoing· This Official Statement does not constitute
an offer to sell or the solicitation of an offer to buy any securities other than those described
on the cover page, nor shall there be any offer to sell, solicitation of an offer to buy or sale
of such securities by any person in any jurisdiction in which it is unlawful for such person to
make such offer~ solicitation or sale.
TABLE OF CONTENTS
Pa~e
SI~-I-ECTED INFORMATION REGARDING THE SERIES A BONDS ........... iii
,INTRODUCTION
· · · · · · · · · · · · · , · , . . . · , ~ . · , · . · , · · · · · · · . · · . · · , , 1
SOURCES AND USES OF FUNDS
THE REFUNDING PLAN
THE REASSESSMENT DISTRICT ................................. 7
THE SERIFS A BONDS ....................................... 8
THE LETI'ER OF CREDIT AND THE REIMBURSEMENT AGREEMENT ....... 22
THE FISCAL AGENT ........................ · ................ 25
RATINGS
· *' · '' · · · -- · '- · · · .. · · · · · · · · · · · · · · · . · · · · · · · . · . . · . .30
O~ LEGAL ]~At~R$ .......... ' ........................... 32
,,
APPENDIX A - The City of Tusfin ................................ A;'i
APPENDIX B - Kredietbank N.V., New York Branch
APPENDIX C - Fora of Legal Opinion of Bond Counsel .................. C-1
APPENDIX D - Reassessment Diagram ............................. D-1
APPENDIX E- List of Parcels ...................... ' E-1
ii'
SELECTED INFORMATION REGARDING THE SERIES A BONDS
The following presents summary information regarding the terms of the Series A
Bonds and is qualified in its entirety by reference to the documents described and the more
detailed descriptions appearing in this Official Statement. No person is authorized to make
offers to tel/, or solicit offers to buy, the Series A Bonds unless the entire Official Statement
is delivered in connection with the offer or solicitation. Certain terms used in this summary
are defined hereafter in this Official Statement.. Any terms not defined in this Official
Statement have the meanings attributed to them in the Fiscal Agent Agreement.
Denomination of Bonds ..........
Individual purchases of Series A Bonds, as initially
issued and so long as they bear interest at a Daily Rate,
will be made in book-entry form only in the
denomination of $100,000 or integral multiples thereof
(except one bond in an odd amount, if necessary).
Book-Entry System .............
The Series A Bonds initially will be registered in the
name of Cede & Co., as nominee of The Depository
Trust Company, New York, New York ('DTC'), which
will act as bond depository (the' 'Bond Depository") for
the Series A Bonds. Purchasers of interests in the Series
A Bonds will not receive physical delivery of bond
certificates, except as described herein. Ownership
interests in the Series A Bonds, and transfers thereof,
will be recorded in book-entry form by Participants (as
defined herein) and the interests of Participants will be
recorded in book-entry form by DTC, as described
herein. Payment of interest on and principal, redemption
price and, with respect to tendered Series A Bonds,
purchase price of the Series A Bonds, will be made by
the Fiscal Agent from funds available under the Fiscal
Agent Agreement (described herein) to Cede & Co., as
registered owner of the Series A Bonds, to be
subsequently disbursed to the beneficial owners as further
described herein. See 'THE SERIES A BONDS - Book-
Entry System." In the event thc Book-Entry System is
discontinued with'restx~t to the Series A Bonds as
described under 'THE SERIES A BONDS-Book-Entry
System-Discontinuance of D TC Services," different
requirements will apply to transfers and demands for
purchase of Series A Bonds. See 'THE SERI~ A
BONDS-Tenders."
Initial Rate ..................
The Series A Bonds will initially bear interest accruing
from their date of issuance at a Daily Rate. When the
Series A Bonds bear interest at a Daily Rate, interest will
City's OptiOn to Designate
Interest Rate Determination
Method .................. · .....
Redemption of Bonds ............
be determined as described under "THE SERIES A
BONDS,Interest - Daily Rate" and will accrue from and
including the first day of each calendar month (except
that 'during the initial interest period interest shall accrue
from and including the dated date of the Series A Bonds)
through the last day of the month and will be payable on
the first Business Day of the following month,
commencing ~, 1995. See 'THE SERIES A
BONDS-Interest-Daily Rate."
The City may elect to change the type of interest rate
borne by'the Series A Bonds (i.e., Daily, Weekly,
Monthly, Semi-Annual, Annual, VIP or Fixed). No
change in interest rate may be made after the Series A
Bonds have commenced to bear interest at a Fixed
Rate. See "THE SERIF. S A BONDS-Interest.'
The interest rate on the series A Bonds may not exceed
the lesser of the maximum rate per annum from time to
time permitted for the Series A Bonds by California law
or the rate used to compute the interest portion available
for drawing under the Letter of Credit (currently 1,2 %).
The Series A Bonds are subject to mandatory purchase
upon the change of the interest rate on the Series A
Bonds from one interest rate mode to another.
When the Series A Bonds bear interest at a Daily Rate,
Weekly Rate or Monthly Rate, the Series A Bonds may
be redeemed at the option of the City, in whole of in
part, in authorized denominations, on the first day of
each calendar month, at their principal amount plus
accrued interest to the redemption date, without
premium.
When the Series A Bonds bear interest at a Semi-Annual
Rate, Annual Rate, Fixed Rate or VIP Pricing Rate, the
Series A Bonds may be redeemed at the option of the
City, in authorized denominations, in whole or in part,
as described herein. See 'THE SERIES A BONDS-
Redemption."
The'Series A B~nds are subject to mandatory redemption
in part on September 2 of each year, commencing
September 2, 1996.
-8l:r2-37~62.4 iv
Mandatory Purchase of Bonds ....
Owner's Right to Tender Bonds..
Sources of Payment for
the Bonds ............. ' .......
The Series A Bonds are subject to mandatory purchase
upon a change in the interest rate determination method,
upon the substitution of the Letter of Credit or five
Business Days prior to the expiration or termination of
the Letter of Credit. In addition, Series A Bonds ~g
interest at a VIP Pricing Rate are also subject to
mandatory purchase on the next succeeating Rate
Determination Date. See 'THE SERIFS A BONDS-
Mandatory Purchase.'
When the Series A Bonds bear interest at a Daily Rate,
an. Owner of a Series A Bond may t~nder his or her
Series A Bond for purchase on any Business Day (a) if
such Series A Bond is held in book-entry form, upon
telephonic notice, immediately confirmed in writing, to
the Remarkefing Agent (initially PaineWebber
Incorporated) by 10:30 a.m., New York City time, on
the day the Owner wishes to tender his or her Series A
Bond, or Co) if such Series A Bond is held directly by
the Owner, upon telephonic notice, immediately
confu'med in writing, to the Remarkefing Agent by
10:30 a.m., New York City time, on the day the Owner
wishes to tender his or her Series A Bond and delivery of
such Series A Bond to the Fiscal Agent by 12:00 p.m.,
New York City time. See ~THE SERIES A BONDS-
Tenders-Daily Rate Tender."
When the Series A Bonds bear interest at a Weekly Rate,
Monthly Rate, Semi-Annual Rate or Annual Rate, an
Owner of a Series A Bond may tender the Bond for
purchase as described in "THE SERIES A BONDS-
Tenders-Weekly or Monthly Rate Tender,~ ~-Semi-Annual
or Annual Rate Tender.~
Each payment for a Series A Bond tendered by its Owner
as described above will be made in immediately available
funds in New York, New York. The purchase price will
be the principal amount of the Series A Bond plus any
accrued interest to the date of purchase.
Each separate group of Series A Fixed Rate Bonds are
payable from the installments collected, on account of the
specific unpaid Reassessments on the parcels of property
designated by the City, pursuant to the Fiscal Agent
A. greement, to be represented by such group of Series A
$F2.37~62
Initial Letter of Credit .......
Fixed Rate Bonds. The Series A Variable Bonds are
paYable frOm 'the proceeds of draws on the Letter of
Credit, and for any period, if any, during which no
Letter'of Credit is in effect, any Outstanding Series A
Variable Bonds, if any, will be payable from the
installments collected on account of all unpaid
Reassessments not so designated by the City.
The Letter of Credit Bank will issue an irrevocable direct
pay Letter of Credit for the purpose of paying the
principal of, interest on, and the purchase price of, the
Series A Variable Bonds. The Letter of Credit will
expire on September 15, 2002 or on the earlier
occurrence of certain events. See "THE LETfP_.,R OF
CREDIT AND THE REIMBURSEMENT
AGREEMENT - The Initial Letter of Credit." The
Letter of Credit will be issued in favor, of the Fiscal
Agent and will permit the Fiscal Agent to make drawings
for the payment of (i) the principal of the Series A
Variable Bonds when due at maturity or on acceleration
or redemption, or the principal portion of the purchase
price of Series A Variable Bonds that are not
remarketed, and (ii) not less than 50 days' accrued
interest on the Series A Variable Bonds.
Under certain circumstances, the City may replace the
initial Letter of Credit with an alternate Letter of Credit
or other qualified credit facility. See "THE LETTER
OF CREDIT AND THE REIMBURSEMENT
AGREEMENT - Alternate Letter of Credit or Other
Credit Facilities." The Series A Bonds will be subject to
mandatory purchase on any such substitution date. See
"THE SERIFS A VARIABLE'BONDS-Mandatory
Purchase-Mandatory Purchase on the Substitution of
Letter of Credit."
$F2.37862.4 vi
CITY OF TUSTIN
(Orange County, California)
MEMBERS OF THE CITY COUNCIL
Jim Potts, Mayor
Tracy A. Worley, Mayor Pro Tem'
Thomas R. Saltarelli, Councilmember
Mike Doyle, Councilmember
Jeffery M. Thomas, Councilmember
CITY STAFF
William Huston, City Manager
Ronald A. Nault, Finance Director
Valerie Crabil, City Clerk
Tim Serlet, Public Works Director
PROFESSIONAL SERVICES
Bond Counsel
Jones Hall Hill & White,
A Professional Law Corporation
San Francisco, California
City Attorney
Rourke, Woodruff & Spradlin,
A Professional Corporation
Orange, California
Financial Advisor
Baffle Wells Associates
San Francisco, California
Fiscal Agent
State Sweet Bank and Trust Company of California, N.A.
Los Angeles, California
$43,000,000'
CITY OF TUSTIN
Limited Obligation Improvement Bonds
Reassessment District No, 95-2 (Tustin Ranch)
Series A
INTRODUC~ON
This Official Statement, including the cover, the table of contents, the selected
information pages and the APlx~ndices, is provided to furnish information in connection with
the sale by the City of Tustin (the "City") of its $43,000,0(~* aggregate principal amount of
Limited Obligation Improvement Bonds, Re. assessment District No. 95-2 Crustin Ranch),
Series A (the "Series A Bonds"). The Series A Bonds will be issued pursuant to a Fiscal
Agent Agreement, dated as of , 1995 (the "Fiscal Agent Agreement"), between the
City and State Street Bank and Trust Company of California, N.A., as fiscal agent (the
"Fiscal Agent").
_. .
The Proceeds from the sale of the Series A Bonds will be used principally to refund
c. enain outstanding limited obligation improvement bonds (the 'Prior Bonds") of the City for
Assessment District No. 85-1 and Assessment District No. 86-2 (the "Prior Assessment
DistrictS").
The City is located in central Orange County, about 40 miles southeast of Los
Angeles and 80 miles north of San Diego. The City. spans approximately 11.2 square miles
and adjoins the cities of Irvine, Orange and Santa Ana. The City's population, as of January
1, 1995, is estimated at 62,500, representing an approximate 4.5 % increase from
January, 1994.
Reassessment District No. 95-2 (Tustin Ranch) (the "Reassessment District") is
bounded generally by the Santa Ana Freeway (Interstate 5), Browning Avenue and Tustin
Ranch Road, Santiago Canyon Road, and Jamboree Road. See "Appendix D - Re. assessment
Diagram" hereiri.
The Reassessme'nt District boundary is coterminous with the combined boundaries of
the Prior Reassessment Districts. The unpaid reassessments which secure the Series A Bonds
have been levied on those parcels of land in the Prior Assessment Districts designated by the
City for such levy, and, the parcels so designated are those parcels which had unpaid prior
assessments which, at the t/me the re. assessments were levied, were security for the
remaining outstanding variable rate Prior Bonds of the Prior Assessment Districts.
Preliminary, subject to change.
sm-aT~:.4 1
The unpaid re. assessments represent liens on the respective parcels of land. Said
unpaid re. assessments, together with the interest thereon, constitute a trust fund for the
redemption and payment of the principal of the Series A Bonds and the interest thereon.
They do not, however constitute a personal indebtedness of the respective owners of such
parcels of land. In addition, the Series A Bonds are secured by the proceeds of draws on the
Letter of Credit. Pursuant to the Fiscal Agent Agreement, while the Letter of Credit is in
effect, the Fiscal Agent makes draws on the Letter of Credit to make timely payment of the
principal of the Series A Bonds and the interest thereon, in which case the installments paid
on account of unpaid reassessments become the sources of reimbursement to the Letter of
credit Bank.
When the Series A Bonds are issued, the Letter of Credit Bank will deliver to the
Fiscal Agent an irrevocable direct pay Letter of Credit initially issued in the amount of
$55,904,109.59 [subject to change] pursuant to a Reimbursement, Credit and Security
Agreement dated as of ,1995 (the "Reimbursement Agreement"), to be
entered into between the City and the Letter of Credit Bank. The initial Letter of Credit shall
expire on September 15, 2002, or the earlier occurrence of certain events as described
herein. The initial Letter of Credit may be replaced by a letter of credit of another
commercial bank or by another credit facility as described under "THE LETr~J~ OF
CREDIT AND THE REIMBURSEMENT AGReEMENT--Alternate Letter of Credit or
Other Credit Facilities." The initial Letter of Credit, or any qualified replacement or
extension, issued by the Letter of Credit Bank, or any other bank, is called a 'Letter of
Credit." Any bank which at the time is the issuer of a Letter of Credit is called the' "Letter
of Credit Bank."
The init/al Letter of Credit will be issued in a total amount equal to the principal
amount of the Series A Bonds, plus not less than 50 days' interest accrued on the Series A
Bonds.
At issuance, the Series A Bonds will bear interest at a rate determined for each day
(the "Daily Rate~) that will accrue from and including the date of delivery through the last
day of the calendar month following the date of delivery and will be payable on. ,
1995, and thereafter, from and including the first day of each calendar month through the
last day of such month and will be payable on the first Business Day of the following month.
The type of interest rate borne by the Series A Bonds may be changed at the option of
the City in accordance with the terms of the Fiscal Agent Agreement, upon notice to the
Owners of the Series A Bonds, to a weekly interest rate (the 'Weekly Ram"), a monthly
interest rate (the "Monthly Ram"), a semi-annual interest rate (the "Semi-Annual Rate"), an
annual interest rate (the "Annual Rate"), a variable interest period interest rate (the "VIP
Pricing Rate"), or a fixed interest rate (the "Fixed Rate"), as described below. When the
Series A Bonds bear interest at a Weekly Rate or a Monthly Rate, interest on such' Series A
Bonds will be payable on the'first Business Day of the following month. When the Series A
Bonds bear interest at a VIP Pricing Rate, interest on such Series A Bonds will be payable
on the first day of the next su~ing Adjustment Period. When Series A Bonds bear
interest at a Fixed Rate, a Semi-Annual Ram or an Annual Rate, interest on such Series A
Bonds will be payable on each March 2 and September 2. Each day on which interest is so
payable, on the Series a Bonds is called an ~IntereSt 'Payment Date. ~ See 'THE SERIES A
BONDS-- Interest."
The term "Business Day" means a day on which the Fiscal Agent, ___.._, as Paying
Agent (the "Paying Agent"), PaineWebber Incorporated, as remarketing agent (the
"Remarketing Agenff), the Letter of Credit Bank or banks or trust companies in New York,
New York, or in Los Angeles, California, are not authorized or required by law to remain
closed. If the date for making any payment on the Series A Bonds is not a Business Day,
the payment may be made on the next Business Day with the same effect as if made on the
nominal date, and no interest will accrue between the nominal date and the actual payment
date.
The Series A Bonds will be issuable as fully registered bonds and initially will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company, New
York, New York (*DTC'~), which will act a bond depository (the "Bond Depository") for the
Series A Bonds. Individual purchases of interests in the Series A Bonds initially will be
made in book-entry form only in the denomination of $100,000 or integral multiples thereof
(except one odd bond, if nexessary). Interest on and principal, redemption price and, with
respect to tendered Series A Bonds, purchase Price of the Series A Bonds will be payable to
beneficial owners of the Series A Bonds as described under "THE SERIES A BONDS--
BOok-Entry System. ~ Prior to any conversion of the interest rate on the Series A Bonds to a
Fixed Rate or a VIP Pricing Rate and so long as Series A Bonds' are registered in .the name
of Cede & Co., beneficial owners of the Series A Bonds may tender their interest in the
Series A Bonds for purchase at the principal amount thereof plus accrued and unpaid interest,
if any, by mean of a book-entry credit of such interests in the Series A Bonds to the account
of the Remarketing Agent, as described under 'THE SERIES A BONDS--Tenders--Tenders
of Bonds in Book-Entry Form."
Brief descriptions of the Reassessment District, the Series A Bonds, the Letter of
Credit, the Reimbursement Agreement and the Fiscal Agent Agreement are included in this
Official Statement. Financial information and a brief description of the Letter of Credit Bank
and general information regarding the City are included in the Appendices. The descriptions
of the Series A Bonds and other documents are qualified in their entirety by reference to
them. Copies of such documents may be obtained from the City at 300 Centennial Way,
Tustin, California 92680, Attention: Finance Department; and, during the initial public
offering period, at PaineWebber Incorporated, 1285 Avenue of the Americas, 10th Floor,
New York, New York 10019, Attention: Short Term Desk or 100 California St., 12th Floor,
San Francisco, California 94111, Attention: Public Finance Department, and, after initial
delivery of the Series A Bonds, at the principal corporate trust office of the Fiscal Agent at
725 South Figueroa Street, Suite 3100, Los Angeles, Cafifornia 90017.
$1~2o~7~52.4 3
SOURCES AND USES OF FUNDS
The estimated sources and uses of proceeds of the Series A Bonds is shown below:
Sources of Funds
Principal Amount of Series A Bonds ............. $43,000,000
Prior Funds ........................... $
Total Sources of Funds ................ $ .
. Uses of Funds
Refunding Escrow ...... . ................. $
Costs of ISsuance ........................ $
Underwriting Discount ............. i ........ $
Total Uses of Funds ................... $43.000.000
THE REFUNDING PLAN
The Refunding Plan for the Prior Variable Rate Bonds and the Prior Fixed Rate
Bonds (the "Refunding Plan") is being implemented in two separate components. The first
component is related to the Series A Bonds and pertains to refunding of the Prior Fixed Rate
Bonds, as discussed herein.
The second component is related to proposed Reassessment District No. 95-2 and the
proposed issuance and sale by the City of its Series A of variable rate hmitecl obligation
improvement bonds (the 'Series A Assessment Bonds (95-2)N) of said Reassessment District
No. 95-2 and provides for the proposed refunding of the remaining outstanding Prior
Variable Rate Bonds. The proposed issuance and sale by the City of its Series A 'of variable
rate limited obligation improvement bonds, if, as and when authorized, will be the subject of
a separate Official Statement pertaining to said proposed issue and is not further discussed
herein.
Pursuant to the Indenture, proceeds from the sale of the Series A Bonds will be
deposited as follows:
(a) An amount equal to the Reserve Requirement with restx~t to the Series A
Bonds, as established in accordance with the definition of Reserve Requirement in the
Indenture, will be deposited in the Reserve Account.
(b) The remainder of the proceeds will be deposited in the Program Fund.
On the Closing Date, the Trustee will withdraw from the Program Fund .an amount
equal to the purchase price of the Assessment Bonds (95-1), as established by the Bond
PurchaSe Agreement (the 'Purchase Agreement (95-1)'), dated as of__, 1995, by and
between the City and the Authority, and relating to the acquisition by the Authority of the
Assessment Bonds (95-I). Payment of said purchase price will be made by the Trustee on
behalf of the Authority, pursuant to the Purchase Agreement (95-1), and the ownership of the
Assessment Bonds (95-1) will be registered to the Trustee.
Payment of said purchase price of the Assessment Bonds (95-1) will be made by the
Trustee to State Street Bank and Trust Company of California, N.A., as Fiscal Agent
pursuant to the Fiscal Agent Agreement. Pursuant to Section 3.02 of the Fiscal Agent
Agreement, proceeds of sale of the Assessment Bonds (95-1) will be deposited or transferred
as follows:
(a) An amount representing capitalized interest with respect to the Assessment
· Bonds (95-1) will be deposited in the Redemption Fund for the Assessment Ik-mds (95-1).
(b) An amount repre, sen~g the Reserve Requirement for the Assessment Bonds
(95-1), as established pursuant to the Fiscal Agent Agreement, will be deposited in the
Reserve Fund for the Assessment Bonds (95-1).
(c) A prescribed amount will be deposited in the Improvement Fund to £mance a
portion of the cost of the remaining components of the public improvement projects of the
Prior Districts.
(d) A prescribed amount will be deposited in the Costs of Issuance Fund for the
Assessment Bonds (95-'1).
(e) A prescribed amount will be transferred to State Street Bank and Trust
Company of California, N.A., as escrow bank (the "Escrow Bank"), pursuant to the Escrow
Agreement (the 'Escrow Agreement"), dated as of , 1995, by and between the City
and the Escrow Bank..
Pursuant to the Escrow Agreement, the Escrow Bank will establish two separate
escrow funds (the 'Escrow Funds"), one (the '85-1 Escrow Fund') for the redemption on' the
Redemption Date of the Prior Fixed Rate Bonds of A.D. 85-1 and the other (the "86-2
Escrow Fund") for the redemption on the Redemption Date of the Prior Fixed Rate Bonds of
A.D. 86-2. As provided in the Escrow Agreement, the moneys deposited in the Escrow
Funds from procx~s of sale of the AsSeSsment Bonds (95-1) will be supplemented by
transfers from prescribed funds held and administered by the trustee under the Prior
Indentures in amounts certified by a nationally recogniz~ firm of independent certified
public accountants to be sufficient to redeem the Prior Fixed Rate Bonds on the Redemption
Date.
SF2.37962.4 5
The Prior Fixed Rate Bonds are the result of eleven (11) separate
conversion/reoffering transactions under the Prior Indentures as follows:
Reoffering Outstanding
Transaction Princival
1. No. 85-1A $ 3,965,000
2. No. 85-1B 7,165,000
3. No. 85-1C 210,000
4. No. 85-1D 2,570,000
5. No. 85-1E 1,035,177
6. No. 86-2A 8,505,000
7. No. 86-2B 14,135,000
8. No. 86-2C 4,365,000
9. No. 86-2D 6,390,000
10.' No. 86-2E 535,000
11. No. 86-2F 2.881.200
Total Principal Outstanding:
$51,756,377
The total redemption price of the Prior Fixed Rate Bonds on the Redemption Date is
, calculated as follows:
Principal Amount
Interest Payable
Redemption Premium
$51,756,377
Total Redemption Price:
As evidenced by Sections 2 and 3 and Schedules 1 and 2 of the Escrow Agreement,
the sources of funds to pay the total redemption price are as follows:
Transfer from Fiscal Agent
[frOm proex~s of Sale of
Assessment Bonds (95-1)]
Transfers from Prior Indentures
Interest Earned on Escrow
Securities
Total Redemption Price: $ .
T~E REASSESS1VFEN~ DISTRICT
The Prior Assessment Districts
The Reassessment District consists of parcels of land within a boundary which is
coterminous with the combined boundaries of the City's Assessment District No'. 85-1 and
Assessment District No. 86-2 (the "Prior Assessment Districts"). The parcels of land
constituting the Reassessment District are parcels of land in the Prior Assessment Districts
designated by the City for inclusion in the Reassessment District, and with one exception, the
parcels so designated are those parcels which had unpaid prior assessments which, at the time
the reassessments were levied, were security for the remaining outstanding variable rate
bonds of.the Prior Assessment Districts.
Issuance of the variable rate limited obligation improvement bonds for Assessment
District No. 85-1 was accomplished in August, 1986, with delivery of $50,650,000 in
principal amount of bonds. Issuance of the variable rate limited obligation improvement
bonds for Assessment District No. 86-2 was accomplished in September, 1988, with delivery
of $81,400,000 in principal amount of bonds. Proceeds of both issues were used primarily
to finance design and construction of public improvements to facilitate development of and to
serve the property within the combined area of the Prior Assessment Districts, including
bridges, interchange improvements, streets and parkways, traffic signals, signing and
striping, street lights, trails, landscaping, drainage and flood control facilities, water lines,
sanitary sewers, and utility improvements, together with the costs and expenses of the
assessment proc. a~ings and bond issuance.
At the time of issuance of the bonds for the Prior Assessment Districts (the "Prior
Bonds"), the major land owner in each of the Prior Assessment Districts was The Irvine
Company. As provided in the legal proceedings and documents for the Prior Bonds, as tide
to parcels of land within either of the Prior Assessment Districts was conveyed to third
parties by the Irvine Company, the City, acting primarily through the Remarketing Agent for
the Prior Bonds, changed the type of interest rate borne by a portion of the Prior Bonds to a
fixed rate and caused a remarketing of such bonds. The amount of the Prior Bonds changed
to a fixed rate (the 'Prior Fixed Rate Bonds") corresponded with the amount of the unpaid
assessments on the parcels .of land conveyed to such third parties. Refunding of the Prior
Fixed Rate Bonds is proposed to be accomplished by Reassessment District No. 95-1 (Tustin
Ranch) of the City, the proceedings for which are being conducted concurrently with the
legal proca~ings for the Reassessment District.
Property Ownership
The Ia'vine Company is currently the major owner of the parcels of land within the
Reassessment District. The Irvine Company has sold certain of the property in the
Re. assessment District and expects to sell additional parcels. Another significant owner of
property within the Re. assessment District is Irvine Apartment Communities, Inc., a'real
estate investment trust, of which The Irvine Company currently has an approximate 61%
ownership interest. Neither The Irvine Company nor Ir'vine Apartment Communities, Lac, is
sm-a?,~:.,, 7
obligated in any manner to continue to own any of the land it presently owns within the
Reassessment District. The installments payable on account of unpaid reassessments are not
a personal obligation of the owner of the subject parcels, and the City can offer no assurance
that either The Irvine Company. or Irvine Apartment Communities, Inc., will be financially
able to pay such installments or that either of them will choose to pay even if financially able
to do so.
The Irvine Company is a privately held corporation founded by James Irvine in 1876,
12 years after he assembled the Ia'vine Ranch through purchase of Spanish and Mexican land
grant ranchos. The Irvine Company is engaged in the long-term, economic utilization of its
land resource in central Orange County (presently measuring approximately acres
in arm). The Irvine Company is developing its property into a series of urban communities
which include centers of employment - office, research, industrial and retail - and a diversity
of residential opportunities for sale and for rent. Within this urban environment, The Irvine
Company is developing high quality income producing properties which it owns and
operates. Land not currently planned for development is being farmed.
TIKE SERIES A BONDS
General
The Series A Bonds will be issued in the principal amount, will be dated, and will
mature as indicated on the cover and inside cover of this Official Statement. Series A Bonds
may be transferred or exchanged for other Series A Bonds at the principal office of the
Paying Agent. The Series A Bonds will initially be issued in denominations of $100,000
(except for one bond in an odd amount,' if necessary) and any integral multiple thereof and
will initially bear interest at the Daily Rate.
When the Series A Bonds bear interest at a Daily Rate, Weekly Rate, Monthly Rate,
Semi-Annual Rate or Annual Rate, the Series A Bonds will only be issued in denominations
of $100,000 or any integral multiple thereof (except for one bond, if necesary). When the
Series A Bonds are in the VIP Pricing Rate, the Series A Bonds will be issuable in
denominations of $100,000 and any integral multiple of $5,000 in excess thereof. When the
Series A Bonds bear interest at a Fixed Rate or are in the VIP Pricing Rate, the Series A
Bonds will be issuable in denominations of $5,000 and any integral multiple thereof.
PaineWebber Incorporated ("PaineWebber") has been appointed Remarketing Agent
under the Fiscal Agent Agreement. Its principal office is at 1285 Avenue of the Americas,
New York, New York 10019, (212) 7134692 (Short Term Desk). The Remarketing Agent
may resign or be removed by the City as further described under the Fiscal Agent
Agreement.
Book-Entry System
Book Entry form. When the Series A Bonds are issued, ownership interests will be
sold to purchasers only by or through Participants (hereinafter defined) and will be available
in bookentry form only under a bookentry system (the "Book-Entry System") maintained by
DTC or such other depository institution designated by the City pursuant to the FiScal Agent
Agreement as the Bond Depository. If the Series A Bonds are taken out of the Book-Entry
System and delivered to owners in physical form, as described hereinbelow under
'Discontinuance of DTC Services,' the following discussion will not apply.
DTC and its Participants. DTC, and its successors and assignS, will act as Bond
Depository for the Series A Bonds. DTC is a limited purpose trust company, organized
under 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 was created to hold securities of the participants,
(the "Participants") and to facilitate the clearance and settlement of securities transactions
among Participants in such securities through electronic bookentry changes in accounts of the
Participants,. thereby eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations, some of which (or their representatives) own
DTC.. A~s to the DTC system is also available to others such as banks, brokers, dealers
and trust companies, that clear through or maintain a custodian relationship with a Participant,
either directly or indirectly (the "Indirect Participants").
Purchase of Ownership Interests. Ownership interests in the Series A Bonds' may be
purchased only through Participants. Such Participants and the persons for whom they hold '
interests in the Series A Bonds, as nominees, will receive a credit balance on the records of
DTC in the amount of such Participant's interest in the Series A Bonds, which will be
confzrmed in accordance with DTC's standard procedures. Each person for which a
Participant, as nominee, has an interest in the Series A Bonds should make arrangements
with such Participant to have all notices of redemption, mandatory tender for purchase and
other communications with respect to the Series A Bonds which may affect such person
forwarded in writing by such Participant and to be notified of all interest payments.
Purchasers will not receive certificates representing their ownership interest in the Series .A
· Bonds, except as specifically described in this Official Statement.
Payments of Principal, Interest and Purchase Price. So long as all Series A Bonds
are registered in the name of Cede & Co., as nominee of DTC, or its registered assign, all
payments of interest and principal (and purchase price upon tenders for purchase) are
required to be delivered to the order of Cede & Co. or its registered assign in same-day
funds while the Series A Bonds bear interest at the Daily Rate, Weekly Rate, Monthly Rate
or Semi-Annual Rate or are in the VIP Pricing Rate and in next-day funds while Series A
Bonds bear interest at an Annual Rate or Fixed Rate. Principal and interest payments on the
Series A Bonds will be made to DTC or its nominee, Cede& Co., as registered owner of
the Series A Bonds. Upon receipt of monies, DTC's current practice is to immediately
SF'i-37g62.4 9
credit the accounts of the Participants in accordance with their respective holdings shown on
the records of DTC. Payments by Participants and Indirect Participants to beneficial owners
is governed by standing instructions and customary practices, as is now the case with
municipal securities held for the accounts of customers in bearer form or registered in
nominee .name, and will be the responsibility of such Participant or Indirect Participant and
not of DTC, the City, the Remarketing Agent, the Paying Agent or the Fiscal Agent, subject
to any statutory and regulator requirements as may be in effect from time to time.
The City, the Fiscal Agent and the Paying Agent will recognize DTC or its nominee
as the Owner for all purposes, including notices and consents. Conveyance of notices and
other communications by DTC to Participants, by Participants to Indirect Participants, and by
Participants and Indirect Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory and regulatory requirements as may be .in effect from
time to time.
The City, the Fiscal Agent, the Paying Agent and the Remarketing Agent shall be
entitled to treat the person in whose name any Series A Bond is registered (DTC or its
nominee) as the absolute owner thereof for all purposes of the Fiscal Agent Agreement and
any applicable laws; and, except as described below, (1) all payments of interest, principal,
redemption price and purchase price made by the Fiscal 'Agent or Paying Agent shall be
delivered only to DTC or Cede & Co., as its nominee, (2) all notices delivered by the City
or the Fiscal Agent pursuant to the Fiscal Agent Agreement shall be delivered only to DTC
or Cede & Co., as its nominee, and (3) all rights of Owners under the Fiscal Agent
Agreement, including without limitation voting rights, rights to approve, waive or consent,
rights to transfer and exchange Series A Bonds, and' rights to tender series A Bonds and not
to tender Series A Bonds shall be rights of DTC or Cede & Co., as its nominee. The
Participants will rely on DTC, and the beneficial owners of the Series A Bonds will rely on
the Participants or an Indirect Participant for timely payments and notices, the execution of
tenders or other rights as directed by the beneficial owner, and for otherwise making
available to the beneficial owner rights of a registered owner. No assurances can be
provided that in the event of any bankruptcy or insolvency of DTC, a Participant or an
Indirect Participant through which a beneficial owner holds interests in the Series A Bonds,
payments will be made by DTC, the Participant or the Indirect Participant on a timely basis.
Transfers and Exchanges of Beneficial Ownership Interests. Transfers of ownership
interests in the Series A Bonds will be accomplished by book entries made by DTC and the
Participants who act on behalf of the beneficial owners. For every transfer and exchange of
the Series A Bonds, the beneficial owner may be charged a sum sufficient to pay any tax, fee
or other governmental charge to be paid with respect thereto.
Discontinuance of DTC Services. DTC may determine to discontinue providing its
services with respect to the Series A Bonds at any time by giving notice to the Fiscal Agent,
the Remarketing Agent and the City and discharging its responsibilities. In addition, the City
may discontinue use of DTC (or any substitute depository or its successor) with respect to
the Series A Bonds at any time upon 30 days' notice to the Fiscal Agent, the Remarketing
$~2.T'/~2.4
o.
Agent and DTC. Should DTC discontinue its services, or should the City discontinue the
use of DTC, Series A Bonds may be del{vered to Bondowners in physical form.
THE CITY, THE FISCAL AGENT, THE PAYING AGENT AND THE
REMARKEq/NG AGENT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION.
TO PARTICIPANTS, INDIRECT PARTICIPANTS OR ANY BENEFICIAL OWNER
WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY
DTC, ANY PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (II) THE PAYMENT
BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT
WITH RESPECT TO THE PRINCIPAL OF, OR PREMIUM, IF ANY, INTEREST ON OR
PLrRCI~SE PRICE OF THE SERIES A BONDS; 0/I) THE TIMKLY EXERCISE BY
DTC, ANY PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY D~ON
OF A BENEFICIAL OWNER WITH RESPECT TO ANY TENDER OF SERIFS A
BONDS; (IV) ANY NOTICE WHICH IS PERMIT£P. iD OR REQUIRED TO BE GIVEN
TO BONDOWNERS UNDER THE FISCAL AGENT AGREEMENT; (V) ~
SEI.ECTION BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT oF ANY
PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMFrION OF
THE SERIFS A BONDS; OR (VI) ANY CONSENT GIVEN OR OTI4KR ACTION TAKEN.
BY DTC AS BONDOWNER.
THE IN 0 .RMATION INCLUDED UNDER THIS CAPTION, OTHER THAN THE
PRECEDING TWO PARAGRAPHS HEREOF, HAS BEEN PROVIDED BY DTC. NO
REPRESENTATION IS MADE BY THE CITY OR THE UNDERWRITER AS TO THE
ACCURACY OR ADEQUACY OF SUCH INFORMATION PROVIDED BY DTC OR AS
TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION
SUBSEQUENT TO THE DATE HEREOF.
Interest
The Series A Bonds may bear interest at a Daily Rate, Weekly Rate, Monthly Rate,
Semi-Annual Rate, Annual Rate, VIP Pricing Rate or Fixed Rate, as elected by the City as
described 'below. The maximum interest rate on the Series A Bonds is the lesser of the
highest rate allowed for the Series A Bonds by California law from time to time in effect or
the rate used to compute the amount available for drawing under the Letter of Credit to pay
interest, which is currently 12%. The Daily Rate, Weekly Rate, Monthly Rate, Semi-Annual
Rate and VIP Pricing Rate are referred to as "ShortTerm Rates.' The Annual Rate and
Fixed Rate are referred to as "LongTerm Rates." On each change from a ShortTerm Rate to
a LongTerm Rate or a LongTerm Rate to a ShortTerm Rate, the City must deliver an
opinion of nationally recognized bond counsel stating that the conversion will not adversely
affect the validity of the Series A Bonds or the exclusion of the interest on the Series A
Bonds from gross income for purposes of federal income taxation or the exemption of
interest on the Series A Bonds from taxation under the laws of the State of California. Upon
a Change in Mode from one interest rate to another, the Series A Bonds will be subject to
mandatory purchase as described under 'Mandatory Purchase" herein.
Daily Rate. On their date of issuance, the Series A Bonds will bear interest at the
Daily Rate and will continue to do so unless the interest rote on the Series A Bonds is hanged
to a Weekly Rate, Monthly Rate, Semi-Annual Rate, Annual Rate, VIP Pricing Rate or
Fixed Rate. Interest at the Daily Rate will be computed on the basis of a year of 365 days
or 366 days, as applicable, and the actual days elapsed and will accrue from the first day of
each calendar month through the last day of such month (except with respect to the initial
interest period). Such interest will be paid on the fzrst Business Day of the following month,
commencing , 1995.
The Daily Rate for the Series A Bonds will be a rate determined on each Business
Day by the Remarketing Agent to be the minimum interest rate that would enable the
Remarketing Agent to sell the Series A Bonds on such day at the principal amount thereof
plus accrued interest, if any. The Daily Rate for a non-Business Day will be the rote set for
the prying Business Day.
Weekly or Monthly Rate. In accordance with the terms of the Fiscal Agent
Agreement, the City may elect to change the interest rote determination mode on the Series
A Bonds to a Weekly Rate or a Monthly Rate, effective on the first day of any calendar
month. The Fiscal Agent Agreement requires the Fiscal Agent to give notice of the
conversion from any mode to a Weekly Rate or a Monthly Rate to the Owners at least 5 days
prior to the effective date of the new interest rote mode.
The Weekly Rate and the Monthly Rate will be the minimum rote determined by the
Remarketing Agent on the Rate Determination Date for each Adjustment Period which, in the
judgment of the Remarketing Agent, will allow the Series A Bonds to be sold on the Rate
Determination Date at their principal amount plus accrued interest, if any. When the Series
A Bonds bear interest at a Weekly Rate or a Monthly Rate, interest shall be calculated on the
basis of a year of 365 days or 366 days, as applicable, and the actual number of days elapsed
and shall accrue from and including the first day of each calendar month through the last day
of the month, and will be payable on the first Business Day of the following month.
Semi-Annual or Annual Rate. In accordance with the terms of the Fiscal Agent
Agreement, the City may elect to change the interest rote determination mode on the Series
A Bonds to either a Semi-Annual Rate or an Annual Rate, effective on the first day of any
calendar month. The Remarketing Agent will set the interest rate at least one Business Day
before the Rate Determination Date when the Series A Bonds bear interest at either the Semi-
Annual Rate or the Annual Rate. The Fiscal Agent Agreement requires the Fiscal Agent to
give notice of the conversion to a Semi-Annual Rate or an Annual Rate at least 5 days prior
to the effective date of the new interest rote mode.
The Semi-Annual or Annual Rate will be the minimum rote determined by the
Remarketing Agent which, in the judgment of the Remarketing Agent, will allow the Series
A Bonds to be sold on the Rate Determination Date at their principal amount plus accrued
interest, if any. When the Series A Bonds bear interest at the Semi-Annual or Annual Rate,
interest shall be paid on each March 2 and September 2. When the Series A Bonds bear
interest at a Semi-Annual Rate or an Annual Rate, interest shall be calculated on the basis of
a 360 day year composed of twelve 30-day months.
VIP Pricing Rates. The City may elect to change the interest rate determination mode
on the Series A Bonds to the VIP Pricing Rate, effective on the first day of any calendar
month. The City shall, prior to the effective date of any VIP Pricing Rate, specify the
Adjustment Period and the principal amount of Series A Bonds to become subject to such
· VIP Pricing Rate. The Fiscal Agent Agreement requires the Fiscal Agent to give notice of
the conversion to a VIP Pricing Rate to the Owners of the Series A Bonds at least 5 days
prior to the effective date of the new interest rate mode.
'When the Series A Bonds bear interest at a VI~ Pricing Rate, on or about 9:00 a.m.,
New York City time, on the appropriate Rate Determination Date for any Series A Bond, the
Remarketing Agent will establish the VIP Pricing Rate which, in the judgment of the
Remarketing Agent, will allow the Series A Bonds to be sold at their principal amount, plus
accrued interest, if any. The Adjustment Period or Periods for Series A Bonds bearing
interest at the VIP Pricing Rate and the principal amount of Series A Bonds to become
subject to each such Adjustment Period shall be established by the City for such Series A
Bonds.
When the Series A Bonds bear interest at a VIP Pricing Rate, interest will accrue
from the Rate Determination Date for the Series A Bonds to the day before the next
su~ing AdjUstment Period for such Series A Bonds and will be payable on the first day
of such next su~ing Adjustment Period. When Series A Bonds are in the VIP Pricing
Rate, interest shall be calculated on the basis of a year of 365 days. or 366 days, as
applicable, and the actual days elapsed.
Fixexl Rate. In accordance with the conditions set forth in the Fiscal Agent
Agreement, the City may elect to change the interest rate mode such that the Series A Bonds
shall bear interest at a Fixed Rate. The City must specify the effective 'date of the Fixed
Rate. The Fiscal Agent Agreement requires the Fiscal Agent to give notice of the' conversion
to a Fixed Rate to the Owners of the Series A Bonds at least 5 days before the effective date.
If conversion to a Fixed Rate is prior to , a portion of the Series A
Bonds will be serialized such that serial maturities for the Series A Bonds may be created
which correspond to certain mandatory redemption dates, as provided in the Fiscal Agent
Agreement.
·
During the period when the Series A Bonds bear interest at a Fixed Rate, the interest
rate for each serialized maturity will be the rate determined by ~he Remarketing Agent to be
the minimum annual interest rate which, in the judgment of the Remarketing Agent, will
allow the Series A Bonds of such maturity to be sold on the Rate Determination Date at their
principal amounts plus accrued but unpaid interest, if any. The Fixed Rate will be set
between one and 30 Business Days prior to the effective date of the Fixed Rate. When the"
Series A Bonds bear interest at a Fixed Rate, the Interest Payment Dates for the Series A
sm.~Tg62.4 13
Bonds will be March 2 and September 2. Interest will be computed on the basis of a 360-
day year composed of twelve 30-day months.
The interest rate mode for the Series A Bonds bearing interest at a Fixed Rate may
not be converted to any other interest rate mode.
Alternate Rate of Interest
If the Remarketing Agent does not set an interest rate for the Series A Bonds on a
Rate Determination Date or a court holds that the rate set is invalid or unenforceable, such
rate will be set with reference to various indices published by Kenny Information. Systems or
any suc. cessor thereto. If such corporation shall no longer publish indices, then another
entity will be selected by the City which does publish similar indices.
Summa~ of Certain Provisions of the Series A Bonds
While the Series A Bonds bear interest at a Daily Rate, Weekly Rate, Monthly Rate,
VIP Pricing Rate, Semi-Annual Rate or Annual Rate, the Interest Payment Dates, the date
each interest rate will be determined (the "Rate Determination Date"), the date each interest
rate will become effective and the period of time each interest rate will be in effect (the
"Effective Date of Rate; Adjustment Period"), the dates on which registered Owners may
tender their Series A Bonds for purchase and the notice requirements therefor (the 'Optional
Tender Dates; Owner's Notice of Optional Tender"), the requirements for physical delivery
of tendered Series A Bonds and payment provisions therefor ("Physical Delivery of and
Payment for Series A Bonds Subject to Optional and Mandatory Tender'), the notice
requirements in order to change from one interest rate mode to a different interest rate mode
('Written Notice of'Change in Mode") and the dams on which the Series A Bonds are subject
to mandatory tender for purchase in the event of a change between interest rate modes
('Mandatory Tender Date Upon Change in Mode") are shown in summary in the following
table (all times shown are New York City time).
Interest Paymeat
Dates(l)
Rate Determination Date
Effective Date of Rate;
Adjustment Period
Optional Tender Dates;
Owner's Notice of
Optional Tender '
Physical I~livery of and
Payment for Series A
Bonds Subject to
Optional and Mandatory
Tender. Also see .'DTC'
below.(2)
Written Notice of
Change in Mode from '
Existing Mode
Mandatory Tendt~r Dale
· Upon Change in Mode
Daily Rate
Fire Business Day of
e~h calend~r month.
Each Business Day.
Weekly Rate
First Business Day of ~ach
calendar month.
Wedaesday or if
We~Inesday is not a
Business Day, the next
Monthly Rate
First Businoss Day of each
caleadar month.
Busines~ Day prior to the first
day of such Adjustment Period.
Each Rate Determination
Date; Daily Rate
effective for one
Business Day and for
each day thereafter until
next succoeding Rate
De, termination Date.
Any Business Day;
Telephonic (confirmation
in writing) or written
notice by Owner to
Remarketing Agent and
Paying Agent on or
prior to 10:30 a.m. on
any Business Day.
To Fiscal Agent by
12:00 noon on
designated purchase
date; payment by 4:30
same day.
Fiscal Agent to mail
notice to Owners at least
15 days prior to
effective date of Change
in Mode.
Effective Date of
Change in Mode.
Suec_~_Ang day or if such
day is not a Business Day,
the Business Day next
p _r~-__-ding such
Wednesday..
Thursday following e!c-h
Rate Determination Date;
Weekly Rate effective
through Wednesday of
next week.'
Any Business Day;
Written notice by Owner
to Remarketing Agent and
Paying Agent on or prior
to 5:00 p.m. on any
Business Day at least 7
days prior to optional
purchase date.
To Fiscal Agent by 12:00
noon on designated
purchase date; payment by
4:30 p.m. ratine day.
Fiscal Agent to mail
notice to Owners at least
15 days prior to effective
date of Change in Mode.
Effective Date of Change
in Mode.
First Business Day of each
calendar month; Monthly Rate.
effective until first Business
Day of' neXt calendar month.
First day of next stw. cxedmg
Adjustment Period of each
calendar month; Written, notice
by Owner to Remark~g
Agent and paying Agent on or
prior to 5:00 p.m. not fewer
thsn 5 Business Days prior to
optional purchase date..
To Fiscal Agent by 12:00 noon
on designated p~ date;
payment by 4:30 p.m. same
day.
Fiscal Agent to mail notice to
Owners at least 15 days prior
to effective date of Change in
Mode.
Effective Date of Change in
Mode.
(1)
(2)
Any Mandatory Purchase Date will also be an Interest Payment Date.
The tender, purchase and remarketing of the Series A Bonds during any period in which the Series A Bonds are
registerod in book-entry form shall be acco~h~ in conformance with the proe__~i_ures of DTC or the then
applicable Bond Deposiwry. See 'THE SERIES A BONDS - Tenders - Tender of 5en'~ A Bonds in Book-
Entry Form. '
The length of the Adjustment Period, the date of commencement and the last day of the period may vary in the
event of a conversion to or from a Weekly Mode.
sn. STm.a 15
VIP Pricing Rate
Semi-Annual Rate
The first day of the next
sue, ceeding Adjustment Period
for such Series A Bond
The first day of the Adjustment
Period for that VIP pricing
Series A Bond which must be a
Business Day.
For e~h VIP Pricing Series A
Bond, the applicable Rate
Determin~ion Date; VIP
Pricing Rate effective through
day p _rec__~ing the next
Adjustment Period
None; None.
To Fiscal Agent by '12:00 noon
on designated mamdatory
purchase date, which is the last
day of each AdjUStment Period
for each Series A Bond;
payment by 4:30 p.m. same
day.
Fiscal Agent to give written
notice, which may be facsimile
transmission, to Owners at
least 30 days prior to effective
date of Change in Mode.
Effective Date of Change in
Mode.
Eatch M~rch 2 ~d September
2.
At least one Business Day
prior to the first day of such
Adjustment Period.
First calendar day of e.a~h
Semi-Annual Adjustment
Period; Semi-Annual Rate
effective to but not including
next suex. eeding March 2 or
September 2, which ever first
First day of next succ~_ing
Adjustment Period; Written
notice by Owner to
Remarketing Agent and
Paying Agent on or prior to
5:00 p.m. not fewer titan 15
days prior to optional
purchase date.-
To Fiscal Agent by 12:00 '
noon on designated purchase
date; payment by 4:30 p.m.
same day.
Fiscal Agent to mail notice to
Owners st least 30 days prior
to effective date of Change in
Mode.
Effective D~e of Change m
Mode.
Famh March 2 ~nd September
2.
At least one Business Day
prior to the f~rst day of ~h
Adjustment Period.
First calendar day of
Annual Adjustmeat Poriod;
Annual Rate effective to but
not including next mm.e, eed~g
March 2 or September 2,
whichever last occurs.
First Day of next suee, eedmg
Adjustment Period; Written
notice by Owner to
Remarketing Agent and
Paying Ageat on or prior to
5:00 p.m. not fewer than 15
days prior to optional purchase
date.'
To Fiscal Agent by 12:00
noon on designated pm'chase
date; payment by 4:30 p.m.
same day.
Fist. a] Agent to nudl notice to
Owners st least 30 days prior
to effective date of Change in
Mode.
Effective Date of Change in
Mode.
Purc~ date is Business Day immediately following Interest Payment Date if Interest Payment D~e is
not a Business Day.
Sources of Pa)~nent
The Letter of Credit Bank will issue the initial Letter. of Credit to the Fiscal Agent
when the Series A Bonds are issued. The Letter of Credit is issued for the benefit of the
Series A Bonds to provide the payment of principal and Purchase Price of and interest on the
Series A Bonds as described under "THE L~R OF CREDIT AND THE
REIMBURSEMENT AGRF_.F_MENT." If the Letter of Credit expires or is terminated, the
Series A Bonds will be subject to mandatory purchase: See 'THE SERIES A BONDS--
Mandatory Purchase--Mandatory Purchase on Expiration of Letter of Credit and-Mandatory
Purchase on the Substitution of Letter of Credit.'
Following conversion of any of the Series A Bonds to a Fixed Rate, and beginning on
the effective date of the Fixed Rate for such convened Series A Bonds (the "Fixed Rate
Series A Bonds"), the Fixed Rate Series A Bonds will not have the benefit of the Letter of
Credit. The principal of and the interest and redemption premiums, if any, on the Fixed
Rate Series A Bonds will be payable solely from payments received by the City on account
of the.unpaid re. assessments on the parcels designated by the City for that purpose pursuant
to the Fiscal Agent Agreement, together with all amounts on deposit in the Reserve Account
established pursuant to the Fiscal Agent Agreement with respect to each group of Fixed Rate
Series A Bonds.
Redemption
Optional Redemption of Series A Bonds in the Daily, Weekly, Monthly, Semi-Annual
or Annual Mode. When Series A Bonds bear interest at a Daily, Weekly, Monthly, Semi-
Annual or Annual Rate, the Series A Bonds may be redeemed at par, plus accrued and
unpaid interest to the redemption date, if any., without premium, on the fa'st day any calendar
month for Series A Bonds bearing a Daily, Weekly or Monthly Rate or on any March 2 or
September 2 for Series A Bonds bearing a Semi-Annual or Annual Rate at the City's option,
in whole or in part. If such redemption is in pan, Series A Bonds owned by the Letter of
Credit Bank shall be selected for redemption .prior to selecting any other Series A Bonds.
Thereafter Series A Bonds shall be redeemed by lot as shall be determined by the Fiscal
Agent [, giving due consideration to the need to maintain balance between annual
installments payable on account of unpaid re. assessments, on the one hand, and debt service
on account of the remaining Outstanding Series A Bonds, on the other hand].
Optional Redemption During VIP Pricing ShortTerm and LongTerm Modes. When
Series A Bonds are in VIP Pricing ShortTerm Mode, such Series A Bonds are not subject to
optional redemption. Series A Bonds in the VIP Pricing LongTerm Mode are subject to
optional redemption by the City, in whole or in part in authorized denominations, on any
Business Day, at a redemption price (expressed as a percentage of the principal amount of
the Series A Bonds to be redeemed) determined in accor~ce with the following table plus
accrued and unpaid interest to the redemption date, if any. If such redemption is in part,
Series A Bonds owned by the Letter of Credit Bank shall be selected for redemption (without
premium) prior to selecting any other Series A Bonds and thereafter VIP Pricing Series A
Bonds shall be redeemed beginning with the earliest Mandatory Purchase Date.
sm-37~2.4 1 7
VIP Lone-Term Mode Adjustment Pen.'0.d
More t/mn 1 but less than or eqmfl to 3 years .........
More than 3 but less than or equal to 6 yeau's .........
More than 6 but less that or equal to 10 years .........
More than 10 years .........................
Time from the most recent '
Rate DeterTni~fion Date
to Redem0tion Date
Less than or eqmd to 1 year
More than 1 but less tha~ or
equ~l to 2 yeau~
More th~n 2 but Iv, ss th~ or
equxl to 3 y~a-s
Less finn or equal to 2 years
More titan 2 but Iv, ss titan or
eqmfl to 3 yem-s
More th~n 3 but l~,s th~ or
eqtml to 4 yeau's
More th~n 4 years
Less th&n or equal to 4 yvau's
More flum 4 but lets th~ or
eqmd to 5 ye.m's
More than 5 yem's but less
titan or equ~l to 6 years
More titan 6 years
Less ttmn or eqmfl to 7 yvarrs
More th~n 7 but less ~ or
eClmd to 8 yemrs
More th~ $ but less th~ or
eqmfl to 9 yeau's
More t~n 9 yeau-s
Redemption
Pric~:
101%
100~
100
100%
100
102
101%
101
100
1021h
102
101
100
Optional Redemption of Series A Bonds in the Fixed Rate Mode. When the Series A
Bonds bear interest at a Fixed Rate, the Series A Bonds may be redeemed in whole or in part
in authorized denominations and by lot in any manner which the Fiscal Agent in its sole
discretion shall deem appropriate and fair on any March 2 or September 2, upon the
expiration of the applicable call protection period described below, at the redemption prices
(expressed as a percentage of the principal amount of the Series A Bonds to be redeemed) set
forth below, declining by 1/2% on every second Interest Payment Date after the initial
Redemption Date, until the redemption price equals 100%, plus accrued and unpaid interest
to the redemption date:
Years Remaining to Maturity
as of Fixed Rate Conversion Dat~
Equal to or greater thaa 17 ...... ' .........
Equ~l to or greater tlum 14 but less than 17 .....
Equal to or' gre_-.tcr than 11 but less than 14 .....
Equ~l to or greater than 7 but less than 11 ......
Less thaa 7 years ......................
Initial Redemption Date Initial
(anniv~ of Fixed Redemption
Rate Conversion Date) Pri~
8th ~miversary 102 %
6th ~miversa. ry 101.5 %
4th ~:mivermry 101%
2md axmiversaxy 100.5 %
1st .nnive~ 100 %
Any Fixed Rate Series A Bonds shall be subject to redemption in accordance with the
Fiscal Agent Agreement and will have mandatory redemption.
The City may, at its option and in any manner it deems appropriate, receive a credit
against the foregoing redemption requirements for Series A Bonds purchased or redeemed
otherwise than ia satisfaction of such requirements.
Procedure for and Notice of Redemption. Notice of redemption of the Series A Bonds
will be mailed by the Fiscal Agent not less than 30 nor more than 60 days before the
redemption date to the Remarketing Agent, the Paying Agent, the Letter of Credit Bank, the
Owners of any Series A Bonds designated for redemption ia whole or ia part and to the
Information Services and Securities Depositories. Each notice'of redemption shall identify
the Series A Bonds or portions of Series A Bonds to be redeemed, specify the redemption
date, the places and dates of payment, and state that from the redemption date interest on the
Series A Bonds which are to be redeemed will cease to accrue.
If fewer than all the Series A Bonds are called for redemption, the Fiscal Agent will
fu'st redeem any Series A Bonds registered in the name of the Letter of Credit Bank and.
thereafter will select Series A Bonds as described in the Fiscal Agent Agreement and within
a maturity, by lot or by any other method deemed fair. Upon surrender of'any Series A
Bond redeemed in part, the Paying Agent will authenticate for the Owner a new Series A
Bond or Series A Bonds equal in principal amount to the unredeemed portion of the Series A
Bond.
Mandatory Purchase
Mandatory Purchase on Change in Interest Rate Determination 'Method. In the event
of a change in the interest rate determination method for the Series A Bonds, the Series A
Bonds will be subject to mandatory purchase on the effective date of the change.
Mandatory Purchase on the Substitution of Letter of Credit. The Series A Bonds will
be subject to mandatory purchase on the effective date of any substitution of an alternate
Letter of Credit or other security or liquidity device for the then existing Letter of Credit.
Mandatory Purchase on Expiration of Letter of Credit. The Series A Bonds will be
subject to mandatory purchase five Business Days before the expiration, termination or
cancellation of the Letter of Credit.
Notice. Notice of a mandatory purchase will be mailed by the Fiscal Agent to the
Owners not less than 15 days prior to the mandatory purchase date.
$m-:37~62.4 19
Tenders
The Fiscal Agent Agreement provides that Series A Bonds will be purchased at the
option of the Owners under certain circumstances described below, but solely from monies
made available for that purpose under the Fiscal Agent Agreement. Payment will be made in
immediately available funds by the close of business on the date specified by the Owner for
purchase, if the conditions described below have been strictly complied with.
Tender of Ser~es A Bonds in Book-Entry Form. During any period in which the Series
A Bonds are registered in bookentry form with DTC or Cede & Co., as its nominee,
beneficial interests in the Series A Bonds may be tendered by means of'a bookentry credit of
such beneficial interests to the account of the Remarketing Agent; provided, however, that if
the Remarketing Agent notifies the Paying Agent that such beneficial interests in the Series A
Bonds have been remarketed pursuant to the Fiscal Agent Agreement, such beneficial
interests may be treated as tendered upon a bookentry transfer of such beneficial interests
from the account of the tendering party to the credit of the account of the purchaser of such'
beneficial interests. Prior to remarketing any beneficial interests in the Series A Bonds
tendered for purchase, the Remarketing Agent shall confirm with DTC and the Paying Agent
that such beneficial interests have been tendered in accordance with the Fiscal Agent
Agreement.
Tender of Set, es A Bonds not in Book-Entry Form. In the case of all tenders of Series
A Bonds not held by the Bond Depository, physical delivery of Series A Bonds properly
endorsed is required in order for the Owner to receive the purchase price of Series A Bonds
as to which a tender has been exercised. Each such Series A Bond shall be accompanied by
an instrument of transfer satisfactory to the Fiscal Agent. An Owner of a Series A Bond,
however, may not tender such Series A Bond from the third Business Day prior to any
mandatory purchase date until after such mandatory purchase date.
Daily Rate Tender. When iriterest on the Series A Bonds is payable at a Daily Rate,
an Owner of a Series A Bond may tender the Series A Bond or any portion thereof (so long
as the principal amount purchased and principal amount not purchased are in authorized
denominations) for purchase at its principal amount, plus accrued but unpaid interest, by
delivering on any Business Day:
(a) a written or telephonic notice, immediately confirmed in writing, to the
Remarketing Agent and the Paying Agent (addresses below) by 10:30 a.m., New
York City time, stating the Series A Bond number and the principal amount of the
Series A Bond, the principal amount to be purchased and the date the Series A Bond
is to be purchased, and
Co) if the Series A Bond is not held by the Bond Depository, the Series A
Bond to the Fiscal Agent (address below) by 12:00 noon, New York City time, on the
date of purchase in compliance with the requirements described above.
.Weekly or Monthly Rate Tender.
Weekly or Monthly Rate, an Owner of a Series A Bond may tender the Series A Bond or
any portion thereof (so long as the principal amount purchased and principal amount not
purchased are in authorized denominations) for purchase at its principal amount plus accrued
but unpaid interest, if any, on any Business Day for the Weekly Rate, and the first day of
any month for the Monthly Rate, by delivering:
When .interest on the Series A Bonds is payable at a
(a) a written notice to the Remarketing Agent and the Paying Agent
(addresses below) by 5:00 p.m., New York City time, seven days prior to the date of
purchase in the case of the Weekly Rate and five Business Days priOr to the Interest
Payment Date in the ease of the Monthly Rate, stating the Series A Bond number and
principal amount of the Series A Bond, the principal amount to be purchased and the
date the Series A Bond is to be purchased, and
Co) if the Series A Bond is not held by the Bond Depository, the Series A
Bond to the Fiscal Agent (address below) by 12:00 noon,' New York .City time, on the
date of purchase in compliance with the requirements described above.
Semi-Annual or Annual Rate Tender. When interest on the Series A Bonds is payable
at a Semi,Annual or Annual Rate, the Owner of a Series A Bond may tender the Series A
Bond or any portion thereof (So long as the principal amount purchased and principal amount
not purchased are in authorized denominations) for purchase at its principal amount plus
accrued but unpaid interest, if any, on the next sucw..eeding March 2 or September 2 by
delivering:
(a) a written notice, by 5:00 p.m. New York City time five Business Days
prior to the date of purchase to the Remarketing Agent and the Paying Agent'
(addresses below), stating the Series A Bond number and principal amount of the
Series A Bond, the principal amount to be purchased and the March 2 or September 2
on which the Series A Bond is to be purchased, and
Co) if the Series A Bond is not held by the Bond Depository, the Series A
Bond to the Fiscal Agent (address below) by 12:00 noon, New~ York City time, on the
date of purchase in compliance with the requirements described above.
Notices in respect of tenders must be delivered as follows:
To the PaYing Agent:
(to come)
To the Remarketing Agent:
PaineWebber Incorporated
Short Term Desk
1285 Avenue of the Americas
10th Floor
New York, NY 10019
Series A Bonds tendered and not held by the Bond Depository must be delivered as
follows:
To the Fiscal Agent:
State Street Bank & Trust Company
of California, N.A.
725 South Figuroa Street
Suite 3100
Los Angeles, CA 90017
Undelivered Series A Bonds
Any Series A Bond to be Purchasexl or redeemed pursuant to the Fiscal Agent
Agreement for which monies have been deposited and which is not delivered to the Fiscal
Agent shall nevertheless be deemed to have been purchased or redeemed. After the
redemption or purchase date, the undelivered Series A Bond will represent °nly a right to
collect the deposited monies. After the deposited monies have been held two years, they will
be returned to the City. See "THE FISCAL AGENT AGRF-~MENT-Unclaimed Money."
THE LETTER OF CRYJBIT AND THE REIMBURSEMF~NT AGREEM¥~NT
The Initial Letter of Credit
The initial Letter of Credit will be an irrevocable direct pay obligation of
Kredietbank, to pay, in immediately available funds, within a specified period of time after
presentation by the Fiscal Agent of specified certificates, an amount equal to (i) the principal
amount of the Series A Bonds, plus (ii) not less than 50 days' interest at a maximum annual
interest rate of 12%. The Fiscal Agent will draw monies under the initial Letter of Credit to
the extent neces~ to make payments of such amounts on the Series A Bonds, including the
purchase price of Series A Bonds tendered for purchase. Drawings by the Fiscal Agent
under the Letter of Credit will reduce the amounts available for subsequent drawings, subject
to reinstatement as provided in the Letter of Credit. See "APPENDIX A - The City of
Tustin."
The initial Letter of Credit expires on the earliest day of thc following: (i) September
15, 2002, (ii) the date of payment of a drawing, not subject to reinstatement, which when
added to all other drawings honored under thc Letter of Credit which were not subject to
reinstatement as provided therein in the aggregate equals thc stated amount of the Letter of
Credit, ('rio the first business day which is 15 calendar days after the Fiscal Agent receives
notice that an event of default has occurred under the Reimbursement Agreement, unless .any
such nofic~ is rescinded, revolaxi or annulled by the Letter of Credit Bank prior thereto, or
that the interest component of the Letter of Credit has not been reinstate, d, (iv) the day the
Fiscal Agent certifies to the L~tter of Credit Bank that no Series A Bonds remain outstanding
under the Fiscal Agent Agreement (other than Fixed 'Rate Series A Bonds) or that the initial
L~tmr of Credit is being replaced with another Letter of Credit or'other security or liquidity
device meeting the requirements of the Fiscal Agent Agreement, or (v) the date when the
Fiscal Agent surrenders the Letmr of Credit to the Letmr of Credit Bank for cancellation.
The Series A Bonds will-be subject to mandatory purchase on the first Business Day prior to
the date the Letter of Credit expires. See 'THE SERI~ A BONDS -- Mandatory Purchase
and -- Mandatory Purchase on Expiration of Letter of Credit."
The Reimbursement Agreement
The City and the Letter of Credit Bank have entered into a Reimbursement
Agreement pursuant to which the Letter of Credit is issued. Among other things, the
Reimbursement Agreement provides for (a) the repayment to the Letter of Credit Bank of all
draws made under the Letter of Credit, together with specified interest thereon; 0a) the
payment or reimbursement to the Letter of Credit Bank of certain 'specified fees, costs and
expenses; and (c) certain affLrmative and negative covenants to be observed on the part of the
City.
The following events will constitute an event of default under the Reimbursement
Agreement:
(a) any warranty, representation or other written statement made by or on
behalf of the City in the Reimbursement Agreement or in any certificate, financial or
other statement furnished by the City pursuant to the Reimbursement Agreement or
the Fiscal Agent Agreement shall prove to have been untrue or misleading in any
material respect when made; or
Co) the City shall fail to pay when due any amount specified in the
Reimbursement Agreement (and any such failure shall remain unremedied for five
days); or
(c) the City shall fail to perform or observe any other material term,
covenant or agreement on its part to be performed or observed under the
Reimbursement Agreement (other than as specified in Co) above) or the City shall fail
to perform or observe any other material term, covenant or agreement on its pan to
be performed or observed under the Fiscal Agent Agreement, and any such failure
shall remain unremedied for 30 days after written notice thereof shall have been given
to the City; provided, however, that the Letter of Credit Bank may approve a longer
period if the City is diligently undertaking to cure such failure; or
(d) the City shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of itself or of its property, (ii) admit in
writing its inability to pay its debts generally as they become due, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, or
(v) commence a voluntary ease under the federal bankruptcy laws of the United States
of America or file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proc. eva:ling; or corporate
action shall be taken by it for the purpose of effecting any of the foregoing and the
result of any of the foregoing shall be that the City shall cease to be a valid legal
entity; or
(e) if Without the applicatiOn, approval or consent of the City, an
involuntary case or other proee~ing shall be instituted in any court of 'competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization, or
relief of debtors seeking in respect of the City an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding-up, liquidation, composition or
arrangement with creditors, a readjustment of debts, the appointment of a trustee
receiver, liquidator or custodian or the like of the City or of all or any substantial part
of the assets of the City, or other like relief in respect thereof under any bankruptcy
or insolvency law, and, if such case or proceeding is being contested by the City in
good faith, the same shall (i) result in the entry of a order for relief of any such
adjudication or appointment or (ii) continue undismissed, or pending an unstayed, for
any period of 30 consecutive days; or
(f) the occurrence of an event of default under the Fiscal Agent
Agreement; or
(g) a final nonappealable judgment for the payment of money in excess of
$100,000 shall be rendered by a court of record against the City that the City does
not discharge or make provision for discharge in aecor~ce with the terms thereof
within 120 days from the date of entry thereof; or
(h) default shall be made in the payment when due (subject to any
applicable grace period), whether by aCe-'elerafion or otherwise, of any Debt (as
defined in the Reimbursement Agreement) in an amount of $250,000 or more or any
interest or premium thereon, or default shall be made in the performance or
observance of any obligation or condition with respect to any such Debt if the effect
of such default is to accelerate the maturity of any such Debt or to permit the holder
or holders thereof, or any trustee or agent for such holders, to cause such Debt to
become due and payable prior to its expressed maturity, or any such Debt shall be
declared to be due and payable or required to be prepaid (other than by regularly
scheduled redemption) prior to its stated maturity, whether or not any such default
shall subsequently be cured; or
(i) any material provision of the Reimbursement Agreement shall at any
time for any reason cea~ to be valid and binding on the City (other than a provision.
which, in the opinion of the Bank, provides could provide immaterial benefits to the
Letter of Credit Bank thereunder), or shall be declared to be null and void,' the
validity or enforceab~ty of any material provision of the Reimbursement Agreement
shall be contested by the City or a proceeding shall be commenced .by. any..
governmental agency or authority having jurisdiction over the City seeking to
establish the invalidity of the ReimburSement Agreement or the unenforceability in
any material respect thereof;
Upon an event of default under the Reimbursement Agreement, the Letter of Credit
Bank may, in it sole discretion, but shall not be obligated to, (a) exercise all of its rights' and
remedies under any Related Document (as defined by the Reimbursement Agreement to
mean, among other documents, the Series A BOnds, the Fiscal Agent Agreement and the
Remarketing Agreement) or applicable law, Co) require the mandatory purchase of the Series
A BOnds as provided in the Fiscal Agent Agreement or (c) exercise all or any combination of
the remedies provided for in this paragraph.'
Alternate Letter of Credit or Other Credit Facilities
The Fiscal Agent Agreement provides that, under certain circumstances, at any time,
the City may deliver to the Fiscal Agent an alternate letter of credit or other security or
liquidity device for the Series A Bonds having the same material terms as the initial Letter of
Credit (except that in the case of a Letter of Credit for the Series A Bonds in a VIP Pricing
LongTerm Mode, a Semi-Annual Mode, and Annual Mode, the Letter of Credit must
provide for the payment of 196 days' interest) and a term of not less than one year. The
City must also furnish to the Fiscal Agent (1) an opinion of counsel stating that the delivery
of such alternate letter of credit or other security or liquidity device is authorized under the
Fiscal Agent Agreement, complies with its terms and will not adversely affect the exclusion
of interest on the Series A Bonds from gross income' for purposes of federal income taxation
and (2) written evidence from a Rating Agency which then has a rating in effect for such
Series A Bonds that such Rating Agency has reviewed the proposed alternate letter of credit
or other security or liquidity device and that its substitUtion for the then current Letter of
Credit will not by itself result in a reduction, suspension or withdrawal of its rating of the
Series A Bonds.
THE FISCAL AGENT AGREEME~
Payment of Series A Bonds
The City has covenanted in the Fiscal Agent Agreement that, subject to certain
exceptions set forth therein, it will, within 60 days of delinquency in the payment of any
sn-~2.~ 25
Reassessments represented by Variable Series A Bonds, or within 150 days of delinquency in
the payment of any Reassessment.s represented by Fixed Rate Series A Bonds, forthwith
undertake and diligently prosecute foreclosure proceedings in the manner prescribed in the
Bond Law.
Arbitrage and Federally Guaranteed Covenant
The City will establish a Rebate Fund, which will be used to the extent necessary to
satisfy all rebate requirements to the federal government in order to preserve the exclusion of
interest on the Series A Bonds from gross income for purposes of federal income taxation.
The City has covenanted in the Fiscal Agent Agreement that it will not use or permit the use
of any proceeds of the Series A Bonds or any funds of the City, directly or indirectly, to
acquire any securities or obligations, and will not take or permit to be taken any other action
which would cause the Series A Bonds to be "arbitrage 'bonds" within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code") or "federally guaranteed" within
the meaning of the Code. For purposes of such covenant, if the City. at any time is of the
opinion that it. is necessary to restrict or limit the yield on the investment of any monies held
by the Fiscal Agent or held by it under the Fiscal Agent Agreement, the City will so restrict
or limit the yield on the investment or will instruct the Fiscal Agent in writing, and the
Fiscal Agent will take such action as may be necess~ in accordance with such instructions.
Defaults
The Fiscal Agent Agreement provides that any of the following events constitutes an
"Event of Default"'
(a) Default in the due and punctual payment of interest on any Series A
Bond, whether at the stated Interest Payment Date thereof, or upon proceedings for
redemption thereof or upon purchase thereof pursuant to the Fiscal Agent Agreement;
(b) Default in the due and punctual payment of the principal of or
premium, if any, on any Series A Bond, whether at the stated maturity thereof, or
upon proceedings for redemption thereof, or upon purchase pursuant to the Fiscal
Agent. Agreement;
(c) The City shall fail to observe or perform in any material way anY
covenant, condition, agreement or provision contained in the Series A Bonds or in the
Fiscal Agent Agreement on the pan of the City other than those set forth in
paragraphs (a) and Co) above and such failure shall continue for 30 days after written
notice specifying such failure and requiring such failure to be remedied shall have
been given to the City by the Fiscal Agent, which notice may be given by the Fiscal
Agent in its discretion and shall be given by the Fiscal Agent at the written request of
Owners of not less than 25 % in aggregate principal amount of all Series A Bonds then
Outstanding; provided, however, that when a Letter of Credit is in effect, no such
notice shall be given without the consent of the Letter of Credit Bank, and provided,
further, that if said default be such that it cannot be corrected within the applicable
period, it shall not constitute an Event of Default if corrective action is instituted by
the City within the applicable period and diligently pursued until the default is
corrected; or
(d)' The Fiscal Agent receives written notice from the Letter of Credit Bank
that the City has not reimbursed the Letter of Credit Bank for a drawing under the
Letter of Credit to pay interest or that any other event of default has oecun'ed and is
continfiing under the Reimbursement Agreement.
If an Event Of Default under the Fiscal Agent Agreement Occurs and is continuing,
the Fiscal Agent will mail notice of the Event of Default to the Owners of the Series A
Bonds and the Letter of Credit Bank as promptly as practicable after it occurs.
Remedies
The Fiscal Agent Agreement provides that if, when a Letter of Credit is not in .effect
or the Letter of Credit Bank has wrongfully dishonored a drawing under the Letter of Credit,
an Event of Default occurs under clause (a) or (b) above (a 'payment default').and is
continuing, or, an Event of Default occurs under clause (c) above, the Fiscal Agent by notice
to the City, or the Owners of at least 25 % in aggregate principal amount of the Series A
Bonds then Outstanding by notice to the City and the Fiscal Agent, may declare the principal
of and accrued interest on the Outstanding Series A Bonds to be due and payable
immediately. The Fiscal Agent Agreement provides that if, when a Letter of Credit is in
effect, so long as the Letter of Credit Bank has not wrongfully dishonored a drawing under
the Letter of Credit, an Event of Default occurs and is continuing, the Fiscal Agent, upon the
written direction of the Letter of Credit Bank, by notice to the City shall immediately declare
the principal and accrued interest on the Series A Bonds to be due and payable immediately.
Upon any such declaration, the principal of and accrued interest on the Outstanding Series A
Bonds shall .be due and payable immediately. When a Letter of Credit is in effect, the Fiscal
Agent shall, immediately upon a declaration of acceleration, draw upon the Letter of Credit
to pay the principal of and interest on the Outstanding Series A Bonds other than Letter of
Credit Bank-owned Series A Bonds. Upon the receipt by the Fiscal Agent pursuant to such
declaration of sufficient funds to pay the principal of and accrued interest on such Series A
Bonds, interest on such Series A Bonds shall cease to accrue; except that interest on Letter of
Credit Bank-owned Series A Bonds shall continue to accrue until provision for the payment
thereof is made in accordance with the Reimbursement Agreement. The Fiscal Agent
Agreement. provides that the Fiscal Agent shall upon the request of the Lener of Credit Bank
rescind an acceleration and its consequences if (1) no payment default has occurred and is
continuing, (2)the Owners have not been notified of the acceleration and (3) the amount
available to be drawn under the Letter of Credit has been reinstated so as to be available in
an amount equal to the principal amount of the Outstanding Series A Bonds, plus the
applicable interest portion under the Letter of Credit. The Fiscal Agent is not otherwise
permitted by the Fiscal Agent Agreement to declare the Series A Bonds to be due and
payable The Fiscal Agent shall be entitled to treat any dishonor of a drawing under the Letter
of Credit as not wrongful unless and until a court of competent jurisdiction makes a final
determination that such dishonor was wrongful.
s~n.~2.4 27
The Fiscal Agent Agreement provides that, if an Event of Default occurs and is
continuing, the Fiscal Agent may pursue any available remedy by proceeding at law or in
equity to collect the principal of or interest on the Series A Bonds or to enforce the
performance of any provision of the Series A Bonds, the Fiscal Agent Agreement or the
Reimbursement Agreement. When a Letter of Credit is in effect and so long as the Letter of
Credit Bank has not Wrongfully dishonored a drawing under the Letter of Credit, the Fiscal
Agent may pursue any remedy only at the direc~on of the Letter of Credit Bank.
The Fiscal Agent Agreement provides that the L~tter of Credit Bank, when the Letter.
of Credit is in effect and so long as the Letter of Credit Bank has not wr°ngfully dishonored
a drawing on the Letter of Credit, may pursue any remedy available under the Fisc~ Agent
Agreement without the necessity of any action by the Fiscal Agent. An Owner of Series A
Bonds may not pursue any remedy with respect to the Fiscal Agent Agreement unless (a) the
Owner gives the Fiscal Agent notice stating that an Event of Default under the Fiscal Agent
Agreement is continuing, Co) the Owners of at least 25 % in principal amount of the Series A
Bonds then Outstanding make a written request to the Fiscal Agent to pursue the remedy, (c)
such Owner Or Owners offer to the Fiscal Agent indemnity satisfactory to the Fiscal Agent
against any loss, liability or expense, (d) the Fiscal Agent does not comply with the request
within 60 days after receipt of the request and the offer of indemnity, and (e) either no Letter
of Credit is in effect or the Letter of Credit Bank has wrongfully dishonored a drawing on
the Letter of Credit.
Modifications and Amendments
The Fiscal Agent Agreement provides that the Fiscal Agent Agreement, the Series A
Bonds and the rights and obligations 'of the City, the Fiscal Agent, the Paying Agent, the
Remarketing Agent, the Letter of Credit Bank, and the Owners of the Series A Bonds may
be amended or supplemented at any time by an amendment or supplement which becomes
binding when the written consents of the Owners of a majority in aggregate principal amount
of the Series A Bonds then Outstanding, exclusive of disqualified Series A Bonds, and while
the Letter of Credit is in effect, the written consent of the Letter of Credit Bank, so long as
the Bank is not in default under the Letter of Credit, are filed with the Fiscal Agent. No such
amendment or supplement shall (1) reduce the rate of interest on any Series A Bond or
extend the time of payment thereof or reduce the amount of principal or redemption
premium, if any, on any Series A Bond or extend the principal payment date thereof without
the prior written consent of the Owner of the Series A Bond so affected, (2) reduce the
percentage of Owners whose consent is required for the execution of any amendment or
supplement to the Fiscal Agent Agreement, or (3) modify any of the rights or obligations of
the Fiscal Agent, the Paying Agent, the Letter of Credit Bank or the Remarketing Agent
without its prior written consent thereto.
The Fiscal Agent Agreement provides that the Fiscal Agent Agreement, the Series A
Bonds and the rights and obligations of the City, the Fiscal Agent, the Paying Agent; the
Remarketing Agent and the Owners of the Series A Bonds may also be amended or
supplemented at any time by an amendment or supplement which becomes binding upon
execution without the written consent of any Owners of the Series A Bonds, but while the
Letter of Credit is in effect, with the written consent of the Letter of Credit Bank, so long as
the Bank is not in default under the Letter of Credit, and if the amendment affects the
Remarketing Agent, with the written consent of the Remarketing Agent, but only after
receipt of a favorable opinion of counsel and only for any one or more of the following
purpose:
(a) to add to the conditions, covenants and terms contained therein required
to' be observed or performed by the City, other conditions, COvenants and terms
thereafter to be observed or performed by the City, or to surrender any right reserved
therein to or conferred therein on the City, and which in either case shall not
adversely affect the interests of the Owners;
Co) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained therein or in
regard to questions arising thereunder which the City may deem desirable or
neces~, and which shall not adversely affect the interests of the Owners;
(c) to comply with the requirements of Moody's or Standard & Poor's for
the initial rating of the Series A Bonds;
(d) to transfer any fund or account created in the Fiscal Agent Agreement
held by the City as well as any money on deposit in any such fund or account to the
Fiscal Agent and to make such provisions for the purpose of COrrecting or
supplementing any provision contained therein to reflect the transfer of such fund or
account;
(e) 'to make such provisions for the purpose of correcting or supplementing
any provision contained therein relating to the use of any Reserve Account and any
monies deposited therein which shall not adversely affect the interests of the Owners;
or
(f) to provide for (or subsequently modify) an additional mOde for the
Series A Bonds and the provisions relating thereto. 'Such amendment shall be
accompanied by a favorable Opinion of Bond Counsel and shall specify the period for
payment of the interest, the intervals and dates at which the rate will be set by the
Remarketing Agent and the intervals and procedures by which the Series A Bonds
may be tendered for purchase. These changes will be noted on the Series A Bonds,
or an amended Series A Bond form will be provided for in the amendment in order to
reflect them.
Discharge of F'~__al Agent Agreement
The Fiscal Agent Agreement provides that when the Series A Bonds become due and,,
payable in ac, cordance with their terms or tltrough redemption proceedings as provided in the
Fiscal Agent Agreement, or otherwise, and the whole amount of principal, or redemption
price and interest due and payable upon all of the Series A Bonds are paid, or provision has
sP~.~:.4 29
been made for payment of the same, together with all other sums payable under the Fiscal
Agent Agreement by the' City, in.eluding all fees and expenses of the Fiscal Agent, then and
in that case, the Fiscal Agent Agreement and the hen created therein are discharged and
satisfied, the City is then released from the covenants, agreements and obligations contained
in the Fiscal Agent Agreement.
If money has been set aside and held by the Fiscal Agent for the payment or
redemption of any Series A Bonds and the interest installments at the maturity or redemption
date, such Series A Bonds are deemed to be paid. Series A Bonds are deemed to be paid if
there has been deposited with the Fiscal Agent monies or, to the extent permitted by law,
non-callable Federal Securities, sufficient to pay all sums of money due'or to become due
according to the provisions of the Fiscal Agent Agreement.
Unclaimed Money
The Fiscal Agent Agreement provides that any money held by the Fiscal Agent or
Paying Agent in trust for the payment and discharge of the interest or principal or purchase
price or redemption premiums, if any, of any Series A Bond which remain unclaimed for
two years after the date when such payments on the Series A Bonds have become payable, if
such money was held by the Fiscal Agent or Paying Agent on such date, or for two years
after the date of deposit of such money if deposited with the Fiscal Agent or Paying Agent
after the date when such payments on the Series A Bonds have become payable, shall upon
written notice from the City be repaid by the Fiscal Agent or Paying Agent, as applicable, to
the City as its absolute property free from trust, and the Fiscal Agent or Paying Agent shall
thereupon be rele. as~ and discharged with respect thereto and the Owners of such Series A
Bonds shall look only to the City for the payment of the interest and principal or purchase
price and redemption premiums, if any, on such Series A Bonds; provided that, before being
required to make any such payment to the City, the Fiscal Agent shall, at the expense of the
City, give notice by mail to the Owners of such Series A Bonds that such money remains
unclaimed and that after a date named in such notice, which date shall not be less than 60
days after the date of giving such notice, the Fiscal Agent or the Paying Agent, as
applicable, shall promptly pay to the Letter of Credit Bank so much of such money that the
Bank certifies to the Fiscal Agent that the City owes to the Letter of Credit Bank with
mspex:t to any Series A Bonds or under the Reimbursement Agreement and the balance of
such money then unclaimed will be returned to the City.
RATINGS
Moody's Investors Service have given the Series A Bonds the rating set forth on the
cover. Such rating reflects only the view of such organization and an explanation of the
significant of the rating may be obtained by contacting them at: Moody's Investors Service,
99 Church Street, New York, New York 10007, (212) 553-0300. The rating, is not
recommendations to buy, sell or hold the Series A Bonds. There is no assurance that either
rating will continue for any given period of time or that they will not be revised downward
or withdrawn entirely by the rating agency, if, in the judgment of either such agency,
circumstances so warrant. Any such downward revision or withdrawal of such ratings may
have an adverse effect on the market price of the Series A Bonds.
PaineWebber Incorporated, as Underwriter, has agreed to purchase the Series A
Bonds at a Price of % of par from the City. The Underwriter is committed to purchase
all the Series A Bonds if any are purchased. The Underwriter may offer and sell Series A
Bonds to certain dealers (including dealers depositing Series A Bonds into investment trusts)
and others at a'price different from that stated on the cover of this Official Statement. After
the initial public offering, the offering price of the Series A Bonds may be changed from
time to time by the Underwriter.
TAX EXEMPTION
In the opinion of Bond Counsel, a complete copy of the proposed, form of which is
attached as Appendix C, based on existing statutes, regulations, rulings and court decisions,
interest on the Series A Bonds is excluded from gross income for federal income tax
purposes and is exempt from State of California personal income taxes.
The Internal Revenue Code of 1986, as amended, imposes various restrictions,
conditions and requirements relating to the exclusion from gross income for federal income
tax purposes of interest on obligations such as the Series A Bonds. The City has cOvenanted
to comply with certain restrictions designed to assure that interest on the Series A Bonds will
not be included in federal gross income. Failure to comply with these covenants may result
in interest on the Series A Bonds being included in federal gross income, possibly from the
date of issuance of the Series A Bonds. The opinion of Bond Counsel assumes compliance
with these covenants. Bond Counsel have not undertaken to determine (or to inform any
person) whether any actions taken (or not taken) or events occurring (or not occurring) after
the date of issuance of the Series A Bonds may affect the tax status of interest on the Series
A Bonds.
Bond Counsel are further of the opinion that interest on the Bonds is not a sPeCific
preference item for purposes of the federal individual or corporate alternative minimum
taxes. However, Bond Counsel observe that interest on the Series A Bonds is included in
adjusted current, earnings in calculating corporate alternative minimum taxable income.
Although Bond Counsel have rendered an opinion that interest on the Series A Bonds
is excluded from federal gross income, the accrual or receipt of interest on the Series A
Bonds may otherwise affect a Bond Owner's federal tax liability. The nature and extent of
these other tax consequences will depend upon the Series A Bond Owner's particular tax
status and the Bond Owner's other items of income or deduction. Bond Counsel express no
opinion, regarding any such other tax consequences.
O TI~ER LEG AL MATTERS
The validity of the Series A Bonds will be passed on by Jones Hall Hill & VOfite, a
Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal
matters will be passed on for the Underwriter by Orrick, Herrington & Sutcliffe, San
·
Francisco, Cal/fomia, and for the City by Rourke, Woodruff & Spradlin, a Professional
Corporation, Orange, California.
CITY OF TUSTIN
By
Jim Botts, Mayor
APP~IX A
The City of Tustin
(To Come)
$F2-37562.4 33
Kredietbank N.V., New York Branch
(To Come)
S1:r2-37867 .a
~Form of I~ga] Opinion of Bond Counsel
(To Come)
APPENDIx D
Reassessment Diagram
(To Come)
APPENDIX E
List of Parcels
(To Come)
sm-~2.4 37