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Home My WebLink AboutRDA TOWN CTR REDEV 05-20-91RDA N0. S 5-20-91 uc.NDA, Inter-Com )ATE: MAY 20, 19 91 TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: TOWN CENTER AREA REDEVELOPMENT PROJECT FINANCING TEAM SUBJECT: TOWN CENTER REDEVELOPMENT PROJECT TAX ALLOCATION BONDS, SERIES 1991 RECOMMENDATION It is recommended that the Agency: 1. Adopt Resolution No. Q11-10 authorizing the issuance of $13,800,000 of principal amount of Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991. 2. Adopt Resolution Not`�A-11 authorizing invitation of bids for purchase of Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991; approving the preliminary official statement, the notice inviting bids and official form of bid and authorizing the publication of the notice of intention to sell bonds. DISCUSSION At the Agency's regular meeting of March 4, 1991, the Agency approved a proposed financing plan for the Town Center Redevelopment Project and authorized staff to proceed with additional steps toward issuance of 1991 tax allocation bonds. Staff have been proceeding with steps necessary for issuance of the new bonds and are currently on a schedule that will bring bonds to market in late June with anticipated award of bids in late July. Attached are the following documents to be considered by the Agency at its May 20th meeting. 1. Resolution No ��91-10 authorizing the issuance of $13,800,000 in Tax Allocation Bonds. 2. Resolution No`` 9P1-11 authorizing the invitation of bids for the Agency's Town Center Redevelopment Project Tax Allocation Bonds, 1991, and approving certain attached documents including the Preliminary Official Statement. The attached documents constitute action required to be taken by the Agency in order to offer the bonds for public sale. - City Council Report Town Center Tax Allocation Bonds May 20, 1991 Page 2 The Agency's financial consultant, Stone Youngberg, ,current dicated that projected tax revenue growth scenarios an conditions may necessitate future amendments to an es the necessary oto currently before the Agency to incorporate reflect terms of bond insurance and to ensure the Agency receives maximum flexibility in the use of its' bond proceeds in he event the event debt service coverage falls below desired leve such amendments are necessary they will be transmitted to the Agency for their action prior to award of bond sans Representatives from Stone Youngberg, the financial consultant, and Mudge Rose Guthrie Alexander and Ferdon, Co., bond available on May 20th to answer any questions about the attached documents. Ronald Nault Finance Director CAS:kbc\tcbond.cas Christine A. Shingle Assistant City Manag zr TUSTIN COMMUNITY REDEVELOPMENT AGENCY RESOLUTION NO. RDA 91-10 Resolution of the Tustin Community Redevelopment Agency Authorizing the Issuance of $13,800,000 Principal Amount of Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991 )56\94691.6\BoodRa7. doc RESOLUTION NO. RDA 91-10, ADOPTED MAY 20, 1991 RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENTRNCIPAL AMOUNT OF TOWN CENTER AREA AUTHORIZING THE ISSUANCE OF REDEVELOPMENT PROJECT TAB ALLOCATION BONDS, SERIES 1991 WHEREAS, the Tustin Community RedevelopmentAgency duly ey is a redevelopment agency, a public body, corporate and politic, created, established and authorized to transact, d pursuant to the provisions business cof the exercise powers under an Community Redevelopment Law of the State of California, including the power to issue bonds for any of its corporate purposes; WHEREAS, a redevelopment plan, and amendmenin ts sthen tof for the Town Center Area edebeenv adopted elopment n Project compliance with all Tustin, California, have requirements of law; WHEREAS, the Agency previously issued $8,500,000 of its ted tax allocation bonds pursuant to Resoluti8212•adpted on 15, November October 20, 1982, and Resolution No. in the financing RDA -n of the 15, 1982, for the purpose of aiding g Project, said bonds having been designated "Tustin comm nTax ity Redevelopment Agency Town Center Area Redevelopmentpro] ectAllocation Bonds, Series 1982"; WHEREAS, the Agency subsequently issued $8,060r000 of f its tax allocation bonds for the pure of refunding RDA 878 011 -8, adopted on aid Series 1982 Bonds, pursuant to ResolutionNo August 3 1987, said bonds having been designated "Tustin o ommu nTax Rity edevelopment Agency A g ' Town Center Area Redevelopment Project Allocation Refunding Bonds, Series 1987"; and WHEREAS, the Agency deems it necessary and desirable to finance additional costs of the Project by issuing additional tax allocation bonds for such purpose; NOW, THEREFORE, BE IT RESOLVED by the Tustin Community Redevelopment Agency, as follows: ARTICLE I AUTHORIZATION OF SERIES 1991 BONDS; DEFINITIONS SECTION 1.01. Authorization. The Agency has reviewed all heretofore taken and has found, as a result fsuc proceedings that allthings, review, and hereby finds and determines, 1 :A56\94691.6\BoodRes7.doc conditions and acts required by law to exist, happen and be performed precedent to and in connection with the issuance of the Series 1991 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Agency is now duly empowered, pursuant to each and every requirement of law, to issue the Series 1991 Bonds in the manner and form provided in this Resolution. SECTION 1.02. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.02 shall, for all purposes of this Resolution, of any resolution supplemental hereto, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. Accreted Value "Accreted Value" means, with respect to the Series 1991 Bonds, the Initial Amount thereof plus the interest accrued thereon to such date of calculation, compounded from the date of .initial delivery at the yeild of maturity thereof on each May 1 and November 1 assuming in any year that such Accreted Value increses in equal daily amounts on the basis of _a year of 360 days composed of twelve thirty -day months. For purposes of the Series 1991 Bonds, the maturity amount is the amount of Accreted Value at maturity. - Agency "Agency" means the Tustin Community Redevelopment Agency, a public body, corporate and politic, established under the Law. Annual Debt Service "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest payable on the Outstanding Series 1991 Bonds and Parity Bonds in such Bond Year, assuming that the Outstanding Serial Series 1991 Bonds and Serial Parity Bonds are retired as scheduled and that the Outstanding Term Series 1991 Bonds and Term Parity Bonds are redeemed from minimum sinking account payments as scheduled, (2) the principal amount of the Outstanding Serial Series 1991 Bonds and Serial Parity Bonds payable by their terms in such Bond Year, and (3) the principal amount of the Outstanding Term Series 1991 Bonds and Term Parity Bonds scheduled to be paid or called and redeemed from minimum sinking account payments in such Bond Year, excluding the redemption premiums, if any, thereon. Bond Counsel "Bond Counsel" means an attorney-at-law, or a firm of such attorneys, of nationally recognized standing in matters pertaining to tax-exempt nature of interest on obligations issued by states and their political subdivisions duly admitted to the practice of 5056\94691.6\BoodRes7.doc 2 law before the highest court of any state of the United States of America. Bond Insurance Policy "Bond Insurance Policy" means the municipal bond insurance policy to be issued by the Bond Insurer with respect to the Series 1991 Bonds. Bond Insurer "Bond Insurer" means Bond Year "Bond Year" means the twelve-month period commencing with July 1 of any year and ending June 30 of the next succeeding year and each twelve-month period thereafter. Bonds "Bonds" means the Series 1991 Bonds and the Series 1987 Bonds, collectively. Business Day "Business Day" means a day of the year, other than Saturday or Sunday, on which the Fiscal Agent and banks or trust companies in New York, New York, or in Los Angeles, California are not authorized or required to remain closed. Chairman "Chairman" means the chairman of the Agency appointed pursuant to Section 33113 of the Law, or other duly appointed officer of the Agency authorized by the Agency by resolution or by-law to perform the functions of the chairman in the event of the chairman's absence or disqualification. Code "Code".means the Internal Revenue Code of 1986, as amended. Costs of Issuance "Costs of Issuance" means all expenses of the Agency incurred in connection with the authorization, issuance and sale of the Series 1991 Bonds (including without limitation legal and consultant fees, rating agency fees, bond insurance premiums, initial Fiscal Agent fees and charges, costs of reproducing and binding documents and printing and advertising expenses). ,O56\94691.6\BoWRa7.doc 3 Depository "Depository" means the securities depository acting as Depository pursuant to Section 2.16. DTC "DTC" means the Depository Trust Company, New York, New York, and its successors and Assigns. Federal Securities "Federal Securities" means (1) United States or those for whi h the bonds, bills or certificates of indebtedness faith and credit of the United States are pledged for the payment of principal and interest, including United States reasuryal (book entry) certificates, notes and bonds, State a nment Series; and (2) obligations issued by banks for cooperatives, federal land banks, federal intermediate credit rdbandsthederal home Tennessee loan banks, the Federal Home Loan Bank Valley Authority, all as and to the extent that s ch obligations are eligible for the legal investment of Agency funds. Financial Newspaper "Financial Newspaper" means The Wali Street Journal or The Bond Buyer or any other newspaper or journal printed in the English Angeles, language publishing financial news, circulated in Los Ang , California, and in the same or similar newspaper or selected real of the general circulation in New York, New York, and Fiscal Agent, whose decision shall be final and conclusive. Fiscal Agent "Fiscal Agent" means its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01. Fiscal Year "Fiscal Year" means any twelve-month period extending from July 1 in one calendar year to June 30 of the th succeeding hcalendar year, both inclusive, or any other twelve-month pe selected and designated by the Agency as its official fiscal year period. Independent Certified Public Accountant "Independent Certified Public Accountant" means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of 4 >056\94691.6\BoWRa7.doc the State of California, appointed by the Agency, and who, or each of whom: (1) is in fact independent and not under domination of the Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and (3 ) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. Independent Financial Consultant "Independent Financial Consultant" means any financial consultant or firm of such consultants appointed by the Agency, and who, or each of whom: (1) is in fact independent and not under domination of this Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and (3 ) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. Independent Real Estate Consultant "Independent Real Estate Consultant" means any real estate consultant or firm of such consultants appointed by the Agency, and who, or each of whom: (1) is in fact independent and not under domination of the Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and (3 ) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. Interest Payment Date "Interest Payment Date" means May 1 and November 1 of each year, commencing May 1, 1992. 056\94691.6\BoodRa7.doc 5 Initial Amount "Initial Amount" means, with respect to the Series 1991 Capital Appreciation Bonds, the initial offering price thereof, which represents the principal amount thereof , and, with respect to the Series 1991 Current Interest Bonds, the principal amount thereof. Law "Law" means the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California, as heretofore or hereafter amended and supplemented, and Article 11, Chapter 3, Part 1, Division 2, Title 5 of the Government Code of the State of California, as heretofore or hereafter amended and supplemented. Maximum Annual Debt Service "Maximum Annual Debt Service" means, as of any date of computation the largest Annual Debt Service for the Bond Year of such computation or any Bond Year thereafter. Nominee "Nominee" means the nominee of DTC, which may be DTC, as - determined from time pursuant to Section 2.12. Orange County Assessor "Orange County Assessor" means -the person who holds the office designated Orange County Assessor from time to time, or one of his duly appointed deputies, or any person or persons performing sub- stantially the same duties in the event said office. is ever abolished or changed. Orange County Auditor -Controller "Orange County Auditor -Controller" means the person who holds the office designated Orange County Auditor -Controller from time to time, or one of his duly appointed deputies, or any person or persons performing substantially the same duties in the event such office is ever abolished or changed. Outstanding "Outstanding," when used as of any particular time with reference to the Series 1991 Bonds, means (subject to the provisions of Section 8.04) all Series 1991 Bonds except: 056\94691.6\BoodR=7.doc 6 (1) Series 1991 Bonds theretofore thecanceled Fiscal Agent for Fiscal Agent or surrendered to cancellation; ` (2) Series 1991 Bonds paid or deemed thave d been paid within the meaning of Section 10.03; (3 ) Series 1991 Bonds in lieu of or Bonds n substshall shave nfor been which other Series 1991 Bo authorized, executed, issued and Resolutionre or y the any Agency pursuant to the Supplemental Resolution. Ow "Owner" means any person who shall be the registered owner of any Outstanding Series 1991 Bond. Parity Bonds "Parity Bonds" means the Series 1987 Bonds and any ax allocation bonds hereafter issued by the Agency onwhich a parity with the payable out of the Pledged Tax Revenues and hich rank Series 1991 Bonds. Pledged Tax Revenues "Pledged Tax Revenues" means, that portion of the first Tax Revenues received by the Agency in each Bond Year equal to the Annual Debt Service for such Bond Year in a the Principal Account any amounts then on deposit in the Interest Account and i provided for in Section 5.02) plus an amount, if any, necessary to maintain the Reserve Requirement. Principal Payment Date "Principal Payment Date" means November 1 of each year, commencing November 11 19_- Pro! 9. Pro! ect "Project" means the undertaking of the Agency pursuant to the Redevelopment Plan and the Law of the Town Center Area Redevelopment Project. Project Area "Project Area" means the Town Center Area Redevelopment Project area described in the Redevelopment Plan. 056\94691.6\BoodRea7.doc 7 Redevelopment Plan "Redevelopment Plan" means the Redevelopment Plan for the Town Center Area Redevelopment Project, approved by ordinance No. 701, enacted by the City Council of the City of Tustin on November 22, 1976, as amended by Ordinance No. 855, enacted by the City Council of the City of Tustin on September 81 1981, and Ordinance No. 1021, enacted by the City Council of the City of Tustin on March 20, 1989, together with any amendments thereof hereafter duly authorized pursuant to the Law. Report "Report" means a document in writing signed by an Independent Financial Consultant or an Independent Real Estate Consultant and including: ' (1) a statement that the person or f irm making or giving such Report has read the pertinent provisions of the Resolution to which such Report relates; (2) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; (3) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report. Reserve Reauirement "Reserve Requirement" means, as of any date of calculation, an amount equal to the least of (a) Maximum Annual Debt Service, (b) 125% of average Annual Debt Service and (c) 10% of the proceeds of the Series 1991 Bonds and Parity Bonds. Resolution "Resolution" means this Resolution, adopted by the Agency under the Law, as originally adopted or as it may be amended or supplemented by any Supplemental Resolution adopted pursuant to the provisions herein. Serial Series 1991 Bonds "Serial Series 1991 Bonds" means Series 1991 Bonds not subject to mandatory call prior to maturity. ?56\94691.6\BoodRa7.doc 8 Serial Parity Bonds "Serial Parity Bonds" means Parity Bonds not subject to mandatory call prior to maturity. Series 1987 Bond Resolution "Series 1987 Bond Resolution" means Resolution No. RDA 87-8, adopted by the Agency on August 3, 1987. Series 1987 Bonds "Series 1987 Bonds" means the Tustin Community Redevelopment Agency Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987. Series 1991 Bonds "Series 1991 Bonds" means the Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991, authorized by this Resolution. Series 1991 Capital Appreciation Bonds "Series 1991 Capital Appreciation Bonds" means Series 1991 Bonds, the interest at which accretes over time and is payable only at the maturity or earlier redemption thereof. Series 1991 Current Interest Bonds "Series 1991 Current Interest Bonds" means Series 1991 Bonds which bear interest payable on each Interest Payment Date. Special State Subventions Special State Subventions "Special State Subventions" means reimbursement payments made by the state to the redevelopment agencies to compensate the agencies for the loss of business inventory tax revenues. Supplemental Resolution "Supplemental Resolution" or "supplemental resolution" means any resolution then in full force and effect which has been duly adopted by the Agency under the Law at a meeting of the Agency duly convened and held, at which a quorum was present and acted thereon, amendatory of or supplemental to this Resolution; but only if and to the extent that such Supplemental Resolution is specifically authorized hereunder. D56\%01.6\BondPtm7.doc 9 Tax Revenues "Tax Revenues" means that portion of taxes levied upon taxable property in the Project Area annually allocated to the Agency, and paid into a special fund of the Agency pursuant to Article 6 of Chapter 6 ( commencing with Section 3 3 67 0 ) of the Law and Section 16 of Article XVI of the Constitution of the State of California, and as provided in the Redevelopment Plan, including all payments and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, but excluding tax increment revenues required by law to be deposited in a low and moderate income housing fund and also excluding to the extent required by the Law, Special State Subventions and subject, in all respects, to any limitation set forth in the Redevelopment Plan. Term Series 1991 Bonds "Term Series 1991 Bonds" means Series 1991 Bonds which are subject to mandatory call prior to maturity. Term Parity Bonds "Term Parity Bonds" means Parity Bonds which are subject to mandatory call prior to maturity. Treasurer "Treasurer" means the officer who is then performing the functions of Treasurer of the Agency. Written Request of the Agency "Written Request of the Agency" means an instrument in writing signed by the Chairman, the Executive Director or any other officer of the Agency duly authorized by the Agency for that purpose and by the Secretary of the Agency, with the seal of the Agency affixed. SECTION 1.03. Articles, Sections. All references herein to "Articles,," "Sections" and other subdivisions are to the corresponding Articles,Sectionsor subdivisions of this �� Resolution, and the words herein, �� hereof, hereunder�� and other words of similar import refer to this Resolution as a whole and not to any particular Article, Section or subdivision herein. SECTION 1.04. Equal Security. In consideration of the acceptance of the Series 1991 Bonds and Parity Bonds by those who shall hold the same from time to time, this Resolution shall be deemed to be and shall constitute a contract between the Agency and the Owners from time to time of the Series 1991 Bonds and any Parity Bonds, and the covenants and agreements herein set forth to be performed on behalf of the Agency shall be for the equal and ?56\94691.6\BoWRm7.doc 10 proportionate benefit, security and protection of all Owners of the Series 1991 Bonds and Parity Bonds without preference, priority or distinction as to security or otherwise of any of b the eason x1991 Bonds and Parity Bonds over anyof ale, oof the others of the execution and delivery number or date thereof or the t thereof, or otherwise forany cause whatsoever, except as expressly provided therein or herein. ARTICLE II THE SERIES 1991 BONDS SECTION 2.01. Authorization. The Series 1991 Bonds are hereby authorized to be issued by the Agency under and subPlaject and the terms of the Resolution, the Redevelopment purpose of Constitution and laws of the State f the Project. California for a Resolution financing a portion of the cost of of constitutes a continuing agreement with the Own rs of all secure the Series 1991 Bonds issued hereunder and then outstanding and the full and final payment of principal and premium and f delivered the interest on all Series 1991 Bonds ex provisions and hereunder, subject to the covenants, agreements, conditions herein contained. SECTION 2.02. Description of Series 1991 Bonds. The Series 1991 Bonds shall be designated "Town Center Areaa ld v elopin meat Project Tax Allocation Bonds, Series 199111 and the eries 1991 Current Interest principal amount of $13,800,000. The S Bonds shall be dated July 1, 1991 and Series 1991 Capital Appreciation Bonds shall be dated the date of deli in the discretion ofery thereof. The Series 1991 Bonds shall be numbered Bond shall bear interest cal Agent. Each Series 1991 Current Interest from the Interest Payment Date next preceding the date tf the authentication thereof unless it is registered during period commencing on the sixteenth day of the month precedingent ate n interest erest Payment Date and ending on such Interestnterest Payment Date, or event it shall bear interest from such case unless it is registered on or before April 15, 1992, in whicheverf that it shall bear interest from July 1, 1991; provide, if , at the time of authentication of any Series es 1991 h Seriinterest is in default on outstanding Series 1991 Bonds, s 991 Current Interest Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or ads ailable for payment on the Outstanding Series 1991 Bonds. roc Seeles date 91 of Capital Appreciation Bonds shall accrete interest f delivery thereof and no payment of principal or interest shall be made respect to the Series 1991 Capital Appreciation Bonds prior to the maturity or earlier redemption thereof. The Series o 1991 Bonds shall be issued only as fully registered with denomination of $5,000 or any integral multipe thereof,, d $5 0,00 per respect to the Series 1991 Current Interest Bonds, 11 ,056\94691.6\BoodRea7.doc final maturity amount or any integral multiple thereof, with respect to the Series 1991 Capital Appreciation Bonds, and shall mature on the dates and in the principal amounts, and shall bear or accrete interest, based on a year composed of twelve thirty -day months, payable or compounded semiannually on May 1 and November 11 commencing May 1, 1992 at the respective rates per annum, shown below: Maturity (November 1) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Principal Interest Accreted Amount Rate Value Each Series 1991 Bond shall bear or accrete interest until the principal sum thereof has been paid; provided, however, that if at the maturity date of any Series 1991 Bond, or if the same has been duly called for redemption then at the date fixed for redemption, funds are available for the payment or redemption thereof in full accordance with the terms of this Resolution, said Series 1991 Bond shall then cease to bear or accrete interest. SECTION 2.03. Place of Payment. The principal or redemption price of the Series 1991 Bonds shall be payable in lawful money of the United States of America upon surrender thereof at the principal corporate trust office of the Fiscal Agent in Los Angeles, California. Payment of the interest on any Series 1991 ',056\94691.6\BoodP.w7.doc .12 Bond shall be made to the person whose name appears on the bond registration books of the Fiscal Agent, the registrar for the Series 1991 Bonds, as the registered owner thereof as of the 15th day of the month immediately preceding an Interest maiPled ent t Date, such interest to be paid by check or such registered owner at his address as it appears on such registration books. SECTION 2.04. Form of Series 1991Bonds. The Series 1991 Bonds, including the Fiscal Agent's certificate of authentication and registration, shall be substantially in the form set forth in Exhibit A annexed hereto, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Resolution. SECTION 2.05. Execution of Series 1991 Bonds. The Series 1991 Bonds shall be signed on behalf of the Agency by its Chairman and Treasurer by their manual or facsimile signatures, and the seal of the Agency shall be impressed, imprinted or reproduced thereon. If any officer whose signature appears onany SeriesSeries 19911Bonds tothe ceases to be such officer before delivery of the purchaser, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Series 1991 Bonds to the purchaser. Any Series 1991 Bonsmay be s at signedthe and attested on behalf of the Agency by such person ual date of the execution of such Series 1991 Bond shall be the proper officers of the Agency although on the date of such Series 1991 Bond any such person shall not have been such officer of the Agency. Only such of the Series 1991 Bonds as shall bear thereon a certificate of authentication and registration in the form set forth in Exhibit A hereto, executed and datedb the Fiscal or entitled to Agent, shall be valid or obligatory for any purpose the benefits of the Resolution, and such certificateies 199th Fiscal Agent shall be conclusive evidence that the S so registered have been duly authenticated, registered and delivered hereunder and are entitled to the benefits of this Resolution. SECTION 2.06. Transfer of Series 1991 Bonds. Any Series 1991 Bond may, in accordance with its terms be transferred, upon the � books required to be kept pursuant to the provisions of Section 2.08 , by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Series 1991 Bond for cancellation, accompanied by delivery oa written instrument of transfer in a form approved by the Fiscal Agent, duly executed. Whenever any Series 1991 Bond or Series 1991 Bonds shall be surrendered for transfer, the Agency shall execute and the Fiscal Agent shall deliver a new Series 1991 Bond or Series 1991 Bonds, for like aggregate principal amount of the same maturity. 056\%01.6\BoodRa7.aoc 13 be made No transfers of Series 1991 Bonds, shall be requiredthe to during the period established beorlafter ascal eSeries 1991 Bond has of Series 1991 Bonds for redemption the been selected for redemption.The Fiscal Agent shall require 191 payment by the Owner requesting the transfer of ySeries Bond of any tax or other governmental charge required to be paid with respect to such transfer. SECTION 2.07. Exchange of Series 1991 Bonds. Series 1991 Bonds may be exchanged at the principal office of the Fiscal Agent for a like aggregate principal amount of Series1991 Bonds of other authorized denominations of the same maturity. The Fiscal geAgent shall require the payment by the Owner requesting such any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Series 1991 Bonds, shall be required the to be made during the period establishedbn orFiscalAgent aeSeries 1991 Bond has of Series 1991 Bonds for redemption been selected for redemption. SECTION 2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its principal corporate trust office in Los Angeles, California, sufficient books for the registration and transfer of the Series 1991 Bonds, which shall be open inspection by the Agency at reasonable times during regular business hours; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it or tray prescribe, register or transfer or cause to be registered said books, Series 1991 Bonds as hereinbefore provided. SECTION 2.09. Ownership of Series 1991 Bonds. The person in whose name any Series 1991 Bond shall be registered 1 h deemed ed and regarded as the absolute Owner thereof for al purposes, payment of or on account of the principal of, premium, if any, and interest or Accreted Value on, any such Series 1991 Bond, shall be made only to or upon the order of the Owner thereof effectual or islegal representative. All such payments shall be valid a satisfy and discharge the liability upon such Series 1991 1 Bono including the interest thereon to the extent of the sum paid. SECTION 2.10. Temporary Series 1991 Bonds. The Series 1991 Bonds may be initially issued in temporary form exchangeable for definitive Series 1991 Bonds when ready for delivery. The temporary Series 1991 Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Agency and may . contain such reference to any of the provisionsof this Bond Resolution as may be appropriate. Every temporary Series shall be executed by the Agency upon thesame conditions and in substantially the same manner as th1definitive 1991 Bonds Series it will execute If the Agency issues temporary Ser 14 6056\94691.6\BoodRes7.doc and furnish definitive Series 1991 Bonds without delay, and thereupon the temporary Series 1991 Bonds shall be surrendered, for cancellation, in exchange therefor at the principal corporate trust office of the Fiscal Agent in Los Angeles, California, and the Fiscal Agent shall deliver in exchange for such temporary Series 1991 Bonds an equal aggregate principal amount of definitive Series 1991 Bonds of authorized denominations. Until so exchanged, the temporary Series 1991 Bonds shall be entitled to the same benefits pursuant to this .Resolution as definitive Series 1991 Bonds authenticated and delivered hereunder. SECTION 2.11. Series 1991 Bonds Mutilated, Lost, Destroyed or Stolen. If any Series 1991 Bond shall become mutilated the Agency, at the expense of the owner of said Series 1991 Bond, shall execute, and the Fiscal Agent shall thereupon deliver, a new Series 1991 Bond of like tenor and amount in exchange and substitution for the Series 1991 Bond so mutilated, but only upon surrender to the Fiscal Agent of the Series 1991 Bond so mutilated. Every mutilated Series 1991 Bond so surrendered to the Fiscal Agent shall be canceled by it and delivered to, or upon the order of, the Agency. If any Series 1991 Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Agency and the Fiscal Agent and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given, the Agency, at the expense of the owner, shall execute, and the Fiscal Agent shall thereupon deliver, a new Series 1991 Bond of like tenor and amount in lieu of and in substitution for the Series 1991 Bond so lost, destroyed or stolen. The Agency may require payment of a sum not exceeding the actual cost of preparing each new Series 1991 Bond issued under this Section and of the expenses which may be incurred by the Agency and the Fiscal Agent in the premises. Any Series 1991 Bond issued under the provisions of this Section in lieu of any Series 1991 Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Agency whether or not the Series 1991 Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Resolution with all other series 1991 Bonds and Parity Bonds issued pursuant to this Resolution. SECTION 2.12. Book -Entry System. The Series 1991 Bonds shall be initially issued in the form of a separate single fully registered Series 1991 Bond (which may be typewritten) for each of the maturities of the Series 1991 Bonds. Upon initial execution and delivery, the ownership of each such Series 1991 Bond shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.14 hereof , all of the Outstanding Series 1991 Bonds shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee. )56\94691.6\BoWRa7.doc 15 With respect to Series 1991 Bonds registered in the registration books kept by the Fiscal Agent in the name of the Nominee, the Agency and the Fiscal Agent shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in the Series 1991 Bonds. Without limiting the immediately preceding sentence, the Agency and the Fiscal Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Series 1991 Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any notice with respect to the Series 1991 Bonds, including any notice redemption, (iii) the selection by the Depository and its Participants of the beneficial interest in the Series 1991 Bonds to be redeemed in the event the Series 1991 Bonds are redeemed in part, or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any amount with respect to principal of , premium, if any, or interest or Accreted Value on the Series 1991 Bonds. The Agent and the Fiscal Agent may treat and consider the Person in whose name each Series 1991 Bond is registered in the registration books kept by the Fiscal Agent as the absolute owner of such Series 1991 Bond for the purpose of payment of principal, premium and interest or Accreted Value with respect to such Series 1991 Bond, for the purpose of giving notices of redemption and other matters with respect to such Series 1991 Bond, for the purpose of registering transfers with respect to such Series 1991 Bond, and for all other purposes whatsoever. The Fiscal Agent shall pay all principal of, premium, if any, and interest or Accreted Value with respect to the Series 1991 Bonds only to or upon the order of the respective Owners, as shown in the registration books keptby the Fiscal Agent, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Agency's obligations with respect to payment of principal of, premium, if any, and interest or Accreted Value on the Series 1991 Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Fiscal Agent, shall receive a Series 1991 Bond evidencing the obligation of the Fiscal Agent to make payments of principal, premium, if any, and interest or Accreted Value pursuant to this Resolution. Upon delivery by the Depository to the Owner, the Fiscal Agent and the Agency of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee the word Nominee in this Resolution shall refer to such new nominee of the Depository. SECTION 2.13. Representation Letter. In order to qualify the Series 1991 Bonds for the Depository's book -entry system, the Treasurer or a Responsible officer is hereby authorized to execute from time to time and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the 456\94691.6\BoodRea7.doc 16 Series 1991 Bonds (the "Representation Letter"). The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.12 or in any other way impose upon the Agency or the Fiscal Agent any obligation whatsoever with respect to the Persons having interest in the Series 1991 Bonds other than the Owners, as shown on the registration books kept by the Fiscal Agent. In the written acceptance of the Fiscal Agent, such Fiscal Agent shall agree to take all actions necessary for all representations of the Agency in the Representation Letter with respect to the Fiscal Agent to at all times be complied with. In addition to the execution and delivery of the Representation Letter, the Treasurer or a Responsible officer is hereby authorized to take any other actions, not inconsistent with this Resolution, to qualify the Series 1991 Bonds for the Depository's book -entry program. SECTION 2.14. Transfer Outside Book -Entry System. In the event (i) the Depository determines not to continue to act as securities depository for the Series 1991 Bonds, or ( ii) the Agency determines that the Depository shall no longer so act, then the Agency will discontinue the book -entry system with the Depository provided that in no event may the Agency or the Depository discontinue the book -entry system (i) during the period from the 15th day of the month immediately preceding an Interest Payment Date to such Interest Payment Date, or ( ii) during the 15 days next preceding the date of mailing and publication of a notice of redemption. If the Agency fails to identify another qualified securities depository to replace the Depository or if the Agency determines that the interests of the Owners may be adversely affected if the book -entry system in continued, then the Agency shall issue authenticate and delivery the Replacement Series 1991 Bonds. Replacement Series 1991 Bonds will be transferable only by presentation and surrender to the Agency or an agent of the Agency to be designated in the Replacement Series 1991 Bonds, together with an assignment duly executed by the Owner of the Replacement Series 1991 Bond or by such Owner's representative in form satisfactory to the Agency, or any agent of the Agency, and containing information required by the Agency in order to effect such transfer. SECTION 2.15. Payments to the Nominee. Notwithstanding any other provisions of this Resolution to the contrary, so long as any Series 1991 Bond is registered in the name of the Nominee, all payments with respect to principal, of, premium, if any, and interest or Accreted Value on such Series 1991 Bond and all notices with respect to such Series 1991 Bonds shall be made and give, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository and agreed upon by the Fiscal Agent. 056\94691.6\BoMRa7.doc 17 SECTION 2.16. Initial Depository and Nominee. The initial Depository under this Resolution shall be DTC. The initial Nominee shall be Cede & Co., as Nominee of DTC. SECTION 2.17. Purchases of outstanding Series 1991 Bonds. The Trustee may purchase Series 1991 Bonds on the open market, with monies on deposit in the Special Fund, at a price not to exceed the greater of par plus accrued interest or the price at which the Series 1991 Bonds may be called for redemption, except as otherwise permitted under the Redevelopment Law. Any Series 1991 Bonds purchased by the Agency or by the Trustee on behalf of the Agency shall be cancelled. ARTICLE III REDEMPTION OF SERIES 1991 BONDS SECTION 3.01. (a) Optional Redemption. Series 1991 Bonds maturing on or before November 1, 2001 are not subject to optional redemption before their maturity. Series 1991 Bonds maturing on or after November 1, 2002, are subject to optional redemption in whole or in part on any Interest Payment Date on or after November 1, 2001, in inverse order of maturity and by lot within a maturity, upon notice as described below, at the option of the Agency from any available source of funds, at a redemption price equal to the principal amount of Accreted Value thereof to be redeemed, together with accrued interest thereon to the redemption date, plus a premium (expressed as a percentage of the principal amount or Accreted Value of Series 1991 Bonds to be redeemed) as follows: Redemption Dates Redemption Price November 1, 2001 and May 1, 2002 102% November 1,2002 and May 1, 2003 101% November 1, 2003 and thereafter 100% Mandatory Redemption. Series 1991 Bonds maturing on November 1, 2015 (the 112015 Term Bonds") are subject to mandatory redemption in part by lot prior to maturity from Sinking Account Installments made on November 11 2007 and on each November 1 thereafter to an including November 1, 2015 (each a "sinking Account Payment Date") at a redemption price equal to 100% of the Accreted Value thereof plus accrued interest, if any, to the redemption date. 2016 Term Bonds and the 2015 Term Bonds are referred to herein collectively as the "Term Bonds") The following Sinking Account Installments are calculated to be sufficient to redeem the principal amount of 2015 Term Bonds: 6056\94691.6\BoodRa7.doc 18 Redemption Date (November 1) 2007 2008 2009 2010 2011 2012 2013 2014 2015 (Maturity) Princival Amount Series 1991 Bonds maturing on November 11 2016 (the 112016 Term Bonds") are subject to mandatory redemption in part by lot prior to maturity from sinking account payments (the "Sinking Account Installments") made on November 11 2007 and on each November 10, thereafter to and including November 11 2016 (each a "Sinking Account payment Date") at a redemption price equal to lo0% of the principal amount thereof plus accrued interest, if any, to the redemption date. The following Sinking Account Installments are calculated to be sufficient to redeem the principal amount of 2016 Term Bonds: Redemption Date (November 1) Principal Amount 2007 $ 2008 2009 2010 2011 2012 2013 2014 2015 2016 (Maturity) SECTION 3.02. Selection for Redemption. Whenever less than all Outstanding Series 1991 Bonds maturing on any one date are called for redemption at any one time, the Fiscal Agent shall select the Series 1991 Bonds to be redeemed from the Outstanding Series 1991 Bonds maturing on such date not previously selected for redemption, by lot in any manner which the Fiscal Agent deems fair; provided, however, that if less than all the Outstanding Term Bonds of any maturity are called for redemption at any one time, the Fiscal Agent shall specify a reduction in any Sinking Account Installments required to be made with respect to such Term Bonds (in an amount equal to the amount of Outstanding Term Bonds to be redeemed) which to the extent practicable, results in approximately equal annual debt service on the Series 1991 Bonds )56\%691.6\BoW Ra7.doc 19 Outstanding following such redemption. For purposes of selecting Series 1991 Bonds for redemption, Series 1991 Current Interest Bonds shall be deemed to be composed of $5, 000 portions, and Series 1991 Capital Appreciation Bonds shall be deemed to be composed of portions equal to their respective Accreted Values as of the redemption date, and any such portions may be separately redeemed. SECTION 3.03. Notice of Redemption. (a) Official notice of redemption shall be given by the Fiscal Agent for and on behalf of the Agency by first class mail, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, to the respective Owners of any Series 1991 Bonds designated for redemption at their addresses appearing on the bond registration books of the Fiscal Agent and, so long as the Bond Insurance Policy is in full force and effect, to (or to such other address as the Bond Insurer shall provide to the Fiscal Agent). Each official notice of redemption shall state the redemption date, the place or places of redemption, and, if less than all of the Series 1991 Bonds, the distinctive numbers of the Series 1991 Bonds to be redeemed and, in the case of Series 1991 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed, and shall also state that on said date there will become due and payable on each of said Series 1991 Bonds the redemption price thereof or of said specified portion of the principal thereof in the case of a Series 1991 Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Series 1991 Bonds be then surrendered. The Agency shall notify the Fiscal Agent in writing of its intention to call and redeem Series 1991 Bonds at least 90 days prior to the redemption date. A certificate by the Fiscal Agent that the official notice of redemption has been given to Owners of Series 1991 Bonds as herein provided shall be conclusive as against all parties, and no Owner whose Series 1991 Bond is called for redemption may object thereto or object to the cessation of interest on the redemption date fixed by any claim or showing that he failed to receive actual notice of call and redemption. Whenever any Series 1991 Bonds are to be selected for redemption by lot, the Fiscal Agent shall determine, in any manner deemed by it to be fair, the numbers of the Series 1991 Bonds to be redeemed, and shall notify the Agency thereof. The Fiscal Agent shall determine, in sufficient time to give the notices required by this Section, what sums will be available on the redemption date in accordance with this Resolution, and shall cause notice to be given in accordance with such determination. Funds for the redemption of the Series 1991 Bonds shall be set aside by the Fiscal Agent in the Redemption Fund established pursuant to Section 4.01 of this Resolution (or in 056\94691.6\BoodPm7.doc 20 another special trust fund or account established for the same purpose) and shall be applied on or after the redemption date to payment (principal and premium, if any) for the Series 1991 Bonds to be redeemed upon presentation and surrender of such Series 1991 Bonds, and shall be used only for that purpose. Any interest due on or prior to the redemption date shall be paid from the Special Fund described in Section 5.02. If after all the Series 1991 Bonds called have been redeemed and canceled or paid and canceled there are moneys remaining in the Redemption Fund, said moneys shall be transferred to the Special Fund; provided, however, that if said moneys are part of the proceeds of refunding bonds said moneys shall be transferred to the fund created for the payment of principal of and interest on said refunding bonds. When official notice of redemption has been given, as provided herein, and when the amount necessary for the redemption of the Series 1991 Bonds called for redemption (principal and premium, if any) is set aside for that purpose in the Redemption Fund, as provided herein the Series 1991 Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and, upon presentation and surrender of said Series 1991 Bonds, at the place specified in the official notice of redemption, such Series 1991 Bonds shall be redeemed and paid at said redemption price out of the Redemption Fund, and no interest will accrue on such Series 1991 Bonds called for redemption from and after the redemption date specified in such notice, and the Owners - of said Series 1991 Bonds so called for redemption after such redemption date shall look for the payment of such Series 1991 Bonds and the premium thereon only to the Redemption Fund. All Series 1991 Bonds redeemed shall forthwith be canceled and destroyed by the Fiscal Agent and shall not be reissued. Upon surrender of any Series 1991 Bond redeemed in part only, the Agency shall execute and the Fiscal Agent shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Series 1991 Bond or Series 1991 Bonds of the same maturity and of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Series 1991 Bond surrendered. (b) In addition to the foregoing official notice of redemption, further notice shall be given by the Fiscal Agent for and on behalf of the Agency as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption. (1) Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus ( i) the CUSIP numbers of all Series 1991 Bonds being redeemed; (ii) the date of issue of the Series 1991 Bonds as originally issued; (iii) the rate of interest borne by each Series 1991 Bond being 156\94691.6\BoMP,a7.doc 21 redeemed; ( iv) the maturity date of each Series 1991 Bond - being redeemed; and (v) any other d Critive information 1991 Bonds being needed to identify accurately the Series redeemed. (2) Each further notice of redemption shall be sent at least two days prior to the date notice of redemption is mailed to the Owners, by registered or certified mail, postage prepaid, telephonically confirmed facsimile transmission, or overnight delivery service, to the registered securities depositories (such depositories now g the four listed below) at the address or transmission n number given, or such other address or transmission numberas may have been delivered in writing by not suchlatdepository to the Fiscal Agent for such purpose r than the close of business on the day before such redemption notice is given: The Depository Trust Company 711 Stewart Avenue Garden City, New York 11530 Facsimile transmission: (516) 227-4039 (516) 227-4190 Midwest Securities Trust Company Capital Structures -Call Notification 440 South La Salle Street Chicago, Illinois 60605 Facsimile transmission: (312) 663-2343 Pacific Securities Depository Trust Company Pacific and Company P.O. Box 7041 San Francisco, California 94120 Facsimile transmission: (415) 393-4128 Philadelphia Depository Trust Company Reorganization Division 1900 Market Street Philadelphia, Pennsylvania 19103 Facsimile transmission: (215) 496-5058; (3) Each further notice of redemption shall also be sent at least two days prior to the date notice of redemp ionis mailed to the Owners, by registered or cert ified mail, postage prepaid, or overnight delivery service, to one of the following services selected by the Agency and designated in writing to the Fiscal Agent: Financial Information, Inc.'s Financial Daily Called Bond Service; A56\94691.6\BoodRes7.doc 22 Interactive Data Corporation's Bond Service; Kenny Information Service's Called Bond Service; Moody's Municipal and Government; or Standard & Poor's Called Bond Record; and Each check or other transfer of funds to a securities depository issued by the Fiscal Agent for the purpose of redeeming Series 1991 Bonds shall be accompanied by a written instrument which bears the CUSIP numbers identifying, by issue and maturity, the Series 1991 Bonds being redeemed with the proceeds of such check or other transfer. ARTICLE IV FUNDS; DISPOSITION OF BOND PROCEEDS; PARITY BONDS SECTION 4.01. Funds. (a) The following special trust fund shall be held and maintained by the Treasurer: (1) The Town Center Area Redevelopment Project Redevelopment Fund (the "Redevelopment Fund"); and (b) The following special trust funds shall be held and maintained by the Fiscal Agent: (1) The Town Center Area Redevelopment Project Special Fund (the "Special Fund"), which shall include the accounts described in Section 5.02; and (2) The Town Center Area Redevelopment Project Redemption Fund (the "Redemption Fund"). So long as any of the Series 1991 Bonds herein authorized, or any interest thereon, remains unpaid, the moneys in the foregoing funds shall be used for no purpose other than those required or permitted by this Resolution and the Law. SECTION 4.02. Disposition of Series 1991 Bond Proceeds. The proceeds from the sale of the Series 1991 Bonds shall be deposited simultaneously with the delivery of the Series 1991 Bonds, as follows: (a) In the Interest Account in the Special Fund, the accrued interest and premium, if any, and capitalized interest, if any, received upon the sale of the Series 1991 Bonds. 5056X%691.6\BoWRa7.doc 23 y (b) In the Reserve Account in the Special Fund, such sum as may be necessary so that the amount on deposit in the Reserve Account is equal to the Reserve Requirement. (c) In the Redevelopment Fund, the remainder of the proceeds. SECTION 4.03. Redevelopment Fund. Moneys in theRedevelopment efopment solely Fund shall be used in the manner provided by law Y r thepurpose of aiding in financing the Project or for any lawful purpose in connection therewith. The Agency shall pay moneys from the Redevelopment Fund upon receipt of warrants drawn thereon and signed by e Agency least warrants one duly authorized officer or member o the from the Redevelopment Fund for that no withdrawal shall be mad any purpose not authorized by law. Any moneys in the Redevelopment Fund in excess of d t amm othe required to complete the Pr ,l be traps Redevelopment Fund to the Special Fund SECTION 4.04. Issuance of Parity Bonds. The Agency may provide for the issuance of, and sell, Parity Bonds, subject tto the o any limitation contained in the Redevelopment Plan subject following conditions precedent to such sale: (a) The Agency shall be in compliance with all covenants set forth in this Resolution; (b) Tax Revenues, excluding interest on the mosthrecent received or to be received by the Agency bas assessed valuation of taxable property in the Project rea (as County reported by the Orange County Assessor or theOrange Auditor -Controller) and upon the most recently established tax ues resulting from rates (plus an allowance for etslin the Pro timated Tax jest Area which has been the construction of improvemends completed prior to the date of issuance of such Parity Bon se bin which is not yet on the tax rolls, including such mprovements ) are at taxable valuation of the land underlying least equal to 125% of the Maximum Annual Debt Service nd ng ail Series 1,991 Bonds and Parity Bonds which will be accordance with their terms following the issuance of Independentsuch c Par Financial Bonds, all as evidenced by a report f an Consultant or an Independent Real Estate to consultant; (c) The supplemental resolution providing for. the issuance of such Parity Bonds shall provide that: (1) Money shall be deposited in the Reserve Account as necessary so that the amount on deposit ithe Reserve Account will equal the Reserve Requirement; 24 5056\94691.6\BoodRes7.doc (2) Principal of and interest be payable on the same month interest on the Series 1991 on such Parity Bonds shall and day as principal of and Bonds; (3) The proceeds of such Parity Bonds shall be applied solely for (i) the purpose of aiding in f inancing the Project, including payment of all cost incidental to or connected with such financing, and/or (ii) the purpose of refunding any Series 1991 Bonds or Parity Bonds, including payment of all costs incidental to or connected with such refunding; and (4) The Agency shall have received all required approvals or rulings from any governmental authority having jurisdiction over such Parity Bonds or their terms, including, without limitation, compliance with all requirements of the Department of the Treasury of the United States. The term "Series 1991 Bonds" when used in Article V includes Parity Bonds. SECTION 4.05. Subordinated Indebtedness. If and to the extent permitted by law the Agency may, at any time .and from time to time, issue indebtedness subordinate in all respects to the security interest, pledge and assignment of the Pledged Tax Revenues, moneys, securities and funds created by this Resolution as security for the Series 1991 Bonds. SECTION 4.06. Validity of Series 1991 Bonds. The validity of the authorization and issuance of the Series 1991 Bonds shall not be dependent upon the completion of the Project or upon the performance by any person of his or her obligation with respect to the Project. ARTICLE V PLEDGE AS SECURITY; SPECIAL FUND AND ACCOUNTS SECTION 5.01. Pledged Tax Revenues. All the Pledged Tax Revenues and all money in the funds and accounts provided for in Section 5.02 are hereby irrevocably pledged to the punctual payment of the interest on and principal of and redemption premiums, if any, on the Series 1991 Bonds, and, except as otherwise provided in Section 5.02 hereof, the Pledged Tax Revenues and such other money shall not be used for any other purpose while any of the Series 1991 Bonds remain Outstanding. This pledge shall constitute an exclusive lien on the Pledged Tax Revenues and such other money for the payment of the Series 1991 Bonds in accordance with the terms thereof. o56\9"91.6\BondRw7.aoc 25 SECTION 5.02. Special Fund. From and after the date of delivery of the Series 1991 Bonds and, so long as any Series 1991 Bonds shall be Outstanding hereunder, all Pledged Tax Revenues shall be paid to the Fiscal Agent when and as received by the Agency, and deposited in the Special Fund. Notwithstanding the foregoing, there shall not be paid to the Fiscal Agent for deposit in the Special Fund any taxes eligible for allocation to the Agency pursuant to the Law in an amount in excess of that amount which, together with all money then on deposit with the Fiscal Agent in the Special Fund and the accounts therein, shall be sufficient to discharge all Outstanding Series 1991 Bonds as provided in Section 10.03. All moneys in the Special Fund shall be set aside by the Fiscal Agent in the following respective accounts within the Special Fund (each of which is hereby created and each of which the Agency hereby covenants and agrees to maintain) in the following order of priority, the requirements of each such account at the time of setting aside to be satisfied before any money is set aside in any account subsequent in priority: (a) Interest Account. No later than one Business Day before each Interest Payment Date, the Fiscal Agent shall set aside from the Special Fund and deposit in the Interest Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Series 1991 Bonds on the next succeeding Interest Payment Date. No deposit shall be made into the Interest Account if the amount contained therein is at least equal to the aggregate amount of the interest becoming due and payable on all Outstanding Series 1991 Bonds on the next succeeding Interest Payment Date. All money in the Interest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on the Series 1991 Bonds as the same becomes due and payable (including accrued interest on any Series 1991 Bonds purchased or redeemed prior to maturity). (b) Principal Account. No later than one Business Day before each Principal Payment Date, the Fiscal Agent shall set aside from the Special Fund and deposit in the Principal Account an amount of money which together with any money contained therein, is equal to the principal amount of Series 1991 Bonds maturing or required to be redeemed through mandatory call on the next succeeding Principal Payment Date. In the event that there shall be insufficient money in the Special Fund to make in full all such principal payments required to be made at any one time, then the available money shall be applied pro rata to the making of such principal payments in the proportion which all such principal payments bear to each other. No deposit shall be made into the Principal Account if the amount contained therein is at least equal to the aggregate amount %6056\94691.6\BoodRc@7.doc 26 of the principal of all Outstanding Series 1991 Bonds maturing or required to be redeemed through mandatory call on the next succeeding Principal Payment Date. All money in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the principal of the Series 1991 Bonds as they mature or are required to be redeemed through mandatory call. (c) Reserve Account. No later than one Business Day before each Principal Payment Date, the Fiscal Agent shall set aside from the Special Fund and deposit in the Reserve Account such amount of money as shall be required to maintain a balance in the Reserve Account equal to the Reserve Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein a sum equal to at least the amount required by this paragraph. All money in the Reserve Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of replenishing the Interest Account or the Principal Account, in such order, in the event of any deficiency at any time in either of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Series 1991 Bonds in the event that no other money of the Agency is lawfully available therefor, or for the retirement of all the Series 1991 Bonds then outstanding, except that so long as the Agency is not in default hereunder and subject to the provisions of Section 5.03, any amount in the Reserve Account in excess of the amount required by this subsection (c) to be on deposit therein shall, at the discretion and at the Written Request of the Agency, be (i) transferred to the Treasurer and deposited in the Redevelopment Fund; (ii) used for the purchase of Series 1991 Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Agency in its discretion may determine, but not to exceed the par value of such Series 1991 Bonds plus the redemption premium applicable on the next ensuing optional redemption date; or (iii) transferred to the Redemption Fund and used for the redemption of any Series 1991 Bonds which are subject to call and redemption prior to maturity. The Agency may at any time elect, subject to restrictions in the Series 1987 Bond Resolution, after review and with the approval of the Bond Insurer, so long as any Bond Insurance Policy is in full force and effect, to maintain the Reserve Requirement by obtaining a letter of credit, a surety bond, a policy of insurance or any other security device (in each case rated in the highest two rating categories by each Rating Agency which rates the Series 1991 Bonds at such time), in any amount which, together with any funds on deposit in the Reserve Account, will guarantee to the Agency the full amount of the Reserve Requirement at such times as all or any portion of the Reserve Requirement is needed for transfer to the Interest Account and/or Principal Account. 5056\%691.6\Bood1ta7.doc 27 SECTION 5.03. Deposit and Investment of Money in Funds and Accounts. All money held by the Agency or Fiscal Agent in any of the funds or accounts established pursuant to this Resolution shall be held in time or demand deposits in any bank, savings and loan or trust company (including the Fiscal Agent) authorized to accept deposits of public funds, and shall be secured at all times by such obligations as are required by law and (except as the Agency may waive security for such portion of any deposit as is insured pursuant to federal law) to the fullest extent required by law, except such money as is at the time invested in accordance with this Section. Money in the Special Fund or in any account thereof, upon the Written Request of the Agency, shall be invested by the Fiscal Agent, and money in the Redevelopment Fund may be invested by the Agency, in any investments permitted by law; provided, however, that, such investments shall be permitted only if and to the extent expressly authorized in the list of permissible investments to be provided to the Agency and the Fiscal Agent from time to time by the Bond Insurer. Investments of money in the Special Fund or in the Interest Account or in the Principal Account must mature prior to the date at which such money is estimated to be required to be paid out hereunder. Money in the Reserve Account, upon the Written Request of the Agency, shall be invested by the Fiscal Agent in any legally permitted investments maturing not more than 10 years from the date of purchase by the Fiscal Agent; provided, however, that such investments shall be permitted only and to the extent expressly authorized in the list of permissible investments provided to the Agency and the Fiscal Agent from time to time by the Bond Insurer. The Fiscal Agent may commingle the moneys held by it in any of the funds or accounts established pursuant to this Resolution for investment purposes only, provided that all funds or accounts held by the Fiscal Agent hereunder shall be accounted for separately, notwithstanding such commingling. Any interest, income or profits from the deposits or investments of the Redevelopment Fund shall remain in the Redevelopment Fund. Any interest, income or profits from the deposits or investments of all funds other than the Redevelopment Fund and of all accounts shall be deposited in the Special Fund. 156\%691.6\BoodRa7.doc 28 ARTICLE VI COVENANTS OF THE AGENCY SECTION 6.01. General. The Agency shall preserve and protect the security of the Series 1991 Bonds and the rights of the Owners and defend their rights against all claims and demands of all persons. Until such time as an amount has been set aside suff icient to pay at maturity, or to call prior to maturity, all Outstanding Series 1991 Bonds, plus unpaid interest thereon to maturity, or to the call date, the Agency will (through its proper membArs, officers, agents or employees) faithfully perform and abide by all of the covenants, undertakings and provisions contained in this Resolution or in any Series 1991 Bond issued hereunder, including the covenants and agreements set forth herein for the benefit of the Owners. SECTION 6.02. Punctual Payment. The Agency will punctually pay or cause to be paid the principal and interest or Accreted Value to become due in respect of all the Series 1991 Bonds, in strict conformity with the terms of the Series 1991 Bonds and of this Resolution, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and of the Series 1991 Bonds. Nothing herein contained shall prevent the Agency from making advances of its own moneys howsoever derived to any of the uses or purposes referred to herein. SECTION 6.03. Extension of Series 1991 Bonds. The Agency will not, directly or indirectly, extend or consent to the extension of the time for the payment of any Series 1991 Bond or claim for interest on any of the Series 1991 Bonds and will not, directly or indirectly, be a party to approve any such arrangement by purchasing or funding the Series 1991 Bonds or claims for interest or in any other manner. In case the maturity of any such Series 1991 Bond or claim for interest shall be extended or funded, whether or not with the consent of the Agency, such Series 1991 Bond or claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Resolution, except subject to the prior payment in full of the principal of all the Series 1991 Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. SECTION 6.04. Against Encumbrances. The Agency will not encumber, pledge or place any charge or lien upon any of the Tax Revenues superior to or on a parity with the pledge and lien herein created for the benefit of the Series 1991 Bonds, except as permitted by this Resolution. SECTION 6.05. Management and Operation of Properties. The Agency will manage and operate all properties owned by the Agency and comprising any part of the Project in a sound and businesslike ?56\%691.6\BoWRa7.doc 29 manner, and will keep such properties insured at all times in conformity with sound business practice. SECTION 6.06. Payment of Claims. The Agency will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Pledged Tax Revenues or any part thereof, or upon any funds in the hands of the Fiscal Agent, or which might impair the security of the Series 1991 Bonds. Nothing herein contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims. SECTION 6.07. Books and Accounts; Financial Statement. The Agency will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the City of Tustin, in which complete and correct entries shall be made of all transactions relating to the Project and to the Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Owners of not less than 10% of the principal amount of the Series 1991 Bonds then Outstanding, or their representatives authorized in writing. The Agency will cause to be prepared and filed with the Fiscal _ Agent annually, within 180 days after the close of each Fiscal Year so long as any of the Series 1991 Bonds are Outstanding, complete financial statements with respect to that Fiscal Year showing the Tax Revenues, all disbursements from the Tax Revenues and the financial condition of the Project, including the balances in all funds and accounts relating to the Project, as of the end of such Fiscal Year, which statement shall be accompanied by a certificate or opinion in writing of an Independent Certified Public Accountant. The Agency will furnish a copy of such statements to any Owner upon request. SECTION 6.08. Protection of Security and Rights of Owners. The Agency will preserve and protect the security of the Series 1991 Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any of the Series 1991 Bonds by the Agency, the Series 1991 Bonds shall be incontestable by the Agency. SECTION 6.09. Payment of Taxes and Other Charges. Subject to the provisions of Section 6.12, the Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area when the same shall become due. Nothing herein contained shall require the Agency to make any such X56\94691.6\BoodRes7.doc 30 payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Project or any part thereof. SECTION 6.10. Completion of Project. The Agency will com- mence, and will continue to completion, with all practicable dis- patch, the Project, and the Project will be accomplished and com- pleted in a sound and economical manner and in conformity with the Redevelopment Plan and the Law. SECTION 6.11. Taxation of Leased Property. Whenever any property in the Project Area has been redeveloped and thereafter is leased by the Agency to any person or persons (other than the City of Tustin or the County of Orange) or whenever the Agency leases real property in the Project Area to any person or persons for redevelopment., the property shall be assessed and taxed in the same manner as privately owned property (in accordance with Section 33673 of the Law) , and the lease or contract shall provide that the lessee shall pay taxes upon the assessed value of the entire property and not merely upon the assessed value of his or its leasehold interest. SECTION 6.12. Disposition of Property. The Agency will not authorize the disposition of any land or real property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property planned for such ownership or use by the Redevelopment Plan in effect on the date of this Resolution) so that such disposition shall, when taken together with other such dispositions, aggregate more than 10% of the land area in the Project Area, unless such disposition is made as hereinafter provided in this Section 6.12. If the Agency proposes to make such a disposition, it shall thereupon appoint a reputable Independent Financial Consultant and direct such consultant to report on the effect of the proposed disposition. If the report of the Independent Financial Consultant concludes that the security of the Series 1991 Bonds and the rights of the Owners will not be materially impaired by the proposed disposition, and that Tax Revenues allocated to the Agency will not be significantly diminished by the proposed disposition, the Agency may thereafter make the disposition. If said Report does not so conclude, the Agency shall not make the proposed disposition. The Agency shall have the sole and exclusive authority to appoint said Consultant. Neither the Agency nor said Consultant shall be liable in connection with the performance of their duties hereunder, except for their own gross negligence or willful misconduct. .6056\%01.6\BoodRa7.doc 31 SECTION 6.13. Tax Revenues. The Agency shall comply with all requirements of the Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness and amendments thereto with appropriate officials of the County of Orange. SECTION 6.14. Eminent Domain Proceeds. The net proceeds received by the Agency from any eminent domain proceeding with respect to property within the Project Area acquired with the proceeds of the Series 1991 Bonds or of any Parity Bonds shall be treated as Tax Revenues. SECTION 6.15. Tax Covenants. (a) The Agency covenants that, in order to maintain the exclusion from gross income for Federal income tax purposes of the interest on the Series 1991 Bonds, and for no other purpose, the Agency will satisfy, or take such actions as are necessary to cause to be satisfied, each provision of the Code necessary to maintain such exclusion. In furtherance of this covenant the Agency agrees to comply with such written instructions as may be provided by Bond Counsel. (b) The Agency covenants that no part of the proceeds of the Series 1991 Bonds shall be used, directly or indirectly, to acquire any„investment property,” as defined in section 148 of the Code, which would cause the Series 1991 Bonds to become "arbitrage bonds" within the meaning of Section 148 of the Code, as in effect from time to time, or under applicable Treasury regulations promulgated thereunder. In order to assure compliance with the rebate requirements of Section 148 of the Code, the Agency further covenants that it will pay or cause to be paid to the United States Treasury Department the amounts necessary to satisfy the requirements of Section 148(f) of the Code, and that it will establish such accounting procedures as are necessary to adequately determine, account for and pay over any such amount or amounts required to be paid to the United States in a manner consistent with the requirements of Section 148 of the Code, such covenants to survive the defeasance of the Series 1991 Bonds. (c) The Agency covenants that it will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial execution and delivery of the Series 1991 Bonds, would result in a loss of exclusion from gross income for purposes of Federal -income taxation, under Section 103 of the Code, of interest on the Series 1991 Bonds. (d) The Agency covenants that it will not use or permit the use of any property financed with the proceeds of the Series 1991 Bonds by any person (other than a state or local governmental unit) in such manner or to such extent as would result in a loss of exclusion of the interest on the Series 1991 Bonds from gross 5056\94691.6\BondRa7.doc 32 income for Federal income tax purposes under Section 103 of -the Code. (e) Notwithstanding any provision of this Resolution, and except as provided below, the Agency covenants that none of the moneys contained in any of the funds or accounts created pursuant to the Resolution shall be: (1) used in making loans guaranteed by the United States (or any agency or instrumentality thereof), (2) invested directly or indirectly in a deposit or account insured by the Federal Deposit Insurance Corporation, National Credit Union Administration or any other similar Federally chartered corporation, or (3) otherwise invested directly or indirectly in obligations guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof); provided, however, that the above restrictions do not apply to: (i) the investment of moneys held in the Special Fund or any other "bona fide debt service fund" as defined for purposes of Section 148 of the Code, (ii) to investment in direct obligations of the United States Treasury, (iii) to investment in obligations guaranteed by the Federal National Mortgage Association, Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation, (iv) obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, (v) to investments permitted under regulations issued pursuant to Section 149 (b) (3) (B) of the Code, or (vi) to such other investments permitted under the Resolution as, in the opinion of Bond Counsel, do not jeopardize the exclusion from gross income for Federal income tax purposes of interest on the Series 1991 Bonds. SECTION 6.16. Further Assurances. The Agency will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Owners of the Series 1991 Bonds of the rights and benefits provided in this Resolution. ARTICLE VII THE FISCAL AGENT SECTION 7.01. Appointment of Fiscal Agent. at its principal corporate trust office in Los Angeles, California, is hereby appointed Fiscal Agent for the Agency to act as the agent and depositary of the Agency for the purpose of receiving all moneys required to be paid to the Fiscal Agent hereunder, to allocate, use and apply the same, to hold, receive and disburse the Pledged Tax Revenues and other funds pledged or held hereunder, and otherwise to hold all the offices and perform all the functions and duties provided in this Resolution to be held and performed by the Fiscal Agent. The Fiscal 056\94691.6\BondRc.7.doa 33 Agent shall signify its acceptance of the duties and obligations imposed upon it by this Resolution by executing and delivering to the Agency a written acceptance thereof; and by executing and delivering such acceptance, the Fiscal Agent shall be deemed to have accepted such duties and obligations, but only upon the terms and conditions set forth in this Resolution. The Agency, so long as it is not in default hereunder may remove the Fiscal Agent initially appointed, and any successor thereto, and shall remove the Fiscal Agent if at any time it is requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Series 1991 Bonds then Outstanding (or their attorneys duly authorized in writing) and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company doing business and having an office in Los Angeles, California, having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision of examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice by first class mail to the Agency and the Owners. Upon receiving notice of such resignation, the Agency shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent and appointment of a successor Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent. SECTION 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Series 1991 Bonds contained shall be taken as statements, covenants and agreements of the Agency, and the Fiscal Agent assumes no responsibility for the correctness of the same, and makes no representations as to the validity or sufficiency of this Resolution or of the Series 1991 Bonds, and shall not incur and responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Series 1991 Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. SECTION 7.03. Notice to Fiscal Agent. The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or 356\9"91.6\BoodRes7.doc 34 presented by the proper party or proper parties. The Fiscal Agent may consult with counsel of its own choice with regard to legal questions, and the opinion of such counsel shall be full and complete authorization *and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Fiscal Agent shall not be bound to recognize any person as the owner of a Series 1991 Bond unless and until such Series 1991 Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed. Whenever in the administration of its duties under the Resolution the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the Agency, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Resolution or any Supplemental Resolution upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may see reasonable. The Fiscal Agent undertakes to perform such duties, and only such duties as are specifically set forth in this Resolution and no implied duties or obligations shall be read into this Resolution against the Fiscal Agent. No provision in this Resolution shall require the Fiscal Agent to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. The Agency agrees to pay the Fiscal Agent reasonable compensation for its services and to reimburse the Fiscal Agent for all its fees and expenses, including but not limited to attorneys fees. The Agency further agrees to indemnify and hold the Fiscal Agent harmless from any loss, liability or expense, including attorneys fees not arising from its negligence or willful misconduct which it may incur in the exercise and performance of its duties hereunder. Such indemnity shall survive the satisfaction or defeasance of the bonds or resignation of the Fiscal Agent hereunder for acts or failure to act which arose prior to such satisfaction, defeasance or resignation. ;456\94691.6\BoodRes7.doc 35 ARTICLE VIII MODIFICATION OR AMENDMENT OF THE RESOLUTION SECTION 8.01. Amendments Permitted. This Resolution and the rights and obligations of the Agency and of the Owners of the Series 1991 Bonds may be modified or amended at any time by a Supplemental Resolution and pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Series 1991 Bonds then Outstanding, exclusive of Series 1991 Bonds disqualified as provided in Section 8.04, and, so long as the Bond Insurance Policy is in full force and effect, with the written consent of the Bond Insurer. No such modification or amendment shall (1) extend the maturity of any Series 1991 Bond; or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Agency to pay the principal thereof, or interest or Accreted Value thereon, or any premium payable on the redemption thereof, at the, time and place and at the rate and in the currency provided therein, without the written consent of the Owner of such Series 1991 Bond, or ( 2 ) permit the creation by the Agency of any mortgage,pledge or lien upon the Tax Revenues superior to or on a parity with the pledge and lien cre- ated for the benefit of the Series 1991 Bonds (except as expressly permitted by the Resolution), or reduce the percentage of Series 1991 Bonds required for the affirmative vote or written consent to an amendment or modification, or (3) modify any of the rights or obligations of the Fiscal Agent without its written consent thereto. This Resolution and the rights and obligations of the Agency and of the Owners of the Series 1991 Bonds may also be modified or amended at any time by a Supplemental Resolution, without the consent of any Owner, but only to the extent permitted by law and only for any one or more of the following purposes: (a) to add to the covenants and agreements of the Agency in this Resolution contained, other covenants and agreements thereaf- ter to be observed, or to surrender any right or power herein reserved to or conferred upon the Agency; (b) with the written approval of the Fiscal Agent and the written consent of the Bond Insurer, to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Resolution, or in regard to questions arising under this Resolution, as the Agency may deem necessary or desirable and not inconsistent with this Resolution, and which shall not adversely affect the interests of the Owners; and (c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may 6056\94691.6\BoodRa7.doc 36 be issued, subject to and in accordance with the provisions of Section 4.06. SECTION 8.02. Owners' Meetings. The Agency may at any time call a meeting of the Owners. In such event the Fiscal Agent is authorized to give notice of the time and place of said meeting and to give notice of the rules and regulations adopted by the Agency for the conduct of said meeting. SECTION 8.03. Procedure for Amendment with Written Consent of Owners. The Agency may at any time adopt a Supplemental Resolution amending the provisions of the Series 1991 Bonds or of this Resolution or any Supplemental Resolution, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. A copy of such Supplemental Resolution, together with a request to Owners for their consent thereto, shall be mailed by the Agency to each Owner of Series 1991 Bonds Outstanding, but failure to mail copies of such Supplemental Resolution and request shall not affect the validity of the Supplemental Resolution when consented to as in this Section provided. Notice of the fact of the adoption of such Supplemental Resolution (stating that a copy thereof is available for inspection at the office of the Agency) shall be mailed to the Owners not more than fifteen (15 ) days after the date of adoption of such Supplemental Resolution. Such Supplemental Resolution shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least 60% in aggregate principal amount of the Series 1991 Bonds then Outstanding (exclusive of Series 1991 Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Series 1991 Bonds for which such consent is given, which proof shall be such as is permitted by, Section 2.10. Any such consent shall be binding upon the Owner of the Series 1991 Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Series 1991 Bonds shall have filed their consents to the Supplemental Resolution, the Agency shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Resolution, stating in substance that the Supplemental Resolution has been consented to by the Owners of the required percentage of Series 1991 Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Resolution or consents ,5056\%691.6\BoWP.m7.doc 37 thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Resolution shall become effective upon the filing with the Fiscal Agent of the proof of the mailing of such last-mentioned notice, and the Supplemental Resolution shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the Agency and the Owners of all Series 1991 Bonds at -the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. SECTION 8.04. Disgualified Series 1991 Bonds. Series 1991 Bonds owned or held for the account of the Agency or the City of Tustin, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Series 1991 Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII. SECTION 8.05. Effect of Supplemental Resolution. From and after the time any Supplemental Resolution becomes effective pursuant to this Article VIII, this Resolution shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Resolution of the Agency and all Owners of Series 1991 Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendments, and all the terms and conditions of any such Supplemental Resolution shall be deemed to be part of the terms and conditions of this Resolution for any and all purposes. The Agency may adopt appropriate regulations to require each Owner, before his consent provided for in this Article VIII shall be deemed effective, to reveal if the Series 1991 Bonds as to which such consent is given are disqualified as provided in Section 8.04. SECTION 8.06. Endorsement or Replacement of Series 1991 Bonds Issued After Amendments. The Agency may determine that Series 1991 Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the Agency, as to such action. In that case, upon demand of the Owner of any Series 1991 Bond Outstanding at such effective date and presentation of the applicable Series 1991 Bond for that purpose at the office of the Fiscal Agent or at such other office as the Agency may select and designate for that purpose, a suitable notation shall be made on such Series 1991 Bond. The Agency may determine that new Series i56\94691.6\Bood1ka7.doc 38 1991 Bonds, so modified as in the opinion of the Agency is necessary to conform to such action, shall be prepared, executed and delivered. In` that case, upon demand of the Owner of any Series 1991 Bonds then Outstanding, such new Series 1991 Bonds shall be exchanged at the office of the Fiscal Agent in Los Angeles, California, without cost to any Owner for Series 1991 Bonds then Outstanding, upon surrender of such Series 1991 Bonds. SECTION 8.07. Amendatory Endorsement of Series 1991 Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Series 1991 Bonds held by him, provided that due notation thereof is made on such Series 1991 Bonds. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS SECTION 9.01. Proceedings Constitute Contract. The provisions of this Resolution and of any other resolution supplementing or Amending this Resolution and adopted prior to the issuance of the Series 1991 Bonds hereunder shall constitute a contract between the Agency and the Owners and the provisions thereof shall be enforceable as provided herein. After the issuance and delivery of the Series 1991 Bonds this Resolution and any supplemental resolutions hereto shall be irrepealable, but shall be subject to modification or amendment to the extent and in the manner provided in this Resolution, but to no greater extent and in no other manner. SECTION 9.02. Events of Default and Acceleration of Maturities. If one or more of the following events ("events of default") shall happen, that is to say: (a) if default shall be made in the due and punctual payment of the principal of or redemption premium (if any) on any Series 1991 Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) if default shall be made in the due and punctual payment of any installment of interest on any Series 1991 Bond when and as such interest installment shall become due and payable; .(c) if default shall be made by the Agency in the observance of any of the covenants, agreements or conditions on its part contained in this Resolution or in the Series 1991 Bonds, and such default shall have continued for a period of 90 days; or (d) if the Agency shall file a petition or answer seeking reorganization or arrangement under the Federal Bankruptcy laws or 056\%691.6\BoMRa7.doc 39 any other applicable law of the United States of America, or if or court of competent jurisdiction shall approve a petition, filed with or without the consent of the Agency, seeking reorganization until. the Federal Bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Agency or of the whole or any substantial part of its property; then, and in each and every such case during the continuance of such event of default, the Fiscal Agent may, upon notice in writing to the Agency, and shall, if so requested by the Owners of at least 60% in aggregate principal amount of the Series 1991 Bonds at the time Outstanding (such request to be in writing to the Fiscal Agent and to the Agency), declare the principal of all of the Series 1991 Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Resolution or in the Series 1991 Bonds contained to the contrary notwithstanding, provided that, so long as the Bond Insurance Policy is in full force and effect, no such declaration shall be effective without the written consent of the Bond Insurer. If, at any time after the principal of the Series 1991 Bonds shall have been so declared immediately due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Agency shall deposit with the Fiscal Agent a sum sufficient to pay all principal on the Series 1991 Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Series 1991 Bonds, with interest at the rate of 12% per annum on such overdue installments of principal, and the reasonable expenses of the Fiscal Agent, and any and all other defaults known to the Fiscal Agent (other than in the payment of principal of and interest or Accreted Value on the Series 1991 Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Owners of a majority in aggregate principal amount of the Series 1991 Bonds Outstanding or provision deemed by the Owners of a majority in aggregate principal amount or the Series 1991 Bonds Outstanding to be adequate shall have been made therefor, then, and in every such case, the Owners of at least a majority in aggregate principal amount of the Series 1991 Bonds then Outstanding, by written notice to the Agency and to the Fiscal Agent, may, on behalf of the Owners of all of the Series 1991 Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. SECTION 9.03. Application of Funds Upon Acceleration. All of the Pledged Tax Revenues and all sums in the funds and accounts provided for in Sections 4.05 and 5.02 upon the date of the declaration of acceleration as provided in Section 9.02, and all 056194691.6\BoWRa7.doc 40 sums thereafter received by the Fiscal Agent hereunder, shall be applied by the Fiscal Agent in the order following upon presentation of the several Series 1991 Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: First, to the payment of the costs and expenses of the Fiscal Agent and of the Owners in declaring such event of default, including reasonable compensation to its or their agents, attorneys and counsel; Second, in case the principal of all of the Series 1991 Bonds shall not have become due and payable, to the payment of the interest in default in the order of the maturity of the installments of such interest with interest on the overdue installments at the rate of 12% per annum (to the extent that such interest on overdue installments shall have been collected), such payments to be made ratably to the persons entitled thereto without discrimination or preference; and Third, in case the principal of all of the Series 1991 Bonds shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon the Series 1991 Bonds for principal and interest or Accreted Value, with interest on the overdue principal and installments of interest at the rate of 12% per annum (to the extent that such interest on overdue installments of interest shall have been collected), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Series 1991 Bonds, then to the payment of such principal and interest or Accreted Value without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. SECTION 9.04. Other Remedies of Owners. Any Owner shall have the right, for the equal benefit and protection of all Owners similarly situated: (a) by mandamus, suit, action or proceeding, to compel the Agency and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Resolution and in the Series 1991 Bonds, and to require the carrying out of any or all such covenants and agreements of the Agency and the fulfillment of all duties imposed upon it by the law; (b) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Owners' rights; or (c) upon the happening of any event of default (as defined in Section 9.02), by suit, action or proceeding in any court of com- x056\%691.6\BoodRn7.doc 41 - petent jurisdiction, to require the Agency and its members and employees to account as if it and they were the trustees of an express trust. SECTION 9.05. Non -waiver. Nothing in this Article IX or in any other provision of this Resolution, or in the Series 1991 Bonds, shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the principal of and interest or Accreted Value on the Series 1991 Bonds to the respective Owners of the Series 1991 Bonds at the respective dates of maturity, as herein provided, or affect or impair the right of action, which is also absolute and unconditional, of the Owners to institute suit to enforce such payment by virtue of the contract embodied in the Series 1991 Bonds. A waiver of any default by any Owner shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner of any of the bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Law or by this Article IX may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners of the Series 1991 Bonds. If a suit, action or proceeding to enforce any right or exercise any remedy be abandoned, or determined adversely to the Owners, the Agency and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. SECTION 9.06. Actions by Fiscal Agent as Attorney -in -Fact. Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Fiscal Agent for the equal benefit and protection of all Owners similarly situated and the Fiscal Agent is hereby appointed (and the successive respective Owners of the Series 1991 Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners of the Series 1991 Bonds for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Series 1991 Bonds as a class or classes, as may be necessary or advisable in the opinion of the Fiscal Agent as such attorney-in-fact, provided, however, the Fiscal Agent shall have no obligation or duty to bring any suit, action or enforce any such rights or remedies unless it has been first indemnified to its satisfaction by the Owners from any liability or expense, including attorneys fees. 6056\%691.6\BoWP.a7.doc 42 SECTION 9.07. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners of Series 1991 Bonds is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise; and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law. ARTICLE X MISCELLANEOUS SECTION 10.01. Benefits of Resolution Limited to Parties. Nothing in this Resolution, expressed or implied, is intended to give to any person other than the Agency, the Fiscal Agent and the Owners of the Series 1991 Bonds, any right, remedy, claim under or by reason of this Resolution. Any covenants, stipulations, promises or agreements in this Resolution contained by and on behalf of the Agency shall be for the sole and exclusive benefit of the Owners of the Series 1991 Bonds and the Fiscal Agent. SECTION 10.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Resolution or any Supplemental Resolution either the Agency or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Resolution contained by or on behalf of the Agency or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. SECTION 10.03. Discharge of Resolution. If the Agency shall pay and discharge the entire indebtedness on all Series 1991 Bonds Outstanding in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest or Accreted Value on all Series 1991 Bonds Outstanding, as and when the same become due and payable; (b) by depositing with the Fiscal Agent, in trust at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in Sections 4.05 and 5.02, is fully sufficient to pay all Series 1991 Bonds Outstanding, including all principal, interest or accreted Value and redemption premiums; or (c) by depositing with the Fiscal Agent, in trust, direct obligations of the United States, or obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest or Accreted Value, in such amount as an Independent Certified Public Accountant shall determine will, together with the interest to accrue thereon and moneys then on J56k%691.6\BoodRa7.doc 43 deposit in the funds and accounts provided for in Section 4.05 and 5.02, be fully sufficient to pay and discharge the indebtedness on all Series 1991 Bonds Outstanding (including all principal, interest or Accreted Value and redemption premiums) at or before the respective maturity dates; and if such Series 1991 Bonds areto be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Resolution provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, notwithstanding that any Series 1991 Bonds shall not have been surrendered for payment, the pledge of the Pledged Tax Revenues and other funds provided for in this Resolution and all other obligations of the Agency under this Resolution with respect to all Series 1991 Bonds Outstanding shall cease and terminate, except only the obligation of the Agency to pay or cause to be paid to the Owners of the Series 1991 Bonds not so surrendered and paid all sums due thereon; and thereafter Pledged Tax Revenues shall not be payable to the Fiscal Agent. Any funds held by any Fiscal Agent which are not required for the payment and discharge of the indebtedness on the Series 1991 Bonds above mentioned, shall be paid over to the Agency. Notwithstanding the foregoing provisions of this Section 10.03, the payment of principal and interest or Accreted Value on the Series 1991 Bonds by the Bond Insurer shall not constitute payment, or provision for payment, of such principal and interest or Accreted Value by the Agency within the meaning of this Section. In the event of such payment by the Bond Insurer, the pledge of the Pledged Tax Revenues and all other rights granted by this Resolution to Owners shall continue to exist and the Bond Insurer shall be subrogated to the rights of such Owners. SECTION 10.04. Waiver of Personal Liability. No member, officer, agent or employee of the Agency shall be individually or personally liable for the payment of the principal of or interest or Accreted Value on the Series 1991 Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. SECTION 10.05. Destruction of Canceled Series 1991 Bonds. Whenever in this Resolution provision is made for the surrender to the Agency of any Series 1991 Bonds which have been paid or canceled pursuant to the provisions of this Resolution, a certificate of destruction duly executed by the Fiscal Agent shall be deemed to be the equivalent of the surrender of such canceled Series 1991 Bonds and the Agency shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series 1991 Bonds therein referred to. SECTION 10.06. Notices and Demands on Agency. Any notice or demand which by any provision of this Resolution is required permitted to be given or served by the Fiscal Agent to or on the .6056\9x691.6\BoodRa7.doc 44 Agency may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Agency with the Fiscal Agent) as follows: Secretary, Tustin Community Redevelopment Agency, 300 Centennial Way, Tustin, California 92680. SECTION 10.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Resolution shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Resolution or the Series 1991 Bonds. The Agency hereby declares that it would have adopted this Resolution and each and every other Section, paragraph, sentence, clause or phrase herein and authorized the issue of the Series 1991 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Resolution may be held illegal, invalid or unenforceable. If, by reason of the judgment of any court, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Treasurer of the Agency in trust for the benefit of the Bondholders. The Agency covenants for the direct benefit the Bondholders that its Treasurer in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder, and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Series 1991 Bonds. SECTION 10.08. Effective Date of Resolution. This Resolution shall take effect from and after the date of its passage and adoption. Attest: PASSED AND ADOPTED this day of City Clerk J56\94691.6\BoodRes7.doc 45 1991. Charles E. Puckett, Chairman EXHIBIT A BOND FORM [FORM OF FACE OF BOND] UNITED STATES OF AMERICA No........ STATE OF CALIFORNIA $ COUNTY OF ORANGE CITY OF TUSTIN TUSTIN COMMUNITY REDEVELOPMENT AGENCY TOWN CENTER AREA REDEVELOPMENT PROJECT TAX ALLOCATION BOND, SERIES 1991 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The Tustin Community Redevelopment Agency (hereinafter sometimes called the "Agency"), a public body corporate and politic, duly organized and existing under the laws of the State of California, for value received, hereby promises to pay (but solely from the funds hereinafter mentioned) to the Owner named above or registered assigns, on the Maturity Date. stated above (subject to right of prior redemption as hereinafter stated) , upon presentation and surrender of this Bond, the principal sum specified above with interest or accreted value thereon (payable solely from said funds) . Interest on this Bond is payable from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated during the period commencing on the sixteenth day of the month preceding an interest payment date and ending on such interest payment date, in which event it shall bear interest from such (interest payment date, or unless it is authenticated on or before April 15, 1992, in which event it shall bear interest from July 1, 1991) at the interest rate specified above per annum, based on a year of twelve thirty day months, payable semiannually on the first day of May and the first day of November of each and every year commencing May 1, 1992 until this Bond is paid; provided, however, that if at the maturity date of this Bond or, if the same is duly called for redemption, then at the date fixed for redemption, funds are available for payment or redemption thereof, as provided in the Resolution hereinafter mentioned, this Bond shall then cease to bear interest. The principal of and interest or accreted value on this Bond and any .6056\%691.6\BondRa7.doc A-1 premium upon the redemption prior to maturity of all or any part hereof are payable in lawful money of the United States of America and (except for interest which is payable by check or draft mailed to the Owner hereof at the address shown on the bond register kept by the Fiscal Agent hereinafter named) are payable upon presentment at the principal corporate trust office of Security Pacific National Bank, Fiscal Agent for the Agency, in Los Angeles, California. This Bond, the interest or accreted value thereon, and any premium payable upon the redemption thereof, are not a debt of the City of Tustin, the State of California or any of its political subdivisions and neither said City, said State nor any of its political subdivisions is liable thereon, nor in any event shall this Bond or said interest or accreted value or premiums be payable out of any funds or properties other than the funds of the Agency hereinafter mentioned. This Bond does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing this Bond are liable personally on this Bond by reason of its issuance. THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED ON THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS AND PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE. It is hereby recited, certified and declared that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this Bond exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California. This Bond shall not be entitled to any benefits under the Resolution or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been signed by the Fiscal Agent. J56\%691.6\BoMRea7.doc A-2 IN WITNESS WHEREOF, the Tustin Community Redevelopment Agency has caused this Bond to be signed on its behalf by its Chairman and by its Treasurer and the seal of said Agency to be impressed, imprinted or reproduced hereon, and this Bond to be dated the first day of July, 1991. Chairman of -the Tustin Community Redevelpment Agency ( SEAL) Treasurer of the Tustin Community Redevelopment Agency (FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION] This is one of the Series 1991 Bonds described in the within -mentioned Resolution and has been authenticated on . as Fiscal Agent BY: AUTHORIZED OFFICER J56\94691.6\BoWR.=7.aoc A-3 (FORM OF BACK OF BOND) This Bond is one of a duly authorized issue of Series 1991 Bonds of the Agency designated "Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991" (herein called the "Series 1991 Bonds") in the aggregate principal amount of $ all of like tenor (except for bond numbers and maturity dates and differences, if any, in date of authentication, denomination and interest rate) and all of which have been issued pursuant to and in full conformity with the Constitution and laws of the State of California and particularly the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California) for the purpose of financing portions of the cost of the redevelopment project above designated, and are authorized by and issued pursuant to Resolution No. RDA 91 - adopted by the Agency on 1991 (herein called the "Resolution"), and all of the Series 1991 Bonds are equally secured in accordance with the terms of the Resolution, reference to which is hereby made for a specific description of the security therein provided for said Series 1991 Bonds, for the nature, extent and manner of enforcement of such security, for the covenants and agreements made for the benefit of the registered owners of the Series 1991 Bonds (herein called the "Owners") , and for a statement of the rights of the Owners, and by the acceptance of this Series 1991 Bond the Owner hereof assents to all of the terms, conditions and provisions of said Resolution. In the manner provided in the Resolution, said Resolution and the rights and obligations of the Agency and of the Owners may (with certain exceptions as stated in said Resolution) be modified or amended with the consent of the Owners of at least 60% in aggregate principal amount of Outstanding Series 1991 Bonds, exclusive of Series 1991 Bonds owned by the Agency or the City of Tustin. The principal of this Series 1991 Bond, the interest or accreted value hereon, and any premium payable upon redemption of all or any part hereof are secured by an irrevocable pledge of, and are payable solely from, the Pledged Tax Revenues (as such term is defined in the Resolution). If this Series 1991 Bond matures on or before November 1, 2001 it is not subject to optional redemption before its maturity. If this Series 1991 Bond matures on or after November 1, 2002, it is subject to optional redemption in whole or in part on any Interest Payment Date on or after November 1, 2001, in inverse order of maturity and by lot within a maturity, upon notice as described below, at the option of the Agency from any available source of funds, at a redemption price equal to the principal amount or Accreted Value thereof to be redeemed, together with accrued interest thereon to the redemption date, plus a premium (expressed as a percentage of the principal amount or Accreted Value of Series 1991 Bonds to be redeemed) as follows: ,056\%691.6\BoodP.w7.doc A-4 Redemption Dates Redemption Price November 1, 2001 and May 1, 2002 102% November 1, 2002 and May 1, 2003 101% November 1, 2003 and thereafter 100% Series 1991 Bonds maturing on November 1, 2015 (the 112015 Term Bonds") are subject to mandatory redemption in part by lot prior to maturity from Sinking Account Installments made on November 1, 2007 and on each November 1 thereafter to an including November 1, 2015 (each a "sinking Account Payment Date") at a redemption price equal to 100$ of the Accreted Value thereof plus accrued interest, if any, to the redemption date. 2016 Term Bonds and the 2015 Term Bonds are referred to herein collectively as the "Term Bonds") The following Sinking Account Installments are calculated to be sufficient to redeem the principal amount of 2015 Term Bonds: Redemption Date (November 1) 2007 2008 2009 2010 2011 2012 2013 2014 2015 (Maturity) Principal Amount Series 1991 Bonds maturing on November 1, 2016 (the 112016 Term Bonds") are subject to mandatory redemption in part by lot prior to maturity from sinking account payments (the "Sinking Account Installments") made on November 1, 2007 and on each November 1, thereafter to and including November 1, 2016 (each a "Sinking Account payment Date") at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date. The following Sinking Account Installments are calculated to be sufficient to redeem the principal amount of 2016 Term Bonds: J56\%691.6\BondRa7.doc A-5 Redemption Date (November 1) Principal Amount 2007 $ 2008 2009 2010 2011 2012 2013 2014 2015 (Maturity) Notice of the call for any redemption, identifying the Series 1991 Bonds or portion thereof to be redeemed, shall be given by the Fiscal Agent by mailing by first-class mail, postage prepaid, a copy of the redemption notice not more than 60 days and not less than 30 days prior to the date fixed for redemption to the Owner of each Series 1991 Bond to be redeemed in whole or in part at the address shown on the registration books maintained by the Fiscal Agent. If this Series 1991 Bond is called for redemption and payment is duly provided therefor as specified in the Resolution, interest shall cease to accrue hereon from and after the date fixed for redemption. If an event of default, as defined in the Resolution, shall occur, the principal of all Series 1991 Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Resolution; provided that, so long as the Bond Insurance Policy (as defined in the Resolution) is in full force and effect, no such declaration shall be effective without the written consent of 0 Such declaration and its consequences may be rescinded and annulled as further provided in the Resolution. The Series 1991 Bonds are issuable only in fully registered form in denominations of $5,000 or any integral multiple thereof, with respect to the Currently Interest Series 1991 Bonds, and $5, 000 per final maturity amount or may integrate multiple thereof, with respect to the Series 1991 Capital Appreciation Bonds. Subject to the limitations and upon payment of the charges, if any, provided in the Resolution, this Series 1991 Bond may be exchanged, at the principal corporate trust office of the Fiscal Agent, for registered Series 1991 Bonds of the same maturity of other authorized denominations. This Series 1991 Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at said office of the Fiscal Agent, but only in the manner, subject to the limitations and upon payment of the charges provided in the .P056\94691.6\BoWRa7.doc A-6 s Resolution, and upon surrender and cancellation of this Series 1991 Bond. Upon such transfer a new fully registered Series 1991 Bond or Series 1991 Bonds without coupons, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The Agency and the Fiscal Agent may treat the Owner hereof as the absolute owner hereof for all purposes, and the Agency and the Fiscal Agent shall not be affected by any notice to the contrary. J56\94691.6\BoMRea7.doc A-7 STATEMENT OF INSURANCE M6\94691.6\BondRc*7.doc A-8 [FORM OF ASSIGNMENT TO APPEAR ON BONDS] For value received the undersigned do(es) hereby sell, assign and transfer unto the within -mentioned Series 1991 Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the Series 1991 Bond register of the Fiscal Agent, with full power of substitution in the premises. Dated: Note: The signatures) to this Assignment must correspond with the name(s) as written on the face of the within Series 1991 Bond in every particular, without alteration or enlargement or any change whatsoever. 56\94691.6\BondRcs7.doc A-9 TUSTIN COMMUNITY REDEVELOPMENT AGENCY RESOLUTION NO. RDA 91-11, ADOPTED MAY 20, 1991 RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AUTHORIZING THE INVITATION OF BIDS FOR THE PURCHASE OF TOWN CENTER AREA REDEVELOPMENT PROJECT TAX ALLOCATION BONDS, SERIES 1991 OF SAID AGENCY; APPROVING THE NOTICE OF INTENTION TO SELL BONDS, THE PRELIMINARY OFFICIAL STATEMENT, THE NOTICE INVITING BIDS AND OFFICIAL FORM OF BID; AND AUTHORIZING THE PUBLICATION OF THE NOTICE OF INTENTION TO SELL BONDS WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") deems it necessary and proper that bids be invited for the purchase of the Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991 (the "Series 1991 Bonds") of the Agency and that the Series 1991 Bonds be sold in the manner and at the time and place hereinafter set forth; NOW, THEREFORE, BE IT RESOLVED by the Tustin Community Redevelopment Agency as follows: Section 1. Sealed bids for the purchase of the Series 1991 Bonds shall be received by the Executive Director of the Agency or his designee at the time and place hereinafter set forth in the Notice of Intention to Sell Bonds and the Notice Inviting Bids as hereinafter approved. Section 2. The Executive Director is hereby authorized and directed to cause a Notice of Intention to Sell Bonds, substantially in the form annexed hereto as "Exhibit All and hereby approved by this Agency, to be .published by one insertion in The Tustin News, a newspaper of general circulation published in the City of Tustin and said publication to be at least five ( 5 ) days prior to the date of receiving bids (as determined in accordance with Section 1 hereof). Section 3. The .Executive Director is further authorized and directed to cause said Notice of Intention to Sell Bonds to be published by one insertion in The Bond Buyer, a financial publication generally circulated throughout California, said publication to be at least 15 days prior to the date of receiving bids (as determined in accordance with Section 1 hereof). Section 4. The Agency hereby approves the Preliminary Official Statement substantially in the form on file with the Secretary, a copy of which has been presented to the Agency, with c: \6056\94691.1 \Rao7. Doc such changes therein as the Executive Director may determine necessary, to be furnished to prospective bidders for the Series 1991 Bonds as provided in Section 6 hereof. The Agency deems the Preliminary Official Statement to be final within the meaning of Security and Exchange Commission Rule 15c2-12, subject to completion of those items permitted by said Rule. The Agency directs the Secretary to file the Preliminary Official Statement in her office and to identify it as being the Preliminary Official Statement so approved hereby, by an endorsement thereon to that effect over her signature. The Executive Director or his designee is authorized and directed to execute and deliver a final Official Statement in substantially the form of the Preliminary Official Statement hereby approved, with such additions thereto and changes therein as are consistent with this Resolution and recommended or approved by Bond Counsel to the Agency and approved by such officer, such approval to be conclusively evidenced by the execution and delivery thereof. Section S. The Executive Director is authorized and directed to cause to be furnished to prospective bidders, upon their request, a reasonable number of copies of the form of resolution (to be adopted following the sale of the Series 1991 Bonds) authorizing the issuance of the Series 1991 Bonds, and the Preliminary Official Statement. The Executive Director is authorized and directed to cause to be furnished to prospective bidders, upon their request, a reasonable number of copies of the Notice Inviting Bids and Official Form of Bid substantially in the forms annexed hereto as "Exhibit B" and "Exhibit C", respectively, and hereby approved by the Agency. The Executive Director is further authorized and directed, after any bid for the purchase of the Series 1991 Bonds has been accepted, and after the final Official Statement has been prepared, to cause to be furnished to the successful bidder, for use in connection with the resale of the Series 1991 Bonds, such number of copies of the final Official Statement as may be reasonably required. PASSED, APPROVED AND ADOPTED this 20th day of May, 1991. (SEAL] ATTEST: Charles E. Puckett, Chairman City Clerk c: \6056\94691.1 \RmoT Doc 2 EXHIBIT A NOTICE OF INTENTION TO SELL BONDS $13,800,000 TUSTIN COMMUNITY REDEVELOPMENT AGENCY, TUSTIN, CALIFORNIA Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991 The Tustin Community Redevelopment Agency intends to receive sealed bids until 10:00 a.m., Pacific Daylight Savings Time, on Monday, July 15, 1991 at the offices of Mudge Rose Guthrie Alexander & Ferdon, 333 South Grand Avenue Suite 2020 Los Angeles, California, for the above Series 1991 Bonds dated July 1, 1991 and maturing in varying amounts on November 1 of the years 1992 to 2016, inclusive. Bid security in the amount of $100,000 in the form of a certified or cashier's check will be required. Copies of the complete Notice Inviting Bids, together with copies of the Preliminary Official Statement to be issued in connection with the sale of the Series 1991 Bonds,- Official Form of Bid, and Bond Resolution may be obtained from the Secretary of the Agency, 15222 Del Amo, Tustin, California 92680, or from the office of the Agency's financial advisor, Stone & Youngberg, 15260 Ventura Blvd., Suite 310, Sherman Oaks, California 91403. WILLIAM A. HUSTON Executive Director Tustin Community Redevelopment Agency c:\6056\94691.1\ReW7.Doc A-1 EXHIBIT B NOTICE INVITING BIDS $13,800,000 TUSTIN COMMUNITY REDEVELOPMENT AGENCY Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991 NOTICE IS HEREBY GIVEN that sealed proposals for the purchase of $13,800,000 par value bonds entitled "Town Center Area Redevelopment Project Tax Allocation Bonds, Series 1991" (the "Series 1991 Bonds") of the Tustin Community Redevelopment Agency (the "Agency") will be received by said Agency at the place and up to the time specified below. TIME: Monday, July 15, 1991 10:00 a.m., Pacific Daylight Savings Time PLACE: Law Offices of Mudge Rose Guthrie Alexander & Ferdon 333 South Grand Avenue Suite 2020 Los Angeles, California 90071 MAILED BIDS: Mailed bids should be addressed to: City Clerk of the City of Tustin c/o Mudge Rose Guthrie Alexander & Ferdon 333 South Grand Avenue Suite 2020 Los Angeles, California 90071 OPENING OF BIDS: The bids will be publicly opened and read at the above address at the time and place shown above and will be presented to the Agency at its meeting to be held later on the same date in the City Hall Council Chambers, 300 Centennial Way, Tustin, California. If no acceptable bids are received at the time shown above,. the Agency will again offer the Series 1991 Bonds on July 22, 1991 and on each successive Monday thereafter at 10:00 a.m. at the place indicated above,'until the Series 1991 Bonds are sold or this notice is withdrawn by the Agency. ISSUE: $13,800,000 designated "Town Center Area Redevelop- ment Project Tax Allocation Bonds, Series 1991." The Series 1991 Bonds will be fully registered, will be in the denomination of $5,000 or any integral multiple thereof and will be dated July 1, 1991, with respect to the Series 1991.Current Interest Bonds, and c:\6056\94691.1\RaO. Doc B-1 will be in the denomination of $5,000 per final maturity and will be dated the delivery date thereof , with respect to the Series 1991 Capital Appreciation Bonds. PRINCIPAL PAYMENTS: Principal of the Series 1991 Bonds will be payable on November 1 in the` amounts for each of the several years as follows: Principal Principal Year Amount Year Amount 1992 $ 2005 $ 1993 2006 1994 2007* 1995 2008* 1996 2009* 1997 2010* 1998 2011* 1999 2012* 2000 2013* 2001 2014* 2002 2015* 2003 2016* 2004 INTEREST: The Series 1991 Current Interest Bonds shall bear interest from July 1, 1991 at a rate or rates to be fixed upon the sale thereof but not to exceed 12% per annum, payable semiannually on May 1 and November 1, commencing May 1, 1992. The Series 1991 Capital Appreciation Bonds will accrete interest from their dated date compounded semiannually on each May 1 and November 1, commencing May 1, 1992. PAYMENT: Interest on the Series 1991 Current Interest Bonds will be payable by check or draft of Security Pacif is National Bank (the "Fiscal Agent") , mailed to the registered owners thereof as of the fifteenth day of the calendar month immediately preceding the Interest Payment Date. Principal and premium, if any, and accreted value in the case of the Series 1991 Capital Appreciation Bonds, will be paid upon presentation and surrender of the Series 1991 Bonds at the principal corporate trust office of the Fiscal Agent in Los Angeles, California. *To be designated by the winning bidder as either a maturity date or a sinking fund payment date with respect to term Series 1991 Bonds. See "Terms of Sale." c: \6056\94691.1 \Rew7. Doc B-2 REDEMPTION: Optional Redemption. The Series 1991 Bonds maturing on or prior to November 1, 2001, are not subject to optional before their maturity. Series 1991 Bonds maturing on and after November 1, 2002, are subject to optional redemption in whole or in part on any Interest Payment Date on or after November 1, 2001, in inverse order of maturity and by lot within a maturity, upon notice at the option of the Agency from any available source of funds, at a redemption price equal to the principal amount of accreted value thereof to be redeemed, together with accrued interest thereon to the redemption date, plus a premium (expressed as a percentage of the principal amount or accreted value of Series 1991 Bonds to be redeemed) as follows: Redemption Dates November 1, 2001 through May 1, 2002 November 1, 2002 through May 1, 2003 November 1, 2003 and thereafter Sinking Fund Redemption. Any Series the winning bidder as term Series 1991 mandatory call and redemption in part at pa 1 in the years prior to their maturity d event prior to November 1, 2007. Premiums 102 101 100 % 1991 Bonds designated by Bonds are subject to r and by lot on November ate or dates, but in no PURPOSE AND AUTHORIZATION: The Series 1991 Bonds are being issued to finance a portion of the costs of the Town Center Area Redevelopment Project. The Series 1991 Bonds are to be issued pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the California Health and Safety Code) and pursuant to the resolution (to be adopted by the Agency following the award of the Series 1991 Bonds, authorizing the issuance of the Series 1991 Bonds (the "Resolution"). SECURITY: The Series 1991 Bonds are payable from and secured solely by the Pledged Revenues (as defined in the Resolution) and certain funds and accounts created under the Resolution and do not constitute a debt of the City of Tustin or of the State of California or any of its political subdivisions (other than the Agency). The Series 1991 Bonds will rank on a parity with the outstanding Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987 and any additional parity bonds which may be issued in the future in accordance with the Resolution. TERMS OF SALE Interest Rate. The maximum rate bid may not exceed 12% per annum payable semiannually. Each rate bid must be a multiple of 1/8 or 1/20 of 1%. No Series 1991 Bond shall bear more than one interest rate, and all Series 1991 Bonds of the same maturity shall bear the same rate. Each Series 1991 Bond must bear interest at the rate specified in the bid from its date to its fixed maturity date. c:\6056\%69 1. I\Rcw7. Doc B-3 -- Only one interest rate will be assigned to each Series 1991 Bond for each installment of interest thereon, and bids providing for additional or supplemental interest rates will be rejected. The interest rate on any maturity or group of maturities shall not be more than 2% higher than the interest rate on any other maturity or group of maturities. The interest rate on any maturity shall not be lower than the interest rate on any earlier maturity. Purchase Price; Premium or Discount. Bidders may specify a premium or discount, t the discount shall not exceed 2% of the par value of the Seri 1991 Bonds. The Series 1991 Bonds shall be sold for cash only. All bids must be for not less than all of the Series 1991 Bonds hereby offered for sale and each bid shall state that the bidder offers accrued interest to the date of delivery, the purchase price, which shall not be less than 98% of par, and the interest rate or rates not to exceed that specified herein, at which the bidder offers to buy the Series 1991 Bonds. Each bidder shall state in its bid the true interest cost (expressed as a percentage), which shall be considered informative only and not a part of the bid. Maturity/Mandatory Call Schedule. Each bidder shall designate each of the years 2007 to and including 2016 (as shown above under the caption "PRINCIPAL PAYMENTS") as either a serial Series 1991 Bond maturity date, a term Series 1991 Bond maturity date, or a sinking fund payment date with respect to a term Series 1991 Bond maturity. Insurance. has issued a commitment for municipal bond insurance relating to the Series 1991 Bonds. All bids may be conditioned upon the issuance effective as of the date on which the Series 1991 Bonds are issued, of a policy of insurance by , insuring the payment when due of principal of and interest or accreted value on the Series 1991 Bonds. Each Series 1991 Bond will bear a legend referring to the insurance. The purchaser, holder or owner is not authorized to make any statements concerning the insurance beyond those set out here and in the bond legend without the approval of • Best Bidder. The Series 1991 Bonds will be awarded to the best responsible bidder or bidders, considering the interest rate or rates specified and the premium or discount offered, if any. The best bid will be determined by doubling the semiannual interest rate (compounded semiannually) necessary to discount the debt service payment from the payment dates to the date of the Series 1991 Bonds and to the price bid, excluding accrued interest. Such true interest cost calculation shall be made to the eighth decimal place. The purchaser must pay accrued interest (computed on a 360 -day year basis) from the date of the Series 1991 Bonds to the c:\6056\94691.1\Rcw7.Doc B-4 date of delivery. The cost of printing the Series 1991 Bonds will be borne by the Agency. Right of Rejection. The Agency reserves the right, in its discretion, to reject any and all bids and to the extent not prohibited by law to waive any irregularity or informality in any bid. Prompt Award. The Agency will take action awarding the Series 1991 Bonds or rejecting all bids not later than 26 hours after the time herein provided for the receipt of proposals; provided that the award may be made after the expiration of the specified time if the bidder shall not have given to the Agency notice in writing of the withdrawal of such proposal. Place of Closing; Place of Delivery and Funds for Payment. The closing will take place at the offices of Mudge Rose Guthrie Alexander & Ferdon, 333 South Grand Avenue, Los Angeles, California, or at such other place as may be agreed upon by the successful bidder and the Agency. Payment for the Series 1991 Bonds shall be made in Federal Reserve Bank funds or other funds immediately available to the Agency. Any expense of providing immediately available funds, whether by transfer of Federal Reserve Bank funds or otherwise, shall be borne by the purchaser. Prompt Delivery; Cancellation for Late Delivery. It is expected that the Series 1991 Bonds will be delivered to the successful bidder approximately three weeks after the bid is accepted. The successful bidder shall have the right, at its option, to cancel the contract of purchase if the Agency shall fail to execute the Series 1991 Bonds and tender them for delivery within 60 days from the date herein fixed for the receipt of bids, and in such event the successful bidder shall be entitled to the return of the check accompanying its bid. The Agency expects to make such delivery in the form of definitive bonds, but reserves the right to make such delivery in the form of temporary bonds, exchangeable for definitive bonds at no cost to the purchaser. Form of Bid. Each bid, together with the bid check, must be in a sealed envelope, addressed to the Agency, with the envelope and bid clearly marked "Proposal for Tax Allocation Bonds." Each bid must be in accordance with the terms and conditions set forth herein, or permitted herein, and must be submitted on, or in substantial accordance with, the official Bid Form provided by the Agency. Bid Check. A certified or cashier's check on a responsible bank or trust company in the amount of $100,000, payable to the order of the Agency, must accompany each proposal to secure the c:\6056\94691.1\Rmo7.Doc B-5 Agency from any loss resulting from the failure of the bidder to comply with the terms of its bid. No interest will be paid upon the deposit made by any bidder. The check accompanying each unaccepted proposal will be returned promptly. The deposit of the successful bidder shall become the property of the Agency and shall be cashed by the Agency, and the amount of said deposit shall be credited toward the purchase price of the Series 1991 Bonds. If the purchase price is not so paid upon the tender of the Series 1991 Bonds, the successful bidder shall have no right in or to the Series 1991 Bonds or to the recovery of said deposit, unless it shall appear that the Series 1991 Bonds cannot be validly issued in the form and manner proposed. Change in Tax Exempt Status. At any time before the Series 1991 Bonds are tendered for delivery, the successful bidder may disaffirm and withdraw the proposal if the interest received by private holders from bonds of the same type and character shall be declared to be no longer excluded from gross income of such holders under present federal income tax laws, either by a ruling of the Internal Revenue Service or by a decision of any federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes (except to the extent presently taken into account in calculating book income and current earnings for purposes of calculating corporate alternative minimum taxable income) , by the terms of any federal income tax law enacted subsequent to the date of this notice. Reoffering Price. Simultaneously with or before delivery of the Series 1991 Bonds, the successful bidder shall furnish to the Agency a written statement in form and substance acceptable to bond counsel: (a) stating the initial reoffering prices on each maturity of the Series 1991 Bonds to the general public and the reoffering prices of each maturity of the Series 1991 Bonds, if any, reoffered to institutional or other investors with concessions or at discounts from the reoffering prices to the general public; (b) certifying that a bona fide offering of the Series 1991 Bonds has by such date been made to the public (excluding bond houses, brokers, and other intermediaries); and (c) stating the price at which each Series 1991 Bond was sold, or will be sold, to institutional or other investors with concessions or at a discount from the prices at which Series 1991 Bonds were, or will be, sold to the general public (excluding bond houses, brokers, and other intermediaries) prior to the sale of any Series 1991 Bonds of each maturity at other prices. California Debt Advisory Commission. The Agency has duly notified the California Debt Advisory commission of the fees proposed osed sale of the Series 1991 Bonds. Paymentall the California Debt Advisory Commission in connection with the execution, sale and delivery of the Series 1991 Bonds shall be the c: \6056\94691.1 \Rew7. Doc B-6 sole responsibility of the successful bidder, and not of the Agency. Closing Papers; Legal Opinion. Each proposal will be understood to be conditioned upon the Agency furnishing to the purchaser, without charge, concurrently with payment for and delivery of the Series 1991 Bonds, the following closing papers, each dated the date of delivery: (a) Legal Opinion - The opinion of Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California, and Rourke & Woodruff, A Professional Corporation, Orange, California, co -bond counsel, approving the validity of the Series 1991 Bonds and stating that interest on the Series 1991 Bonds is excluded from gross income of the holders under present federal income tax laws, and that such interest is also exempt from personal income taxes of the State of California under present state income tax laws; (b) Nonarbitrage Certificate - A certificate of the Agency certifying that on the basis of the facts, estimates and circumstances in existence on the date of issue, it is expected that the proceeds of the Series 1991 Bonds will not be used in a manner that would cause the Series 1991 Bonds to be arbitrage bonds; (c) Signature and No -Litigation Certificate - A certificate of the Agency signed by officers of the Agency certifying the following: (1) that said officers have signed the Series 1991 Bonds, whether by facsimile or manual signature, and that they were respectively duly authorized to execute the same; and (2) that there is no litigation threatened or pending affecting the validity of the Series 1991 Bonds; (d) Receipt - The receipt of the Agency showing that the purchase price of the Series 1991 Bonds, including interest accrued to the date of delivery thereof, has been received by the Agency; and (e) Certificate re Official Statement - A certificate of an officer of the Agency, acting in such person's official and not personal capacity, to the effect that at the time of the sale of the Series 1991 Bonds and at all times subsequent thereto up to and including the time of delivery of the Series 1991 Bonds, the Official Statement relating to the Series 1991 Bonds did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, c:\6056\%691.1\Rao7. Doc B-7 in light of the circumstances under which they were made, not misleading. Official Statement. The Preliminary Official Statement dated , 1991 is in a form "deemed final" by the Agency, except for certain pricing information, for the purpose of Rule 15c2-12 (b)(1) of the Securities and Exchange Commission but is subject to revision, amendment and completion in a final Official Statement. The Agency will furnish to the successful bidder or bidders within seven business days following award of the Series 1991 Bonds as many copies of the final Official Statement as the bidder or bidders shall request in their Official Form of Bid. No charge will be made to the successful bidder for the first copies of the final Official Statement. CUSIP Numbers. It is anticipated that CUSIP numbers will be printed on the Series 1991 Bonds, but neither the failure to print such numbers on any Series 1991 Bond nor error with respect thereto shall constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Series 1991 Bonds in accordance with the terms of the bid. All expenses of printing CUSIP numbers on the Series 1991 Bonds shall be paid by the Agency, but the CUSIP Service Bureau charge for the assignment of said numbers shall be paid by the purchaser. INFORMATION AVAILABLE. Requests for information concerning the Agency or additional copies of this Notice Inviting Bids, the Official Bid Form and the Preliminary Official Statement should be addressed to: Stone & Youngberg 15260 Ventura Boulevard Suite 310 Sherman Oaks, California 91403 818-906-0315 GIVEN by order of the Tustin Community Redevelopment Agency, adopted May 20, 1991. WILLIAM A. HUSTON Executive Director Tustin Community Redevelopment Agency c: \6056\94691.1 \Reso7. Doc B-8 EXHIBIT C OFFICIAL BID FORM $13,800,000 TUSTIN COMMUNITY REDEVELOPMENT AGENCY Town Center Area Redevelopment Project Tax Allocation Bonds,. Series 1991 ff 1991 Tustin Community Redevelopment Agency Ladies and Gentlemen: On behalf of a group which we have formed, consisting of the firms hereinafter named, and pursuant to the Notice Inviting Bids dated , 1991, we offer to purchase $13,800,000 principal amount, all or none, of the bonds of the Agency designated as "Town Center Area Redevelopment Project Tax Allocation Bonds, Series 199111, particularly described in said Notice, with interest as set -- forth in the following schedule, entitled "Schedule of Interest Rates", and to pay therefor the principal amount thereof [plus a premium of $ ] [ less a discount of $ ] making a total sum of $ plus interest accrued on such bonds to the date of delivery thereof. \6056\94691.1\Rmo7.Doc C-1 Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SCHEDULE OF INTEREST RATES Principal Amount Rate For the years 2007 through 2016, indicate whether serial bond maturity, term bond maturity or sinking fund payment. This bid is made subject to all of the terms and conditions of the Notice Inviting Bids dated , 1991, all of which terms and conditions are made a part hereof as fully as though set forth in this bid. There is enclosed herewith a certified or cashier's check for $100,000 payable to the order of the Agency. If this bid is accepted and the Series 1991 Bonds are awarded to us, the amount of the check will be credited toward the purchase price of the Series 1991 Bonds. If this bid is unsuccessful, the check will be returned promptly to the undersigned. There is submitted herewith a "Memorandum of Interest Cost" (which shall not constitute a part of this bid), stating the total interest and the true interest cost determined thereby. c:\6056\9x691.1\Rew7.Doc C-2 We hereby request that copies of the Official Statement be furnished to us in accordance with the Notice Inviting Bids. Very truly yours, By. Address: Phone: LIST OF SYNDICATE MEMBERS (subject to Change prior to Delivery of Series 1991 Bonds) x:\6056\94691. 1uRm7.Da C-3 e MEMORANDUM OF INTEREST COST The purchase price of the Series 1991 Bonds and the true interest cost is determined as follows: PRINCIPAL AMOUNT OF SERIES 1991 BONDS $ LESS DISCOUNT OR PLUS PREMIUM TOTAL PURCHASE PRICE $ (excluding accrued interest) TRUE INTEREST COST* * Please calculate to eight (8) decimal places. c:\6056\%691. I\I wIt 7. Doc C-4 NEW ISS[JE 5/12/91 In the opinion of Co -Bond Counsel, under existing law, the interest on the Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the tax covenant described herein, is excluded from gross income for Federal income tax purposes and is not a specific preference item for purposes of the Federal alternative minimum tax. See, however, "TAX EXEMPTION" herein regarding certain other tax considerations. $13,800,000 E Q ZUSTIN COMMITY REDEVELOPMENT AGENCY SAY 1 4 199) TONIN CENTER AREA REDEVELOPMENT PROJECT TAX ALLOCATION BONDS, SERIES 1991 FINANCE DEPT. Current Interest Bonds dated: July 1, 1991 Due: November 1 as shown below Capital Appreciation Bonds dated: Delivery Date Interest on the Series 1991 Current Interest Bonds is payable on May 1 1992 and semiannually thereafter on May 1 and November 1 (each an "Interest Payment Date") of each year until maturity. The Series 1991 Capital Appreciation Bonds will accrue interest from their dated date compounded semiannually on each May 1 and November 1, commencing May 1, 1992, payable only at maturity or earlier redemption as a component of their Accreted Value. The Series 1991 Bonds will be issued and delivered as fully registered bonds only and, when issued and delivered, will be registered in the name of CEDE & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to ultimate purchasers ("Beneficial Owners") in the denomination of $5,000 or any integral multiple thereof with respect to Series 1991 Current Interest Bonds and $5,000 per final maturity amount or any integral multiple thereof in the case of Series 1991 Capital Appreciation Bonds, under the book -entry system maintained by DTC, only through brokers and dealers who are, or who act through, Participants. Beneficial Owners will not be entitled to receive delivery of the Series 1991 Bonds. Principal, Accreted Value, premium, if any, and interest are payable directly to DTC by the Fiscal Agent. So long as DTC or its nominee remains the registered Owner of the Series 1991 Bonds, disbursement of such payments to Participants is the responsibility of DTC and disbursement of such payments to the .Beneficial Owners is the responsibility of Participants. See "THE SERIES 1991 BONDS - Book -Entry System" herein. The Series 1991 Bonds are subject to optional and mandatory redemption as described herein. The Series 1991 Bonds are being issued for the purpose -of funding certain activities of the Tustin Community Redevelopment Agency (the "Agency") pursuant to the Redevelopment Law as more fully described herein. The proceeds from the sale of the Series 1991 Bonds will be used to provide financing for the purposes more fuly described herein and permitted under the Redevelopment Law, to fund a reserve account and to pay the costs of issuance of the Series 1991 Bonds. M The Series 1991 Bonds are limited obligations of the Agency payable from and secured by Tax Revenues (as hereafter defined) to be derived from the Town Center Redevelopment Project of the Agency (the "Project Area") and from interest earnings on the funds and accounts on deposit with the Fiscal Agent. Taxes levied on the property within the Project Area on that portion of the assessed valuation over and above the assessed valuation of the base year for the Project Area, shall be delivered to the Agency to be deposited in the Special Fund administered by the Fiscal Agent for the payment of interest, principal and premium, if any, on the Series 1991 Bonds. The receipt of Tax Revenues is subject to certain risks which are described under "BONDOWNERS' RISKS" herein. THE SERIES 1991 BONDS ARE NOT A DEBT OF THE CITY OF TUST I N , THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY, AND NEITHER SAID CITY, SAID STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY IS LIABLE THEREFOR. THE INTEREST, PRINCIPAL AND ACCRETED VALUE OF AND PREMIUM, IF ANY, ON THE SERIES 1991 BONDS ARE PAYABLE SOLELY FROM TAX REVENUES ALLOCATED TO THE AGENCY FROM THE PROJECT AREA. THE SERIES 1991 BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY, THE CITY, NOR ANY PERSONS EXECUTING THE SERIES 1991 BONDS ARE LIABLE PERSONALLY ON THE SERIES 1991 BONDS BY REASON OF THEIR ISSUANCE. MATURITY SCHEDULE $ Series 1991 Current Interest Serial Bonds Maturity Date Principal Interest Maturity Date Principal Interest November 1 Amount Rate Price November 1 Amount Rate Price 1992 $ % 2000 $ % 1993 2001 1994 2002 1995 2002 1996 2003 1997 2004 1998 2005 1999 2006 $ % Series 1991 Capital Appreciation due November 1, 2015 $ % Series 1991 Current Interest Term due November 1, 2016 Price: Term Bonds Bonds (Plus Accrued interest from the Dated Date) The Series 1991 Bonds are offered, when, as and if issued, subject to approval as to legality by Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California, and Rourke & Woodruff, a Professional Corporation, Orange, California, Co -Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the Agency by its General Counsel. It is anticipated that the Series 1991 Bonds in definitive form will be available for delivery in New York on or about July — , 1991. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those 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 Agency or the Financial Advisor. Statements contained in this Official Statement which involve estimates, forecasts, or other matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representation of fact. The information and expressions of opinion stated herein are subject to change without notice. The information set forth herein has been obtained from sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation of such by the Agency or the Financial Advisor. 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 Agency since the date hereof. This Official Statement has been "deemed final" by the Agency pursuant to Rule 15c2-12 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended, except for information which is permitted to be excluded from this Official Statement under said Rule 15c2-12. 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 1991 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Summaries and references to statutes, resolutions and other documents referred to herein do not purport to be comprehensive or definitive, and are qualified in their entirety to each of said statutesm resolutions and documents. -i- TOE TUSTIN C(nwNITY REDEmDPENf AGENCY TUSTIN, CALIFORNIA CITY COUNCIL AND NMERS OF THE AGENCY Charles E. Puckett, Mayor and Chairman Leslie Anne Pontious, Mayor Pro Tem and Vice Chairman Jim Potts Earle J. Prescott Richard B. Edgar CITY AND AGENCY STAFF William A. Huston, City Manager and Executive Director Ronald A. Nault, Director of Finance and Treasurer Christine A. Shingleton, Assistant City Manager and Director of Community Development James G. Rourke, City Attorney and Agency General Counsel PROFESSIONAL SERVICES Co -Bond Counsel Mudge Rose Guthrie Alexander & Ferdon Los Angeles, California and Rourke & Woodruff, A Professional Corporation Orange, California Fiscal Agent [To Come Los Angeles, California Fiscal Consultant Katz Hollis, Inc. Los Angeles, California Financial Advisor Stone & Youngberg Los Angeles, California TABLE OF CONTENTS O Introduction............................................................. The Series 1991 Bonds ................................................... Description.......................................................... Book -Entry System .................................................... Optional Redemption .................................................. Sinking Account Redemption ........................................... Notice of Redemption ................................................. Purchase of Outstanding Bonds ........................................ Transfer and Exchange ............................................... Sources and Uses of Funds ....•.•••••••••••••. ..................•••••• Debt Service Schedule ................................................ Security for the Bonds .......•••••••........................•••........ Pledge of Tax Revenues .....•.•••••••••• .........................•••.. Series 1991 Bonds Parity Debt .:..................................... Reserve Account ...................................................... Subordinate Obligations .............................................. Bondowners' Risks ........................................................ Property Tax Increment Revenues ...................................... Reduction in Tax Revenues ....... ..................................... Book -Entry System .................................................... Limitations on.Tax Revenues .............................................. Property Tax Rate Limitations - Article XIIIA ........................ Appropriation Limitations - Article XIIIB ......................•••••• Low and Moderate Income Housing Requirements ......................... Property Tax Collection Procedures ................................... Unitary Property ..................................................... Business Inventory and Supplemental Revenues ......................... Tax Revenues and Debt Service ............................................ Property Tax Increment ............................................... Historical Taxable Values ............................................ Projected Revenues and Debt Service .................................. Debt Service and Estimated Coverage .................................. TheAgency............................................................... General.............................................................. AgencyPowers........................................................ Agency Members....................................................... AgencyStaff......................................................... Agency Financial Statements .......................................... Town Center Redevelopment Project ........................................ Background.......................................................... Controls, Land Use and Building Restrictions ......................... Major Development Activities in the Project Area ..................... Application of Bond Proceeds ......................................... TaxExemption............................................................ Approval of Legal Proceedings ............................................ Litigation............................................................... Legality for Investment .................................................. • _. Ratings.................................................................. Underwriting............................................................. Miscellaneous ............................... Appendix A - Definitions ................................................. A-1 B-1 Appendix Appendix B C - The Resolution .............................................. - Supplemental Information On The City Of Tustin .............. C-1 Appendix D - Opinion of Bond Counsel ..................................... D-1 E-1 Appendix E - Agency Financial Information ................................ F-1 Appendix Appendix F G - Fiscal Consultant's Report .................................. - Accreted Value Table for Capital Appreciation Bonds ......... G-1 VENTURA V E N T U R A KERN COUNTY ' ,\ COUNTY Oxnard , Lancaster \ 118 Moorpark ` \ Hueneme Palmdale Valley I Pakrtdak Thousand i Oaks San Fernando L O S A N G E L E S Barstow 1 lol � COUNTY MaMbtt Burbank Sena Afa+iea Glendale Bay Sang Monica • PASADENA , Alhambra r/ Ing tewood �J • LOS •Monrovia / Manhattan Beach ANGELES •GWtdora /� • SAN B E R N A R U I N O Redondo Beach Compton Whittier Clarentorn ' Hesperia C O Ll N T Y Rmeho Palos Vadaa • 1 , Pomona Montclair Raneho Norwalk /, La Habra / C a -, . •` \ �" ✓ • Lake Arrowhead F~on _ + •Ontario` Fontana `ra UM BEACH • Yortia Chino I 1 B aheirn — \ • Big Bear Lake •0 91 \� \ . SAN IIERNARDENO SANTA ANA I RIVERSIDE r Redlands Httrt"on Beach Corona 38 Co la Mesa t n • I \ Newport Beach 7 3 ORANGE � Irvine Avalon Mission Viejo \ . Laguna Beach co U N T 1` Perris Banning \ SANTA CATMJKA MAND ` \ 1 San .wan / Sun City \ Capistrano Lake \ Dana Point Elsinore ,( Hemet � \ San Ctartettte �. �." � • \ R I V E R S I D E PALM SPRINGS Off of \ Rancho Calitomia i I1 n Santa Catalina 4, COUNTY Cathedral City t \ Rancho Mirage w' \ Palm Desert • rOCEANUDE ` \ Indian Wells \ Carlsbad Vista ` \ Indio 78 ` \ C) \ M CardM by the Sea San Marcos - ESCONDIDO \ \ 2 �\ Poway • \ SAN DIEGO COUNTY / �\ , fAN WEGO � EI Cajon Salaon Coronado / son h National City , Imperial Beach • Tijuana `\. / IMPERIAL COUNTY GREATER ' • SOUTHERN CALIFORNIA ' AREA MEx1.00 10 5 0 10 20 Mil" EI Centro e MCVL)Donm by STONE E YOUNGBERG. t Como"" Steal, San Franc". CA 94111 3M $13,800,000 TUSTIN COb WNITY REDEVELOPMENT AGENCY TONIN CENTER AREA REDEVELOPMENT PROJECT TAX ALIACATION BONDS, SERIES 1991 IIS MDUCTION This Official Statement, including the cover page, Table of Contents and appendices hereto, is provided to furnish information in connection with the sale by the Tustin Community Redevelopment Agency (the "Agency") of its $13,800,000 aggregate principal amount of Redevelopment Project Tax Allocation Bonds, Series 1991 (the "Series 1991 Bonds"). The Series 1991 Bonds are being issued by the Agency under the authority and in accordance with the Constitution and the laws of the State of California (the "State") including the Community Redevelopment Law of the State of California (the "State"), constituting Part 1 of Division 24 (commencing with Section 33000) of the California Health and Safety Code, as amended (the "Redevelopment Law"). The Series 1991 Bonds will be issued pursuant to and will be secured by the terms of Resolution No. 91-10, adopted by the Agency on May 20, 1991 (the Series 1991 Resolution"), Resolution No. RDA 87-8, adopted by the Agency on August 3, 1987, the "Series 1987 Resolution" and together with the Series 1991 Resolution (the "Resolution'). The Agency has appointed Los Angeles, California, to act as Fiscal Agent (the "Fiscal Agent") for the Bonds pursuant to the Resolution. The Series 1991 Bonds will be issued on a parity with the Agency's $8,060,000 aggregate principal amount of the Tustin Community Redevelopment Project Tax'Allocation Refunding Bonds, Series 1987 (the "Series 1987 Bonds"), of which $7,510,000 aggregate principal amount are currently outstanding. The Series 1991 Bonds and the Series 1987 Bonds are referred to herein collectively as the "Bonds." The Resolution permits under certain circumstances the issuance of additional series of bonds payable from and secured by the Tax Revenues (as hereafter defined) and secured by a lien and charge upon Tax Revenues equal to the lien and charge securing the Bonds theretofore issued under the Series 1987 Resolution. See "APPENDIX B: THE RESOLUTION -- Additional Bonds." The net proceeds of the Series 1991 Bonds will provide financing for certain purposes permitted under the Redevelopment Law (as discussed in "TOWN CENTER AREA REDEVELOPMENT PROJECT -- Application of Bond Proceeds"), to fund a reserve account and to pay the costs of issuance incurred in connection with the issuance of the Series 1991 Bonds. The City of Tustin (the "City") is located in the County of Orange (the "County"), California. Incorporated in 1927 as a general law city, the City encompasses an area of approximately 10.8 square miles. The City Council activated the Agency through Ordinance No. 696-A adopted on October 20, 1976. The City Council at the same time declared itself to be the governing body of the Agency. The Agency adopted a redevelopment plan (the "Redevelopment Plan") pursuant to which it established the Town Center Redevelopment Project Area (the "Project Area") on November 22, 1976 by Ordinance No. 701. On September 8, 1981 the Agency adopted Ordinance No. 855 amending the Redevelopment Plan (the "First Amendment") to increase the limitation on the average yearly tax increment which could be collected and allocated to projects and programs from $600,000 to $3,000,000 per year and to increase the limitation on bonded indebtedness from $6,500,000 to $20,000,000. OAgency further, 19 by amended the No. 1021 (the "Second Amendment"), the g y Redevelopment Plan to expand the list of eligible projects within the Project Area and to (i) convert the yearly tax increment limit from $3,000,000 per year to a cummulative total of $90,000,000 and (ii) to increase the amount of bonded indebtedness to be repaid with tax increment revenues that may be outstanding at any one time from $20,000,000 to $35,000,000. The First Amendment also permitted the Agency to issue bonds or incur obligations which may extend beyond the November 22, 2006 termination date of the Redevelopment Plan. The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a project area. The taxable valuation of a project area last equalized prior to the effective date of the ordinance adopting the redevelopment plan, or base roll (the "Base Year"), is established and, except .for any period during which the taxable valuation drops below the Base Year level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate upon the Base Year. Taxes collected upon any increase in taxable valuation over the Base Year are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. In addition, the State pays to certain redevelopment agencies, including the Agency, a special subvention which replaces a portion of the tax increment revenues previously available to redevelopment agencies from tax levies on business inventories. Under current State law, the Agency does not have the authority to pledge these special subventions to the repayment of bonds. See "LIMITATIONS ON TAX REVENUES -Business Inventory and Supplemental Revenues" herein. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of taxes produced as previously described. The Bonds are payable solely from Tax Revenues allocated to the Agency from the Project Area. See "SECURITY FOR THE BONDS" herein. The Agency has pledged for the repayment of the Series 1991 Bonds, taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Redevelopment Law and pledgable by the Agency (but excluding amounts required by the Redevelopment Law to be set aside for certain housing purposes in the Housing Fund, provided, however, that such amounts shall not be excluded if and to the extent that the Agency delivers to the Fiscal Agent an opinion of counsel experienced in redevelopment law that such amounts may be lawfully made available as Tax Revenues and the Agency makes such amounts available as Tax Revenues) (collectively, the "Tax Revenues"). See "SECURITY FOR THE BONDS," "BONDOWNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein. 7 • 1 v As a result of redevelopment activities which have taken place to date, the Orange County Auditor -Controller reports that the 1990/91 tax assessment roll for the Project Area shows an increase in assessed valuations of $221,597,302 over the Base Year. This increase in assessed valuation will result in estimated tax increment revenues allocated to the Project Area of approximately $2,307,000 for fiscal year 1990/91. Tax increment revenues allocated to the Project Area totaled $2,045,686 (excluding supplemental. revenue and redemption payments) for the 1989/90 fiscal year. Maximum Annual Debt Service for the Bonds would be initially covered approximately 1.25 times based upon the Project's estimated fiscal year 1990/91 Tax Revenues. The projections of Tax Revenues contained in this Official Statement (See "TAX REVENUES AND DEBT SERVICE") are based on current assessed valuations w.ithin the Project Area and on the current tax rates applicable to the taxable property in the Project Area. Any future decrease in the receipt of taxes, the assessed valuation of the Project Area, the applicable tax rates or the economic stability of the Project Area would reduce the Tax Revenues allocated to the Agency and correspondingly would have an adverse impact on the ability of the Agency to pay debt service on the Bonds. See "BONDOWNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein. Definitions of certain terms used in this Official Statement are set forth in Appendix A - "DEFINITIONS" hereto. This Official Statement contains brief descriptions of, among other things, the Series 1991 Bonds, the Resolution, the Agency and the Project -Area. Such descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to documents are qualified in their entirety by reference to such documents, and references to the Series 1991 Bonds are qualified in their entirety by reference to the form of Series 1991 Bond included in the Resolution. Copies of the Resolution and other documents described in this Official Statement may be obtained from the Fiscal Agent. 3 TSE SERIES 1991 BONDS Description The Series 1991 Bonds will be issued in the aggregate amount of $13,800,000. The Series 1991 Current Interest Bonds will be issued as fully registered bonds in the denomination of $5,000 each or any integral multiple thereof. The Series 1991 Capital Appreciation Bonds will be issued as fully registered bonds in the denominations which will produce $5,000 of Accreted Value at maturity, or any integral multiple thereof. The Series 1991 Bonds will bear or accrete, as applicable, interest at the rates and mature on the dates and in the amounts set forth on the cover page of this Official Statement. The Fiscal Agent shall maintain at its office books for the registration, exchange and transfer of Series 1991 Bonds. The Series 1991 Current Interest Bonds are dated July 1, 1991 and the Series 1991 Capital Appreciation Bonds are dated as of their date of delivery. Interest on the Series 1991 Current Interest Bonds will be payable semiannually on May 1 and November 1 of each year (each an "Interest Payment Date"), commencing May 1, 1992 and will be calculated on the basis of a 360 -day year comprised of twelve 30 -day months. The Series 1991 Current Interest Bonds shall bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, -in which event they shall bear interest from such Interest Payment Date, or unless such date of registration is prior to the first Interest Payment Date, in which event they shall bear interest from July 1, 1991; provided, however, that if at the time of registration of any Series 1991 Current Interest Bond interest is then in default on the Outstanding Bonds, 'such Series 1991 Current Interest Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Series 1991 Bonds. Interest on the Series 1991 Capital Appreciation Bonds shall accrue from the date thereof compounded semiannually on each May 1 and November 1, commencing May 1, 1992, and shall be payable only at maturity or upon the prior redemption thereof as part of the Accreted Value thereof. Interest on the Series 1991 Current Interest Bonds shall be paid by check or draft mailed on the Interest Payment Date to the address of the registered owner appearing on the Series 1991 Bond register of the Fiscal Agent (an "Owner") on the Record Date preceding any Interest Payment Date or by wire transfer in immediately available funds to an account within the continental United States upon the instructions of any owner of $1,000,000 or more in aggregate principal amount of Series 1991 Bonds. Principal and Accreted Value of, premium (if any), and interest on the Series 1991 Bonds are payable in lawful money of the United States of America upon surrender of the Series 1991 Bond at maturity or redemption at the office of the Fiscal Agent in Los Angeles, California. A Table setting forth the Accreted Value per $5,000 due at maturity for the Series 1991 Capital Appreciation Bonds is set forth in Appendix G. Book -Entry System The Depository Trust Company, New York, New York ("DTC") will act as Securities Depository (the "Securities Depository") for the Series 1991 Bonds. One fully registered Series 1991 Bond for each maturity as set forth 4 on the cover page, each in the aggregate principal amount of or Accreted Value due at such maturity, will be registered in the name of CEDE & Co., as nominee for DTC (the "Nominee"). DTC is a limited -purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve. System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its participants (the "Participants") and to facilitate the clearance and settlement of securities transactions among Participants in such securities through electronic book -entry changes in accounts of the Participants, thereby eliminating the need of physical movement of securities certificates. Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of which (and/or their representatives) have ownership interests in DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant either directly or indirectly. Ownership interests in the Series 1991 Bonds may, be purchased by or through the records of a Participant or an indirect participant. Each Participant will receive a credit balance on the records of DTC. Individual purchases will be made in the denomination of $5,000 for Series 1991 Current Interest Bonds and $5,000 due at maturity for Series 1991 Capital Appreciation Bonds or an integral multiple thereof. Owners are expected to receive a written confirmation of'thei-r purchase providing details of the Series 1991 Bonds acquired. Each such person for whom a Participant has an interest in the Series 1991 Bonds, may desire to make arrangements with such Participant to receive a credit balance in the records of such Participant, and may desire to make arrangements with such Participant to have all notices of redemption or other communications of the Agency or the Fiscal Agent to DTC, which may affect such persons, forwarded in writing by such Participant and to receive notification of all interest payments. NEITHER THE AGENCY NOR THE FISCAL AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION, INCLUDING ANY OBLIGATION FOR THE PAYMENT OF PRINCIPAL, ACCRETED VALUE, INTEREST OR PREMIUM, IF ANY, REPRESENTED BY THE SERIES 1991 BONDS AND THE PROVISIONS OF NOTICE WITH RESPECT TO THE SERIES 1991 BONDS, TO SUCH PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE SERIES 1991 BONDS. SO LONG AS CEDE & CO., OR A SUCCESSOR AS NOMINEE, IS THE REGISTERED OWNER OF THE SERIES 1991 BONDS, REFERENCES HEREIN TO THE SERIES 1991 BONDS OR THE REGISTERED OWNERS OF THE SERIES 1991 BONDS SHALL MEAN THE NOMINEE AND NOT THE BENEFICIAL OWNERS OF THE SERIES 1991 BONDS. For the purposes of this Official Statement, the term "Beneficial Owner" shall refer to the person for whom the Participant acquires an interest in the Series 1991 Bonds. DTC will receive payments from the Fiscal Agent to be remitted to the Participants for subsequent disbursement to the Owners. The ownership interest of each Owner in the Series 1991 Bonds will be recorded through the records of the Participants, whose ownership interest will be recorded on a computerized book -entry system operated by DTC. The interests of the Owners will not be recorded on the registration books for the Series 1991 Bonds maintained by the Fiscal Agent. 5 When reference is made to any action which is required or permitted to be taken by the Owners, such reference shall only relate to those permitted to act (by statute, regulation or otherwise) on behalf of such Owners for such purposes. When notices are given, they shall be sent by the Fiscal Agent to DTC. DTC shall forward (or cause to be forwarded) the notices to the Participants so that such participants may forward (or cause to be forwarded) the notices to the Owners. Owners will receive a written confirmation of their purchase detailing the terms of the Series 1991 Bonds acquired. Transfer of ownership interests in the Series 1991 Bonds will be accomplished by book entries made by DTC and the Participants who act on behalf of the Owners. Owners will not receive physical certificates representing their ownership interest in the Series 1991 Bonds, except as specifically provided in the Resolution. Interest, premium, if any, and principal or Accreted Value with respect to the Series 1991 Bonds will be paid when due by the Fiscal Agent to DTC, then paid by DTC to the Participants and thereafter paid by the Participants to the Owners. UNLESS OTHERWISE NOTED, THE INFORMATION CONTAINED IN THE PRECEDING PARAGRAPHS OF THIS SUBSECTION "BOOK -ENTRY SYSTEM" HAVE BEEN EXTRACTED FROM A REPORT PREPARED BY DTC ENTITLED "BOOK -ENTRY -ONLY MUNICIPALS." THE AGENCY MAKES NO REPRESENTATION AS TO THE COMPLETENESS OR THE ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENSE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF. DTC may discontinue providing its services with respect to the Series 1991 Bonds at any time by giving notice to the Agency and the Fiscal Agent and discharging its responsibilities with respect thereto under applicable law. In the event (i) DTC determines not to continue to act as Securities Depository for the Series 1991 Bonds, or (ii) the Agency determines that DTC shall -no longer so act, then the Agency will discontinue the book -entry system with DTC. If the Agency fails to identify another qualified Securities Depository to replace DTC, the Series 1991 Bonds shall no longer be restricted to being registered in the registration books kept by the Fiscal Agent in the name of the Nominee, but shall be registered in whatever name or names Owners of Series 1991 Bonds transferring or exchanging Series 1991 Bonds shall designate, in accordance with the Resolution. Optional Redemption Series 1991 Bonds maturing on or before November 1, 2001 are not subject to optional redemption before their maturity. Series 1991 Bonds maturing on or after November 1, 2002, are subject to optional redemption in whole or in part on any Interest Payment Date on or after November 1, 2001, in inverse order of maturity and by lot within a maturity, upon notice as described below, at the option of the Agency from any available source of funds, at a redemption price equal to the principal amount or Accreted Value thereof to be redeemed, together with accrued interest thereon to the redemption date, plus a premium (expressed as a percentage of the principal amount or Accreted Value of Series 1991 Bonds to be redeemed) as follows: Redemption Dates Redemption Price November 1, 2001 and May 1, 2002 .............................. 102% November 1, 2002 and May 1, 2003 .............................. 101% November 1, 2003 and thereafter ............................... 100% Z MIAMIJ AWA4001 I 41NIO )1 11 Series 1991 Bonds maturing on November 1, 2015 (the "2015 Capital Appreciation Term Bonds") are subject to mandatory redemption in part by lot prior to maturity from Sinking Account Installments made on November 1, 2007 and on each November 1 thereafter to and including November 1, 2015 (each a "Sinking Account Payment Date") at a redemption price equal to 100% of the Accreted Value thereof plus accrued interest, if any, to the redemption date. The 2016 Current Interest Term Bonds and the 2015 Capital Appreciation Term Bonds are referred to herein collectively as the "Term Bonds." The following Sinking Account Installments are calculated to be sufficient to redeem the principal amount of 2015 Capital Appreciation Term Bonds: Redemption Date November 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 (Maturity) $ Series 1991 Bonds maturing on November 1, 2016 (the 112016 Current Interest Term Bonds") are subject to mandatory redemption in part by lot prior to maturity from sinking account payments (the "Sinking Account Installments") made on November 1, 2007 and on each November 1 thereafter to and including November 1, 2016 (each a "Sinking Account Payment Date") at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date. The following Sinking Account Installments are calculated to be sufficient to redeem the principal amount of 2016 Current Interest Term Bonds: Redemption Date November 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (Maturity) 7 Principal Amount In lieu of such mandatory redemption, the Agency may elect to purchase, or instruct the Fiscal Agent to purchase, Term Bonds at public or private sale at such prices as the Agency or the Fiscal Agent may in their discretion determine; provided that, unless otherwise authorized by the Redevelopment Law, the purchase price thereof shall not exceed the Accreted Value thereof (in the case of Series 1991 Capital Appreciation Bonds) or the principal amount thereof plus accrued interest to the purchase. date (in the case of Series 1991 Current Interest Bonds). The principal amount or Accreted Value of any Term Bonds so purchased by the Fiscal Agent, or by the Agency and tendered to the Fiscal Agent, in any twelve month period ending 60 days prior to any Principal Payment Date shall be credited towards and shall reduce the principal amount or Accreted Value of such Term Bonds required to be redeemed on such Principal Payment Date. Notice of Redemption As provided in the Resolution, notice of redemption shall be mailed by the Fiscal Agent by first class mail, postage prepaid, (except if mailed to the owner of at least $1,000,000 in aggregate principal amount of Series 1991 Current Interest Bonds, in which case, by certified mail with return receipt) no less than 30 nor more than 60 days prior to any redemption date to the respective registered Owners of the Series 1991 Bonds designated for redemption at their addresses appearing on the registration books of the Fiscal Agent and, [so long as the Bond Insurance Policy is in full force and effect to , and] further notice shall be given to certain other information services and securities depositories. Neither failure to mail such further notice nor any defect in such further notice so mailed shall affect the sufficiency of the proceedings for redemption of such Series 1991 Bonds or the cessation of interest on the redemption date. Whenever less than all outstanding Series 1991 Bonds maturing on any one date are called for redemption at any one time, the Fiscal Agent shall select the Series 1991 Bonds to be redeemed from the outstanding Series 1991 Bonds maturing on such date not previously selected for redemption, by lot in any manner which the Fiscal Agent deems fair; provided, however, that if less than all the outstanding Term Bonds of any maturity are called for redemption at any one time, the Fiscal Agent shall specify a reduction in any Sinking Account Installments required to be made with respect to such Term Bonds (in an amount equal to the amount of outstanding Term Bonds to be redeemed) which, to the extent practicable, results in approximately equal annual debt service on the Series 1991 Bonds outstanding following such redemption. For purposes of selecting Series 1991 Bonds for redemption, Series 1991 Current Interest Bonds shall be deemed to be composed of $5,000 portions, and Series 1991 Capital Appreciation Bonds shall be deemed to be composed of portions equal to their respective Accreted Values as of the redemption date, and any such portions may be separately redeemed. Purchases of Outstanding Bonds The Fiscal Agent may purchase Series 1991 Bonds on the open market, with monies on deposit in the Special Fund, at a price not to exceed the greater of par plus accrued interest or the price at which the Series 1991 Bonds may be called for redemption, except as otherwise permitted under the Redevelopment Law. Any Series 1991 Bonds purchased by the Agency or by the Fiscal Agent on behalf of the Agency shall be cancelled. Transfer and Exchange The Series 1991 Bonds may be transferred or exchanged at the principal corporate trust office of the Fiscal Agent in Los Angeles, California, provided that the Fiscal Agent shall not be required to register the 'transfer of any Series 1991 Bond 15 days before any Interest Payment Date or any redemption date for Series 1991 Bonds which have been selected for redemption. The Fiscal Agent, under certain circumstances, shall replace Series 1991 Bonds which have been mutilated, lost, destroyed or stolen. The Fiscal Agent shall require the payment by the Owner requesting the transfer or replacement of any Series 1991 Bond of any tax or other governmental charge required to be paid with respect to such transfer or replacement. The proceeds from the sale of the Series 1991 Bonds are estimated to be as follows: Sources: Principal Amount of Series 1991 Bonds $13,800,000 Accrued Interest Less Underwriter's Discount Total Sources Uses: Reserve Account of the Special Fund Interest Account of the Special Fund (1) Redevelopment Fund (2) Total Uses (1) Amounts deposited in the Special Fund will consist of $ of accrued interest on the Series 1991 Current Interest Bonds. [Verify that tax increment will be adequate for May 1, 1992 interest payment.] (2) Amounts on deposit in the Redevelopment Fund may be used to pay costs of issuance of the Series 1991 Bonds, including Bond Counsel, Fiscal Consultant and Fiscal Agent fees, and printing. Debt Service Schedule TABLE 1 TUSTIN COMMUNITY REDEVELOPMENr AGENCY TOWN CENM AREA REDEVELOPMENT PROJECT Tax Allocation Bonds, Series 1991 Annual Debt Service Due November 1 Principal 1992 $ 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Accreted Interest 10 Current Interest Annual Value Total SEMITY FOR THE SERIES 1991 BONDS PIPdy-e of Tax Revenues The Series 1991 Bonds are secured by and payable from the Tax Revenues derived from taxes assessed on property within the Project Area. As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California (the "State"), taxes levied upon taxable property in the Project Area each year by or for the benefit of the State, any agency, county, city and county, district or other public corporation (collectively, the "Taxing Agencies") for fiscal years beginning after the effective date of the ordinances adopting the Redevelopment Plan for the Project Area shall be divided as follows: 1. To Taxing Agencies: The portion equal to the amount of those taxes which would have been produced by the then current tax rate applied to the assessed valuation of such property within the Project Area as last equalized prior to the effective date of the ordinance approving the Redevelopment Fund, shall be allocated to and when collected shall be paid into the funds of the respective Taxing Agencies as taxes by or for said Taxing Agencies; and 2. To the Agency: Except for taxes which are attributable to a tax rate levy by a Taxing Agency for the purpose of producing revenues to repay bonded indebtedness approved by the voters of the Taxing Agency on or after January 1, 1989 which shall be allocated to and when collected shall be paid to the respective Taxing Agency, that portion of the taxes levied in each year in excess of the amount set forth in paragraph 1 above shall be allocated to, and when collected, shall be paid to the Agency for deposit in the Special Fund established under the Resolution to the extent necessary to pay the principal and Accreted Value of, premium (if any) and interest on, and to replenish the Reserve Account for, the Bonds. The Bonds are secured by a pledge of and lien on all of the Tax Revenues and a pledge of all of the monies in the Special Fund created pursuant to the Resolution, including the Interest Account, the Principal Account, the Term Bonds Sinking Account and the Reserve Account therein. The Tax Revenues are allocated by the Resolution in their entirety to the payment of the principal and Accreted Value of, premium, if any, and interest on the Bonds and any Additional Bonds issued on a parity with the Bonds and the transfer of amounts to the Reserve Account for the -Bonds. If the Reserve Requirement is fully funded, excess Tax Revenues may be applied by the Agency for any lawful purpose in accordance with the Resolution. See "THE RESOLUTION - Application of Tax Revenues" in Appendix B. The Agency has no power to levy and collect taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies having the effect of reducing the property tax rate, or the value of property subject to ad valorem taxations, must necessarily reduce the amount of Tax Revenues that would otherwise be 11 available to pay the principal and Accreted Value of, premium, if any, and interest on, the Bonds. Likewise, broadened property tax exemptions or successful appeals of assessed valuations could have a similar effect. See "BONDONNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein. The Bonds are not a debt of the City, the State or any of its political subdivisions, and neither the City, the State, nor any of its political subdivisions, is liable therefor. The principal and Accreted Value of, premium (if any) and interest on the Bonds are payable solely from the Tax Revenues allocated to the Agency from the Project Area. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limit or restriction. Series 1991 Bonds Parity ebt The Series 1991 Bonds are secured on a parity with the Series 1987 Bonds, of which $7,510,000 aggregate principal amount is currently outstanding. The Agency will certify on the date the Series 1991 Bonds are sold to the original purchaser thereof that it has satisfied each of the conditions required for the issuance of Additional Bonds. In addition to the Series 1991 Bonds, the Resolution permits the Agency to issue additional Series of bonds in the future secured by a lien and charge upon Tax Revenues equal to the lien and charge securing the Bonds. See "APPENDIX A: THE RESOLUTION - Additional Bonds" in Appendix B. Current State law, however, restricts the Agency's ability to pledge the portion of the Tax Revenues which constitute State Special Subventions. See "LIMITATIONS ON TAX REVENUES --Business Inventory and Special Subventions" herein. Reserve Account The Fiscal Agent is required upon delivery of the Series 1991 Bonds to deposit in the Reserve Account from Series 1991 Bond proceeds an amount which, when added to the amounts already on deposit 'in the Reserve Account, is sufficient to bring the balance on deposit in the Reserve Account to an amount equal to Maximum Annual Debt Service on the Bonds (the "Reserve Requirement"). Moneys in the Reserve Account will be used solely for the purpose of paying the principal and Accreted Value of, premium, if any, and interest on the Bonds in the event that no other money of the Agency is lawfully available therefor, or for replenishing the Interest Account, the Principal Account or the Term Bonds Sinking Account in the event of any deficiency at any time in such accounts. The Series 1987 Resolution requires the provision of a cash funded Reserve Fund. While the Series 1987 Bonds are outstanding the Agency may, provided consent of the Series 1987 Bondowners is received, elect to maintain the Reserve Requirement by obtaining a letter of credit, a surety bond, a policy of insurance or any other security device (in each case rated in the highest two rating categories by each Rating Agency which rates the Series 1991 Bonds 12 at such time), in any amount which, together with any funds on deposit in the Reserve Account, will guarantee to the Agency the full amount of the Reserve Requirement at such times as all or any portion of the Reserve Requirement is needed for transfer to the Interest Account and/or Principal Account. Subordinate Obligations As of , 1991, the Agency reports that there are no subordinate obligations to the Bonds. 13 SERIES 1991 BONDOWN1"RS' RISKS Property Tax Increment Revenues Tax Revenues allocated to the Agency, other than amounts representing State Supplemental Subventions, are determined by he current rate o orincreased ere se assessed value of property in the Project Area, at which property in the Project Area is taxeddoesandthe hhavepercentage powertanor xes collected in the Project Area. The Agency g does the Agency have the power to affect the rate at which property is taxed. At least three types of events which are beyond the control of the Agency could occur and cause a reduction in this portion of Tax Revenues thereby imparting the ability of the Agency to make payments of principal, Accreted Value, interest and premium, if any, when due on the Series 1991 Bonds. First, a reduction of taxable values of property in the Project Area caused by economic factors beyond the Agency's control, such as a relocation out of the Project Area by one or more major property owners, successful appeals by property owners for a reduction in a property's assessed value or the destruction of property caused by natural or other disasters, could occur, thereby causing a reduction in the Tax Revenues that secure the Series 1991 Bonds. Second, there are many Constitutional and statutory limitations on the ability of the Agency to collect and receive tax increment revenues. In addition to the existing limitations on Tax Revenues described herein under "LIMITATIONS ON TAX REVENUES;" the California electorate or Legislature could adopt further limitations with the effect of reducing Tax Revenues payable to the Agency. Finally, delinquencies in the payment of property taxes by the owners of land in the Project Area could have an adverse effect on the Agency's ability to make timely debt service payments. Reduction in Tax Revenues Any reduction in Tax Revenues, whether for any of the foregoing reasons or any other reason, could have an adverse effect on the Agency's ability to make timely payments of principal and Accreted Value of, premium, if any, and interest on the Series 1991 Bonds, which are secured by such Tax Revenues. To estimate the total Tax Revenues available to pay debt service on the Series 1991 Bonds, the Agency has made certain assumptions. with regard to the assessed valuation in the Project Area, future tax rates, the percentage of taxes collected, the amount of funds available for investment and the interest rate at which those funds will be invested. The Agency believes these assumptions to be reasonable, but to the extent that the assessed valuation, the tax rates or, the percentage of taxes collected are less than the Agency's assumptions, the total Tax Revenues available to pay debt service on the Bonds may be less than those projected herein. See "TAX REVENUES AND DEBT SERVICE" herein. Book—Entry System Owners of the Series 1991 Bonds may experience some delay in their receipt of distributions of principal or Accreted Value of and interest on the Series 1991 Bonds since such distributions will be forwarded 14 by the Fiscal Agent to DTC and DTC will credit such distributions tions to the accounts of the DTC Participants which will thereaftercredit accounts of the Owners either directly or indirectly through indirect participants. See "THE SERIES 1991 BONDS - Book -Entry Only System. Issuance of the Series 1991 Bonds in book -entry form may reduce the liquidity of the Series 1991 Bonds in the secondary trading market since investors may be unwilling to purchase Series 1991 Bonds for which they, cannot obtain physical certificates. In addition, since transactions in the Series 1991 Bonds can be effected only through a C, Participants, direct participants and certain banks, the ability o pledge Serie s 1991 Bonds to persons or entities that do not participate in the DTC system, or otherwise to take actions in respect of such Series 1991 Bonds, may be limited due to lack of a physical certificate. Owners will not be recognized by the Fiscal Agent as registered Owners for purposes .of the eyed Resolution, wners only a indirectly tnd hrough will be permitted to exercise the rights of reg through DTC and the Participants. See "THE SERIES 1991 BONDS- Book -Entry System." 15 LIMITATIONS ON TAX REVENUES Pro Tax Rate Limitations - Article XIIIA California voters, on June 6, 1978, approved, an amendment (commonly known as both Proposition 13 and the Jarvis -Gann Initiative) to the California Constitution which imposes limitations on taxes that maybe levitheed against ait real property. This amendment, which added Article valuationsllA of real property for ia Constitution, among other things, affecte the purposes of taxation. It defines full cash value of prwn on operty 1975/76 tax n bill county assessor's valuation of real eafte�perty the a appraised value of real property under 'full cash value' or, ther, P when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. This full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or rreduction the the consumer price index or comparable local data, or any reduction event of declining property value caused by damage, common ad valorem or tax other factors. The amendment further limits the amount of any on real property to one percent of the full cash value, except ion additional di t io al taxes may be levied to pay debt service on general ob ga nd certain other indebtedness approved by the voters prior to July 1, 1978 and on any bonded indebtedness for the acquisition or improvement fmhe of re lvotingrty which is approved after July 1, 1978 by two-thirds on such indebtedness. Avnronriations Limitations- Article XIIIB On November 6, 1979, California voters approved Proposition 4, known as the Gann -Initiative, which added Article XIIIB tothnia vonia Constitution. Propositions 98 and ill, approved by the Calivoter 1988 and 1990, respectively, substantially modify Article XIIIB. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority, or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living and population. The initial version of Article XIIIB provided that the "base year" for establishing an appropriations limit was the 1978/79 fiscal year, which was then adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies. Proposition 111 revised the method for making annual adjustments to the appropriations limit by redefining changes in the cost of living and in population. It also required that beginning in fiscal year 1990/91, each appropriations limit must be recalculated using the actual 1986/87 appropriations limit and making the applicable annual adjustments as if the provisions of Proposition 111 had been in effect. Appropriations subject to limitation of a local government under Article XIIIB include generally any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of certain State subventions to that entity, exclusive of refunds of taxes. 16 Proceeds of taxes include, but are not limited to, all tax revenues plus the proceeds to an entity of government from (1) regulatory licenses, user charges and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation), (2) the investment of tax revenues, and (3) certain subventions received from the State. As amended by Proposition 111, Article XIIIB provides for testing of appropriations limits over consecutive two-year periods. If an entity's revenues in any two-year period exceed the amounts permitted to be spent over such period, the excess has to be returned by revising tax rates or fee schedules over the subsequent two years. As amended by Proposition 98, Article XIIIB provides for the payment of a portion of any excess revenues to a fund established to assist in financing certain school needs. Effective September 30, 1980, the California Legislature added Section 33678 to the Redevelopment Law which provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by such agency of proceeds of taxes levied by or on behalf of such agency within the meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of the proceeds of taxes by, or an appropriation subject to the limitation of, 'any other public body within the meaning or for the purpose of the Constitution -and laws of the State, including Section 33678 of the Law. The constitutionality of Section 33678 has been upheld in two California appellate court decisions, Brown v Community Redevelopment Agency of the City of Santa Ana and Bell Community Redevelopment Agency v. Woosley. The plaintiff in Brown v Community Redevelopment Agency of the City of Santa Ana petitioned the California Supreme Court for a hearing of this case. The California Supreme Court formally denied the petition and therefore the earlier court decisions are now final and binding. On the basis of these decisions, the Agency has not adopted an appropriations limit. Low and Moderate Income Housing Requirements Sections 33334.2 and 33334.3 of the Redevelopment Law require redevelopment agencies to set aside 20% of gross tax increment revenues derived from redevelopment project areas established after December 31, 1976 in a low and moderate income housing fund. Section 33334.2, as amended in 1987 by the California Legislature (Chapter 1111, Statutes of 1987), provides that this low and moderate income housing requirement can be reduced or eliminated if a redevelopment agency finds annually by resolution, consistent with the housing element of the community's general plan: (1) that no need exists in the community.to improve or increase the supply of low and moderate income housing; (2) that some stated percentage less than 20% of the tax increment is sufficient to meet the housing needs of the community and is consistent with the housing element of the community's general plan; or (3) that the 'community is making substantial efforts, consisting of direct financial contributions of funds from state, local, and federal sources for low and moderate income housing of equivalent impact, to meet its existing and projected housing needs (including its share of regional housing needs.) Chapter 1135, Statutes of 1985, amended Section 33334.3 and added Section 33334.6 to the Redevelopment Law, extending the requirement for redevelopment agencies to set aside into a low and moderate income housing 17 fund 20% of tax increment revenues allocated to redevelopment project areas established prior to January 1, 1977, beginning with fiscal year 1985/86 revenues. A redevelopment agency may make the same findings described above to reduce or eliminate the low and moderate income housing requirement for such areas. Additionally, as provided in Section 33334.6-, as amended by Chapter 1111, for project areas (or portions thereof) established prior to January 1, 1977, a redevelopment agency may defer its low and moderate income housing deposit requirements in any fiscal year that the agency finds that the deferral is necessary to make payments on existing obligations," and, for fiscal years through 1995/96 only, to fund the orderly and timely completion, of "public and private projects, programs or activities." Existing obligations include any loan, advance or indebtedness (whether funded, refunded, assumed or otherwise) incurred by a redevelopment agency to finance or refinance, in whole or in part, any redevelopment project existing on, and created prior to January 1, 1986, and contained on a statement of existing obligations of the agency filed with the State. The Project Area, for which the Redevelopment Plan was adopted prior to January 1, 1977, is subject to the requirements of Section 33334.6. The Agency adopted a statement of programs and existing obligations prior to September 1, 1986 and has deferred the full 20% set-aside requirement for low and moderate income housing. As of June 30, 1990, the amount. of deferred 20% Set -Aside approximated $2 million. The Agency is currently making efforts to develop a housing plan to remedy its deferred 20% Set -Aside requirement. Property Tax Collection Procedures In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any property tax levied by a county becomes a lien on that property sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on the secured property, regardless of the time of the creation of the other liens. A tax levied on unsecured property does not become a lien against the unsecured property, but may become a lien on certain other property owned by the taxpayer. Secured and unsecured property are entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured personal property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or taxable to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent. 18 Current tax payment practices by the County provide for payment to the Agency of approximately 45% of the secured tax increment revenues in December, with the balance of any additional first installment tax collections made in January. By April, the County advances approximately 85% of the adjusted secured tax levy to the Agency. It apportions the balance, if any, of collected taxes from the second installment of tax levies Salain y. After the final tax close of each fiscal year, the County determinesand revenues due to the Agency and allocates them in July. Unsecured tax revenues are allocated to redevelopment agencies in three payments, beginning with an 80% payment in September. The Agency receives subsequent payments of unsecured tax collections generally in January and June. At the present time, unitary revenues are disbursed separately in equal installments in February and March of each year. In addition, supplemental tax increment revenues are disbursed to the Agency as collected by the County on a monthly basis. A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1 1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1 1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. Except for property assessed by the State, the valuation of property is determined as of March 1 each year and equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent November 31, and such taxes are levied at the prior year's secured tax rate. The evaluation of State -assessed property is determined on January 1 of each year. Legislation enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Previously, California Law enabled the assessment of such changes only as of the next March 1 tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments for up to 14 months. Collection of taxes based on supplemental assessments will occur throughout the' year. Taxes due will be pro rated according to the amount of time remaining in the tax year, with the exception of tax bills dated March 1, through May 31, which will be calculated on the basis of the remainder of the current fiscal year and the full twelve months of the next fiscal year. 19 vita Property AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with the 1988/1989 Fiscal Year, assessed value derived from State-assessed unitary property county-wide is-to'be allocated as follows: (1) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro-rata basis; and (2) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro-rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State-assessed utility according to a specified formula. Additionally, the lien date on State-assessed property was changed from March 1 to January 1. AB 454 (Statutes of 1987, Chapter 921) further modifies Chapter 1457 regarding the distribution of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides for the consolidation of operating unitary State-assessed property, except for regulated railroad property, into a single tax rate area in each county. Chapter 921 further provides for a new method of establishing tax rates on State-assessed property and distribution of property tax revenues derived from State-assessed property to taxing jurisdictions within each county in accordance with a new formula. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property-is sited. The intent of Chapters 1457 and 921 is to provide redevelopment agencies with their appropriate share of revenue generated from the property assessed by the State Board of Equalization. The County Auditor-Controller's office implemented the procedures specified in Chapter 921 for redevelopment agencies for 1988/89 and subsequent fiscal years by: (i) reducing the base year value for all redevelopment project areas by the amount of State-assessed unitary property present in the base year valuation totals; and (ii) calculating the revenue due from unitary property based on a project area's Fiscal Year 1987/88 incremental assessed value for unitary property. In Fiscal Year 1990/91, County records indicate the Agency will receive $40,043 as unitary revenue for the Project Area. For purposes of analysis of the ability of the Agency to meet its obligations under the Bonds. Table 4 "Projections of Tax Revenues" includes unitary revenues held constant at the Fiscal Year 1990/91 amount as reported by the County. Business Inventory and Supplemental Revenues Under prior State law, tax revenues generated by the value of business inventories were based on the actual assessed value of inventories located in a jurisdiction. The revenues generated, which were provided through taxpayer payments and state subventions (50% each), were distributed to local taxing entities and to redevelopment agencies. In 1979, the Legislature enacted AB 66 (Statutes of 1979, Chapter 1150), eliminating the assessment and taxation of business inventory property and providing for replacement revenue, in part, for local agencies, except redevelopment agencies. In 1980, the Legislature enacted AB 1994 (Statutes of 1980, Chapter 610), providing replacement revenue, in part, for the loss of business inventory revenues by redevelopment agencies. 20 TAX REVENUES AND DEBT SERV I CE Prgperty Tax Increment As discussed in the subsection "LIMITATIONS ON TAX REVENUES - Property Tax Rate Limitations - Article XIIIA", the property tax rate applicable within the Project Area is limited by the State Constitution to 1% of taxable property value plus the rate necessary to service certain indebtedness approved by the voters. The table below presents a summary of the secured tax rate for 1990/91 for the tax rate area corresponding to the Project Area. Tax Revenues are calculated by using the current year's secured tax rates for secured property and the previous year's secured tax rates for unsecured property. TABLE 2 TUSTIN CWHUNITY REDEVELOPMENT AGENCY TONIN CENTER AREA REDEVELOPMENT PROJECT Secured Tax Rate, Fiscal Year 1990/91 (1) Basic Tax Rate 1.00000 Tustin High School District Tustin Elementary School Bond 0.00234 Saddleback Community College District County Improvement Bonds 0.00016 Orange County Flood Control District 0.00082 Tustin City Basic Area Bonds 0.00401 Metro Water District 0.00970 East Orange County Water District 0.00341 TOTAL Tax Rate 1.02044 Source: Auditor -Controller, County of Orange and Katz Hollis, Inc. (1) Represents the secured tax rate for over 99% of total 1990/91 Project value. 22 Historical Taxable The following Values table shows Project Area Taxable Valuations and tax increment revenues for fiscal years 1986/87 through 1990/91. Table 3 TUSTIN COMMUNITY REDEVELOPMENT AGENCY TOWN CENrFR AREA REDEVELOPKEKr PROJECT Historic Tax Increment Revenues 1986/87 1987/88 1988/89 1989/90 1990/91 Secured $175,680,714 $197,083,529 $210,793,317 $219,810,476 $238,436,816 State -assessed (1) 4J18,830 4,220,210 88,206 88,158 88,240 Unsecured 26,047,978 33,157,608 38,686,167 ----------- 40,792,459 ----------- 40,355,017 ----------- Total value (2) ----------- $205,847,522 ----------- $234,4611347 $249,567,690 $2601691,093 $278,880,073 Less base year value (3) 58,3872540 581387,540 ----------- 57,430,344 ----------- 57,430,344 ----------- 57,282,771 ----------- Incremental value ----------- $147,459,982 $176,073,807 $192,137,346 $203,260,749 $221,597,302 Computed Tax Revenue (4) $1,535,034 $1,800,450 $2,019,276 $2,164,245 $2,306,617 Tax Receipts (5) $1,489,693 $1,716,333 $12997,178 $2,045,686 $1,324,121 Percentage Receipts 97.0% 95.3% 98.9% 94.5% 57.4% Notes (1) Pursuant to AB 454 (Chapter 921, Statutes of 1986), commencing with Fiscal Year 1988/89, the State changed the manner utility revenues are allocated. See "APPENDIX F --THE FISCAL CONSULTANT'S REPORT --Unitary Property". The decline in assessed value of State -assessed property in Fiscal Year 1988/89 and later reflects the implementation of AB 454. (2) Amounts as annually reported by the Orange County Auditor -Controller. (3) The base year decline reflected in 1988-89 and thereafter reflects adjustments made by the Orange County Auditor -Controller in the implementation of AB 454. In addition, Base Year values may vary from year to year as Orange County automatically adjusts the base year to reflect property acquisitions, if any, by public entities. (4) Initial tax increment levies, as annually reported as by Orange County. (5) Tax Receipts are based upon reported allocations made by the County Auditor -Controller. Amounts shown are net of prior year redemption payments, any refunds/impounds and County collection charges. Receipts shown for Fiscal Year 1990/91 represent collections through February 1991 only. Source: Katz Hollis, Inc. 23 Table 4 on the following page shows the projected tax increment revenue for the Project Area through 1999/2000 as prepared by the Agency's Fiscal Consultant. The projections of Tax Revenues are generally based on the assumption that the real property values will increase 6% annually, which is consistent with the historical rate of growth in the Project Area (when adjusted to deduct major new developments which have occurred since 1985.) The Fiscal Consultant has also prepated an alternative tax increment revenue projection incorporating growth from moderate near term new development and a 2% annual increase for inflation, as allowed by Article XIIIA of the California Constitution. The 6% projection has been incorporated herein because while no significant new development activity has been identified, numerous modest near term development and rehabilitation projects are anticipated to occur which suggests that the Project Area will continue to be revitalized in the same fashion as has contributed to prior years' assessed value growth. See APPENDIX F - Fiscal Consultant's Report" for a full discussion of assumptions and qualifications utilized to project future tax revenues. The projections of Tax Revenues are also based on the following assumptions: (a) Tax rates used in the determination of Tax Revenues each year are reduced from the prior year's rate by an amount approximately equal to the average annual drop in the rates experienced between fiscal years 1985/86 and 1990/91. The decline, which is due to the gradual redemption of general obligation debt, is allowed to continue until the rate stabilizes at the rate of $1.00 per $100 of taxable value as established by Article XIIIA of the California Constitution; (b) The revenue attributable state assessed utility property is assumed to remain constant at its 1989/90 level. See "LIMITATIONS ON TAX REVENUES - Business Inventory and Supplemental Revenues" herein. 24 Q 2 d' H O g 00 p p co N O Cl O O N M tIL Eli, O M• co . "4 .:� V'+ �+ CI O N N vim! ' tND_ 'a' 00 iNDw .a t- C', a d tD a& O O O O N O N M O +4 O co . "4 .:� V'+ t� V CI M O 00 C9 ' tND_ 00 m 00 iNDw t� t- ti LO avow N N c0 N MY Nco N N N M �Q w N co 00 0 O O CR O N O N N .N•� "4 O LO ep t� ti N t- La N tri O N N N eMD tp � +M'► M M Cq 09 t� O 0 O � M d t33 Q 0 1-4 .M.4 ' ' N N t. m to •-� M N t° CM ti o ti O coo .No "r LO O N w N N N LO a Cf) 1C O O h N O CV O t` tM O O ti ' w • t- t- .we 00 D O N N ee��w tD M 07 Ci O? N er C* O t- co cocoo o qw ' ..1 .•� .'� !� t� 0o Lo tJ C! N N co N N H il► co) 0 0 N a a ' 9 9 t`� .N-, t`• to LL1 t- LO 00 CO Ci. a w1 0 00 O M N N N N N M N N O O c0 N O O � t- tom- a O t� .4 tOA *N-+ co . "4 .:� V'+ t� V CI t" It 00 C9 t� to 00 m 00 00 to t- N LO LQ N N c0 N MY N N ri N N rr •Q 00 O O c0 N O N O tom- t` O t✓ Go 0 N O O 00 00 W I. N LO LQ N N t- N eIi N vs N ri N N u a C Ca O . La v � W �v v `U? r ' d •� rr ^ q) ? go'. Q� t: cy3 L. S Z C E2 it H r p go omw N t` 9. t0 N N N c0 w M to t- u o� r` Cb •-' M N > Cr u �0 a •b o M b lo - 00 O O . •� M $ 0 u � ... V-4 Cb 0 03 to C u p n cli r.r to to G to �. N N N p O C O qe O03 N a� ffi C c � O tC M Pi •Cl C*4 C9 IV- to p " M p � O 4 4A c� 0 � � o cis -8 4 o fh y N Cl) Table 5 sets forth the debt service and estimated coverage on the Bonds during the next five fiscal years. Estimated total revenues are based on the following assumptions: 1. The Agency's projections of net Tax Revenues as set forth in Table 4 are realized through fiscal year 1995/96. 2. The debt service is based on the maturity schedule and interest rates for the Bonds as set forth on the cover page hereof. The estimates in Table 5 are based on the assumption that the Agency will not incur parity debt for the Project Area during the next five years. However, it is likely the Agency will incur such parity debt as its Tax Revenues increase, although it is difficult to predict the timing or amount of any such debt. See "APPENDIX B -- THE RESOLUTION - Additional Bonds". Table 5 TUSTIN COMMUNITY REDEVELOPMENT AGENCY TOWN CENTER AREA REDEVELOPMENT PROJECT Projections of Tax Revenues PROJECTED REVENUES (1) DEBT SERVICE (2) 26 1987 1991 Bonds Bonds Fiscal Tax Increment Less Housing Total Tax Debt Debt Coverage Year Revenues(3 L Set -Aside (3) Revenues Svc. Svc. Ratio 1990/91 $2,307 $ $ 2,307 $803.6 -- 2.87 1991/92 2,352 2,352 803.7 1,039 1.28 1992/93 2,497 2,497 802.6 1,039 1.36 1993/94 2,649 2,649 804.6 1,039 1.44 1994/95 2,809 2,809 804.9 1,039 1.52 1995/96 2,992 2,992 802.8 1,039 1.62 1996/97 3,186 637 2,549 803.8 1,039 1.38 1997/98 3,392 678 2,714 802.0 1,039 1.47 1998/99 3,611 722 2,888 802.3 1,039 1.57 1999/00 3,842 768 3,074 805.0 1,039 1.67 (1) Source: Katz Hollis, Inc. See Table 1 in "FISCAL CONSULTANT'S REPORT" in Exhibit F. (2) Source: Stone & Youngberg. (3) Totals reflect no deduction for the housing set-aside requirement until the 1996/97 Fiscal Year. Any such amounts which must be set aside will not be available to pay debt service on the Bonds. See "LIMITATIONS ON TAX REVENUES - Low and Moderate Income Housing Requirements" herein. 26 THE AGENCY fitnerall The Tustin- Community Redevelopment Agency was established on October 20, 1976 by Ordinance No. 696-A of the Tustin City Council pursuant to the Redevelopment Law. The members of the City Council serve as the board of directors (the Board) of the Agency and The City Manager serves as the Agency's Executive Director. The Agency is a separate public body, charged with the authority and responsibility of redeveloping and upgrading blighted areas of the City. City staff provides technical services connected with redevelopment projects, including fiscal planning, engineering, planning, and other functions necessary for implementation of the Redevelopment Plan. The Agency has adopted two Redevelopment Plans: the Town Center Area Redevelopment Plan and the South Central Redevelopment Plan. Agengy Powers .Power in the Agency is vested in the Board, under the Redevelopment Law. The Agency exercises broad governmental functions in executing duly adopted redevelopment projects. As such, the Agency has authority to accomplish its purposes, including, but not limited to, the power of eminent domain, the right to accept financial assistance from any source, the power to issue bonds for authorized purposes and to expend such bond proceeds, and the authority to acquire, sell, rehabilitate, develop, administer, or lease property as a building site. The Agency may demolish buildings, clear land, and cause to be constructed certain improvements including streets sidewalks, and utilities, and can further prepare for use as a building site any real property which it owns or acquires. The Agency does not have the power to levy taxes. The Agency may, from any funds made available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities, or other improvements to be publicly owned and operated, provided that such improvements are of benefit to a redevelopment project area and cannot be financed by any other reasonable method. The Agency may not construct or develop buildings, with the exception of certain housing and publicly owned buildings or structures, and must sell or lease cleared property which it acquires within a redevelopment project area for redevelopment in conformity with a particular redevelopment plan. The Agency may further specify a period within which such redevelopment must begin and be completed., 27 Agency Members The City Council serves as the Board. The following are brief descriptions of the Board Members: Mr. Charles E. Puckett, Mayor, was appointed to the City Planning Commission in 1982. He remained on the Commission until 1988, serving one year as Chairman and one year as Vice Chairman. Mr. Puckett was elected to the City Council in April, 1990 and was subsequently elected Mayor Pro Tem. Employed by Beatrice/Hunt Wesson, Inc., he is currently serving as District Sales Manager of the Foodservice Division for Southern California, Arizona and Las Vegas. His current term expires in April, 1994. Ms. Leslie Anne Pontious, Mayor Pro Tem, was elected to the City Council in 1990 and serves on several committees and public agencies such as the County Sanitation District 14, the East Tustin Plan, and Santa Ana Flood Control District. Prior to running for the office of City Council, she served as a Planning Commissioner and a member of the Tustin Water Board. She was also elected to the Airport Land Use Committee in 1991. Ms. Pontious is the owner of Ancient Mariner Travel Agency in Tustin. Her current term expires in April, 1994. Mr. Jim Potts was elected to the City Council in April, 1990. In his capacity as councilmember, Mr. Potts has been appointed as the City representative to the Foothill/Eastern Transportation Corridor Agency, the League of California Cities, the Santa Ana/Tustin Joint Powers Agency. Since 1977, he has been employed with the City of Irvine Police Department. In addition, Mr. Potts is co-owner of a large manufacturing corporation. His current term expires April, 1992. Mr. Earl G. Prescott has served on the City Council since 1986. He currently represents the City to the League of Cities and the Santa Ana Flood Control District. Mr. Prescott is a fourth-generation resident of the County and is involved in real estate and family business management and development. His current term expires in April, 1992. Mr. Richard B. Edgar, was first elected to the City Council in 1974 and served as Mayor in 1976 and 1990. He has since served on the City Council at various times and also served as Mayor in 1982 and 1987. In addition to his service on the City Council, Mr. Edgar was appointed to the Tustin Parks and Recreation Commission in 1968 and to the Planning Commission in 1973. Mr. Edgar was recently elected to the Orange County Transportation Authority. He also served as- first chairman of the Tustin Redevelopment Agency in 1976 and is currently serving in that position. His current term expires in April, 1992. Agengy Staff Mr. William A. Huston, City Manager and Executive Director of the Agency, was appointed as the City's first City Manager on September 1, 1981. Prior to that appointment, Mr. Huston served as City Manager of Milbrae, California. He is a graduate of the University of Southern California with a Masters Degree in Public Administration. 28 Mr. Ronald A. Nault, Director of Finance, is a graduate of California State College at Fullerton, and prior to joining the City in November, 1980, was Assistant Finance Director of the City of Laguna Beach. As the Director of Finance and City Treasurer, he is responsible for all investments for the City and the preparation of both the Comprehensive Annual Financial Report and the Program and Financial Plan (Budget) for each fiscal year. Mrs. Mary E. Wynn, Secretary, has worked for the City as chief deputy city clerk from 1979 to 1989, a full-time City staff position which involves City record keeping and taking the minutes of City Council meetings. She is completing her third four-year term as elected city clerk. Mrs. Wynn's responsibilities include the filing, city records, preparation of City Council agendas and administration of local elections. Ms. Christine A. Shingleton, Director of Community Development, has worked in the planning realm for the past eighteen years. She was recently appointed to the position of Assistant City Manager while continuing in her role as Director of Community Development. She earned her masters degree in public policy from California State University, Long Beach. Prior to joining the City in 1986, Ms. Shingleton started as an intern with the City of Pasadena, spent several years as a regional planner with the County of Los Angeles and worked for the cities of Monterey Park and Signal Hill where she spent five years as Community Development Director. Mr. James G. Rourke, City Attorney and General Counsel of the Agency, was admitted to the bar in 1954. His background includes service as a member of the League of California Cities, City Attorneys Department, and the Panel of Arbitrators, American Arbitration Association. He served as Judge Pro Tempore from 1960 through 1964 to the Orange County Superior Court. Mr. Rourke has been a member of the Orange County City Attorneys Association where he served as President in 1980. He has been the City Attorney since 1960. Agency Financial Statements Included in Appendix E are the Agency's audited financial statements for the fiscal year ended June 30, 1990. 29 EXIIIIiIT I Map of . Redevelopment LEGEND Project Area RESIDENTIAL SINGLE FAMILY As Adopted by RESIDENTIAL MULTIPLE FAMILY the - ® RESIDENTIAL MOBIL HOME Tustin city council and PROFESS-IONAL Community Redevelopment Agency COMMERCIAL tiovember 22, 1976 INDUSTRIAL PUBLIC Ek INSTITUTIONAL J JL C---� L .�► R t let.. • TONIN CENTER AREA REDEVELOPMENT' PROJECT - Bac ground The Redevelopment Plan for the Project Area was approved by Ordinance No. 701 and amended through the adoption of Ordinance No. 855 on September 8, 1981 and Ordinance No. 1021 on March 20, 1989. The Project Area includes approximately 360 acres in the center of the City, an area which includes the historic "old town" and civic center and a majority of the commercial properties within the central portion of the City. The Project Area contains commercial, service -commercial, neighborhood commercial, and residential land uses. Although a precise breakdown of land uses is not available, the predominant land use in the Project Area is commercial, which is estimated to approximate 90% of the total area. Residential and public/institutional uses account for approximately 5% each of the Project Area's land. Residential uses are mostly multi -family with a very small proportion of the Project Area containing single-family and mobile home uses. Public institutional uses include two parks (Columbus -Tustin and Peppertree), the Civic Center, the Tustin School District administrative offices, Columbus -Tustin Intermediate School, and the Tustin Post Office. The Project Area is generally bounded by portions of Beneta Avenue and Irvine Boulevard on the north, Interstate Highway 5 (Santa Ana Freeway) on the south, portions of Prospect Avenue and "B" Street on the west, and portions of Newport Avenue and Main Street on the east. The Agency initiated proceedings to establish the Project Area in 1971 after central -city merchants and the Tustin Chamber of Commerce requested its help in revitalizing and expanding the E1 Camino Real commercial area in central Tustin. In the early 1970's, the El Camino Real area consisted of mixed residential and commercial uses on substandard lots. Most of the commercial facilities lacked off-street parking. Some of the businesses dated back to the early 1900's; only one new structure had been built in the area during the previous decade. The general objectives of the Redevelopment Plan are the elimination and prevention of blight in the Project Area. The Redevelopment Plan calls for constructing and improving streets, utilities or other public improvements; acquiring, disposing of and redeveloping real property; participation of owners and tenants in the Project Area; management of property under Agency ownership and control; and demolition, rehabilitation or removal of buildings. In the Project Area particularly, the Agency's goal.was to eliminate existing blight and prevent the spread of blight and deterioration by: • Providing for participation by owners and residents of the Project Area by extending the them preferences to remain or relocate within the redeveloped areas should their present structures be suffering from deterioration requiring assistance; • Rehabilitate structures and improvements by present owners, their successors, or the Agency; 31 • Redevelop land by private enterprise or public agencies for uses in accordance with the Redevelopment Plan; • Install, construct_ or reconstruct -streets, utilities and other public improvements such as center islands, street trees and landscaping; • Acquire certain real property for public improvements or to help expedite private development; • Provide relocation assistance to displaced residential and non-residential occupants; • Demolish or remove certain buildings and improvements; • Manage any property acquired under the ownership and control of the Agency; • Dispose of any property acquired by the Agency for uses in accordance with the Redevelopment Plan. Controls, Land Use and Building Restrictions All real property in the Project Area is subject to the controls and restrictions of the Redevelopment Plan. The Redevelopment Plan requires that new construction shall comply with all applicable State statutes and local laws in effect, including City zoning ordinances and City codes for building, electrical, heating, ventilating and plumbing. The Redevelopment Plan further provides that no existing building shall be substantially modified, altered, repaired or rehabilitated, except in accordance with architectural, landscape and site plans submitted and approved by the Agency. The Redevelopment Plan allows for commercial, industrial, residential, and public uses within the Project Area, but specifies the particular area in which each of these uses is permitted. The Agency may permit an existing but nonconforming use to remain so long as the existing building is* in good condition and is generally compatible with other surrounding development uses. The owner of any property with a nonconforming use must be willing to enter into a participation agreement with the Agency and agree to the imposition of such reasonable restrictions as are necessary to protect the development and use of the Project Area. Within the limits, restrictions and controls established in the Redevelopment Plan, the Agency is authorized to establish land coverage, setback requirements, design criteria, and other development and design controls necessary for proper development of both private and public segments within the Project Area. Under certain circumstances, the Agency is authorized to permit a variation from the limits, restrictions and controls established by the Redevelopment Plan. However, no variation shall be granted which changes the basic land use or which permits other than a minor departure from the 32 Redevelopment Plan provisions. In permitting a variation, the Agency shall impose such conditions as are necessary to protect the public health, safety and welfare and to assure compliance with the purposes of the Redevelopment Plan. Any variation permitted by the Agency shall not supersede any other approval required under City codes and ordinances. MaJor Development Activities in the Project Area At the time the Redevelopment Plan was adopted, the City recognized that a number of problems existed in the Project Area, including scattered physical deterioration; limited renovation or new construction; lack of major street attractions; inadequate parking and amenities; increased business competition in surrounding areas; and the absence of a central shopping and commercial district for the City's town center. Developments in the area included a small strip commercial shopping center adjacent to a railroad right-of-way and a chemical storage facility. Under the Redevelopment Plan, the Agency acquired the shopping center and storage facility property as well as the railroad right-of-way. The Agency has participated in over $9.5 million of public improvements, with redevelopment resources accounting for approximately $6.8 million of the total costs for such improvements. The public projects completed to date include: undergrounding of utilities; widening 17th Street; new storm drains; the reconstruction of streets and alleys; new traffic signals; landscaping; parking facilities.; civic center improvements; improvments to public open spaces including Columbus -Tustin Park, and numerous landscaping programs. Development in the Project Area since adoption of the Redevelopment Plan includes shopping and commercial centers and a parking structure. Tustin Plaza on Newport Avenue is an office and commercial center containing about 85,500 square feet of retail space, 45,700 square feet of office space, and an anticipated 5,000 -square -foot freestanding restaurant. The office and retail development was completed in 1986, and the restaurant was completed in 1988. The Agency assisted financially in the costs of constructing public improvements for the project. The La Fayette Plaza Shopping Area, also on Newport Avenue, is a 44,000 -square -foot retail center, which was completed in 1987. An adjoining theme restaurant, Newport Square, containing approximately 9,000 square feet was recently completed. The Agency was involved in land acquisition and assistance in constructing public improvements for the proj-ect. A 247 -space downtown parking structure has been completed on C Street to provide additional parking for adjacent commercial and office developments. The Agency assisted in the costs of construction, and has a financial interest in spaces defined for public parking use. Additional private construction has occurred in the Project Area, including over 250,000 square feet of office space and support retail facilities. Public investment by the Agency was used for street and signal improvement within the Project Area and a public plaza adjacent to the parking structure. 33 For additional discussion regarding new development activity within the Project Area, see APPENDIX F - "FISCAL CONSULTANT'S REPORT". The following table shows the assessed valuations of the property held by the ten major assessees located in the Project Area. Table 6 TUSTIN CO KINITY REDEVELOPMENT AGENCY TOWN CENTER AREA REDEVELOPMENT PROJECT Assessed Valuations Secured Property Held by Ten Major Taxpayers Fiscal Year 1990/91 .M 1. Arthur E. Bartlett (2) 2. Newport Avenue Partners 3. RREEF-IV, Inc. 4. McCombs Properties S. David Gaon 6. Burnett-Ehline Properties 7. The Courtyard 8. Raymond Larson 9. Price Edward Evans 10. Orange Pacific Limited Source: Katz Hollis, Inc. 1990/91 Local Percent of Assessed Secured Type of Business Value 1) Value Retail/Neighborhood/ $26,004,874 10.91% Commercial (Larwin Square) Shopping Center 15,235,771 6.39 (Tustin Plaza) Neighborhood/ 9,212,787 3.86 Commercial Specialty Retail/ 7,663,191 3.21 Commercial Garden Office 6,838,398 2.87 Retail/Restaurant 6,729,232 2.82 (Lafayette Plaza) Retail Shopping Center 5,228,876 2.19 Office/Bank 5,024,385 2.11 Small Office 4,032,588 1.69 Banks 3,654,913 1.53 TOTAL VALUE $89,625,015 37.58% (1) Secured Taxable value only. (2) An appeal is currently outstanding on this assessment. For purposes of projecting Tax Revenues as shown in Table 4, the Fiscal Consultant has reduced this assessment's real property value by approximately $8.7 million in Fiscal Year 1991/92 to account for the potential effect of the valuation appeal. See "APPENDIX F - FISCAL CONSULTANT'S REPORT -- Assessment Appeals." Application of Bond Proceeds The Agency is issuing the Series 1991 Bonds to pay for a portion of the costs associated with the completion of the Redevelopment Plan. These projects include the expansion of the City's Civic Center, improvements to Columbus -Tustin Park, provision for various new water wells and other public improvements. 34 TAX EXEMPTION The Internal Revenue Code of 1986 (the "Code") establishes certain requirements which must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in gross income for Federal income tax purposes retroactive to the date of issue of the Bonds. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the Bonds are to be invested and require, under certain circumstances, that certain investment earnings on the foregoing be rebated on a periodic basis to the Treasury Department of the United States of America. The City has covenanted in the Resolution to maintain the exclusion of the interest on the Bonds from gross income for Federal income tax purposes pursuant to section 103(a) of the Code. In the opinion of Mudge Rose Guthrie Alexander & Ferdon, and Rourke & Woodruff, Co -Bond Counsel, under existing law, interest on the Bonds is exempt from personal income taxation of the State- of California and, assuming compliance with the aforementioned covenant, interest on the Bonds is excluded from gross income for Federal income tax purposes. Co -Bond Counsel is also of the opinion that the Bonds are not "specified private activity bonds" within the meaning of -Section 57(a)(5) of the Code and, therefore, the interest on the Bonds will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. Interest on the Bonds owned by corporations will, however, be taken into account: (1) in determining the alternative minimum tax imposed by Section 55 of the Code on 75 percent of adjusted current earnings over alternative minimum taxable income (determined without regard to this adjustment and the alternative tax net operating loss deduction) (2) in calculating the environmental tax equal to 0.12° of the Corporation's modified alternative mininum taxable income in excess of a certain amount (generally $2 million) imposed by Section 59A of the Code; and (3) in determining the foreign branch profits tax imposed on the effectively connected earnings and profits (with adjustments) of United States branches of foreign corporations by Section 88A of the Code. Co -Bond Counsel is further of the opinion that the difference between the principal amount of the Bonds maturing on (the "Discount Bonds") and the initial offering price to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount which is excluded from gross income for Federal income tax purposes to the same extent as interest on the Discount Bonds. Further, such original issue discount accrues actuarilly on a constant interest rate basis over the term of each Discount Bond and the basis of each Discount Bonds acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. 35 Co -Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance of the Bonds may affect the tax status of -- interest on the Bonds. No assurance can be given that future legislation, or amendments to the Code, if enacted into law, will not contain provisions which could directly or indirectly reduce the benefit of the exclusion of the interest on the Bonds from gross income for Federal income tax purposes. Certain requirements and procedures contained or referred to in the Resolution and other relevant documents may be changed and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. Co -Bond Counsel expresses no opinion as to any Bond, or the interest thereon, if any such change occurs or action is taken upon the advice or approval of bond counsel other than Mudge Rose Guthrie Alexander & Ferdon and Rourke & Woodruff. Although Co -Bond Counsel has rendered an opinion that interest on the Bonds is excluded from ,gross income for Federal income tax purposes, a Bondholder's Federal tax liability may otherwise be affected by the ownership or disposition of the Bonds. The nature and extent of these other tax consequences will depend upon the Bondholder's other items of income or deduction. Without limiting the generality of foregoing, prospective purchasers of the Bonds should be aware that (i) Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of a holder's interest expense allocated to interest on the Bonds, (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Bonds, (iii) interest on the Bonds earned by some corporations could be subject to the environmental tax imposed by Section 59A of the Code, (iv) interest on the Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code, (v) passive investment income, including interest on the Bonds, may be subject to Federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter corporation is passive investment income and (vi) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Bonds. Co -Bond Counsel has expressed no opinion regarding any such other tax consequences. APPROVAL OF LEGAL PROCEEDINGS The legality of the issuance of the Series 1991 Bonds is subject to the approval of Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California, and Rourke & Woodruff, a Professional Corporation, Orange, California acting as Co -Bond Counsel. Certain legal matters will be passed upon for the Agency by James G. Rourke as Agency General Counsel. 36 LITIGATION There is no litigation pending or, to the Agency's knowledge, threatened in any way to restrain or enjoin the issuance, execution or delivery of the Series 1991 Bonds, to contest the validity of the Series 1991 Bonds, the Resolution or any proceeding of the Agency with respect thereto. In the opinion of the Agency and its counsel, there are no lawsuits or claims pending against the Agency which will materially affect the Agency's finances so as to impair its ability to pay principal of and interest on the Series 1991 Bonds when due. LEGALITY FOR INVESTMT The Redevelopment Law provides generally that the State and its municipal corporations, political subdivisions and public bodies, as well as banks, trust companies, savings banks, insurance companies and various other financial institutions and fiduciaries within the State may legally invest funds within their control in Series 1991 Bonds or other obligations issued by redevelopment agencies. Such Series 1991 Bonds and other obligations are also security for public deposits within the State. RATINGS [To be Added) UNDERWRITING The Series 1991 Bonds are to be purchased following receipt of competitive bids by (the "Underwriter"). The Underwriter has agreed, subject to certain terms and conditions set forth in the Notice of Sale and the Preliminary Official Statement, to purchase the Series 1991 Bonds at a price of $ plus accrued interest. The Underwriter will purchase all the Series 1991 Bonds if any are purchased. The Series 1991 Bonds may be offered and sold to certain dealers (including dealers depositing said Series 1991 Bonds into investment trusts) and others at prices lower than the initial public offering price, and the public offering may be changed from time to time by the Underwriter. FINANCIAL ADVISOR Stone & Youngberg served as Financial Advisor to the Agency with respect to the sale of the Series 1991 Bonds. The Financial Advisor has assisted the Agency in the preparation of this Preliminary Official Statement and in other matters relating to the planning, structuring, and issuance of the Series 1991 Bonds. MISCELLANEOUS All the preceding summaries of the Resolution, applicable legislation, agreements and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or 37 ,♦ all of such provisions. Reference is hereby made to such documents on file with the Agency for further information in connection therewith. Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the Owners of the Series 1991 Bonds. The execution and delivery of this Official Statement has been dul authorized by the Agency. y TUSTIN C0WUNITY REDEVELOPMENT AGENCY By Chairman 38