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HomeMy WebLinkAboutPRELIM OFFICIAL STMNT 11-20-95PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER __, 1995 NEW ISSUE - BOOK-ENTRY ONLy _1 In thc opinion of Jones HaH Hill & White, A Profeuiontl Law Corporation, San Francisco, C. tlifomia, Bond Counsel, subjeet, however to ee, aain qtmlific.~ons described here. in, under existing law, intc. r~t on thc Series A Bonds is cxclud~ from gross income for fedcrtl income tax purposes and such interest is not tn item of ts.x preference for porpou~s of thc fodcrs.! tltcn~tiv¢ ininimum tax imposed on individuah and corporaxions, .aithou~ for. thc .purpos~ of com.puting thc nkcmnfiv¢ minimum tax imposed on ecrU. in corponmons, such interest u ttten rots a~,count in determining ecrttin income and timings. In thc further opinion of Bond Counsel, such interest is exempt fzom C. aJifornh porsona.1 incomc ts.xes. Sec "TAX MATTERS' beaT. in. RATING: Moody's (to come) (See "RATINGS herein.) $37,829,000' TUSTIN IN. YBLIC FINANCING AUTHO~ REVENUE BONDS Series A Dated: Date of Delivery Due: Septesnb~ 2, ns shown on the inside front cover Thc $37,829,000* Tustin Public Fimmcing Authority Revenue Bonds (Ttatin Ranch), Series A (thc "Series A Bonds") arc being issued by thc Tustin Public Financing Authority (thc "Authority') pursuant to tn Indenture of Trust, dazed ts of 1995 (the 'Indenture'), between the Authority and $tuc Street Bank and Trust Company of Ca.lifo~, N.A., ts trustee (thc 'Trustee'), ~'be secured ts described herein. The Bonds nrc ,b~ing issued topurcha~e certain limited obliguion ~t~p~.v. ement bonds (the 'Assessment Bonds (95,1)') of Rcassctsment District No. 95-1 (thc Reaasessment Dim'ict") of the City of Tustin (the czty ). The Assessment Bonds (95-I) arc being issued by the City pursuant to thc Refundin~ Act of X9 4 _oF xg_xs Xm ,7 -.?t_Act. nd, (the 'Act'! and. f rtheF pursuit to · ris the City and ~tate atn:~ ~ rna -trust c;ompany of Ctlifonua, N.A., ts fucal agent (the Fiscal Agent ), and'will be secured by ecrt~in unpaki rcusessmcats levied by the City pursuant to the Act. Sec description under "THE REFUNDING PLAN' hca'tin. The Series A Bonds will be issued in book-entry form, initially registered in the name of C. odc& Co., New York, New York, ts nominee of The Depository Trust Company ('DTC'), New York, New York. Intcrc. st on thc Scri~ A BOnds, pay·hie aX the ~t_~ set forth below, will be payable o_n S temb F = and = of y ..oo .mmen.¢in =,. r, wiU not i,,e c t c,t Series A Bonds. Individual purchase· wLU sc m pnncLoa~ tmounu o~ :~=,vuu or m any integrtl multiple of $5,000. Paymenu of principal tnd interest will be paid by the Trustee to DTC for subsccluent disbursement to DTC Puti¢il:mnts who will remit such payments to the beneficial ow·cs of the Series A Bonds. The Series A Bonds will nm'utc on Selxesnbcr 2 in the yeas and in thc amounts ts shown on the Mnturity Schedule set forth on thc inside front cover hereof. Thc Series A Bonds ~c subject to redemlXion prior to maturity ts set forth herein. Sec "THE SERIES A BONDS - Redemption of thc Series A BOnds' herein. The Series A BOnds a.~ limited obligations of thc Authority. Thc Scriea A Bonds a.~ payabl~ solely fr~m Revenues of the Authority, consisting ~y of ~yments r~cived ' by th¢.A..uth, ority.,fro, m. thc. Cit~,~ in oo.nncet~.on .with the Assessment Bonds (95-1), which payments arc secured by morc ruuy ocscnoc~ nctcm. ~),menu undcr thc Asscasment Bonds (95-1) &rc e&leu~ to bc sufficient to permit thc Authority to pay thc princip~ of., ptcrr~um, if' tn)', and intcrut on thc Series A Bonds when duc. Thc City hu dcterm~ed that it wLU not obligM~ itself to ~vancc funds from b tr~uury to eov~ &ny de.l~nquency on thc renucssments oF paymcnts on thc Asscssment Bonds (95-]). THE SERI~S A BONDS ARE NOT A DEBT or THE CITY, THE STATE Or CALI]~ORNIA OR ANY or ITS POLITICAL SUBDrv*ISIONS, AND NEITHER THE FAITH AND CREDIT NOR THE'GENERAL TAXING POWER Or THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE S~ A BONDS. Thc Authority is considering applying for tn L, uutancc policy to imurc payment of aH oF · peri of ~ prinoip~ of' and interest on thc Series A Bonds. As of this date, no decision has bccn made on whcthcr to tpply, Ind no .company has provided · commkmcnt to issue such · policy Furthermore, thcrc c&n be no usur&nce tim, ~ thc Authority ~ 6ecidc to apply for insurance, su~ ins~ would be avaHablc oF cost effective. TI~ cov~ Pagc corn&ira inform~on for reference only. It is not · ·unuTury of tl~ issue. Investors must rud thc critic O~ci&l Stttement, including thc scion ent~lcd 'SPECIAL RISK FACTORS', for · d~cussion of special hcton ~ should be considcred, in ~Jdition to thc oth~ mmIcrs set forth berc~n, in suing tn infom)ed invctancat decision ~x)ut thc Series A Bonds. Thc Series A Bonds L-c offcred, wben, ts and tf issued and s~pted by thc Un6crwriu~, ·ub.k~t to q~'ov~ ts to thc~ v&lidity by Jones HaH Hm & White, A Ptofcssion&1 Law Corpor~on, San Francisco, r..a~orr~, Bond Couracl, L~d sub. k~t to ecrttin other conditions. Cetttin lcgil rna~rs w~ bc pused upon for thc Underwriter by b counsel, Orr~k, Hcrrington & SutclLffc, Sin Frincisco, CllLfonth, tnd for thc Authority &nd thc City by Rourk¢, Woodruff' & Spt&dian, · Frofossior~l Cotporlfion, OFtngc, C&Ldomh. It is anticipated th~ thc Series A Bonds ~ be ·w~L~blc for 6clivcry in book*entry form in New York, New York, on or ~bout Deccmbct ~, 1995. PaineWebber Incorporated .Dated Novcmbcr. 1995 = * latcJ~, subject to ch~gc (Inside Cover) ~TURITY SCHEDULE $37,829,000* TUSTIN PUBLIC FINANCING AUTHORITY REVENUE BONDS (Tustin Ranch) Series A Serial Bonds Maturity Principal Interest {SePte.mber 2) AmouDt Rate 1997 1998 1999 2000 2001 2002 2003 2004 2005 Term Bonds due September 2, 2013 Price: _ TUSTIN PUBLIC FINANCING AUTHORITY and CITY OF TUSTIN (Orange County, California) MEMBERS OF THE AUTHORITY COMMISSION AND CITY COUNCIL Jim Potts, Chair/Mayor Tracy A. Worley, Vice Chair/Mayor Pro Tem Thomas R. Saltarelli, Commissioner/Councilmember Mike Doyle, Commissioner/Councilmember Jeffery M. Thomas, Commissioner/Councilmember AUTHORITY OFFICERS AND CITY STAFF William A. Huston, President/City Manager. Ronald A. Nault, AUthority Treasurer/City Finance Director Pamela Stoker, Authority Secretary/City Clerk Tim Serlet, City 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 Bartle Wells Associates San Francisco, California Assessment Engineer Muni Financial Services, Inc. San Francisco, California Trustee State Street Bank and Trust Company of California, N.A. Los Angeles, California Verification Agent Grant Thorton Minneapolis, Minnesota No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Authority or the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Series A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtain from the Authority, the City, and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation of Such by the Authority or the City. The information and expressions ~f opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City, the Reassessment District, or the property oWner since the date hereof. ~ The discussion and information herein relating to the Series A Bonds, the Reassessment District, the Authority, and the City do not purport to be comprehensive or definitive. Ail references to the Series A Bonds are qualified in their entirety by reference to the Indenture setting forth the terms and descriptions thereof. The summaries and references to any code, act, resolution or the Indenture and to other statutes and documents in this Official Statement do not purport to be comprehensive or definitive, and are qualified in their entirety by reference to each statute and document. IN CONNECTION WITH THIS BOND UNDERWRITING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A BONDS DESCRIBED HEREIN AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAy BE DISCONTINUED AT ANY TIME. The Series A Bonds have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in reliance upon an exception from the registration requirement contained in said Securities Act of 1933. The Series A Bonds have not been registered or qualified under the securities laws of any State. INSERT LOCATION MAP TABLE OF CONTENTS INTRODUCTION ........................ 1 THE REFUNDING PLAN . 4 · · · · · · · · · · · · · · · · · · · · · ESTIMATED SOURCES AND USES ................. 7 Series A Bonds · 7 · · · · · · · · · · · · · · · · · · · · · Assessment Bonds (95-1) ................ THE SERIES A BONDS ................. 8 Description of ~ Series A Bgn~s ........... 8 Redemption of the Series A Bonds .......... .. . 8 Transfer and Exchange of Series A Bonds ........ 10 Book Entry System ............... 11 Additional Authorit~ ~o~d; ............... 13 Debt Service Schedule ................. 14 SECURITY FOR THE SERIES A BONDS ............... 15 General ........................ 15 Payments of Assessment Bonds (95-1) .......... 16 Additional Assessment Bonds .............. 18 Reserve Account ............ 18 Covenant for Supe r urt rclo u e ........ 19 Priority of Lien - 19 · · · · · · · · · · · · · · · · · · · · BOND INSURANCE ....................... 21 METHOD OF REASSESSMENT ................... 21 THE REASSESSMENT DISTRICT .................. 21 General ........................ 21 Status of Public Improvements .... 21 Location and Terrain of the Rea~s~s~m~n% ~i~t~i~t . . . 22 Land Uses and Development Status ............ 22 Largest Landowners by Reassessment Amount ....... 24 Debt Service Coverage ................. 26 Delinquency History . . . . .............. 26 Estimated Value-to-Lien Ratios. . . . . . . . . . . . . 27 Estimated Direct and Overlapping Debt ......... 29 ........... · .e s.=i.. .one; j; Ob i . io . Authority .............. 31 The Reassessments are Ngt Personal Obli~a%ign; gf Property Owners .................. 31 The Assessment Bonds (95-1) are Limited Obligations of the City ..................... 32 Bankruptcy and Foreclosure Delays ........... 32 Existence of Undeveloped Property ........... 34 Price Realized Upon Foreclosure ............ 34 Uncertainties of Future Development .......... 35 Direct and Overlapping Indebtedness .......... 36 Earthquakes ...................... 36 Drought Conditions ................... 36 Land Values ...................... 37 Hazardous Substances ................_ _ 37 Endangered and Threatened SpeCies ........... 38 Cumulative Burden of Parity Taxes, Special Assessments and Development Costs ............... 38 Loss of Tax Exemption ................. 39 Orange County Bankruptcy ................ 39 Delays in Remittances ................. 45 THE AUTHORITY ........................ 45 THE CITY .......................... 45 CONCLUDING INFORMATION ................... 46 Underwriting ...................... 46 Legal Opinion ..................... 46 Tax Matters ...................... 46 No Litigation ..................... 47 Rating ......................... 47 Financial Advisor ................... 47 Verification of Mathematical Computations ....... 48 Continuing Disclosure ................. 48 Miscellaneous ..................... 49 APPENDIX A - Reassessment Diagram APPENDIX B - Summary of Indenture and Fiscal Agent Agreement APPENDIX C - The City of Tustin APPENDIX D - Insurance Policy Specimen APPENDIX E - Forms of Bond Counsel Opinions APPENDIX F - Continuing Disclosure Agreement $37,829,000* TUSTIN PUBLIC FINANCING AUTHORITY REVENUE BONDS (Tustin Ranch) INTRODUCTION This Official Statement, including the cover, inside cover, the table of contents and the Appendices, is provided to furnish information in connection with the sale by the Tustin Public Financing Authority (the "Authority") of its $37,829,000* aggregate principal amount of Revenue Bonds (Tustin Ranch), Series A (the "Series A Bonds"). The Series A Bonds will be issued by the Authority pursuant to an Indenture of Trust, dated as of , 1995 (the "Indenture,,), between the Authority and State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"). The proceeds from the sale of the Series A Bonds will be used principally to purchase certain limited obligation improvement bonds of Reassessment District No. 95-1 [the "Assessment Bonds (95-1)"] of the City of Tustin (the "City"). The Assessment Bonds (95-1) are being issued by the City pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (the "Act") and further 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"), and will be secured by certain unpaid reassessments levied by the City pursuant to the Act. The proceeds from the sale of the Assessment Bonds (95-1) will be used principally to refund the outstanding fixed rate improvement bonds (the "Prior Fixed Rate Bonds") of the City's previously-formed Assessment District No. 85-1 and Assessment District No. 86-2 (the "Prior Districts',). See "THE REFUNDING PLAN" herein. Together, the Prior Districts include the entire area of a mixed-use development project of the Irvine Company known as the "Tustin Ranch". The City is located in central Orange County, about 40 miles southeast of Los Angeles and 80 miles north of San Diego. The City spans approximately 11.2 square miles and adjoins the cities of Irvine, Orange and Santa Ana, as well as unincorporated areas of the County of Orange. As of January 1, 1995, the City's current population was estimated at 62,500, representing an approximate 4.5% increase from January, 1994. * Preliminary, subject to change Reassessment District No. 95-1 (Tustin Ranch) (the "Reassessment District") is bounded generally .by the Santa Aha Freeway (Interstate 5), Browning. Ayenue and Tustin Ranch Road, Santiago Canyon Road, and jamb°ree~Ro'ad. See "ADDendi~ A - Reassessment Diagram" herein. In legal proceedings concluded in 1986, the City established Assessment District No. 85-1 ("A.D. 85-1"), then comprised of 19 assessed parcels covering a total area of approximately 522 acres. A.D. 85-1 is bounded by the Santa Ana Freeway (Interstate 5), Browning Avenue, Irvine Boulevard and.Jamboree Road. Within A.D. 85-1, approximately 52 acres is occupied by the Tustin Autocenter; 120 acres is either occupied by or designated for the Tustin Market Place and Tustin Ranch Plaza, retail shopping centers, and other commercial and retail development; and the remaining 350 acres are either occupied by or designated for residential development. In August, 1986, the City issued $50,650,000 principal amount of variable rate improvement bonds for A.D. 85-1, and proceeds of the issue have been used to fund the design and construction of public improvements within A.D. 85-1, including streets and other traffic access and control facilities, drainage facilities, and utility improvements. The planned improvements are substantially completed. As of March, 1994, there were approximately 1,315 assessed parcels from the original 19 parcels. In legal proceedings concluded in 1988, the City established Assessment District No. 86-2 ("A.D. 86-2"), then comprised of 56 assessed parcels covering a total area of approximately 2,260 acres, 1,440 of which are within the City boundary and the remaining portion of which are located primarily in an unincorporated area of the County (to the northeast of the City), with a small portion of A.D. 86-2 falling within the southeastern border of the City of Orange. A.D. 86-2 is bounded by Irvine Boulevard, Tustin Ranch Road, santiago Canyon Road, and Jamboree Road. As to the portion of A.D. 86-2 within the City, approximately 30 acres are either occupied by or designated for commercial and retail development; 150, acres are occupied by the Tustin Ranch Golf Club; 670 acres are either occupied by or designated for residential development; and the balance to various other uses. In September, 1988, the City issued $81,400,000 principal amount of variable rate improvement bonds for A.D. 86-2, and proceeds of the issue have been used to fund the design and construction of public improvements within A.D. 86-2 of a similar nature to those for A.D. 85-1. Again, the public improvements are substantially complete. As of March, 1994, there were approximately 2,298 assessed parcels from the. original 56 parcels. The respective Indentures of Trust (the "Prior Indentures") pursuant to which the variable rate improvement bonds of the Prior Districts (the "Prior Variable Rate Bonds") were issued each provided for the conversion of a portion of the Prior Bonds to a fixed rate mode (the "Prior Fixed Rate Bonds") upon the occurrence of certain events prescribed by the Prior Indentures (primarily, the transfer to third parties of title to portions of the assessed property by The Irvine Company, the owner of substantially all of the assessed property at the time of issuance of the Prior Variable Rate Bonds). The Prior Indentures and related legal documents for the Prior Districts also provided for conversion to a fixed rate of the unpaid assessments on the related parcels (the "Fixed Rate Parcels"), the conveyance of which caused the conversion of the subject portion of the Prior Variable Rate Bonds into the Prior Fixed Rate Bonds. The Reassessment District consists of all Fixed Rate Parcels from the Prior Districts which have an unpaid reassessment. Of the $132,050,000 principal amount of Prior Variable Rate Bonds, $53,024,000 have been converted to Prior Fixed Rate Bonds, of which $51,756,377 remain outstanding and will be redeemed on September 2, 1995, from the proceeds of sale of the Series A Bonds and other available funds. See "THE REFUNDING PLAN" herein. The Series A Bonds are limited obligations of the Authority, payable, solely from Revenues (as defined in the Indenture) of the Authority, consisting primarily of payments received by the Authority from the City in connection with the Assessment Bonds (95-1), which payments are in turn secured by liens of the unpaid reassessments levied upon the parcels in the Reassessment District. The Series A Bonds are not a debt of the City, the State of California or any of its political subdivisions, and neither the faith and credit nor the general taxing power of the City, the State or any of its political subdivisions is pledged to the payment of the Series A Bonds. Pursuant to the Act, reassessment installments sufficient to pay the principal of and interest on the Assessment Bonds (95-1) are to be billed on the regular County property tax bills and are to be remitted to the City in accordance with established procedures for such remittances. Pursuant to the Indenture, the Authority has assigned to the Trustee, for the benefit of the Owners from time to time of the Series A Bonds, all right, title and interest of the Authority in the Assessment Bonds (95-1), including the entitlement to receive payment of the principal of and interest on said Assessment Bonds (95-1). If a delinquency' occurs in the payment of any reassessment installment securing the Assessment Bonds (95-1), the Fiscal Agent will have a duty only to transfer into the Redemption Fund for the Assessment Bonds (95-1) from the Reserve Fund for the Assessment Bonds (95-1) (but only to the extent funds are available therein) the amount necessary to pay principal of or interest on the Assessment Bonds (95-1) when due. There is no assurance that sufficient funds will be available in the Reserve Fund for the Assessment Bonds (95-1) for this purpose. The City has. determined, pursuant to Section 8769 of the California Streets and Highways Code, that it will not obligate itself to advance funds from its treasury to cover'any delinquency on the reassessments or payments on the Assessment Bonds (95-1). The City has covenanted in the Fiscal Agent Agreement that, no later than October I each year, judicial foreclosure proceedings will be commenced and diligently prosecuted to enforce payment of reassessm~nt!~h~ilment~ which are then delinquent in an amount of $2,000 or more and to enforce payment of other, delinquent installments of a lesser amount in certain prescribed circumstances. .See "SECURITY FOR THE BONDS - Covenant of Superior Court Foreclosure" herein. THE REFUNDIN~ PL~I~ 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 limited obligation improvement bonds (the "Series A Assessment Bonds (95-2)") 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 respect 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 (95-1). 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 Bonds (95-1). (b) An amount representing 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 finance 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 proceeds 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 recognized firm of independent certified public accountants to be sufficient to redeem the Prior Fixed Rate Bonds'on the Redemption Date. The Prior Fixed Rate Bonds are the result of eleven (11) separate conversion/reoffering transactions under the Prior Indentures as follows: Reoffering Transaction Outstanding Principal 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. $6-2D 6,390,000 10. NO. 86-2E 535,000 11. NO. 86-2F 2.881.2Q0 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 i and 2 of the Escrow Agreement, the sources of funds to pay the total redemption price are as follows: Transfer from Fiscal Agent [from proceeds of Sale of Assessment Bonds (95-1)] Transfers from Prior Indentures Interest Earned on Escrow Securities Total Redemption Price: Series ~ Bonds ESTIMATED SOURCES AND USES The estimated sources and uses of proceeds of sale of the Series A Bonds are as follows: Principal Amount of Series A Bonds [Less Original Issue Discount [Plus Contribution from 95-1 )] ] Total Sources: Uses' Program Fund Reserve Account [Cost of Issuance Total Uses: Assessment Bonds (95-1) The estimated sources and uses of proceeds of sale of the AsSessment Bonds (95-1) are as follows: Principal Amount of Bonds Transfers from Other Sources Total Sources: Uses [Reserve Fund for the Assessment Bonds (95-1) Improvement Fund Costs of Issuance Fund Transfer to the Escrow Bank for deposit in the Escrow Funds Total Uses: p~sc~t~on of the 5er;ies A Do~ds The Series A Bonds will be issued in the aggregate principal amount of $37,829,000*. The Series A Bonds will be issued as fully registered bonds in the denomination of $5,000 or any integral multiple of $5,000. The Series A Bonds will be dated their date of delivery. The Series A Bonds will bear interest at the rates per annum and will mature, subject to the redemption. provisions set forth below, on the dates and in the principal amounts, all as set forth on the inside cover page hereof. Interest on the Series A Bonds is payable semiannually on March 2 and September 2 of each year, commencing March 2, 1996 (each an "Interest Payment Date").to the person whose name appears on the. Registration Books of the Trustee as the registered Owner thereof on the Record Date. Such interest will be paid by check mailed by the Trustee on such Interest Payment Date, by first class mail, to such registered Owner at the address which appears on such Registration Books or at such other address as may have been filed with the Trustee for that purpose prior to the Record Date. Interest on the Series A Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. Principal of, and redemption premium, if any, on the Series A Bonds will be payable upon presentation and surrender, thereof at the principal corporate trust office (the "Trust Office") of the Trustee in Los Angeles, California. Principal of and redemption premiums, if any, and interest on the Series A Bonds shall be paid in lawful money of the United States of America. The Series A Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company ("DTC"),. New York, New York. Payment of interest with respect to any Series A Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same-day funds to the account of Cede & Co. See "Book Entry System" herein. Redemption of the ~eries A'BO~ds O~tiona~ i~ede~mp%ion The Series A Bonds maturing on or after September 2, 2005, shall be subject to optional redemption in whole, or in part among maturities on such basis as shall be designated by the Authority in a Written Certificate of the Authority filed with the Trustee, on any Interest Payment Date on.or after September 2, 2004, at the'following respective Redemption Prices (expressed as percentages of the principal amount of the Series A Bonds to * Preliminary, subject to change. be redeemed), plus accrued interest thereon to the date of redemption: RedemDtion Dates September 2, 2004 and March 2, 2005 September 2, 2005 and March 2, 2006 September 2, 2006 and thereafter Redemption PriG9 102% 101 100 ]landatory_ Redemption From The Series A Bonds shall be subject to mandatory redemption, in whole, or in part among maturities on the same 'basis as the Assessment Bonds (95-1) are redeemed and by lot within a maturity, on any Interest Payment Date, from and to the extent of any Principal Prepayments with respect to the Assessment Bonds (95-1), at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series A Bonds to be redeemed), plus accrued interest thereon to the date of redemption: RedemDt$on Dates Redemption Price September 2, 1995 through March 2, 2004 103% September 2, 2004 and March 2, 2005 102 September 2, 2005 and March 2, 2006 101 September 2, 2006 and thereafter 100 ]iandatory Sinktnq Fund Redemptio~ The Outstanding Series A Term Bonds maturing on September 2, 2013, are subject to mandatory sinking fund redemption in part, by lot, at a redemption price equal to 100% of the principal amount to be redeemed, together with accrued interest to the September 2 fixed for redemption, without premium, in the years and in the aggregate principal amount listed below (provided that, in the event of an optional or mandatory redemption of any of the Series A Term Bonds maturing on September 2, 2013, such amounts shall be adjusted as provided in the redemption instructions pertaining thereto): Redemption Date CSeDte~ber ~) 2006 2007 2008 2009 2010 2011 2012 2013 Principal Amount (to come) ~e~ec~ion of Series'A Bends. for~Re~em~tion Whenever less than all of the Series A Bonds of a maturity are redeemed, the Trustee shall select the Series A Bonds to be redeemed from all Series A Bonds not previously called for redemption, by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Series A Bonds shall be deemed to be comprised of separate $5,000 denominations, and such separate denominations shall be treated as separate Series A Bonds which may be separately redeemed. Not~ce of Re~em~tion Notice of any redemption shall be given by the Trustee by first class mail to the respective Owners of any Series A Bonds designated for redemption, at their respective addresses appearing on.the Registration Books maintained by the Trustee, at least 30 but not more than 60 days prior to the redemption date. Neither the failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of the Series A Bonds or the cessation of the accrual of interest thereon. The redemption price of any Series A Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Trust Office of the Trustee. From and after the date fixed for redemption of any Series A Bonds, interest on such series A Bonds will cease to accrue. Transfer and _~xchanqe of series & Bonds Any Series A Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Series A Bond for cancellation, accompanied by delivery of a written instrument of 'transfer, duly executed in a form acceptable to the Trustee. Whenever any Series A Bond or Bonds are surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver'a new Series A Bond or Bonds for a like aggregate principal amount of the same maturity, in any authorized denomination. The Trustee shall require the Series A Bond Owner requesting .such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Series A Bonds may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount of Series A Bonds of the same maturity, but of other authorized denominations. The Trustee shall require the payment by the Series A Bo'nd Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be obligated to make any transfer or exchange of Series A Bonds during the period established by the Trustee for the selection of Series A Bonds for redemption, or with respect to any Series A Bonds which have been selected for redemption. ]~ook l~n~ f~¥Stem Except as otherwise provided in the Indenture, the registered Owner of all of the Series. A Bonds shall be DTC, and the Series A Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Any additional Series of Bonds under a Supplemental Indenture may also be registered in the name of Cede & Co., as nominee of DTC, as provided in such Supplemental Indenture. Payment of interest with respect to any Series A Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same-day funds to the account Of Cede & Co. on the payment date for the Series A Bonds at the address indicated on the record date or special record date for Cede & Co. in the Registration Books or as otherwise provided in the Representation Letter. The Series A Bonds shall be initially issued in the form of separate single fully registered Series A Bonds in the amount of each separate stated maturity of the Series A Bonds. Upon initial issuance, the ownership of such Series A Bonds shall be registered in the Registration Books in the name of Cede & Co., as nominee of DTC. The Trustee and the Authority may treat DTC (or its nominee) as to the sole and exclusive Owner of the Series A Bonds registered in its name for the purposes of payment of the principal, Redemption Price or interest with respect to the Series A Bonds, selecting the Series A Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Series A Bonds under the Indenture, registering the transfer of Series A Bonds, obtaining any consent or other action to be taken by Owners of Series A Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority shall be affected by any notice to the contrary. Neither the Trustee nor the Authority,shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the series A Bonds under or through DTC or any Participant, or any other person which is not shown on the Registration Books as being an Owner, with respect to the accuracy of any records maintained by DTC or any Participant; the payment by DTC or any Participant of any amount in respect of the principal, Redemption Price or interest with respect to the Series A Bonds; any notice which is permitted or required to be given to Owners of Series A Bonds under this Indenture; the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Series A Bonds; or any consent given or other action taken by DTC as Owner of Series A Bonds. The Trustee shall pay all principal, premium (if any) and interest with respect to the Series A Bonds, only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal, premium (if any) and interest with respect to the Series A Bonds to~the~extent of the sum or sums so paid. Except under the conditions of (c) below, no person other than DTC shall receive an executed Series A Bond for each separate stated maturity. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of CEDE & Co., and subject to the provisions herein With respect to record dates, the term "Cede & Co." in the Indenture shall refer to such new nominee of DTC. In the event (i) DTC, including any successor as securities depository for the Series A Bonds, determines not to continue to act as securities depository for the Series A Bonds, or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will discontinue the book-entry system with the incumbent securities depository for the Series A Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate fully registered Series A Bond for the aggregate outstanding principal amount of Series A Bonds of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Series A Bonds are not inconsistent with the terms of the Indenture. If the Authority fails to identify another qualified successor securities depository of the Series A Bonds to replace the incumbent securities depository, then the.Series A Bonds shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository for the Series A Bonds, or its nominee, shall designate. In such event the Trustee shall authenticate and deliver a sufficient quantity of' Series A Bonds as to carry out the transfers and exchanges provided in Sections 2.05, 2.07 and 2.08 of the Indenture. All such Series A Bonds shall be in fully registered form in denominations authorized by the Indenture. In the event that the book entry system is discontinued, payments of principal of and redemption premiums, if any, and interest on the Series A Bonds shall be payable as described in the section herein entitled "THE SERIES A BONDS - Description of the Series A Bonds". So long as'any Series A Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, premium (if any) and interest with respect to such Series A Bond and all notices with respect to such Series A Bond shall be made and given, respectively, as provided in the Representation Letter. In connection with any notice or other communication to be provided to Owners o'f Book-Entry Bonds pursuant to the Indenture by the Authority or the Trustee with respect to any consent or other action to be taken by Owners, the Authority or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. Addit~onal Authority Bonds In addition to the Series A Bonds, the Authority may issue additional Authority revenue bonds (the "Additional' Bonds") payable from the Revenues on a parity with the Series A Bonds, in such principal amount as shall be determined by the Authority in a supplemental indenture (the "Supplemental Indenture"), subject to the requirements of the Bond Law (as defined in the Indenture), and further subject to certain conditions set forth in the IndentUre, summarized as follows: (1) The Authority shall not be in default under the Indenture; (2) The Supplemental Indenture shall provide for an increase in the Reserve Account to an amount equal to the Reserve Requirement, as computed for the combined Series A Bonds and Additional Bonds; (3) Principal and Interest Payment Dates for the Additional Bonds shall be matched up to those for the Series A Bonds; (4) The redemption provisions for the Additional Bonds shall be compatible with the redemption provisions for the additional Assessment Bonds (95-2) being acquired with the proceeds of such Additional Bonds; (5) Issuance of the Additional Bonds shall be related to acquisition of the additional Assessment Bonds.(95-2); (6) No default shall have occurred and be continuing under the fiscal agent agreement [the "Fiscal Agent Agreement (95-2)"] pursuant to which the Assessment Bonds (95-2) were issued; (7) The aggregate principal amount of the Series A Bonds and Additional Bonds shall not exceed any limitation imposed by law or by any Supplemental Indenture; and (8) The Authority shall have filed the following documents with the Trustee: (a) An opinion of Bond Counsel respecting certain matters prescribed by the Indenture, including an opinion that the issuance of the Additional Bonds and the application of the proceeds thereof in accordance with the applicable Supplemental Indenture will not adversely affect the tax-exempt status of the outstanding Series A Bonds and previously-issued additional Authority revenue bonds; (b) A certificate of the Authority that Item (1) above has been met; (c) A certificate of the fiscal agent (the "Fiscal Agent (95-2") under the Fiscal Agent Agreement (95-2) that Item 6 above has been met; (d) A written 'report of an Independent Financial Consultant respecting the sufficiency of the Revenues to make timely payment of the principal of and interest on the Series A Bonds and Additional Bonds. Among other things, .said written report must confirm and demonstrate that, upon the issuance of such Additional Bonds and upon acquisition of the additional Assessment Bonds .(95-2) related thereto, the Revenues in each Bond Year will. be at least equal to 110% of the principal of and premium, if any, and interest on all remaining outstanding Series A Bonds and Additional Bonds scheduled to be paid in each such Bond Year; and (e) An executed copy of the Supplemental Indenture. Under the Indenture, Additional Bonds may be issued without complying with the foregoing conditions if the Additional Bonds are being issued to refund and retire any outstanding Series A Bonds and previously-issued additional Authority revenue bonds. DeBt Service Schedule The schedule of annual debt service payments on the Series A Bonds, based on the maturity schedule and interest rates set forth on the inside cover of this Official Statement, together with the mandatory sinking fund redemption payments listed for the Series A Term Bonds maturing on September 2, 2013, set forth, herein in the section entitled "THE SERIES A BONDS - Redemption of the Series A Bonds - Mandatory Sinking Fund Redemption,,, is as follows: Annual Year Debt fSemtember 2) Principal ~ ~ 1995 (to come) (to come) (to come) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year (September 2) 2006 2007 2008 2009 2010 2011 2012 2013 Totals: Principal] (to come) (to come) Annual Debt (to come) SECURITY FOR THE .SERIES A BONDS The Series A BOnds are secured by the Revenues of the Authority, as defined in the Indenture and consisting primarily of principal of and interest on the Assessment Bonds (95-1), whether as a result of scheduled debt service or redemption of any Assessment Bond (95-1) in advance of maturity, together with all investment earnings on any moneys held in the funds or accounts established under the Indenture except the Rebate Fund. Pursuant to the Indenture, a Reserve Account will be funded with proceeds' of. the Series A Bonds in the amount of $ . As prescribed by the Indenture, the Trustee will be the registered Owner of the Assessment Bonds (95-1) and will therefore receive from the Fiscal Agent the payments of the principal'of and the redemption premiums, if any, and interest on the Assessment Bonds (95-1), all of which payments constitute Revenues upon receipt by the Trustee. Pursuant to the Act, the City is required annually to transmit to the County Auditor the respective amounts of individual reassessment installments on all unpaid reassessments, the sum of which individual reassessment installments is sufficient to pay the principal of and interest on the Assessment Bonds (95-1).as such principal and interest become due and payable. Said reassessment installments are then billed on the regular County property tax bills and are remitted to the City in accordance with established procedures for such remittances. Assuming timely payment by the respective property owners of the obligations (including the reassessment installments) billed on the regular County property tax bills, and further assuming timely remittance by the County to the City of the amount of such reassessment installments thereby collected, the City will have sufficient funds from the reassessment installments to make timely payment to the Fiscal Agent of each March 2 interest payment and each September 2 principal and interest payment on the Assessment Bonds (95-1), as the same become due and payable. In December, 1994, and as a consequence.of the bankruptcy filing of the County of Orange (see "SPECIAL RISK FACTORS - Delays in Remittances" herein), the City experienced temporary delays in the remittance by the County of certain amounts collected for the City on the County's property tax bills, including installments of assessments related to the Prior Fixed Rate Bonds. However, as of January 31, 1995, all amounts related to property tax bill collections on behalf of the City had been remitted to the City in full, and the March 2, 1995, interest payments and September 2, 1995 principal and interest payments to holders of the Prior Fixed Rate Bonds were made on time. The City presently expects that future remittances of such amounts will be made to the City on a timely basis and in accordance with established procedures for such remittances. However, as the County reduces staffing levels in response to its financial problems, neither the City nor the Authority can be certain that the City's expectation of timely remittances will be met, and there may be further delays in such remittances.from the County to the City which could lead to delays in principal or interest payments to the Owners of the Series A Bonds. THE SERIES A BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED SOLELY BY THE REVENUES PLEDGED THEREFOR IN THE INDENTURE. THE SERIES A BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF PRINCIPAL OR INTEREST ON THE SERIES A BONDS. IN NO EVENT SHALL THE SERIES A BONDS OR ANY INTEREST OR REDEMPTION PREMIUM THEREON BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY AS SET FORTH IN THE INDENTURE. NEITHER THE SERIES A BONDS NOR THE OBLIGATION TO MAKE PAYMENTS UNDER THE ASSESSMENT BONDS (95-1) CONSTITUTE AN INDEBTEDNESS OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. Pa~me~ts Of ASsessment Bonds The Assessment Bonds (95-1) are secured by unpaid reassessments levied against private property within the Reassessment District, pursuant to the Act. Such unpaid reassessments (together with interest thereon) and moneys in the Redemption Fund established for the Assessment Bonds (95-1) constitute a trust fund for the redemption and payment of the principal of, Premium, if any, and interest on the Assessment Bonds (95-1). Principal of, premium, if any, and interest on the Assessment Bonds (95-1) are payable exclusively out of the Redemption Fund. Pursuant to the Fiscal Agent Agreement, a Reserve Fund has been established for the Assessment Bonds (95-1) in the amount of $ . THE ASSESSMENT BONDS (95-1) ARE NOT SECURED BY THE GENERAL TAXING POWER OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE, AND NEITHER THE CITY NOR THE STATE HAS PLEDGED ITS FULL FAITH AND CREDIT FOR THE PAYMENT THEREOF. PURSUANT TO SECTION 8769 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE, THE CITY HAS ELECTED NOT TO OBLIGATE ITSELF TO ADVANCE~ AVAILABLE FUNDS FROM THE CITY TREASURY TO CURE ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION FUND. A DETERMINATION NOT TO OBLIGATE ITSELF, HOWEVER, SHALL NOT PREVENT THE CITY FROM SO ADVANCING FUNDS IN ITS SOLE DISCRETION. The reassessments levied in the Reassessment District and each installment thereof and any interest and penalties thereon constitute liens against the parcels of land on which they are levied until the same are paid. The liens imposed in the Reassessment District are subordinate to fixed special assessment liens previously imposed upon the same property but have priority over existing and future private liens and over any fixed special assessment liens which hereafter be created against the property. Such liens are co-equal to and independent of the lien for general property taxes and special taxes. While there are no prior special assessment liens on any of the parcels of land in the Reassessment District, there are liens for special taxes and the recurring lien for general property taxes. See "LAND OWNERSHIP AND FUTURE DEVELOPMENT - Estimated Direct and Overlapping Debt" herein. ALTHOUGH THE UNPAID REASSESSMENTS CONSTITUTE LIENS ON THE PARCELS OF LAND ASSESSED, THEY DO NOT CONSTITUTE A PERSONAL INDEBTEDNESS OF THE RESPECTIVE PROPERTY OWNERS. THERE IS NO ASSURANCE THAT PRESENT PROPERTY OWNERS WILL REMAIN THE PROPERTY OWNERS, THAT PROPERTY OWNERS WILL BE FINANCIALLY ABLE TO PAY THEIR ASSESSMENTS, OR THAT PROPERTY OWNERS WILL IN FACT PAY SUCH REASSESSMENT INSTALLMENTS EVEN THOUGH FINANCIALLY ABLE TO DO SO. Under provisions of the Act, installments sufficient to meet annual payments of principal and interest on the' Assessment Bonds (95-1) are to be collected on the regular property tax bills sent by the Orange CountY Tax Collector to owners of the parcels of land against which there are unpaid reassessments. These annual installments are to be paid into the Redemption Fund for the Assessment Bonds (95-1), which will be held by the Fiscal Agent, and used to pay the principal of and interest on the Assessment Bonds (95-1) as they become due. The installment billed against each parcel of land each year represents a pro-rata share of the total principal and interest coming due on all of the Assessment Bonds (95-1) that year. The amount billed against each parcel of land is based on the percentage which the unpaid reassessment against the parcel bears to the total of unpaid reassessments in the Reassessment District, plus an administrative charge of the City. The failure of a property owner to pay an annual reassessment installment will not result in an increase in reassessment installments against other property in the Reassessment District. In the event of delinquencies of a certain amount respecting any installment of an unpaid reassessment, and with respect to all delinquencies in certain circumstances, as prescribed in the Fiscal Agent.Agreement, the city has~ovenanted to institute superior court foreclosure proceedings to enforce payment of such delinquencies. See "Covenant for Superior Court Foreclosure" herein. Additional Assess, meD$ Bonds ¢95-1) The Assessment Bonds (95-1) are being issued pursuant to the Fiscal Agent Agreement in a principal amount equal to the unpaid reassessments for the Reassessment District. Pursuant to the Act, no additional Assessment Bonds (95-1) can be issued upon the security of the unpaid reassessments for the Reassessment District. ~eserve Account · Under the Indenture, the Trustee is required on the Closing Date to deposit in the Reserve Account from proceeds of sale of the Series A Bonds an amount equal to the "Reserve Requirement", which is defined in the Indenture to mean, as of the date of any calculation, the lesser of (1) ten percent (10%) of the original aggregate principal amount of the Series A Bonds or (2) the maximum amount of principal of and interest on the Series A Bonds coming due and payable in the current or any future Bond Year. The moneys in the Reserve Account may be invested in any "Permitted Investment", as said term is defined in the Indenture, subject to the following: (1) In the event that such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date, then any amount in the Reserve Account may be invested in such redeemable Permitted Investments maturing on any date on or prior to the final maturity date of the Series A Bonds. (2) Otherwise, investment of Reserve Account moneys shall be restricted to Permitted InveStments which mature no later than the earlier of (a) five years from the date of investment or (b) the final maturity date of the Series A Bonds. Ail interest or gain from the investment of moneys in the Reserve Account shall be retained therein, subject to the payment of rebate respecting portions of such interest or gain. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the then applicable Reserve Requirement on February 15 and Augus.t 15 of each year shall be withdrawn from the Reserve Account by the Trustee and, subject to payment of rebate respecting portions of such excess, deposited in the Interest Account. Pursuant to Section 6.02 of the Fiscal Agent Agreement, the City has covenanted, for the benefit of the Owners of the Assessment Bonds (95-1), that, no later than October 1 each year, it will cause to be commenced and thereafter diligently prosecuted a superior court foreclosure action, pursuant to Sections 8830 through 8835, inClusive, of the California Streets and Highways Code, under the following circumstances: (1) If there is a cumulative delinquency respecting reassessment installments of $2,000 Or greater for a specific parcel for one or more prior Fiscal Years, foreclosure shall be commenced against each such parcel. (2) If there is a cumulative delinquency respecting reassessment installments of $1,000 or greater for a specific parcel for one or more prior Fiscal Years, and if the'total amount of delinquent reassessment installments for the prior Fiscal Year attributable to all parcels in the Reassessment District other than the parcels subject to foreclosure under (1) above exceeds 5% of the total reassessment installments billed for the prior Fiscal Year, then foreclosure shall be commenced against each parcel having the cumulative delinquency of $1,000 or greater. (3) Finally, if the total amount of delinquent reassessment installments for the prior Fiscal Year attributable to all parcels in the Reassessment District other than the parcels subject to foreclosure under (1) and (2) above exceeds 3% of the total reassessment installments billed for the prior Fiscal Year, then foreclosure shall be commenced against every delinquent parcel. Even though foreclosure is commenced and diligently prosecuted in accordance with the City's covenant of foreclosure, neither the City nor the Authority can be assured that, in the event such foreclosure progresses to the point of a foreclosure sale, there will be any bidder for the subject parcel or parcels. While the City presently believes that each of the parcels in the Reassessment District has sufficient value to assure meaningful bidding at such foreclosure sale, there is no assurance that such present value will not decline in the future, and neither the City nor the Authority is obligated to be a bidder at such foreclosure sale. In the absence of any outside bidder, the foreclosure sale may not produce money to the City in satisfaction of its foreclosure judgment from which to pay the principal of or the interest on the Assessment Bonds (95-1). :~riority of Lie- General The unpaid reassessments and each installment thereof and any interest and penalties thereon constitute a lien against each of the respective parcels within the Reassessment District until the same are paid. Such lien is subordinate to all special assessment or reassessment liens~previously imposed upon the same property, but has priority over ali Private liens and over all special assessment or reassessment liens which may thereafter be created against the same property. However, such lien will be on a parity with the lien of any special taxes or other taxes imposed, whether prior to the date hereof or in the future, against parcels within the Reassessment District pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Mello-Roos Act"), or other applicable legislation. Community F&cilities District The Tustin Unified School District has formed its community Facilities District No. 88-1 ("CFD No. 88-1") pursuant to the Mello-Roos Act, encompassing a major portion of the land within the Reassessment District, to provide financing for school facilities. Special tax' bonds (the "CFD Series A Bonds") have been issued by CFD No. 88-1 upon the security of the special tax lien established upon the parcels within CFD No. 88-1, and the CFD is obligated to levy special taxes upon the parcels within CFD No. 88-1 from year to year in amounts sufficient to pay the principal of and the interest on the CFD Series A Bonds (together with any additional CFD special tax bonds which may be issued hereafter). The last maturity of the CFD Series A Bonds is in 2017, beyond the last maturity of the Series A Bonds. The lien securing payment of the special taxes to be levied from year to year upon the parcels within CFD No. 88-1 will be on a parity with the lien securing payment'of the reassessments. See "REASSESSMENT DISTRICT NO. 95-1 - Direct and Overlapping Debt" herein. BOND INSURANCE (to come, if applicable) METHOD OF REASSESSMENT The total amount of reassessments levied in the Reassessment District was established to be equal to the principal amount of the Assessment Bonds (95-1). Said amount of each reassessment was calculated for each of the individual parcels of land within the Reassessment District in proportion to the unpaid existing assessment on each such parcel. The amount of each of the reassessments levied, identified by reassessment number,, is shown in the Reassessment Report for the Reassessment District, Which report is on file in the office of the Public Works Director of the City. THE REASSESSMENT DISTRICT General The parcels of land comprising the Reassessment District are the Prior Fixed Rate Parcels of the Prior Districts (see "INTRODUCTION" herein). Those parcels of the Prior Districts which continued to have a variable rate status are included in Reassessment District No. 95-2. See "REFUNDING PLAN" herein. Status of Public ]~mprov~_m_ent_- The public improvements financed with the proceeds of the Prior Bonds are substantially complete. The only remaining public improvements necessary to enable the remaining undeveloped property in the Reassessment District to develop are in-tract improvements to certain specific parcels which will be the responsibility of the developer of such specific parcel or parcels. Examples of such in-tract improvements are local streets; curb, gutters and sidewalk; traffic control signage and striping; street lights; landscaping; water distribution lines and appurtenances; sanitary sewer laterals, collection lines and appurtenances; and underground gas, electric, telephone and cable television facilities. With the exception of school facilities to be developed.by the Tustin Unified School District, no additional major infrastructure such as arterial s~reets, parks, fire stations, or libraries are reqUired or anticipated for the full development of the remaining undeveloped property in the Reassessment District, and construction of such school facilities is not a condition precedent to issuance of building permits for any of such remaining undeveloped property in the Reassessment District. Looati0D and Terrain o~ the Reassessment Distriot 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.combined area of the Prior Districts, of which the Reassessment District is a part (and consisting of the Prior Fixed Rate Parcels from both of the Prior Districts), is approximately 2',782 acres and is located along 'the east side of the City, extending generally in a southwest-to-northeast band approximately 3/4ths of a mile Wide, from the Santa Ana Freeway (Interstate 5) (the "Freeway") to Santiago Canyon Road, a distance of approximately 6 miles. The terrain is relatively flat, extending gently uphill toward the northeast, and transitioning to gently rolling hills in the last mile. Land Uses and Development Status The following Table 1 illustrates the land use categories of the reassessed parcels in the Reassessment District. As used in Table 1, the ten "developed" means that at least one structure has been. constructed on the parcel, which has been assigned improvement assessed value by County. The developed portion of the reassessed property represents approximately 85% of the total number of reassessed parcels and approximately % of the unpaid reassessments on the reassessed property. 0~--' 0 0 0 o~c~ o t~ 6~6, L 0 o u~ L~ 0 0 0 Larqest Landowners bY Reassessme~t AmouDt The following Table 2 illustrates the 15 largest landowners in the Reassessment District, as measured by total reassessment amount levied on property owned by such landowner. Ail other parcels in the Reassessment District as single family residences. · Debt Servioe Coverage The following Table 3 illustrates the estimated coverage for debt service on the Series A Bonds from Revenues, consisting of the debt service on the Reassessment Bonds (95-1) plus estimated interest earnings on the Series A Bonds Reserve Account. In the event transfers from the Reserve Account become necessary as a result default by the City in the payment to the Trustee of debt service on the Reassessment Bonds (95-1), there may be reduced or no interest earnings on said Reserve Account. Series A Bond Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TABLE 3 Re&ssessment District No.'95-! Estimated Debt Service Coverage from Revenues Series A Bond Estimated Estimated Debt Service Revenues Cover~qe De 1;J. nquency History As of , 1995, there were a total of parcels within the Reassessment District which were delinquent in the payment of assessment installments for Fiscal Year 1994-95. These delinquent 1994-95 assessment installments totaled $ , which represents % of the total 1994-95 assessment installments levied. Of the 15 largest landowners (see Table 2 above), only the San Ramo and Lewis Homes parcels were delinquent, and the San Ramo delinquency has been reinstated. The following Table 4 illustrates the historical assessment delinquency for parcels included in the Reassessment District. See Table of Appendix A for a summary of property tax collections and delinquencies (including assessment installments for the Prior Districts) for the entire City for Fiscal Years 1987-88 through 1991-92, inclusive. CITY OF TUSTIN Reassessment District No. 95-1, Tustin Ranch Assessment Installment Delinquencies for Fiscal Years 1990/91 through 1994/95 Fiscal Parcels P&rceLs DoL lars DoL L&rs ~ of OoL Lars Yeer Levi~ DeL i~nt Levi~ DeL t~ 1~-91 1,9~ 0 $ 3,~70,~5.~ $ 0 0.~ 1~1 '92 2,~6 3 4,~, 5~.30 ~,~ 1.76 1~2' 93 2,~5 6 4,358, 011 .~ 74, 1 ~3- 9& 3,2~ 21 &,~l, 716.~ 91 ,~0 1 TOTALS 1~,5&1 1~ S19,~7,~D.Z4 ~,4Z8 1 estimated Value-to-Lien Ratios As of March 1, 1994, there were approximately 3,613 separate parcels in the Reassessment District, both developed and undeveloped. These parcels (including improvements, where developed) 'had a total assessed value of $787,925,188. Total reassessments of $38,214,000 have been levied in the Reassessment District proceedings. This provides an over-all value-to-lien ratio of . The following Table 5 illustrates the breakdown, by category of value-to-lien range, of the total number of parcels and the corresponding total reassessment amounts attributable thereto. ;;o0 0 · I ! I .I I I I ~ ee ee ~ ~ ee ~ *e ®e ~ (~ ~-~ o 0~o ~ o O0 o~0 ~-0~ ~,~° o o 0 °I o ~0 o~ 0 o ~O 0 tn Neither the value-to-lien calculations nor the total reassessment amounts include parity obligations for CFD No. 88-1 and 'for general property taxes. Estimated Direct ~d OverlampiDq Debt Set forth in Table 6 is the eXisting authorized indebtedness payable from taxes and assessments that may be levied on property within the Reassessment District. Additional indebtedness on a parity with the Reassessment Bonds (95-1) could be authorized by the City, subject to the limitation of the total amount of reassessments levied. In addition, other public agencies may issue additional indebtedness on property within the Reassessment District at any time. ~ 6 Roassossment D£str£¢t )Jo. 95-1 _1994-95 ASsessed Vs~u~q;ion: $787,925,18~ DIRECT AND O.VERL. APPING TAX AND ASSES~IENT DEBT: Orange Co~x~ty Or~e Canonry Ft~ Control District Netr~Ltt~n Water District Il'Vine R~r~ch Water Dtmtrtct, %.D. ~105 Il-vine Ranch Water Dtltrtct, ].D. ~50 City of Tustin City of Tu~tin Reeeaesmment District #1~-1 T~tin Unifi~ School District Co,~Jnity FaciLities District #19~-1 TOTAL DIRECT AND OVERLAPPING T~ AND ASSE$~NT DEBT (1) Ref~r~ding bonds to be sold. ExcLudes issues to be refunded. ~YVERLAPP]NG VEASE OB~.IGATION p~BT: Orange C~ty Certificates of Partici~ti~ Orate C~ty P~i~ ~[igati~ Orate C~ty Tromit Authority ~ici~t Water District of Oca~e C~ty Water FaciLities Cor~Fati~ S~[~ck C~ity Co[[~e District Certificates of Partici~ti~ City of T~tin Water Cor~rati~ Irvi~ R~h ~ater District Certificates of Partici~ti~ Or~e C~ty ~ater District Certificates of Partici~ti~ Or~e C~ty Sanitati.~ District ~1~ Certificates of Partici~ti~ TOTAL. ~OSS O~RLAPPING LEASE ~LI~T%~ DEBT O~a~e C~ty Tra~it Authority (80~ se[f-s~rti~) ~ ~ater FaciLities Cor~Fati~ City of T~tin ~ater Cor~rati~ Or~e C~ty Water District Certificates of Pmrtici~ti~ TOTAL ~RLAPP%NG LEASE ~L]~T]~ DEBT Ratios to Assessed Vat~Jatio~ Direct Debt .......................... Tote[ Direct end OverLapping Tax ~ Assessment Debt ..... 10.96% Cembifled Gross Debt ($92,783,680) ............... 12.16~ Ccmbined Net Debt (92,756,974) . ' .......... . ..... 11.77% STATE SCHOOL {IUILDING AID R~PAYABIrE AS OF 6/30/94:$0 Source: Catifocnia #~nicipet Statistics end 0.497% 0.498 0.1:)98' 37.4~6 37.585 24.280 100. 99.698 0.497% 0.497 0.497 0.762 1.387 24,28O 4.715 0.713 6.6.35 Debt 5/1/95 $ 2,932 5,453 614,~67 15,138,754 17,670,185 43,70,4 38,214,000(1) 14.670.561 _ $86,359,956 $1,454,888 1,590,59~ 104,867 671,589 376,432 789,100 2,82.9,000 1,482,113 1~5.136 S9,423,724 ~, 894 671,589 789,100 1.482.113 S6,397,028 SPECIAL RISK FACTORS The following information should be considered by prospective investors in evaluating the Series A Bonds. Howe%er, it does not purport to be an exhaustive listing of the risks and other considerations which may be relevant to an investment in the Series A Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could delay or preclude payment of princiPal of or interest on the Series A Bonds or both. The Series A Bonds are Limited Obligations of the &uthorit¥ Funds for the payment of the principal of and the interest on the Series A Bonds are derived from annual reassessment installments. While a modest coverage factor has been established in structuring the annual reassessment amounts (see "REASSESSMENT DISTRICT - Debt Service Coverage - TABLE 6" herein), the amount of annual reassessment installments that are collected by the City could be insufficient to pay principal of and interest on the Series A Bonds due to non-payment of such annual reassessment installments levied or due to insufficient proceeds received from a judicial foreclosure sale of land within the Reassessment District following delinquency. The City's legal obligations with respect to any delinquent reassessment installments which secure the Series A Bonds are limited to (1) payments from the Reserve Fund to the extent of funds on deposit therein, and (2) the institution of judicial foreclosure proceedings with respect to any parcels for which the reassessment installment is delinquent (see "SECURITY FOR THE SERIES A BONDS - Covenant for Superior Court Foreclosure" herein). The Series A Bonds cannot be accelerated in the event of any default. The Reassessments are Not Personal 0bliqations of ~e ProDert¥ Owners Under the provisions of the Act, reassessment installments will be billed to the owner of each parcel in the Reassessment District against which there is an unpaid reassessment, such billing to be made on the regular property tax bills sent to such owners. Such reassessment installments are due and payable at the same time and bear the same late charges and penalties as for non-payment of regular property tax installments. The obligation to pay reassessment installments does not constitute a personal obligation of the Current or subsequent owners of the respective parcels which are subject to the reassessment liens. Enforcement of the payment obligation by the City is limited to judicial foreclosure in the Orange County Superior Court pursuant to Sections 8830 and following of the California Streets and Highways Code. There is no assurance that any current or subsequent owner of a parcel subject to a reassessment lien will be able to pay the reassessment installments or that such owner will choose to pay such installments even though financially able to do so. The Assessment Bonds ¢95-1) are. Limited Oblications of the City The obligation of the City, as issuer of the Assessment Bonds (95-1), to advance the amount of delinquencies to the Trustee, as the registered holder of the Assessment Bonds (95-1), is strictly limited to funds on deposit in the Reserve Fund established and held by the City pursuant to the Fiscal Agent Agreement. Pursuant to Section 8769 of the California Streets and HighwaYs Code, the City has expressly elected not to obligate itself to advance available funds from the City's treasury to make up deficiencies in the amount of reassessment installments collected. Sustained failure by property owners to pay reassessment installments when due, combined with depletion of the Reserve Fund and the inability of the City to sell parcels which have become subject to judicial foreclosure proceedings for amounts sufficient to cover the delinquent reassessment installments, will most likely result in the inability of the City to make full or punctual payments of interest on or principal of the Assessment Bonds (95-1), which could result in a default on the Series A Bonds. Bankruptcy and Foreclosure Delays The payment of reassessment installments and the ability of the City to foreclose the lien of a delinquent reassessment is normally delayed by and may be limited in other ways by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by State law relating to judicial foreclosure. In addition, the prosecution of a judicial foreclosure may be delayed due to congested local court calendars or procedural delays. The various legal opinions to be delivered concurrently with the delivery of the Series A Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of'the various legal instruments, including the Series A Bonds, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the reassessments to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting'judicial foreclosure proceedings and could result in delinquent reassessment installments not being paid in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Series A Bonds. The ability of the City to foreclose the lien of a delinquent reassessment may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the "FDIC") or the Resolution Trust Company (the "RTC") has an interest or hereafter obtains an interest. In 1991 and 1992, the RTC issued certain policy statements (the "Policy Statements") (and later adopted by the FDIC) pursuant to which the RTC, when liquidating assets in its corporate and receivership capacities (but not when acting as a conservator) has taken the position, in part, that real property owned by the RTC is subject to state and local real property taxes if those taxes are assessed according to the property's value, but that the RTC is immune from real property taxes assessed on other bases. The Policy Statements also provide that the RTC will pay its proper tax obligations when they become due and will pay claims for delinquencies as promptly as is consistent with sound business practice and the orderly administration of the institution,s affairs, unless abandonment of the RTC interest in the property is appropriate. It further provides that the RTC will pay claims for interest on delinquent property taxes owed at the rate provided under state law. The RTC will not pay for any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. The Policy Statements also provide that if any property taxes (including interest) on RTC-owned property are secured by a valid lien (in effect before the property became owned by the RTC), the RTC will pay those claims. No property of the RTC is subject to levy, attachment, garnishment, foreclosure or sale without the RTC's consent. In addition, a lien for taxes and interest may attach, but the RTC will not permit a lien or security interest held by the RTC to be eliminated by foreclosure without the RTC's consent. The Policy Statements are unclear as to whether the RTC considers the reassessments levied by the City to be "real property taxes" which the RTC intends to pay. The Policy Statements provide: "The [RTC] is only liable for state and local taxes which are based on the value of the property during the period for which the tax is imposed, notwithstanding'the failure of any person, including prior record owners, to challenge an assessment under the procedures available under State law. In the exercise of its business judgment, the [RTC] may challenge assessments which do not conform with the statutory provisions, and during the challenge will generally pay tax claims based on the assessment level deemed appropriate. The [RTC] will generally limit challenges to the current and immediately preceding taxable years and to the pursuit of previously filed tax protests. However, the [RTC] may, in the exercise of its business judgment, challenge any prior taxes and assessments provided that (1) the [RTC's] records (including appraisals, offers or bids received for the purchase of the property, etc.) indicate that the assessed value is clearly excessive, (2) a successful challenge will result in a substantial savings to the [RTC], (3) the challenge will not unduly delay the sale of the property, and (4) there is a reasonable likelihood of a successful challenge." The Authority and the City are unable to predict what effect, if any, the application of~the Policy Statement will have in the event of a delinquency in the payment of reassessments relating to a parcel or to parcels within the Reassessment District in Which either the RTC or the FDIC have an interest. The Authority and the City are likewise unable to predict what effect, if any, the application of the Policy Statements will. have on the payment of the interest on and the principal of the Series A Bonds. The Authority and the City are unable to determine if the RTC or the FDIC has an interest in any parcel within the Reassessment District. _~xisteDce 9~ Undeveloped Property Approximately % of the reassessments are secured by liens on undeveloped property, and the average value-to-lien ratio for such undeveloped property is ~:1 (see "THE REASSESSMENT DISTRICT - Development Status - TABLE 1" herein). The undeveloped property consists of subdivided lots which are owned by developers or merchant builders who intend, to develop the property for single family residential (see "THE REASSESSMENT DISTRICT - Zoning Classifications for Undeveloped Property - TABLE 3" herein). There may be subsequent transfers of ownership of the undeveloped property prior to completion of development. Failure of the owners of undeveloped property to pay the reassessment installments when due could result in a default in the payments of principal of and interest on the Reassessment Bonds (95-1), which could result in the inability of the Authority to make payments of the principal of and interest, on the Series A Bonds. price Realized Upon Foreclosure Section 8832 of the California Streets and Highways Code (the "Streets and Highways Code") prescribes the minimum price (the "Minimum Price") at which property may be sold in a judicial foreclosure resulting from delinquencies on reassessment installments. The Minimum Price is the amount equal to the delinquent installments of principal and interest of the reassessment, together with all interest, penalties, costs, fees, charges and other amounts more fully detailed in said Section 8832. However, Section 8836 of the Streets and Highways Code provides that the court may authorize a sale a less than the Minimum Price if the court makes certain determinations, based on the evidence introduced at the required hearing, which evidence must establish that no ultimate loss will result to the Bondholders or that no other remedy is acceptable.and at least 75% of the Bondholders' consent. The reassessment lien' upon property sold pursuant to this procedure at a lesser price than the Minimum Price shall'be reduced by the difference between the Minimum Price and the 3 4 actual sale price. In addition, the court shall permit participation by the Authority, as owner of all of the· Reassessment Bonds (95-1), in its consideration of the petition as necessary to it determination. Reference should be made to Section 8836 for the complete presentation of this provision. If foreclosure proceedings do not result in full collection of delinquent reassessments, it is possible that owners of the Series A Bonds may not receive payment of principal of or interest on the Series A Bonds. Uncertainties of Future Develop~en% The motivation of the present or future owners of the undeveloped property in the Reassessment District may be diminished in the event significant delays are experienced in development efforts. However, further development of the lands located in the Reassessment District may be affected by changes in general economic conditions, fluctuations in the real estate market, changes in the ownership of the land, and other factors. In addition, any' proposed development is subject to existing and future federal, state and local regulations. Approval may be required from various public agencies in connection with the 'design, nature and extent of the required public improvements, or such matters as land use and zoning. Failure to meet any such future regulations or obtain any such approvals in a timely manner could delay or adversely affect any proposed development of the parcels of land in the ReasseSsment District. The land within the Reassessment District is subject to a number of contingencies which could slow or prevent future development of the undeveloped land. Consequently, no assurance can be given that such development will be partially or fully completed, and in assessing the investment quality of the Series A Bonds, prospective purchasers should evaluate the risks of noncompletion, including but not limited to the following. (1) First, undeveloped land is less valuable than such land in a developed condition and provides less valuable security to the-Series A Bondowners should it be necessary for the City to foreclose due to the nonpayment of reassessment installments which secure the Assessment Bonds (95-1). (2) Second, if much of the land in the Reassessment District remains undeveloped, the number of likely purchasers at a foreclosure sale, in the event the City forecloses the lien of delinquent unpaid reassessment installments, is likely to be reduced. (3) Third,-in addition to potentially reducing the ability and willingness of the landowners to pay reassessment installments, a slowdown of the economic development process in the region could adversely affect land values and reduce the proceeds received at a foreclosure sale in the event reassessment installments are not paid when due. There can be no assurance that land development operations within the Reassessment District will not be adversely affected by future governmental policies, including, but not limited to, governmental policies to restrict or control development. Any event that significantly impacts the ability to develop land in the Reassessment District may cause the property values on undeveloped property to decrease substantially from the assessed values set forth herein and could affect the willingness and ability of the owners of the undeveloped property to pay the reassessment installments when due. Direct an~ Overla~min~ X~eM~e~ness The ability'or willingness of an owner of land within the Reassessment District to pay reassessment installments could be affected by the imposition of other taxes and assessments imposed upon the land. In addition, other public agencies whose boundaries overlap those of the Reassessment District could, without the consent of the CitY or the Authority, and in certain cases without the consent of the owners of the land within the Reassessment Districts, impose additional taxes or assessment liens on the property within the Reassessment District to finance public improvements or services to be located or provided inside of or outside of the Reassessment District. A statement of direct and overlapping indebtedness on land within the Reassessment District is included herein under the heading "REASSESSMENT DISTRICT NO. 95-1 - Estimated Direct and Overlapping Debt - TABLE 9". Earthauakes The Reassessment District, like all California communities, may be subject to unpredictable seismic activity. The occurrence of seismic activity in or around the Reassessment District could result in substantial damage to properties in the Reassessment District, which, 'in turn, could substantially reduce the value of such properties and could affect the willingness or ability of the property owners to pay their reassessment installments when due. Drouaht coDd~t~ons · California has recently experienced drought conditions, although rainfall this year has terminated the drought conditions .throughout the State. Water service within the Reassessment District is provided by the Irvine Ranch Water District ("IRWD"). While IRWD currently anticipates being able to supply water for existing and new development within its service area for the foreseeable future, there can be no assurance that any renewal of drought conditions will not adversely affect IRWD's ability to do so. Such failure could adversely affect the financial condition of the property owners and could slow or halt development efforts, thereby adversely affecting the willingness or the ability of the owners of undeveloped property to pay their reassessment installments when due. Lan~ ValUeS The value of land within the Reassessment District is an important factor in evaluating the investment quality of the Series A Bonds. In the event that a property owner defaults in the payment of a reassessment installment, the City's only remedy is to judicially foreclose on that property. Prospective purchasers of the Series A Bonds should not assume that the property within the Reassessment District could be sold for the assessed amount described herein at a foreclosure sale for delinquent reassessment installments or for an amount adequate to pay delinquent reassessment installments. The property values set forth in the various tables herein are the property values determined by the Orange County Assessor for property tax purposes. These assessed value determinations may be subject to an appeal by the property owner. Assessment appeals are annually filed with the County Assessment Appeals Board for a hearing and resolution. At the time of filing, applicants are required to estimate an opinion of value. The resolution of an appeal may result in a reduction to the Assessor's original taxable value and a tax refund to the applicant/property owner. Any reduction in assessed taxable values of property within the Reassessment District would have an adverse impact on the value-to-lien ratios discussed in the tables herein. The actual market value of the property is subject to future events such as downturn in the economy, occurrences such as earthquakes, droughts or floods or other events, all of which could adversely impact the value of the land in the Reassessment District which is the security for the Assessment Bonds (95-1) which secure the Series A Bonds. As discussed herein, many factors could adversely affect property values or prevent or delay land development within the Reassessment District. Hazardous ~ubsta~ces The market value of the property in the Reassessment District is subject to'diminution upon the future release or discovery thereon of a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or "Superfund Act" is the most well know and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect therefore, should any of the parcels be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. · The value of the property within the Reassessment District, as set forth in the various tables herein, does not reflect the presence of any hazardous substance or the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the property. Neither the Authority nor the city has independently verified, and neither is aware, that the owner (or operator) of any of the parcels within the Reassessment District have such a current liability with respect to any such parcel. However, it is possible that such liabilities do currently exist and that neither the Authority nor the City is aware of. them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the Reassessment District resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified .as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly adversely affect the value of a parcel and the willingness or ability of the owner of any parcel to pay the reassessment installments when due. Endangered and Threatened ~pecies There is no known presence of any endangered or threatened species of animal or plant life within the area of the Reassessment District. Future discovery of any endangered or threatened species could delay or halt further development of the undeveloped property in the Reassessment District. ,,,,Cumulative Burden of Parity Taxes, Special Assessments an~ .Development Costs The reassessments and the annual installments thereon constitute a lien against the parcels of land on which the reassessments have been levied. Such lien is on a parity with all special taxes levied by other agencies and is co-equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property. Development of the undeveloped land within the Reassessment District is contingent upon construction and installation of public improvements within the respective parcels of land, including local streets, water distribution facilities, sewage collection laterals and lines, drainage facilities, gas, telephone, electrical and cable television facilities, as well as on-site grading and related improvements. The cost of these additional improvements could increase the public and private debt for which the undeveloped land within the Reassessment° District is security. This increased debt could reduce the ability or willingness of the owners of the undeveloped property to pay the reassessment installments when due. Neither the City nor the Authority has control over the ability of other entities to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within the Reassessment District. In addition, the owners of property within the Reassessment District may, without the consent or knowledge of the City or the Authority, petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any such special taxes may have a lien on such property on a parity with the lien of the reassessments. Loss of Tax Exemption As discussed under the caption "CONCLUDING INFORMATION - Tax Exemption" herein, the interest on the Series A Bonds could become includable in gross income for federal income tax purposes, retroactive to the-date of issuance of the Series A Bonds, as a result of failure of the Authority or the City to comply with certain provisions of the Code. Should such an event of taxability occur, the Series A'Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption or mandatory sinking fund redemption provisions of the Indenture. Orange County Bankruptcy Background of Bankruptcy on December 6, 1994, the County and the Orange County Investment Pools (collectively, the "Pool") filed for protection under Chapter 9 of the United States Bankruptcy Code following losses which were eventually realized at approximately $1.7 billion in the market value of the Pool's investment portfolio. County funds and funds of more than 200 non-County governmental · agencies within the State were invested in the Pool. As of November 30, 1994, the Pool had assets of approximately $20.6 billion, of which $13 billion was borrowed through repurchase contracts and reverse repurchase contracts. The remaining $7.6 billion included $2.7 billion deposited by the County and $4.9 billion deposited by local agencies other than the County. Although non-County Pool investors ("Pool Participants") were entitled to withdraw monies on relatively short notice, the Pool. was invested in securities with an average duration of four (4) years in order to enhance returns. To further enhance yield, some Pool monies were also invested in a variety of structured instruments, such as inverse floaters and step-up callable notes, which were highly sensitive to changes in market interest rates. Repurchase and reverse repurchase~agr~eements were also used t° obtain loans from broker/dealers to further enhance returns by leveraging. Such borrowing exposed the County to cash collateral calls in the event of losses in the market value of the collateral. These long dated and structured securities, together with leverage, caused the Pool's portfolio to generate high rates of return while the interest rate yield curve was steep from late 1991 through 1993. However, these same factors limited the Pool's liquidity and resulted in substantial losses of market value when market interest rates incureased and the yield curve flattened through most of 1994. Shortly after the cases were filed, an Official Investment Pool Participants' Committee (the "Pool Participants' Committee") was formed, comprised of representative Pool depositors, to facilitate negotiation and settlement of various issues with the County. Several other official and unofficial committees and subcommittees have been formed in each Chapter 9 cases, all with the same overall purpose. The Bankruptcy Code provides for the creation of official creditors' committees to represent their constituents before the U.S. Bankruptcy Court, to investigate the debtor's conduct and to advise the debtor in connection with formulation of a plan of adjustment. Following the $1.7 billion losses in the Pool's investment portfolio and the resulting bankruptcy filings, distributions from the Pool were stayed, and various Pool Participants asserted a variety of tort claims against the County, including breach of fiduciary duty, fraud and .negligence, and asserted trust claims seeking the full amount of the funds they had placed in the County treasury. After extensive negotiations between the County and the Pool Participants Committee, the County and the Pool Participants entered into the Comprehensive Settlement Agreement Re the Orange County Investment Pools ("the Settlement Agreement"). See "The Settlement Agreement" below. In 1994, the City had approximately $4 million of principal on deposit with the Pool which it withdrew. There were certain interest earnings on the City's investment that could be withdrawn only after giving written notice to the County. These earnings were not withdrawn before the bankruptcy filing. The interest earnings of the City currently on deposit in the Pool amount to approximately $8,000.00. The Settlement Aqreement On April 5, 1995, the County'filed with the Bankruptcy Court the Settlement Agreement. The effectiveness of the Settlement Agreement was contingent upon acceptance of the Settlement Agreement within approximately three (3) weeks by at least 80% of the Pool Participants holding at least 90% in aggregate amount of the non-County investment balances in the Pool. The requisite number of Pool Participants accepted the Settlement Agreement, and on May 2, 1995, the Bankruptcy Court entered an order approving the Settlement Agreement and authorizing the county to perform its respective obligations under the Settlement Agreement. The Settlement Agreement generally provides for distributing to Pool Participants a portion of their December 6, 1994, investment balances in the Pool which portion constitutes approximately 77% of the Pool Participants' aggregate December 6, 1994, investment balances. This amount was distributed to Pool Participants on May 19, 1995. Moreover, the Settlement Agreement enables Pool Participants to select one or two options for the treatment of the deficiency between that distribution and their investment balances. Under "Option B", which was selected by less than 10% of the Pool Participants, Pool Participants generally reserve their rights to litigate against the County to recover their deficiency Under "Option A" which was selected · , by more than 90% of the Pool Participants, including the City (the "Option A Pool Participants"), Option A Pool Participants release any and all Pool-related claims they may have against the County and assign to the County any and all Pool-related claims they may have against third parties, and receive in exchange the following three types of consideration, intended to enable the Option A Pool Participants eventually to receive approximately 100% of their investment balances. The first component of consideration consists of approximately $236 million in "Recovery Notes" to be distributed to Option A Pool Participants in amounts such that (a) each Option A Pool participant that is a school district or school- related entity (the "School Pool Participants") will receive approximately $.13 for each $1.00 invested in the Pool and (b) the other Option A Pool Participants will receive approximately $.03 for each $1.00 invested in the Pool. The Recovery Notes constitute administrative claims under Section 364(c) (1) of the Bankruptcy Code, with priority over all other administrative expenses and unsecured claims against the County, subject to certain carve-out expenses for professional and legal fees incurred by the County in the bankruptcy proceedings. Under the Settlement Agreement, the County is required to use its "best efforts" to monetize the Recovery Notes, and did so by selling bonds on June 16, 1995. The second component of consideration consists of approximately $343 million of "Settlement Secured Claims" allocated to the Option A Pool Participants that are not School Pool Participants in an amount that provides them the approximately 90% level of recovery provided to School Pool Participants through the Recovery Notes. The Settlement Secured Claims are allowed general claims in the County's bankruptcy case that are secured by a first priority security interest in a ratable share of 65% of.the net proceeds the County receives from the assertion of certain Pool-related claims against third parties. The County has filed lawsuits ~gainst Merrill Lynch & Co., Inc. and its affiliates (the "Merrill Lynch Lawsuit") and may proceed against other entities in ~.f~orts to recover some or all of the Pool's investment losses. The outcome of these lawsuits 'is not certain, but any recovery received by the county would be subject to distribution as stated above. The third and final component of consideration consists of approximatelY $514 million of "Repayment Claims" that represent the final approximately $.10 increment of the deficiency claims asserted by Option A Pool Participants. The Repayment Claims are allowed general unsecured claims in the County's bankruptcy case on account of which the holder is not entitled to receive any payment from the County or out of any assets of the County, whether under a plan of adjustment or otherwise, until the payment in full of all "Senior Claims" against the County and the payment of postpetition interest therein, "Senior Claims" include, among other indebtedness, short-term debt for borrowed money, some trade debt incurred prior to the commencement of the County's bankruptcy case, and certain other indebtedness of the County. On May 23, 1995, the Bankruptcy court determined that the Pool was not eligible for bankruptcy relief because it is not a "municipality" specifically authorized by State law to file for bankruptcy protection and that the Pool's bankruptcy case would be dismissed. All orders made in the Pool's case, including the order approving the Settlement Agreement, will be preserved or otherwise protected by transfer to the County's bankruptcy case. The final eight orders were scheduled for court hearing to approve transfer on July 27, 1995. One-Half Cent Sales Tax Increase Ballot Proposal The County submitted to the voters for election on June 27, 1995, a proposal to increase the County-wide sales tax by one- half cent for up to ten years ("Measure R"). The election was held and Measure R did not pass. Consensus County Recovery Plan .The County submitted to the State Legislature a Consensus County Recovery Plan which provided for the transfer of revenues between certain public agencies in Orange County, the purpose of which was to enable the County, over time, to obtain revenues sufficient to satisfy its obligations under the Settlement Agreement. Both Houses of the State Legislature adopted Assembly Bill 1664, Senate Bill 863, and Senate Bill 1276, the purpose of which was to amend or provide authority under State law to effectuate the Consensus County Recovery Plan. These Bills were signed by the Governor on October 9, 1995, along with Senate Bill 727 which pertains to Los Angeles County. Assembly Bill 1664 authorizes the County to enter into an agreement to finance the lease or lease purchase of County property through the issuance of certificates of participation or lease revenue bonds. Such certificates of participation or lease revenue bonds shall be paid from monies credited to the Motor Vehicle License Fee Account in the Transportation Tax Fund to which the Orange County Transportation Authority ("OCTA") is currently entitled. This Fund would then be reduced by the amount of the payments on the certificates of participation or lease revenue bonds to which the County would otherwise be entitled. The monies of the County in the Motor Vehicle License Fee Account in the Transportation Fund are pledged to all certificates of participation or lease revenue bonds issued by the County in 1996 or 1997, including any obligations issued before 2010 to refund such certificates of participation or lease revenue bonds having a maturity of 20 years or more. In addition, the county may also elect to provide funds to pay such certificates of participation or lease revenue bonds from monies which would otherwise be transmitted by the County pursuant to Section 7204 of the Revenue and Taxation Code (sales and use taxes imposed by the County in excess of 1%). The funds transferred from the Transportation Tax Fund and sales and use taxes to pay for the certificates of participation or lease revenue bonds are authorized to be transferred for a period of 15 years commencing in 1996. The legislation also limits the amount of such taxes which may be transferred during the 15-year period to $38 million per year. The County is required to use these funds to provide satisfaction in full or other consensual treatment of the outstanding and allowed claims of County vendors, employees and holders of outstanding debt of the County and the expenses of administration of the County's bankruptcy case and to perform the County's obligations pursuant to a confirmed plan of adjustment. Senate Bill 863 provides that the Orange County Development Agency shall transfer to the general fund of the County $4 million per year. In addition, the Orange County Flood Control District and Harbors, Beaches and Parks District is to transfer $4 million per year to the County. The County is required to utilize these funds for the purpose of providing satisfaction in full, or other consensual treatment of the outstanding and allowed claims of County vendors, employees and holders of County debt. These funds may also be utilized to pay expenses of administration in the County's bankruptcy case and of the County's obligations pursuant to confirmed plan of adjustment. Senate Bill 1276 provides that it is in'the interest of the State of California and all public debt issuers in the State of California to enable the County of Orange to finance an acceptable plan of adjustment in order to improve the credit standing of all California public debt issuers and to protect the health, safety and welfare of the residents of the County and the State. This Bill also provides a backup plan in the event that the County does not file a plan of adjustment with the Bankruptcy Court by January 1, 1996, the Governor may appoint an individual to serve as a trustee of the County. The appointment may occur at any time after January 1, '1996, until confirmation of the plan. Moreover, if the Governor determines that as of May 1, 1996, or any date thereafter,~.the Parties in the Orange County bankruptcy case have failed to reach substantial agreement on the terms of a plan of adjustment and the timely confirmation of the Plan appears unlikely, the Governor shall appoint a trustee. This legislation also provides for the duties of the trustee with~ regards to the Orange County bankruptcy case. This Bill also provides that $23 million per year that would be allocated to the County for motor vehicle fuel taxes shall be transferred instead to OCTA. This transfer shall end in June, 2013. It is anticipated that the County will file a plan of adjustment with the Bankruptcy Court before January 1, 1996. City cannot currently predict when the County will be able to emerge from the Chapter 9 bankruptcy. The The Authority was not a Pool Participant, and the City, with only $8,000.00 remaining in the Pool, does not expect any material adverse consequences from the losses to the Pool. However, water, sanitary sewer, and fire protection services are provided to property within the Reassessment District by entities which are either governed by the County or are Pool Participants. Furthermore, school facilities and K through 12 public educational programs and services are provided within the Reassessment District by the Tustin Unified School District (the "School District"), which is a Pool Participant. Neither the City nor the Authority can predict the severity of the adverse consequences to either the water, sanitary sewer and fire protection service providers or the School District as a result of the investment losses experienced by the Pool, and neither the City nor the Authority can predict either (1) the degree or duration of any possible curtailment of services normally provided to the property and inhabitants of the Reassessment District by the respective service providers and-the School District or (2) the need for either the serviCe providers or the School District to increase fees or taxes to pay for such services. However, it is possible that such services will be curtailed to a degree or for a period of time or that fees or taxes will be increased to an extent that such curtailment or increases or both may lead to delays in further development of the undeveloped property in the Reassessment District or to decreases in property values or both. Either such delays or such decreases in property values could reduce the willingness or the ability of the property owners in the Reassessment District to pay reassessment installments when due, which could lead to default in the payment~of the principal of or the interest on the Series A'Bonds. ~elays Sn ~em~ttances As a consequence of the Orange County bankruptcy, 'the City has experienced temporary delays in the remittance by the County of certain amounts collected for the City on the County's property tax bills, including installments of assessments related to the Prior Fixed Rate Parcels. However, as of , 1995, all amounts related to property tax bill collections on behalf of the City have been remitted to the City in full, and the March 2, 1995, interest payments to holders of the Prior Fixed Rate Bonds were made on time. The City presently expects that future remittances of such amounts will be made to the City on a timely baSis and in accordance with established procedures for such remittances. THE AUTHORITY The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers Agreement, dated as of April 3, 1995, between the City and the Tustin Community Redevelopment Agency (the "Agreement"). The Agreement was entered into pursuant to Sections 6500 and following of the California Government Code. The Authority is a separate entity, constituting a public instrumentality of the State of California and. was formed for the public purpose of assisting in financing and refinancing projects pursuant to the Bond Law for the benefit of the City. The Authority is governed by a Commission, which is comprised of five members. The members of the City Council of the City constitute the members of the Commission of the Authority. The Authority is specifically granted all of the powers specified in the Bond Law, including but not limited to the power to issue bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The Authority is entitled to exercise the powers common to its members and necessary to accomplish the purposes for which it was formed. These powers include the power to make and enter into contracts; to employ agents and employees; to acquire, construct, manage, maintain and operate buildings, works or improvements; to acquire, hold or dispose of property within the City; and to incur debts, liabilities or obligations. THE CITY The City of Tustin is located in central Orange County, approximately 40 miles southeast of Los Angeles and 80 miles north of .San Diego. The City covers approximately 11.2 square miles and adjoins the cities of Irvine, Orange and Santa Ana. See APPENDIX [ ] hereto for a description of the City and certain economic and demographic information related thereto. CONCLUDING INFORMATION Underwritinq The Series A Bonds are being purchased through negotiation by PaineWebber Incorporated (the ,,Underwriter"). The Underwriter has agreed to purchase the Series A Bonds at an aggregate purchase price of $ . Simultaneously with the purchase of the Series A Bonds by the Underwriter, the Authority has agreed to purchase the Assessment Bonds (95-1) from the City. The Underwriter's obligation to purchase the Series A Bonds is contingent upon the Authority's purchase of the Assessment Bonds (95-1), the approval of certain legal matters by counsel and certain other conditions. The Underwriter is obligated to purchase all of the Series A Bonds if any are purchased. The Underwriter may offer and sell the Series A Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof. The offering prices of the Series A Bonds may'be changed from time to time by the Underwriter. Legal opinion The legal opinions of Jones Hall Hill & White, A Professional Law Corporation, Bond Counsel, approving the validity of the Series A Bonds and the Assessment Bonds (95-1), in substantially the forms set forth as Appendix [ ] hereto, will be made available to purchasers at the time of original delivery. A copy of the legal opinion approving the validity of the Series A Bonds will be provided with each definitive bond. Certain legal matters will be passed upon for the Underwriters by Orrick, Herrington & Sutcliffe and for the Authority and the City by the City Attorney. Tax Matters In the opinion of Jones Hall Hill & White, A Pr6fessional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series A Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth, in the preceding paragraph are subject to the condition that the Authority comply with al1 requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Series A Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Authority has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest-in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series A Bonds. In the.further opinion of Bond Counsel, interest on the Series A Bonds is exempt from California personal income taxes. Owners of the Series A Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Series A Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Series A Bonds other than as expressly described above. No Litiqation There is no proceeding or litigation of any nature now pending to restrain or enjoin the issuance, sale, execution or delivery of the Series A Bonds, or in any way contesting or affecting the validity of the Series A Bonds, the proceedings of the Authority taken with respect to the issuance or sale thereof, the proceedings of the City relating to the issuance and sale to the Authority of the Assessment Bonds (95-1), the pledge or application of any moneys or securities provided for the payment of the Series A Bonds, the existence or powers of the Authority or the title of any Commissioners or officers of the Authority to their respective positions. A certificate of the Authority to this effect will be delivered on the date of delivery of the Series A Bonds. Rating (to come) Financial Advisor Bartle Wells Associates is acting as Financial Advisor to the Authority and the City. The Financial Advisor's services inClude, consulting with and advising the Authority and the City regarding the structure and technical details of the financing, providing the Authority and the City with information regarding municipal bond market conditions, assisting the City and the Authority in bond pricing negotiations with the Underwriter, and attending meetings and hearings at the Authority's or the City's request. Verificat~o~ of Mathematical Computations Upon delivery of the BondS, Grant Thornton LLP will deliver its independent certified public accountants' verification report on the mathematical accuracy of certain computations, contained in schedules provided to them which were prepared on behalf of the Authority, relating to (a) the sufficiency of the anticipated receipts from the securities deposited with the Escrow Agent (the "Escrow Securities") to pay when due the principal whether at maturity or upon prior redemption, interest and redemption premium requirements of the Prior Bonds and, (b) the "yield" on the Escrow Securities and on the Series A Bonds considered by Bond Counsel in connection with the tax opinion rendered by such firm. See "CONCLUDING INFORMATION - Tax Exemption" herein. The report of Grant Thornton LLP will include the statement that the scope of their engagement is limited to verifying the mathematical accuracy of the computations contained in such' schedules provided to them, and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report. Continuinq Disclosure The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the Series A Bonds, and the Authority will not provide any such information. The City has undertaken all responsibilities for any continuing disclosure to Bondholders as described below, and the Authority shall have no liability to the Holders of the Bonds or any other person with respect to such disclosures. The City has covenanted for the benefit of holders and beneficial owners of the Series A Bonds .(1) to provide certain financial information and operating date (the "Annual Report") relating to the City and the property in the Reassessment District not later than eight (8) months after the end of the City's Fiscal Year (which currently would be March 1), commencing with the report for the 1995-96 Fiscal Year, and (2) to provide notices of the occurrence of certain enumerated events, if deemed by the City to be material. The Annual Report will be filed by the Trustee, acting as Dissemination Agent, on behalf of the City, with each Nationally Recognized Municipal Securities information Repository and with each State Repository, if any. The notices of material events will be filed by the Trustee on behalf of the City with the Municipal Securities Rulemaking Board and wi%h each State Repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the Continuing Disclosure Agreement. See "APPENDIX F - Continuing Disclosure Agreement." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b) (5) (the "Rule"). This is the City's first undertaking with respect to the Rule, and the City has not failed to comply in all material respects with any previous undertakings with respect to the Rule to provide annual reports or notices of material events. Miscellaneous Ail of the preceding summaries of the Indenture, the Fiscal Agent Agreement, applicable legislation, agreements and other documents are made subject to the provisions of such documents and legislation and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. This Official Statement does not constitute a contract with the purchasers of the Series A Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement have been authorized by the members of the Commission of the Authority. TUSTIN PUBLIC FINANCING AUTHORITY By Authority Chair APPENDIX A Reassessment Diagram (To Come) RI-,-,.JSESSMENT DIAGRAM "- ' REASSESSMENT DISTRICT 95-1 (TUST1N RANCH) CITY OF TUSTIN ORANG[ COUNTY STATE OF CAUFORNIA i ii SHEET 1 OF 19 ~A~ ~ ~ ~ ... DAY ~ ~ DAY ~ ~ 1~. ~ IS a~ T0 ~ EXACT AM~NT ~ [A~ R~ENT ~ A~T NOTE Ti-II RF.J, SS~S~I[~ITS ['VIDO, ICI~ BY ALL Pf~'"VIOU~.Y LL"V~D AS_~SIdEN1~ AS I~COg1~O IN Tl~ (~FlC[ OF TI4[ Of' I:"JEIU¢ wORKS / OTY ENGaNF. F.R. OTY of' TUSllN. TO ACOU~:~ lroR 11~£ UdPRO~MENTS ~0 K uAOE Ir0~ 1HfS R~.ASS[~:SMEN! DSS11~CT SHALL NOT BE ~JBJ~CT TO SNO't/N ON 1'Ht$ R~.ASS[S~d~NT DIAGRAM. etTERL~C[ tS ~R~llY MAI~ TO ~HE UA~S of I~com) m ~ ~ ~ ~ A~ r~ ANY PAR~ FIL.L'D 11-115 0AY Of t~4,. IN ~ OF'T'IC[ Of THE O1'1' ~ Of ~ C3TY Of 1LISrlN. O~ANG~ COuNtY. CALI~O~'N~A. Ol'~ ~. OTY Of TUS"nN I~C~eDED 11~$ ~ DAY 01r 1994. IN ~ OlrrlC[ Of TN[ De~CIOR Of e~JC wom~ / OTY [NG~EER Of 1~[ QTY Of TUST~. CITY Of I1;STIN ~ 'THIS DAY Of ~ l~'g__ AT ~ HOUR' Of ,,, O°CL,/X~ ~W AT PA~ IN 11~ O~ Of ~ COUNI~f ~Cl01~R Of ~1~[ COUNTY Of (:~AN4~. STAT[ Of CAUFC~aA. COUNTY RECOR00~. CO~TY Of O~ANG~. C~L~0maA NO'/ l0 SCALE REASSE~ENT DISTRICT VICINITY MAP ,MFS ~765 ~e,e ~ Or~e T~e. ~,t~*o. g2590 V~e [~1 6~g-sgg0 FAx ~g0g) 699-~0 RF~-~"~ESSMENT DIAGRAM REASSESSMEN. ~ISTRICT 95-1 (TUSTIN CiTY OF' TUSTIN ORANGE COUNT~ STATE: OF CAUFORNIA RANL SHEET 2 OF 20 REASSESSMENT NUMBER INDEX kSS(SSO~'S RC4SSr~sur-N I PARCEL HU~[R N~8~ NUMBER ~0~ ~RU ~0575 I ~U 7~ ~01 ~RU ~2~ 76 ~ 155 ~20701 ~RV ~20747 1~ "~ 202 ~0~ 20~ ~491 ~RU 5~2~4~7 204 ~ Z~0 6 ~2~4~ ~RU ~254~ 231 ~ 270 ~1 THRU ~ 271 ~ ~1~ 6 5~2~101 ~RU 5~25145 315 ~ 557 ~25201 ~U ~210 ~ ~U ~7 ~2620~ ~RU ~262~ ~2 ~ ~t~ ~27101 ~RU ~271~5 455 ~ ~9~ 7 5~2720~ ~U 5~272~5 ~9~ ~ 532 7 ~28101 ~g ~28129 555 ~ ~1 ~g032102 ~ ~321~ ~41 5~2120 ~4~ 9 ~32122 6~ ~ ,, ~2127 ~ 9 ~21~2 646 ~21~4 ~7 9 ~152 6~ ~109519 649 10 5~1~9f~ ~RV 5~109515 652 ~ ~5~ 10 ~og?ol ~Ru ~1o9751 718 ~ ?60 ~11~1 ?69 ~110~? 771 ~uo?ol ~u ~107~ 77~ ~u ,?g~ ~2 ~n~ol ~u 5ono~ ?g~ ~ ~ ~11~1 THRU ~110970 ~4 ~ g~3 ~0111301 J 934 20 ~111303~ 935 lO ~0~307 ~U ~Q~1~I 9~ ~ ~4~ ~0 L ~111313 941 10 5011160~ ~RU 50111605 . ~44 ~ ~4e 13 ~1~60~ ~RU 501~615 J 949 ~ g~ ~113101 ~U ~011~1~~ 1024 ~ I~ 50116102 ~4 I 1o 50u?~m ~v 50!~?~2e~1 10~ ~ 108! 1 ~tt9101 ~U ~11915~~ 1113 ~ 1164 ~I'~010~ ~U ~1Z0166 ~165 ~ 12}0 15 ~121101 J 1231 ~121103 ~RU ~1211~t 1232 ~ 1235 50121~23 ~u 5012~157 j 1244 ~ I~9 REASSESSMENT NUMBER INDEX ASs~:ss~;'s R~SS[SSM£N1 P&RC~L NUMBCR NUMS~ ~121145 ~ 501211~ 1264 ~U 1265 16 ~121160 ~u ~121162 1277 ~ 1279 ~121164 ~U ~121166 12~ ~U 12Q2 ~121176 ~U ~1~1e0 1287 ~U 1291 16 ~122118 ~U ~122~19 1~ ~u 1~7 22121 1~ 16 ~12212~ 1~ ~122155 I~11 ~122142 ~U ~122145 1313 ~9 I~14 ~122145 131~ ~122152 1517 16 ,,, ~1221 ~ 1520 ~ 6 ~12216~ 1~21 lB ~24510t ~ 322 1 g ~24~12 1323 ~9 ~2102 1~4 ~ , 5~220~ ~u 52~22o2 I~25 ~RU 132~ ~3~01 ~U 525031~ 1327 ~U 1~74 ~2~3201 ~ 52503229 ~375 ~U ~403 52~01 ~ ~2~1~ ~4~ ~V ~4~ 2~0~ 1~ I ? ~2~112 ~U 5~116 1410 ~U 1414 17 5~125 ~V 5~127 141~ ~U 1417 17 ~2~4141 ~U 52~143 1418 ~U 1420 ~2~46 ~U 52504152 14li ~U ~417 17 ~2~154 ~U 525~ ~4~ ~U t4~ 17 52~t58 ~ 525~62 . 1431 ~U 1435 52~5101 ~U 525051~ t 14~ ~RU 1475 17 5~5173 ~V 52505175 [ 147{ ~U 147~ 17 52~5~77 ~V 52505~79 J 1479 ~ ~461 52~519~ ~RU 52~51~ J 1492 ~ 1495 ~2~5198 I 1496 17 ~2~163 ~U ~68 J 1532 ~U 1~7 ~52~7101 ~ ~25071~ I~ ~U 1~70 5~8121 1572 1B 52~I01 ~g 52~14~ 157~ ~ 161~ 5251010~ ~U 5~t0140 1~ ~V 1663 9~25 ~ g~e9 ~S~ ~u ~ g 9~8175 ~ 9~4~1 1~ ~u 2045 5 ~3~4~ ~ g~4 2124 ~ 11~2 20 t342~0 ~ 9~2822g 2270 ~U ~439 10 g3428767 ~u g~Z~O~ 2517 ~u ~553 g g~182 ~U g~193 25~ ~ ~5 ~37111t~ ~U 93711376 2~6 ~U 2B13 3 ~3~3~ ~ 9~3333 2B~4 ~ 29e4 9~t~I ~U 9~224~ ~6 ~U 3613 MFS 28765 5~ne,e ~e~el rle~. v~e (~) 699-~390 FAX Lg0g) 699-~ R ' ~SESSMENT DIAGRAM 'x , REASSESSMENT DISTRICT 9.5-1 (TUST1N RANCH) CITY OF TUST1N ORANGE COUNT( STATE OF CAUFORNIA SMEUT 3 SEE SHEET 4 SEE SHEET 4 OF 20 RF'~'~C~E$SMENT DIAGRAM REASSESSMEN ~ISTRICT 95-1 (TUSTIN RAN,~ CITY or TUSllN ORANGE COUNTY STATE OF CAUFORNIA OF 20 SCALE ; 1' - IOO' BROW~IING AVENUE SEE BELOW SEE SHEET 3 ARAPAHO([ SEE ABOVE -- iii ~ i.,,.'__ .SSESS~ENT DIAGRAIVI ', / REASSESSMENT DISTRICT 95-1 (TUST1N RANCH) CITY OF TUSTIN ORANGE COUNTY STATE or CAUFORNIA SHEET 5 Glr 2 WAY SEE SHEET · 9 · SCULl : I' .f I00' 314 R'~ "SESSMENT DIAGRAM REASSESSMEK .)ISTRICT 95-1 (T1JSTIN RAN, C~TY OF TUSllN O~ANGE COUNTY STAT~ OF CAUFORNIA SHEET 6 OF 20 CAU. E LA ,aA ~ IlrOl)lD _ MFS :8765 S~Q~ :w. ~,t~. SCALE . 1' - 60' 60' N...~SSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) OTY OF TUSllN ORANGE COUNT%' STAT[ OF CAUFORNIA BRO~NG SHEET 7 OF 20 sAR~T0C~ MON11~OTO SEE SHEET pORTAL MFS Munl F~nOnClO! 5~'~1~, Inc. ~8765 ~nqie Oq~ Or~e ~c~o Temecu~o. C~I~,o. g25~ v~. (9~) 699-39~0 tax i F~ ':SESSMENT DIAGRAM REASSESSMEN, DISTRICT 95-1 (TUSTIN CITY OF TUSllN ORANGE COUNTY STAT[ Or CAUFORNIA IRVINE PALE~o IdAR~LINA L SHEET 8 OF iii R~SESSMENT DIAGRAM REASSESSMENT DISTRICT 9.5-1 (TUSTIN ~TY OF TUS'nN ORANGE COUNTY , STATE OF CAUFORNIA .SHEET 20 ALVA~ADO Om~[ MFS Muft, r~onc~al Sen.eec. Inc. T~o. C~,*om,a. g25~ v~e (~} 699-3990 F*x (9~) 699-~ LAGJER S4;AL£ : ~' - ~00' Nt'w R~.J, SSES4J, dI~T ~ IK. ASSi:S~T ~ Cae ~ ~I.4EX"T: 136-1,4e tSe4,.-teOe ~517-2'u, S3 REASSESSMEN. SESSMENT DIAGRAM DISTRICT 95-1 (TUSTIN aT( Or TUSllN ORANGE COUNTY STATE OF CAUFORNIA ~l:j: JNJJ'T 1t / SHL"E:T 10 OF' 2O ~oo' 200' O' " SHEET 11OF' I:~SESSMENT DIAGRAM ' REASSESSMENT DISTRICT 95-1 (TUSTIN RAN~ CITY OF TUSTIN ORANGE COU N 1'~'. STATE OF CAUFORNIA TUS~N RANCH ROAD ~ERA REASSES NT DIAGRAM REASSESSMENT DISTk,..F g5-1 (TUSTIN RANCH) CITY OF TUSllN ORANGE COUNTY · STATE OF CAUFORNIA , , SHEET , /./'/ 12 OF 20 MFS i~Jn! ~'~no~c,ol ~,ennce4~. Inc. ~c~o ~o~ :~ecu,o. C~t~,o. g25~0 v~e (9~) 699-3990FAX (9~) 8995 ~ECEUB[~ 1994 N~SESSMENT DIAGRAM , .... · REASSESSMENT DIS~ICT g5-1 (~S~N RANCH) ~TY OF TUS~N ORANGE COUN~ STATE OF CAUFORNIA iii i ~££T 15 OF 20 75' O' 150' i MFS R REASSESSMEN. 'SESSMENT DIAGRAM OISTRICT 95-1 (TUSTIN CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA RAF~K...~ SHEET l~ OF 20 LECD, ID u~, F~o~ ~. inc. T~eculo. C~,tom,o. g2~ ~NT 1~)0' 9t' O' __ SCALE. ~'., 150' F~SESSMENT DIAGRAM ., REASSESSMENT DISTRICT 95-1 (TUSTIN RAN~) OI'Y OF TUST1N ORANGE COUNTY STATE OF CALIFORNIA SHEET 15 OF 2O MFS ~o. ~,~,o. 92590 ~D95 ~MBE~ ~994 Nil IG'CASS~SSId~IT #UW[W 1113-t230 , SCALE . 1' - 100' R SESSMENT DIAGRAM REASSESSMEN, DISTRICT g5-1 (TUSTIN CITY OF TUS'flN OR ANCtr COUNTY STAT~ OF' CAUFORNIA 11}o' 50' o' SCALE : 1' ". I00' UORF~)W ORIVE TUSTIN RANCH ROAD LECD4D IK.,~.~2~T I,d~II~S C~ 11..S S~: 1231-~321 ~2S6S SHEET 16 OF' 20  tO0' 50' O' 100' __ ~: I' - I00' F~SSESSMENT DIAGRAM REASSESSMENT DISTRICT 9.5-1 (TUSTIN RANCH) QTY OF TUST1N ORANGE COUNTY STATE OF CAUFORNIA SHEET 17 OF 20 I.[0ENO DAVIS ORIV/ I, YAy R .SESSMENT DIAGRAM REASSESSIdEN~ DISTRICT 95-1 (TUST1N CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA SHEET 1~ OF 20 DAVIS DRIVE PLUMB DRIVE 133 0 ri1 0 .~CCEUBC!W ~994 40' O' $~L[ : I' . RL--~.SSESSMEN T DIAGRAM - - REASSESSMENT DISTRICT 95-1 (TUSTIN RANC~i) OTY OF TUS~N ORANGE COUNTY STATE OF CALIFORNIA SHEET 19 OF 20 TllaMONS FINLEY WATSON IOO' MFS b4~.,, lr~,~CmClO~ c~elr~ces. Inc. ~c~d ~o~ '~e (~0~) ~99-~3~0 tax (909) 699-~0 x RL SESSMENT DIAGRAM REASSESSMENT DISTRICT OTY OF TUS~N ORANGE COgN Tg' STAI'I~ Or CAUFORNIA SHEET 20 OF 20  I00' $0' O' __ APPENDIX B Summary of Indenture and Fiscal Agent Agreement (To Come) APPENDIX C The City of Tustin (To Come) APPENDIX D Insurance Policy Specimen (To Come) APPENDIX 'E Forms of Bond Counsel Opinions (To Come) I r ; APPENDIX F Continuing Disclosure Agreement (To Come) gP2-42058.~ V 40879-y;-s$4-1