HomeMy WebLinkAbout12 PUBLIC HEARING AND APPROVAL BY THE TUSTIN FINANCING AUTHORITY AND THE CITY OF TUSTINDocusign Envelope ID: 3EFE5DEg-C71E-480B-80B0-BFC4B657B312
AGENDA REPORT
MEETING DATE: MAY 20, 2025
TO: ALDO E. SCHINDLER, CITY MANAGER
Agenda Item 12
Initial
Reviewed: a�
City Manager �"'�''�
Finance Director I
FROM: JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: PUBLIC HEARING AND APPROVAL BY THE TUSTIN FINANCING
AUTHORITY AND THE CITY OF TUSTIN AS THE LEGISLATIVE BODY
FOR THE COMMUNITY FACILITIES DISTRICTS OF THE ISSUANCE OF
SPECIAL TAX REVENUE REFUNDING BONDS IN AN AMOUNT NOT TO
EXCEED $63 MILLION TO REFUND THE COMMUNITY FACILITIES
DISTRICT NO. 2014-1 (TUSTIN LEGACY/STANDARD PACIFIC) 2015
SPECIAL TAX BONDS, SERIES 2015A AND COMMUNITY FACILITIES
DISTRICT NO. 06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES) SPECIAL
TAX REFUNDING BONDS, SERIES 2015A AND SERIES 2015B
SUMMARY:
On April 1, 2025, the City of Tustin ("City") authorized the initiation of proceedings to issue
bonds (the "2025 Refunding Bonds") to refund its outstanding City of Tustin Community
Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Bonds, Series
2015A, City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus
Village) Special Tax Refunding Bonds, Series 2015A; and the City of Tustin Community
Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds Series
2015B (collectively, the "2015 CFD Bonds") to take advantage of lower interest rates to
reduce the annual debt service payments and lower property owners' special tax
payments starting in FY 2025-2026. To maximize savings, the 2025 Refunding Bonds
will be issued and publicly sold by the Tustin Financing Authority ("Authority"), by pooling
the underlying refunding bonds of each community facilities district.
RECOMMENDATIONS:
It is recommended that the City Council:
1. CONDUCT A PUBLIC HEARING TO CONSIDER THE ISSUANCE BY THE
TUSTIN FINANCING AUTHORITY OF ITS SPECIAL TAX REVENUE
REFUNDING BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO
EXCEED $63 MILLION TO POOL AND ISSUE DEBT TO FACILITATE THE
REFUNDING OF THE 2015 CFD BONDS;
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City Council Agenda Report
Authorize Bond Issuance to Refund 2015 CFD Bonds
May 20, 2025
Page 2
2. ADOPT RESOLUTION 25-37, A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF TUSTIN, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY
OF CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.06-1 (TUSTIN
LEGACY/COLUMBUS VILLAGES), AUTHORIZING THE ISSUANCE OF ITS
SPECIAL TAX REFUNDING BONDS, SERIES 2025 IN A PRINCIPAL
AMOUNT NOT TO EXCEED $38 MILLION AND APPROVING CERTAIN
DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH; AND
3. ADOPT RESOLUTION 25-38, A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF TUSTIN, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY
OF CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 2014-1
(TUSTIN LEGACY/STANDARD PACIFIC), AUTHORIZING THE ISSUANCE
OF ITS SPECIAL TAX REFUNDING BONDS, SERIES 2025 IN A PRINCIPAL
AMOUNT NOT TO EXCEED $25 MILLION AND APPROVING CERTAIN
DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH.
It is recommended that the Board of Directors of the Tustin Financing Authority:
1. ADOPT RESOLUTION NO. 25-01 AUTHORIZING THE ISSUANCE OF ITS
SPECIAL TAX REVENUE REFUNDING BONDS IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $63 MILLION AND APPROVING
CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
FISCAL IMPACT:
The 2025 Refunding Bonds will have no financial impact on the City's General Fund, as
all payments of principal and interest on the 2025 Refunding Bonds will be paid solely
from the special tax revenues levied and collected from properties located in the affected
community facilities districts. All bond issuance costs will be paid from the proceeds of
the Bonds.
It is estimated that the refunding of the 2015 CFD Bonds will reduce annual debt service
payments by approximately $485,000 per year, totaling over $3.6 million in net present
value saving over the remaining term of the 2015 CFD Bonds based on market conditions
as of April 30, 2025.
CORRELATION TO THE STRATEGIC PLAN:
The recommendation correlates to the strategic plan by implementing Goal E.
Organizational Excellence and Customer Services. Specifically, the City continues to fulfill
its obligations as the Community Facilities District's administrator by proactively
identifying opportunities to generate measurable long-term savings for property owners.
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City Council Agenda Report
Authorize Bond Issuance to Refund 2015 CFD Bonds
May 20, 2025
Page 3
BACKGROUND AND DISCUSSION:
The CFD No. 06-1 Special Tax Refunding Bonds Series 2015A & Series 2015B, totaling
$52.48 million, were issued for two purposes: (1) to refund outstanding bonds that were
originally used to fund public infrastructure projects related to the Columbus Square and
Columbus Grove communities; and (2) to provide funding for additional infrastructure at
the same communities. These bonds currently have an outstanding balance of $41.21
million and mature in 2039. The CFD No. 2014-1 Special Tax Bonds Series 2015A $27.67
million were issued to fund public infrastructure for the Standard Pacific Project at Tustin
Legacy. These bonds currently have an outstanding balance of $25.495 million and
mature in 2045.
The CFD bonds are not the obligations of the City. They are the liabilities of the property
owners within the affected CFD and secured by liens against the assessed properties.
The City serves as the CFD's administrator and is responsible for on -going reporting and
other administrative matters, including acting as an agent for the collection of principal
and interest by the property owners via annual property tax assessments, and remittance
of such monies to the bondholders. As CFD administrator, the City has fiduciary
responsibility for the best interest of the district's property owners.
The City, working with its Municipal Advisor, Fieldman, Rolapp & Associates, Inc., has
determined that, due to prevailing financial market conditions, it is in the best interests of
the affected property owners to refund the outstanding 2015 CFD Bonds. The proposed
2025 Refunding Bonds will have the same maturity as the 2015 Bonds.
Due to current market conditions with lower interest rates, low historical delinquency rates
within both CFD No. 2014-1 and CFD No. 06-1, and the 2015 CFD Bonds being callable
at no premium on September 1, 2025, the property owners within both CFD's are
expected to benefit from this refunding. The preliminary analysis indicates an estimated
net present value savings of approximately 5.4%, based on estimated market rates as of
April 30, 2025. The net present value savings over the life of the issues are currently
estimated to exceed $3.6 million. The property owners are estimated to save
approximately $520 on average per year for CFD No. 2014-1 and $93 on average per
year for CFD No. 06-1.
The City Council should note that due to daily changes in interest rates, the actual level
of savings cannot be determined until the proposed 2025 Refunding Bonds have been
priced and sold. The pricing date is tentatively set for the week of May 27, 2025. The
proposed 2025 Refunding Bonds will not be issued if interest rates rise to the point where
a 3% net present value savings cannot be achieved. If the savings cannot be achieved,
the market will be monitored and the 2015 CFD Bonds will be refunded when at least 3%
savings can be achieved. Based on current market conditions it is anticipated that the
estimated savings will exceed the 3% net present value threshold contained in the City's
Debt Management Policy.
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City Council Agenda Report
Authorize Bond Issuance to Refund 2015 CFD Bonds
May 20, 2025
Page 4
On April 1, 2025, the City Council adopted Resolution 25-17 authorizing the
commencement of proceedings for the proposed refunding as well as the selection of
consultants required for implementation. Standard & Poor's has assigned an "A+" long-
term rating to the proposed 2025 Refunding Bonds. Tonight's action is the third step to
refund the outstanding 2015 CFD Bonds and issue the 2025 Refunding Bonds. The
attached resolutions along with the required legal and financing documents listed below
are required to issue the 2025 Refunding Bonds:
• Escrow Agreement CFD No. 06-1 — by and between CFD No. 06-1, the Tustin
Financing Authority, and U.S. Bank Trust Company, N.A., as escrow agent, to
provide for the defeasance and redemption of the CFD No. 06-1 Series 2015A and
Series 2015B Bonds.
• Escrow Agreement CFD No. 2014-1 — by and between CFD No. 2014-1, the
Tustin Financing Authority, and The Bank of New York Mellon Trust Company,
N.A., as escrow agent, to provide for the defeasance and redemption of the CFD
No. 2014-1 Series 2015A Bonds.
• Bond Indenture — CFD No. 06-1 — by and between CFD No. 06-1 and the Bank
of New York Mellon Trust Company, N.A. relating to the CFD No. 06-1 Special Tax
Refunding Bonds, Series 2025.
• Bond Indenture — CFD No. 2014-1 — by and between CFD No. 2014-1 and the
Bank of New York Mellon Trust Company, N.A. relating to the CFD No. 2014-1
Special Tax Refunding Bonds, Series 2025.
• Preliminary Official Statement — containing material information, including, but
not limited to information about the CFD No. 06-1, CFD No. 2014-1 and the sale
of the 2025 Refunding Bonds by the underwriter, Stifel, Nicolaus & Company,
Incorporated (the "Underwriter"). Also included in this document is the Continuing
Disclosure Agreement by and between the Tustin Financing Authority and Webb
Public Finance, acting as Dissemination Agent, to provide continuing disclosure of
certain information specified therein pertaining to the 2025 Special Tax Refunding
Bonds, CFD No. 06-1 and CFD No. 2014-1.
• Indenture of Trust— by and between the Tustin Financing Authority and The Bank
of New York Mellon Trust Company, N.A. as trustee, establishing the terms and
conditions pertaining to the issuance of the 2025 Refunding Bonds.
• Bond Purchase Agreement— by and between the Tustin Financing Authority and
the Underwriter, related to the sale of the 2025 Refunding Bonds.
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City Council Agenda Report
Authorize Bond Issuance to Refund 2015 CFD Bonds
May 20, 2025
Page 5
Next Steps:
1. Negotiated sale of Bonds (May 2025)
2. 2025 Refunding Bonds closing (June 2025)
3. New special tax assessments submitted to the County of Orange for fiscal year
2025-2026 property tax roll (August 2025)
4. 2015 CFD Bonds called (September 2025)
Public Outreach:
A postcard notifying affected property owners of the proposed refinancing and tonight's
public hearing was mailed out. The next stage of public outreach communication includes
the following steps:
1. July 2025 or August 2025: If the refunding is approved and closed
successfully, a letter to notify property owners of the specific savings that will
be applicable to their 2025-2026 property tax assessment because of the
refunding transaction.
2. A dedicated email address will be set up to respond to property owner inquiries
and included in all communications.
Signed by:
4D86AFAFFF77473...
Jennifer King
Finance Director/City Treasurer
Attachment(s):
1. Resolution No. 25-37 (CFD No. 06-1)
2. Resolution No. 25-38 (CFD No. 2014-1)
3. Resolution No. 25-01 (Tustin Financing Authority)
4. Escrow Agreement CFD No. 06-1
5. Escrow Agreement CFD No. 2014-1
6. Bond Indenture CFD No. 06-1
7. Bond Indenture CFD No. 2014-1
8. Preliminary Official Statement (includes Continuing Disclosure Agreement)
9. Indenture of Trust (Tustin Financing Authority)
10. Bond Purchase Agreement (Tustin Financing Authority)
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RESOLUTION NO. 25-37
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA,
ACTING AS THE LEGISLATIVE BODY OF CITY OF TUSTIN COMMUNITY
FACILITIES DISTRICT NO. 06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES),
AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX REFUNDING BONDS,
SERIES 2025 IN A PRINCIPAL AMOUNT NOT TO EXCEED $38,000,000 AND
APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City Council of the City of Tustin (the "City"), located in Orange
County, California (hereinafter sometimes referred to as the "legislative body of the
District"), has heretofore undertaken proceedings to form City of Tustin Community
Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) ("CFD No. 06-1" or the
"District") pursuant to the terms and provisions of the Mello -Roos Community Facilities
Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the California
Government Code (the "Act"); and
WHEREAS, CFD No. 06-1 is authorized to issue bonds to refund outstanding
bonds if such refunding results in savings to the District in accordance with the Act; and
WHEREAS, the City of Tustin, on behalf of CFD No. 06-1, previously issued the
$49,740,000 City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2015A (the "Prior CFD
No. 06-1 Series A Bonds"), to refinance certain capital improvements in CFD No. 06-1;
and
WHEREAS, the City of Tustin, on behalf of CFD No. 06-1 also previously issued
the $2,735,000 City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages) Special Tax Bonds, Series 2015B (the "Prior CFD No. 06-1
Series B Bonds" and, with the Prior CFD No. 06-1 Series A Bonds, the "Prior Bonds") to
finance capital improvements in CFD No. 06-1;
WHEREAS, the legislative body of the District now desires to refund the Prior
Bonds through the issuance of bonds in an aggregate principal amount not to exceed
$38,000,000 designated as the "City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages), Special Tax Refunding Bonds, Series 2025" (the
"2025 Bonds"); and
WHEREAS, in order to affect the issuance of the 2025 Bonds, the legislative body
of the District desires to enter into a Bond Indenture (the "Local Obligation Bond
Indenture"), with The Bank of New York Mellon Trust Company, N.A., as trustee, in
substantially the form presented herewith; and
Resolution 25-37
Page 1 of 7
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WHEREAS, in order to effect the refunding and redemption of the Prior Bonds, the
legislative body of the District desires to enter into an escrow agreement (the "Escrow
Agreement"), with U.S. Bank Trust Company, National Association, as escrow agent, in
substantially the form presented herewith; and
WHEREAS, the legislative body of the District has determined in accordance with
Section 53360.4 of the Act that a negotiated sale of the 2025 Bonds to the Tustin
Financing Authority (the "Authority") in accordance with the terms of a bond purchase
agreement (the "Bond Purchase Agreement") to be entered into by and among the
Authority, City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard
Pacific), CFD No. 06-1, and Stifel, Nicolaus & Company, Incorporated, as underwriter (the
"Underwriter") of the Authority Bonds (defined below) approved as to form by this
legislative body herein will result in a lower overall cost to CFD No. 06-1 than a public
sale; and
WHEREAS, the Authority is a joint exercise of powers authority duly organized and
existing under the provisions of Articles 1 through 4 (commencing with section 6500) of
Chapter 5 of Division 7 of Title 1 of the California Government Code (the "JPA Act"), and
is authorized pursuant to Article 4 of the JPA Act (the "Bond Law") to borrow money for
the purpose of financing the acquisition of bonds, notes and other obligations to provide
financing and refinancing for capital improvements of member entities of the Authority
and other local agencies; and
WHEREAS, the 2025 Bonds will be sold to the Authority, together with other local
obligations, and the Authority will sell its revenue bonds (the "Authority Bonds") to provide
funds for its purchase of the 2025 Bonds and other local obligations;
WHEREAS, the City Council of the City has adopted a Debt Management Policy
for the City that complies with Government Code Section 8855(i) (the "Debt Management
Policy"), which Debt Management Policy is by this Resolution hereby adopted by the
District, and the sale and issuance of the 2025 Bonds as contemplated by this Resolution
comply with the Debt Management Policy;
WHEREAS, the legislative body of the District has duly noticed and held a public
hearing and hereby determines that it is prudent in the management of its fiscal affairs to
issue the 2025 Bonds and that the issuance of the 2025 Bonds will result in significant
public benefits of the type described in Section 6586 of the Act; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF TUSTIN, ACTING AS THE LEGISLATIVE BODY OF THE DISTRICT, AS FOLLOWS:
Section 1. Each of the above recitals is true and correct. Following a duly
noticed and conducted public hearing, the legislative body of the District hereby finds and
determines that there are significant public benefits to the citizens of the City through the
use of the Act to assist the City with respect to the subject matter hereof through the
approval of the issuance of the 2025 Bonds and otherwise hereunder within the meaning
of Section 6586(a)-(d), inclusive, of the Bond Law, in that the issuance of the 2025 Bonds
Resolution 25-37
Page 2 of 7
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and related transactions will result in demonstrable savings in effective interest rate to the
District and more efficient delivery of local agency services to residential and commercial
development.
Section 2. The legislative body of the District is authorized pursuant to the Act
to issue the 2025 Bonds for the benefit of CFD No. 06-1 for purposes set forth herein and
to take the necessary steps to refund and redeem the Prior Bonds.
Section 3. The issuance of the 2025 Bonds in an aggregate principal amount
not to exceed $38,000,000 is hereby authorized with the exact principal amount to be
determined by the official signing the Bond Purchase Agreement in accordance with
Section 6 below. The legislative body of the District hereby determines that it is prudent
in the management of its fiscal affairs to issue the 2025 Bonds. The 2025 Bonds shall
mature on the dates and pay interest at the rates set forth in the Bond Purchase
Agreement to be executed on behalf of CFD No. 06-1 in accordance with Section 6
hereof. The 2025 Bonds shall be governed by the terms and conditions of the Local
Obligation Bond Indenture presented at this meeting. The Local Obligation Bond
Indenture shall be prepared by Bond Counsel to CFD No. 06-1 and executed by one or
more of the City Manager, the Assistant City Manager, the Finance Director and the City
Clerk of the City, and any designee thereof (collectively, the "Authorized Officers")
substantially in the form presented at this meeting, with such additions thereto and
changes therein as the officer or officers executing the same deem necessary to cure any
ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling
compensation, principal amount per maturity, redemption dates and prices and such other
related terms and provisions as limited by Section 6 hereof, to conform any provisions
therein to the Bond Purchase Agreement and the Official Statement for the Authority
Bonds. Approval of such changes shall be conclusively evidenced by the execution and
delivery of the Local Obligation Bond Indenture by one or more Authorized Officers.
Capitalized terms used in this Resolution which are not defined herein have the meanings
ascribed to them in the Local Obligation Bond Indenture.
In satisfaction of the requirements contained in section 53363.2 of the Act, the
legislative body of the District hereby determines that: (1) the 2025 Bonds shall bear the
date, be in the denominations, have the maturity dates (which do not exceed the latest
maturity date of the Prior Bonds), and be payable at the place and be in the form specified
in the Local Obligation Bond Indenture, (2) the 2025 Bonds will bear interest at the
maximum true interest cost of 5.00% per annum, and (3) the designated cost of issuing
the 2025 Bonds, as defined by section 53363.8 of the Act, shall include all of the costs
specified in Section 53363.8(a), (b)(2) and (c) of the Act.
In satisfaction of the requirements contained in section 53364.2 of the Act, the
legislative body of the District hereby determines that any savings achieved through the
issuance of the 2025 Bonds shall be used to reduce special taxes of CFD No. 06-1 in
accordance with the Act.
Resolution 25-37
Page 3 of 7
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Section 4. The 2025 Bonds shall be executed on behalf of CFD No. 06-1 by
the manual or facsimile signature of the Mayor of the City and attested with the manual
or facsimile signature of the City Clerk. The Bank of New York Mellon Trust Company,
N.A., is hereby appointed to act as trustee for the 2025 Bonds.
Section 5. The covenants set forth in the Local Obligation Bond Indenture to
be executed in accordance with Section 3 above are hereby approved, shall be deemed
to be covenants of the City Council in its capacity as the legislative body of the District
and shall be complied with by CFD No. 06-1 and its officers.
Section 6. The form of the Bond Purchase Agreement presented at this
meeting is hereby approved; and any one of the Authorized Officers is hereby authorized
and directed, for and in the name of CFD No. 06-1, to execute the Bond Purchase
Agreement substantially in the form approved, with such additions thereto and changes
therein as may be approved or required by an Authorized Officer, including changes
relating to dates and numbers as are necessary to conform the Bond Purchase
Agreement to the dates, amounts and interest rates applicable to the 2025 Bonds as of
the sale date. Approval of such additions and changes shall be conclusively evidenced
by the execution and delivery of the Bond Purchase Agreement; provided, however, that
the Bond Purchase Agreement shall be signed only if: (i) the interest rate on the 2025
Bonds is such that the principal and total net interest cost to maturity on the 2025 Bonds
is less than the principal and total net interest cost to maturity on the Prior Bonds; and (ii)
the net present value of the debt service savings resulting from the issuance of the 2025
Bonds is equal to or greater than three percent (3.00%) of the principal amount of the
Prior Bonds being refunded.
Section 7. The form of the Preliminary Official Statement for the Authority Bonds
presented at this meeting is hereby approved, and the Underwriter is hereby authorized
to distribute the Preliminary Official Statement to prospective purchasers of the Authority
Bonds in the form hereby approved, together with such additions thereto and changes
therein as are determined necessary or desirable by the Authorized Officers, to make
such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 of the
Securities and Exchange Commission, including, but not limited to, such additions and
changes as are necessary to make all information set forth therein accurate and not
misleading. The Underwriter is further authorized to distribute the final Official Statement
for the Authority Bonds and any supplement thereto to the purchasers thereof.
Section 8. The form of the Escrow Agreement presented at this meeting is
hereby approved; and any one of the Authorized Officers is hereby authorized and
directed, for and in the name of CFD No. 06-1, to execute and the City Clerk, or her written
designee, is authorized to attest to the Escrow Agreement, with such additions thereto
and changes therein as may be approved or required by an Authorized Officer, including
changes to conform to the final pricing of the escrow investments and to clarify any
ambiguities; provided that the form of Escrow Agreement may be modified to conform to
federal tax law requirements or to achieve further savings, with the advice and assistance
of Bond Counsel, such approval to be conclusively evidenced by the execution of the
Resolution 25-37
Page 4 of 7
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Escrow Agreement by an Authorized Officer. U.S. Bank Trust Company, National
Association, is hereby appointed to act as Escrow Agent under the Escrow Agreement.
Section 9. In accordance with the requirements of section 53345.8 of the Act,
the legislative body of the District hereby determines that the assessed value of the real
property in CFD No. 06-1 subject to the special tax to pay debt service on the 2025 Bonds
is at least three times the principal amount of the 2025 Bonds and the principal amount
of all other bonds outstanding that are secured by a special tax levied pursuant to the Act
or a special assessment levied on property within CFD No. 06-1.
Section 10. Each of the Authorized Officers is authorized, but not required, to
cooperate with the Authority so that the Authority may obtain a rating of the Authority
Bonds from a nationally recognized rating service and to obtain a municipal bond
insurance policy guaranteeing payment of principal and interest with respect to some or
all of the Authority Bonds and/or a debt service reserve policy with respect to the Authority
Bonds. The Authorized Officers are hereby further authorized to revise any of the
documents referenced herein, or any related documents, to incorporate any provisions
required in order to obtain such a municipal bond insurance policy and/or a debt service
reserve policy.
Section 11. The City Manager, the Director of Finance or their written designee,
are authorized to provide for all services necessary to effect the issuance of the 2025
Bonds. Such services shall include, but not be limited to, obtaining legal services, trustee
services and any other services deemed appropriate as set forth in a certificate of the City
Manager, the Director of Finance or their written designee. The City Manager, the Director
of Finance or their written designee, are authorized to pay for the cost of such services,
together with other costs of issuance from 2025 Bond proceeds, including premium costs
for a municipal bond insurance policy and for a debt service reserve policy.
Section 12. The Authorized Officers are hereby authorized and directed to take
any actions and execute and deliver any and all documents as are necessary to
accomplish the issuance, sale and delivery of the 2025 Bonds in accordance with the
provisions of this Resolution, the fulfillment of the purposes of the 2025 Bonds as
described in the Local Obligation Bond Indenture, including, but not limited to modifying
the documents approved by this Resolution to reflect any provisions required by the bond
insurer for the Authority Bonds, if any, certifying as to the accuracy of information in the
Preliminary Official Statement and the final Official Statement relating to CFD No. 06-1
and executing and delivering any amendments to the documents for the Prior Bonds. Any
document authorized herein to be signed by the City Clerk may be signed by a duly
appointed deputy clerk.
Section 13. With the passage of this Resolution, the City Council, acting as the
legislative body of the District, hereby confirms that the District has adopted the Debt
Management Policy and certifies that such Debt Management Policy complies with
Government Code Section 8855(i), and that the District's financing described in this
Resolution 25-37
Page 5 of 7
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Resolution and its obligations under the 2025 Bonds and the Local Obligation Bond
Indenture as contemplated by this Resolution are in compliance with the Debt
Management Policy, and to the extent the sale and issuance of the 2025 Bonds and the
execution and delivery of the Local Obligation Bond Indenture are not in compliance with
the Debt Management Policy, such noncompliance is waived in accordance with the
terms of the Debt Management Policy, and instructs Stradling Yocca Carlson & Rauth
LLP, as Bond Counsel, on behalf of the District, with respect to the 2025 Bonds described
in this Resolution, (a) to cause notices of the proposed sale and final sale of the 2025
Bonds to be filed in a timely manner with the California Debt and Investment Advisory
Commission pursuant to Government Code Section 8855, and (b) to check, on behalf of
the Authority, the "Yes" box relating to such certifications in the notice of proposed sale
filed pursuant to Government Code Section 8855.
Section 14. The City Council, acting as the legislative body of the District,
acknowledges that the good faith estimates required by Section 5852.1 of the California
Government Code are set forth in Exhibit A attached hereto.
Section 15. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED by the City Council, acting as the legislative body of
the District, at a regular meeting held on the 20t" day of May 2025.
CITY COUNCIL OF THE CITY OF TUSTIN,
acting as the legislative body of the District
AUSTIN LUMBARD,
Mayor
ATTEST:
ERICA N. YASUDA,
City Clerk
APPROVED AS TO FORM:
F
cuSigned by:
Z179
DA TF3KENDIG,
City Attorney
Resolution 25-37
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 25-37 was duly passed
and adopted at a regular meeting of the Tustin City Council, held on the 20t" day of May,
2025, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
COUNCILMEMBER RECUSED:
ERICA N. YASUDA,
City Clerk
Resolution 25-37
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EXHIBIT A
SB 450 GOOD FAITH ESTIMATES
City of Tustin
Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Special Tax Refunding Bonds, Series 2025
SB 450 Summary / Government Code 5852.1 *
Total Estimated Principal Amount $ 34,705,000
Estimated Premium 3,087,479
Net Proceeds 37,792,479
A. True Interest Cost (TIC) of the 2025 Bonds 3.73%
B. Sum of all fees and charges paid to 3rd parties(l) $ 485,837
C. Bond Proceeds Net of Reserves, Capitalized Interest and 3rd Party
Fees and Charges $ 35,776,598
Net proceeds 37,792,479
Less Reserve Fund (1,530,043)
Less Sum of all fees and charges paid to 3rd parties (485,837)
Less Capitalized Interest N/A
D. Total Payment Amount (Total Principal and Interest to Maturity) $ 48,171,611
* Summary reflects good faith estimates as of 05/01/25 based on preliminary cash flows from
Stifel, Nicolaus & Company, Incorporated as of 05/01/25 and all estimated costs associated with the
financing; subject to change based on interest rates, market conditions, and other factors.
(1) Costs of Issuance.
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RESOLUTION NO. 25-38
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA,
ACTING AS THE LEGISLATIVE BODY OF CITY OF TUSTIN COMMUNITY
FACILITIES DISTRICT NO. 2014-1 (TUSTIN LEGACY/STANDARD PACIFIC),
AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX REFUNDING BONDS,
SERIES 2025 IN A PRINCIPAL AMOUNT NOT TO EXCEED $25,000,000 AND
APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City Council of the City of Tustin (the "City"), located in Orange
County, California (hereinafter sometimes referred to as the "legislative body of the
District"), has heretofore undertaken proceedings to form City of Tustin Community
Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) ("CFD No. 2014-1" or the
"District") pursuant to the terms and provisions of the Mello -Roos Community Facilities
Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the California
Government Code (the "Act"); and
WHEREAS, CFD No. 2014-1 is authorized to issue bonds to refund outstanding
bonds if such refunding results in savings to the District in accordance with the Act; and
WHEREAS, the City of Tustin, on behalf of CFD No. 2014-1, previously issued its
$27,665,000 City of Tustin Community Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific) Special Tax Bonds, Series 2015A (the "Prior Bonds") to finance
certain capital improvements in CFD No. 2014-1; and
WHEREAS, the legislative body of the District now desires to refund the Prior
Bonds through the issuance of bonds in an aggregate principal amount not to exceed
$25,000,000 designated as the "City of Tustin Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific), Special Tax Refunding Bonds, Series 2025" (the "2025
Bonds"); and
WHEREAS, in order to affect the issuance of the 2025 Bonds, the legislative body
of the District desires to enter into a Bond Indenture (the "Local Obligation Bond
Indenture"), with The Bank of New York Mellon Trust Company, N.A., as trustee, in
substantially the form presented herewith; and
WHEREAS, in order to effect the refunding and redemption of the Prior Bonds, the
legislative body of the District desires to enter into an escrow agreement (the "Escrow
Agreement"), with The Bank of New York Mellon Trust Company, N.A., as escrow agent,
in substantially the form presented herewith; and
WHEREAS, the legislative body of the District has determined in accordance with
section 53360.4 of the Act that a negotiated sale of the 2025 Bonds to the Tustin
Resolution 25-38
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Financing Authority (the "Authority") in accordance with the terms of a bond purchase
agreement (the "Bond Purchase Agreement") to be entered into by and among the
Authority, CFD No. 2014-1, City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages), and Stifel, Nicolaus & Company, Incorporated, as
underwriter (the "Underwriter") of the Authority Bonds (defined below) approved as to
form by this legislative body herein will result in a lower overall cost to CFD No. 2014-1
than a public sale; and
WHEREAS, the Authority is a joint exercise of powers authority duly organized and
existing under the provisions of Articles 1 through 4 (commencing with section 6500) of
Chapter 5 of Division 7 of Title 1 of the California Government Code (the "JPA Act"), and
is authorized pursuant to Article 4 of the JPA Act (the "Bond Law") to borrow money for
the purpose of financing the acquisition of bonds, notes and other obligations to provide
financing and refinancing for capital improvements of member entities of the Authority
and other local agencies; and
WHEREAS, the 2025 Bonds will be sold to the Authority, together with other local
obligations, and the Authority will sell its revenue bonds (the "Authority Bonds") to provide
funds for its purchase of the 2025 Bonds and other local obligation;
WHEREAS, the City Council of the City has adopted a Debt Management Policy
for the City that complies with Government Code Section 8855(i) (the "Debt Management
Policy"), which Debt Management Policy is by this Resolution hereby adopted by the
District, and the sale and issuance of the 2025 Bonds as contemplated by this Resolution
comply with the Debt Management Policy;
WHEREAS, the legislative body of the District has duly noticed and held a public
hearing and hereby determines that it is prudent in the management of its fiscal affairs to
issue the 2025 Bonds and that the issuance of the 2025 Bonds will result in significant
public benefits of the type described in Section 6586 of the Act; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF TUSTIN, ACTING AS THE LEGISLATIVE BODY OF THE DISTRICT, AS FOLLOWS:
Section 1. Each of the above recitals is true and correct. Following a duly
noticed and conducted public hearing, the legislative body of the District hereby finds and
determines that there are significant public benefits to the citizens of the City through the
use of the Act to assist the City with respect to the subject matter hereof through the
approval of the issuance of the 2025 Bonds and otherwise hereunder within the meaning
of Section 6586(a)-(d), inclusive, of the Bond Law, in that the issuance of the 2025 Bonds
and related transactions will result in demonstrable savings in effective interest rate to the
District and more efficient delivery of local agency services to residential and commercial
development.
Section 2. The legislative body of the District is authorized pursuant to the Act
to issue the 2025 Bonds for the benefit of CFD No. 2014-1 for purposes set forth herein
and to take the necessary steps to refund and redeem the Prior Bonds.
Resolution 25-38
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Section 3. The issuance of the 2025 Bonds in an aggregate principal amount
not to exceed $25,000,000 is hereby authorized with the exact principal amount to be
determined by the official signing the Bond Purchase Agreement in accordance with
Section 6 below. The legislative body of the District hereby determines that it is prudent
in the management of its fiscal affairs to issue the 2025 Bonds. The 2025 Bonds shall
mature on the dates and pay interest at the rates set forth in the Bond Purchase
Agreement to be executed on behalf of CFD No. 2014-1 in accordance with Section 6
hereof. The 2025 Bonds shall be governed by the terms and conditions of the Local
Obligation Bond Indenture presented at this meeting. The Local Obligation Bond
Indenture shall be prepared by Bond Counsel to CFD No. 2014-1 and executed by one
or more of the City Manager, the Assistant City Manager, the Finance Director and the
City Clerk of the City, and any designee thereof (collectively, the "Authorized Officers")
substantially in the form presented at this meeting, with such additions thereto and
changes therein as the officer or officers executing the same deem necessary to cure any
ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling
compensation, principal amount per maturity, redemption dates and prices and such other
related terms and provisions as limited by Section 6 hereof, to conform any provisions
therein to the Bond Purchase Agreement and the Official Statement for the Authority
Bonds. Approval of such changes shall be conclusively evidenced by the execution and
delivery of the Local Obligation Bond Indenture by one or more Authorized Officers.
Capitalized terms used in this Resolution which are not defined herein have the meanings
ascribed to them in the Local Obligation Bond Indenture.
In satisfaction of the requirements contained in section 53363.2 of the Act, the
legislative body of the District hereby determines that: (1) the 2025 Bonds shall bear the
date, be in the denominations, have the maturity dates (which do not exceed the latest
maturity date of the Prior Bonds), and be payable at the place and be in the form specified
in the Local Obligation Bond Indenture, (2) the 2025 Bonds will bear interest at the
maximum true interest cost of 5.00% per annum, and (3) the designated cost of issuing
the 2025 Bonds, as defined by section 53363.8 of the Act, shall include all of the costs
specified in Section 53363.8(a), (b)(2) and (c) of the Act.
In satisfaction of the requirements contained in section 53364.2 of the Act, the
legislative body of the District hereby determines that any savings achieved through the
issuance of the 2025 Bonds shall be used to reduce special taxes of CFD No. 2014-1 in
accordance with the Act.
Section 4. The 2025 Bonds shall be executed on behalf of CFD No. 2014-1 by
the manual or facsimile signature of the Mayor of the City and attested with the manual
or facsimile signature of the City Clerk. The Bank of New York Mellon Trust Company,
N.A., is hereby appointed to act as trustee for the 2025 Bonds.
Section 5. The covenants set forth in the Local Obligation Bond Indenture to
be executed in accordance with Section 3 above are hereby approved, shall be deemed
Resolution 25-38
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to be covenants of the City Council in its capacity as the legislative body of the District
and shall be complied with by CFD No. 2014-1 and its officers.
Section 6. The form of the Bond Purchase Agreement presented at this
meeting is hereby approved; and any one of the Authorized Officers is hereby authorized
and directed, for and in the name of CFD No. 2014-1, to execute the Bond Purchase
Agreement substantially in the form approved, with such additions thereto and changes
therein as may be approved or required by an Authorized Officer, including changes
relating to dates and numbers as are necessary to conform the Bond Purchase
Agreement to the dates, amounts and interest rates applicable to the 2025 Bonds as of
the sale date. Approval of such additions and changes shall be conclusively evidenced
by the execution and delivery of the Bond Purchase Agreement; provided, however, that
the Bond Purchase Agreement shall be signed only if: (i) the interest rate on the 2025
Bonds is such that the principal and total net interest cost to maturity on the 2025 Bonds
is less than the principal and total net interest cost to maturity on the Prior Bonds; and (ii)
the net present value of the debt service savings resulting from the issuance of the 2025
Bonds is equal to or greater than three percent (3.00%) of the principal amount of the
Prior Bonds being refunded.
Section 7. The form of the Preliminary Official Statement for the Authority Bonds
presented at this meeting is hereby approved, and the Underwriter is authorized to
distribute the Preliminary Official Statement to prospective purchasers of the Authority
Bonds in the form hereby approved, together with such additions thereto and changes
therein as are determined necessary or desirable by the Authorized Officers, to make
such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 of the
Securities and Exchange Commission, including, but not limited to, such additions and
changes as are necessary to make all information set forth therein accurate and not
misleading. The Underwriter is further authorized to distribute the final Official Statement
for the Authority Bonds and any supplement thereto to the purchasers thereof.
Section 8. The form of the Escrow Agreement presented at this meeting is
hereby approved; and any one of the Authorized Officers is hereby authorized and
directed, for and in the name of CFD No. 2014-1, to execute and the City Clerk, or her
written designee, is authorized to attest to the Escrow Agreement, with such additions
thereto and changes therein as may be approved or required by an Authorized Officer,
including changes to conform to the final pricing of the escrow investments and to clarify
any ambiguities; provided that the form of Escrow Agreement may be modified to conform
to federal tax law requirements or to achieve further savings, with the advice and
assistance of Bond Counsel, such approval to be conclusively evidenced by the execution
of the Escrow Agreement by an Authorized Officer. The Bank of New York Mellon Trust
Company, N.A., is hereby appointed to act as Escrow Agent under the Escrow
Agreement.
Section 9. In accordance with the requirements of section 53345.8 of the Act,
the legislative body of the District hereby determines that the assessed value of the real
property in CFD No. 2014-1 subject to the special tax to pay debt service on the 2025
Resolution 25-38
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Bonds is at least three times the principal amount of the 2025 Bonds and the principal
amount of all other bonds outstanding that are secured by a special tax levied pursuant
to the Act or a special assessment levied on property within CFD No. 2014-1.
Section 10. Each of the Authorized Officers is authorized, but not required, to
cooperate with the Authority so that the Authority may obtain a rating of the Authority
Bonds from a nationally recognized rating service and to obtain a municipal bond
insurance policy guaranteeing payment of principal and interest with respect to some or
all of the Authority Bonds and/or a debt service reserve policy with respect to the Authority
Bonds. The Authorized Officers are hereby further authorized to revise any of the
documents referenced herein, or any related documents, to incorporate any provisions
required in order to obtain such a municipal bond insurance policy and/or a debt service
reserve policy.
Section 11. The City Manager, the Director of Finance or their written designee,
are authorized to provide for all services necessary to effect the issuance of the 2025
Bonds. Such services shall include, but not be limited to, obtaining legal services, trustee
services and any other services deemed appropriate as set forth in a certificate of the City
Manager, the Director of Finance or their written designee. The City Manager, the Director
of Finance or their written designee, are authorized to pay for the cost of such services,
together with other costs of issuance from 2025 Bond proceeds, including premium costs
for a municipal bond insurance policy and for a debt service reserve policy.
Section 12. The Authorized Officers are hereby authorized and directed to take
any actions and execute and deliver any and all documents as are necessary to
accomplish the issuance, sale and delivery of the 2025 Bonds in accordance with the
provisions of this Resolution, the fulfillment of the purposes of the 2025 Bonds as
described in the Local Obligation Bond Indenture, including, but not limited to modifying
the documents approved by this Resolution to reflect any provisions required by the bond
insurer for the Authority Bonds, if any, certifying as to the accuracy of information in the
Preliminary Official Statement and the final Official Statement relating to CFD No. 2014-
1 and executing and delivering any amendments to the documents for the Prior Bonds.
Any document authorized herein to be signed by the City Clerk may be signed by a duly
appointed deputy clerk.
Section 13. With the passage of this Resolution, City Council, acting as the
legislative body of the District, hereby confirms that the District has adopted the Debt
Management Policy and certifies that such Debt Management Policy complies with
Government Code Section 8855(i), and that the District's financing described in this
Resolution and its obligations under the 2025 Bonds and the Local Obligation Bond
Indenture as contemplated by this Resolution are in compliance with the Debt
Management Policy, and to the extent the sale and issuance of the 2025 Bonds and the
execution and delivery of the Local Obligation Bond Indenture are not in compliance with
the Debt Management Policy, such noncompliance is waived in accordance with the
terms of the Debt Management Policy, and instructs Stradling Yocca Carlson & Rauth
Resolution 25-38
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LLP, as Bond Counsel, on behalf of the District, with respect to the 2025 Bonds described
in this Resolution, (a) to cause notices of the proposed sale and final sale of the 2025
Bonds to be filed in a timely manner with the California Debt and Investment Advisory
Commission pursuant to Government Code Section 8855, and (b) to check, on behalf of
the Authority, the "Yes" box relating to such certifications in the notice of proposed sale
filed pursuant to Government Code Section 8855.
Section 14. The City Council, acting as the legislative body of the District,
acknowledges that the good faith estimates required by Section 5852.1 of the California
Government Code are set forth in Exhibit A attached hereto.
Section 15. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED by the City Council, acting as the legislative body of the
District, at a regular meeting held on the 20th day of May 2025.
CITY COUNCIL OF THE CITY OF TUSTIN,
acting as the legislative body of the District
AUSTIN LUMBARD,
Mayor
ATTEST:
ERICA N. YASUDA,
City Clerk
APPROVED AS TO FORM:
F
cuSigned by:
Z179
DA 8EF3KL9gDIG,
City Attorney
Resolution 25-38
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 25-38 was duly passed
and adopted at a regular meeting of the Tustin City Council, held on the 20t" day of May,
2025, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
COUNCILMEMBER RECUSED:
ERICA N. YASUDA,
City Clerk
Resolution 25-38
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EXHIBIT A
SB 450 GOOD FAITH ESTIMATES
City of Tustin
Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific)
Special Tax Refunding Bonds, Series 2025
SB 450 Summary / Government Code 5852.1
Total Estimated Principal Amount $ 22,390,000
Estimated Premium 1,663,471
Net Proceeds 24,053,471
A. True Interest Cost (TIC) of the 2025 Bonds 4.32%
B. Sum of all fees and charges paid to 3rd parties(l) $ 355,139
C. Bond Proceeds Net of Reserves, Capitalized Interest and 3rd Party
Fees and Charges $ 22,585,332
Net proceeds 24,053,471
Less Reserve Fund (1,113,000)
Less Sum of all fees and charges paid to 3rd parties (355,139)
Less Capitalized Interest N/A
D. Total Payment Amount (Total Principal and Interest to Maturity) $ 37,345,528
* Summary reflects good faith estimates as of 05/01/25 based on preliminary cash flows from
Stifel, Nicolaus & Company, Incorporated as of 05/01/25 and all estimated costs associated with the
financing; subject to change based on interest rates, market conditions, and other factors.
(1) Costs of Issuance.
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TUSTIN FINANCING AUTHORITY RESOLUTION NO. 25-01
RESOLUTION OF THE BOARD OF DIRECTORS OF THE TUSTIN FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX REVENUE
REFUNDING BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO
EXCEED $63,000,000 AND APPROVING CERTAIN DOCUMENTS AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Tustin Financing Authority (the "Authority") is a joint exercise of
powers authority duly organized and existing under the provisions of Articles 1 through 4
(commencing with section 6500) of Chapter 5 of Division 7 of Title 1 of the California
Government Code (the "Act"), and is authorized pursuant to Article 4 of the Act (the "Bond
Law") to borrow money for the purpose of financing the acquisition of bonds, notes and
other obligations to provide financing and refinancing for capital improvements of member
entities of the Authority and other local agencies; and
WHEREAS, the City of Tustin Community Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific) ("CFD No. 2014-1 ") previously issued the $27,665,000 City of
Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special
Tax Bonds, Series 2015A (the "Prior CFD No. 2014-1 Bonds"); and
WHEREAS, the City of Tustin, on behalf of the City of Tustin Community Facilities
District No. 06-1 (Tustin Legacy/Columbus Village) ("CFD No. 06-1" and together with
CFD No. 2014-1, the "Community Facilities Districts"), previously issued the $49,740,000
City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Village)
Special Tax Refunding Bonds, Series 2015A (the "Prior CFD No. 06-1 Series A Bonds");
and
WHEREAS, the City of Tustin, on behalf of CFD No. 06-1, also previously issued
the $2,735,000 City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Village) Special Tax Bonds, Series 2015B (the "Prior CFD No. 06-1
Series B Bonds" and, with the Prior CFD No. 2014-1 Bonds and the Prior CFD No. 06-1
Series A Bonds, the "Prior Bonds"); and
WHEREAS, as a result of favorable conditions in the municipal bond market, the
Authority and each of the Community Facilities Districts desire to refund the Prior Bonds;
and
WHEREAS, the Authority, for the purpose of acquiring special tax refunding bonds
of each of the Community Facilities Districts (the "Local Obligations"), the proceeds of
which will be utilized to defease and refund the Prior Bonds, has determined to issue its
Special Tax Revenue Refunding Bonds, Series 2025 (the "Authority Bonds") pursuant to
and secured by the Indenture (as defined below) providing for the issuance of the
Authority Bonds, all in the manner provided therein; and
Tustin Finance Authority
Resolution 25-01
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WHEREAS, the Authority Bonds will be secured by debt service payments paid
with respect to the Local Obligations, the payment of which will be secured by special tax
liens on taxable property within the respective Community Facilities Districts; and
WHEREAS, for this financing there has been filed with the Secretary of the Board
of Directors of the Authority the forms of the following documents to be executed by the
Authority with respect to the issuance of the Authority Bonds, which documents the Board
desires to approve for execution as described herein:
(1) The Indenture of Trust (the "Indenture"), by and between the Authority and
The Bank of New York Mellon Trust Company, N.A., as trustee;
(2) The Bond Purchase Agreement, to be dated the date of sale, by and among
Stifel, Nicolaus & Company, Incorporated, as underwriter (the "Underwriter"), the
Community Facilities Districts, and the Authority (the "Bond Purchase Agreement");
(3) The Escrow Agreement for the Prior CFD No. 2014-1 Bonds by and among
the Authority, The Bank of New York Mellon Trust Company, N.A., as escrow agent, and
CFD No. 2014-1;
(4) The Escrow Agreement for the Prior CFD No. 06-1 Series A Bonds and the
Prior CFD No. 06-1 Series B Bonds by and among the Authority, U.S. Bank Trust
Company, National Association, as escrow agent, and CFD No. 06-1;
(5) The preliminary Official Statement for the Authority Bonds (the "Preliminary
Official Statement"); and
(6) The Continuing Disclosure Agreement to be executed and delivered by the
Authority (the documents described in (1) through (4) above and the Continuing
Disclosure Agreement are collectively referred to herein as the "Authority Documents").
WHEREAS, the City Council of the City of Tustin (the "City") has adopted a Debt
Management Policy for the City, that complies with Government Code Section 8855(i)
(the "Debt Management Policy"), which Debt Management Policy is by this Resolution
hereby adopted by the Authority, and the sale and issuance of the Authority Bonds as
contemplated by this Resolution comply with the Debt Management Policy;
WHEREAS, the Community Facilities Districts have held duly noticed public
hearings regarding the issuance of the Authority Bonds to purchase the Local Obligations
and determined that such financing will result in significant public benefits of the type
described in section 6586 of the Bond Law; and
WHEREAS, the Authority has determined and hereby finds that the issuance of
the Authority Bonds and the acquisition of the Local Obligations will result in significant
public benefits of the type described in section 6586 of the Bond Law; and
Tustin Finance Authority
Resolution 25-01
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NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE TUSTIN FINANCING AUTHORITY, AS FOLLOWS:
Section 1. Each of the above recitals is true and correct and is adopted by the
Board of Directors. The Board of Directors has determined and hereby finds that the
Authority's execution and delivery of the Authority Bonds will result in significant public
benefits of at least one of the types described in Section 6586 (a) through (d), inclusive,
of the Act.
Section 2. The Authority Bonds shall be issued in an aggregate principal
amount not to exceed $63,000,000 with the exact principal amount to be determined by
the official signing the Bond Purchase Agreement in accordance with Section 4 below.
The Authority Bonds shall mature on the dates and pay interest at the rates set forth in
the Bond Purchase Agreement to be executed on behalf of the Authority in accordance
with Section 4 below. The scheduled payments of principal and interest on the Authority
Bonds shall be structured to equal the scheduled payments of principal and interest on
the Local Obligations. The Authority Bonds shall be issued under the terms of the
Indenture, the form of which is on file with the Secretary of the Authority. The form of the
Indenture on file with the Secretary of the Authority is hereby approved and each of the
Chairman of the Authority, or such other member of the Board of Directors as the
Chairman may designate, the Executive Director of the Authority, the Treasurer of the
Authority and the Secretary of the Authority, and any designee thereof (collectively, the
"Authorized Officers"), is hereby authorized to execute the Indenture, in the form hereby
approved, with such additions thereto and changes therein as the officer or officers
executing the same deem necessary to accomplish the issuance of the Authority Bonds
as contemplated by this Resolution. Approval of such additions and changes shall be
conclusively evidenced by the execution and delivery of the Indenture by one or more of
such Authorized Officers.
Section 3. The Authority Bonds shall be executed on behalf of the Authority by
the manual or facsimile signature of the Chairman of the Authority and attested with the
manual or facsimile signature of the Secretary of the Authority. The Bank of New York
Mellon Trust Company, N.A. is hereby appointed to act as the trustee for the Authority
Bonds under the Indenture. If the Executive Director determines at any time while the
Authority Bonds are outstanding that another bank should be selected to act as trustee
for the Authority Bonds, in order to ensure the efficient administration of the Authority
Bonds, then the Executive Director, or his designee, is hereby authorized and directed to
select and engage a bank or trust company meeting the requirements set forth in the
Indenture to act as the trustee for the Authority Bonds under the terms of the Indenture.
Section 4. The form of the Bond Purchase Agreement on file with the Secretary
of the Authority is hereby approved; and each of the Authorized Officers is hereby
authorized to execute the Bond Purchase Agreement in the form so approved, with such
additions thereto and changes therein as are necessary to conform the Bond Purchase
Agreement to the dates, amounts and interest rates applicable to the Authority Bonds as
Tustin Finance Authority
Resolution 25-01
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of the sale date or to cure any defect or ambiguity therein. Approval of such additions and
changes shall be conclusively evidenced by the execution and delivery of the Bond
Purchase Agreement by one or more of such Authorized Officers; provided, however, that
the Bond Purchase Agreement shall be signed only if the Underwriter's discount
(exclusive of original issue discount) does not exceed 0.40% of the principal amount of
the Authority Bonds. Each of the Executive Director, the Treasurer and their written
designees is authorized to determine the day on which the Authority Bonds are to be
priced in order to attempt to produce the lowest borrowing cost for the Authority and may
reject any terms presented by the Underwriter to the Authority if determined not to be in
the best interest of the Authority.
In the event the Executive Director or his written designee determines that the
purchase of one or more of the Local Obligations will not result in sufficient net present
value savings to a Community Facilities District or will not otherwise achieve the purposes
of the Authority set forth in this Resolution, then the Local Obligations of such Community
Facilities District shall not be purchased by the Authority, and the Authority Documents
shall be amended to reflect that such Local Obligations will not be purchased by the
Authority.
Section 5. The form of the Continuing Disclosure Agreement on file with the
Secretary of the Authority is hereby approved; and each of the Authorized Officers is
authorized to execute the Continuing Disclosure Agreement in the form hereby approved,
with such additions thereto and changes therein as the officers executing the same deem
necessary to comply with the requirements of Rule 15c2-12 of the Securities and
Exchange Commission and to cure any ambiguity or defect therein. Approval of such
changes shall be conclusively evidenced by the execution and delivery of the Continuing
Disclosure Agreement by one or more of such officers.
Section 6. The form of the Preliminary Official Statement on file with the
Secretary of the Authority is hereby approved; and the Underwriter is hereby authorized
to distribute the Preliminary Official Statement to prospective purchasers of the Authority
Bonds in the form hereby approved, together with such additions thereto and changes
therein as are determined necessary by the Executive Director of the Authority, or his
written designee, to make such Preliminary Official Statement final as of its date for
purposes of Rule 15c2-12 of the Securities and Exchange Commission, as amended,
including, but not limited to, such additions and changes as are necessary to make the
information therein accurate and not misleading. Each of the Authorized Officers is hereby
authorized to execute a final Official Statement in the form of the Preliminary Official
Statement, together with such changes as are determined necessary by the Executive
Director of the Authority, or his written designee, to make such Official Statement
complete and accurate as of its date. The Underwriter is further authorized to distribute
the final Official Statement for the Authority Bonds and any supplement thereto to the
purchasers thereof upon its execution on behalf of the Authority as described above.
Tustin Finance Authority
Resolution 25-01
Page 4 of 7
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Section 7. The Authorized Officers are hereby appointed as the authorized
officers of the Authority for all purposes required to effect the issuance of the Authority
Bonds and are hereby authorized, empowered, and directed, jointly and severally, to do
all such acts and things and to execute all such documents as may be necessary to carry
out and comply with the foregoing actions.
Section 8. Each of the Authorized Officers is authorized, but not required, to
obtain a rating of the Authority Bonds from a nationally recognized rating service. Each
of the Executive Director and the Treasurer, or their respective written designees, acting
alone, is hereby authorized to negotiate the terms of a commitment (the "Insurance
Commitment") for bond insurance for some or all of the Authority Bonds and a
commitment for a reserve fund surety bond or debt service reserve policy (the "Surety
Commitment") for all or a portion of the Reserve Fund (as defined in the Indenture) from
one or more municipal bond insurance companies (an "Insurer") and, if such officer
determines that the acquisition of a bond insurance policy or a reserve fund surety bond
or debt service reserve policy, or both, from an Insurer will result in net interest rate
savings or will result in more annual debt service savings, to pay the premiums for such
policy and surety bond or debt service reserve policy from the proceeds of the Authority
Bonds and to amend the Authority Documents to the extent necessary to conform to the
terms of the Insurance Commitment and the Surety Commitment. Each of the Authorized
Officers, acting alone, is further authorized to execute a reimbursement agreement if
required by the Surety Commitment.
Section 9. The Authorized Officers are hereby authorized and directed to do
any and all things and to execute and deliver any and all documents which they may
deem necessary or advisable in order to consummate the issuance and sale of the
Authority Bonds and otherwise to effectuate the purposes of this Resolution.
Section 10. With the passage of this Resolution, the Authority hereby confirms
that it has adopted the Debt Management Policy and certifies that such Debt Management
Policy complies with Government Code Section 8855(i), and that the Authority's financing
described in this Resolution and its obligations under the Authority Bonds and the
Indenture as contemplated by this Resolution are in compliance with the Debt
Management Policy, and to the extent the sale and issuance of the Authority Bonds and
the execution and delivery of the Indenture are not in compliance with the Debt
Management Policy, such noncompliance is waived in accordance with the terms of the
Debt Management Policy, and instructs Stradling Yocca Carlson & Rauth LLP, as Bond
Counsel, on behalf of the Authority, with respect to the Authority Bonds described in this
Resolution, (a) to cause notices of the proposed sale and final sale of the Authority Bonds
to be filed in a timely manner with the California Debt and Investment Advisory
Commission pursuant to Government Code Section 8855, and (b) to check, on behalf of
the Authority, the "Yes" box relating to such certifications in the notice of proposed sale
filed pursuant to Government Code Section 8855.
Tustin Finance Authority
Resolution 25-01
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Section 11. The Board acknowledges that the good faith estimates required by
Section 5852.1 of the California Government Code are set forth in Exhibit A attached
hereto.
Section 12. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED by the Board of Directors at a regular meeting held on
the 20th day of May 2025.
ATTEST:
ERICA N. YASUDA,
Secretary
APPROVED AS TO FORM:
FDocuSigned by:
,: y -
DA 8EF31fi)IG,
City Attorney
BOARD OF DIRECTORS OF
THE TUSTIN FINANCING AUTHORITY
AUSTIN LUMBARD,
Chairman
Tustin Finance Authority
Resolution 25-01
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, Secretary of the Tustin Financing Authority of the City of Tustin,
California, do hereby certify that the whole number of the Board of the Tustin Financing
Authority is five; that the above and foregoing Resolution No. 25-01 was duly passed and
adopted at a regular meeting of the Tustin Financing Authority, held on the 20th day of May,
2025, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
ERICA N. YASUDA,
Secretary
Tustin Finance Authority
Resolution 25-01
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EXHIBIT A
SB 450 GOOD FAITH ESTIMATES
Tustin Financing Authority
Special Tax Refunding Bonds, Series 2025
SB 450 Summary / Government Code 5852.1*
Total Estimated Principal Amount $ 57,095,000
Estimated Premium 4,750,950
Net Proceeds 61,845,950
A. True Interest Cost (TIC) of the Authority Bonds 4.02%
B. Sum of all fees and charges paid to 3rd parties(') $ 840,977
C. Bond Proceeds Net of Reserves, Capitalized Interest and 3rd Party
Fees and Charges $ 58,361,930
Net proceeds 61,845,950
Less Reserve Fund (2,643,043)
Less Sum of all fees and charges paid to 3rd parties (840,977)
Less Capitalized Interest N/A
D. Total Payment Amount (Total Principal and Interest to Maturity) $ 85,517,139
* Summary reflects good faith estimates as of 05/01/25 based on preliminary cash flows from
Stifel, Nicolaus & Company, Incorporated as of 05/01/25 and all estimated costs associated with the
financing; subject to change based on interest rates, market conditions, and other factors.
(1) Costs of Issuance.
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Stradling Yocca Carlson & Rauth LLP
04/25/25
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2015A
and
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2015B
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement"), made and entered into as of
June 1, 2025, by and among the TUSTIN FINANCING AUTHORITY (the "Authority"), CITY OF
TUSTIN COMMUNITY FACILITIES DISTRICT NO.06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES)
("CFD No. 06-1"), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as escrow agent
(the "Escrow Agent"), a national banking association organized and existing under the laws of
the United States of America and being qualified to accept and administer the escrow hereby
created.
WI TNESSETH:
WHEREAS, CFD No. 06-1 has previously issued its $49,740,000 City of Tustin Community
Facilities District No.06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds,
Series 2015A (the "2015A Bonds") to refinance certain capital improvements in CFD No. 06-1;
and
WHEREAS, CFD No.06-1 has also previously issued its $2,735,000 City of Tustin
Community Facilities District No.06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds,
Series 2015B (the "2015B Bonds" and, with the 2015A Bonds, the "Prior Bonds") to finance and
refinance certain capital improvements in CFD No. 06-1; and
WHEREAS, CFD No. 06-1 has determined to cause the issuance and sale of City of Tustin
Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding
Bonds, Series 2025 (the "2025 CFD No. 06-1 Bonds") for the purpose of providing moneys to the
Escrow Agent, which amount will be sufficient (when combined with moneys to be provided
from other sources) to pay the principal of and interest due on the Prior Bonds on September 1,
2025, and to redeem on September 1, 2025 (the "Redemption Date") the Prior Bonds maturing
on and after September 1, 2026, at a redemption price equal to 100% of the principal amount to
be redeemed (the "Redemption Price"); and
WHEREAS, a portion of the proceeds of the sale by the Authority of its Tustin Financing
Authority Special Tax Revenue Refunding Bonds, Series 2025 (the "Authority Bonds"), will be
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used by the Authority to purchase the 2025 CFD No. 06-1 Bonds and provide the funds required
hereunder; and
WHEREAS, pursuant to Section 2 of this Escrow Agreement, CFD No. 06-1 will cause a
prescribed portion of the proceeds of the 2025 CFD No. 06-1 Bonds, together with certain funds
held by the fiscal agent with respect to the Prior Bonds (the "Prior Fiscal Agent"), to be set aside
with the Escrow Agent, in order to pay the principal of and interest due on the Prior Bonds on
September 1, 2025, and to pay, on the Redemption Date, the Redemption Price of the Prior
Bonds maturing on and after September 1, 2026, such proceeds and funds to be deposited in an
escrow fund to be created hereunder designated as the "CFD No.06-1 Escrow Fund," to be
maintained by the Escrow Agent (the "Escrow Fund") which moneys will be used to purchase
securities as described on Schedule II hereto (the "Federal Securities"), provided the principal of
and the interest on which when paid will provide money which, together with the moneys
deposited with the Escrow Agent at the same time pursuant to this Escrow Agreement, will be
sufficient to pay the principal of and interest due on the Prior Bonds on September 1, 2025, and
to pay, on the Redemption Date, the Redemption Price of the Prior Bonds maturing on and after
September 1, 2026, as set forth in Schedule III hereto; and
NOW, THEREFORE, the Authority, CFD No. 06-1 and the Escrow Agent hereby agree as
follows:
SECTION 1. Establishment and Maintenance of Escrow Fund. The Escrow Agent
agrees to establish and maintain, until the Prior Bonds have been paid in full, the Escrow Fund,
and to hold the moneys and securities therein at all times as a special and separate escrow fund
(wholly segregated from all other securities, investments or moneys on deposit with the Escrow
Agent). All moneys and securities in the Escrow Fund are hereby irrevocably pledged, subject to
the provisions of Section 2 hereof, to secure the Redemption Price of the Prior Bonds.
SECTION 2. Funding of the Escrow Fund.
(a) CFD No. 06-1 agrees that, not later than June _, 2025 (the "Closing
Date"), CFD No. 06-1 will cause to be transferred to the Escrow Agent from the Prior Fiscal Agent
$ from amounts held in under the Fiscal Agent Agreement dated as of December 1,
2015, between the City of Tustin, for and on behalf of CFD No.06-1, and U.S. Bank Trust
Company, National Association, as successor fiscal agent, relating to the Prior Bonds (the "Prior
Fiscal Agent Agreement") for deposit in the Escrow Fund.
(b) CFD No. 06-1 agrees that, not later than the Closing Date, CFD No. 06-1
will cause to be transferred to the Escrow Agent for deposit in the Escrow Fund from The Bank
of New York Mellon Trust Company, N.A., as trustee (the "Trustee") under the Bond Indenture
dated as of June 1, 2025 (the "CFD No. 06-1 Bond Indenture"), by and between CFD No. 06-1
and the Trustee, the amount of $ from the proceeds of sale of the 2025 CFD
No. 06-1 Bonds; and
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(c) CFD No.06-1 hereby directs the Escrow Agent to immediately apply
$ to acquire, on the Closing Date, the Federal Securities set forth in Schedule II and
to hold $ uninvested as cash.
SECTION 3. Investment of Moneys. The Escrow Agent acknowledges receipt of the
moneys described in Section 2 and agrees immediately to invest such moneys in the Federal
Securities listed on Schedule II hereto and to deposit such Federal Securities in the Escrow Fund.
The Escrow Agent shall be entitled to rely upon the conclusion of Causey Public Finance LLC (the
"Verification Agent"), that the Federal Securities listed on Schedule II hereto mature and bear
interest payable in such amounts and at such times as, together with cash on deposit in the
Escrow Fund, will be sufficient to pay on the Redemption Date, the Redemption Price of the
Prior Bonds.
SECTION 4. Investment of Any Remaining Moneys. At the written direction of CFD
No. 06-1, the Escrow Agent shall reinvest any other amount of principal and interest, or any
portion thereof, received from the Federal Securities prior to the date on which such payment is
required for the purposes set forth herein, in noncallable Federal Securities maturing not later
than the date on which such payment or portion thereof is required for the purposes set forth in
Section 6, at the written direction of CFD No. 06-1, as verified in a report prepared by an
independent certified public accountant or firm of certified public accountants of favorable
national reputation experienced in the refunding of obligations of political subdivisions to the
effect that the reinvestment described in said report will not adversely effect the sufficiency of
the amounts of securities, investments and money in the Escrow Fund to pay on the
Redemption Date, the Redemption Price of the Prior Bonds, as set forth in Schedule III hereto,
and provided that CFD No. 06-1 has obtained and delivered to the Escrow Agent an unqualified
opinion of Stradling Yocca Carlson & Rauth LLP that such reinvestment will not adversely effect
the exclusion from gross income for federal income tax purposes or of the interest with respect
to the Authority Bonds. Any interest income resulting from investment or reinvestment of
moneys pursuant to this Section 4 which is not required for the purposes set forth in Section 6,
as verified in the letter of the Verification Agent originally obtained by CFD No. 06-1 with
respect to the refunding of the Prior Bonds or in any other report prepared by an independent
certified public accountant or firm of certified public accountants of favorable national
reputation experienced in the refunding of tax-exempt obligations of political subdivisions, shall
be paid to CFD No. 06-1 promptly upon the receipt of such interest income by the Escrow
Agent. The determination of CFD No. 06-1 as to whether an accountant qualifies under this
Escrow Agreement shall be conclusive.
SECTION 5. Substitution of Securities. Upon the written request of CFD No. 06-1, and
subject to the conditions and limitations herein set forth and applicable governmental rules and
regulations, the Escrow Agent shall sell, redeem or otherwise dispose of the Federal Securities,
provided that there are substituted therefor from the proceeds of the Federal Securities other
Federal Securities, but only after CFD No. 06-1 has obtained and delivered to the Escrow Agent:
(i) an unqualified opinion of Stradling Yocca Carlson & Rauth LLP to the effect that the
substitution of securities is permitted under the legal documents in effect with respect to the
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Prior Bonds and that such reinvestment will not adversely effect the exclusion from gross
income for federal income tax purposes of the interest with respect to the Authority Bonds; and
(ii) a report by a firm of independent certified public accountants to the effect that the
reinvestment described in said report will not adversely effect the sufficiency of the amounts of
securities, investments and money in the Escrow Fund to pay on the Redemption Date, the
Redemption Price of the Prior Bonds, as set forth in Schedule III hereto. The Escrow Agent shall
not be liable or responsible for any loss resulting from any reinvestment made pursuant to this
Escrow Agreement and in full compliance with the provisions hereof.
SECTION 6. Payment and Redemption of the Prior Bonds. CFD No. 06-1 hereby
requests and irrevocably instructs the Escrow Agent to pay on the Redemption Date, from the
amounts on deposit in the Escrow Fund, the Redemption Price of the Prior Bonds, as set forth in
Schedule III hereto. Upon payment in full of the Prior Bonds, the Escrow Agent shall transfer any
moneys remaining in the Escrow Fund to CFD No.06-1 and, after provision for payment of
amounts due to the Prior Fiscal Agent and the Escrow Agent pursuant to Section 6 and 9 hereof,
this Escrow Agreement shall terminate. The Escrow Fund cash flow for the Escrow Fund is set
forth in Schedule III attached hereto. Pursuant to the Prior Fiscal Agent Agreement, as a result
of the irrevocable deposit in the Escrow Fund pursuant to Section 2 of this Escrow Agreement to
pay and redeem all of the Prior Bonds, the entire indebtedness of the outstanding Prior Bonds
has been discharged within the meaning of the Prior Fiscal Agent Agreement.
SECTION 7. Notices of Defeasance and Redemption of the Prior Bonds. CFD No. 06-1
hereby instructs the Escrow Agent to mail, first class, postage prepaid, a notice to the owners of
the Prior Bonds, in the form attached hereto as Schedule I -A, stating that the defeasance of the
Prior Bonds has occurred. Pursuant to instructions provided by CFD No. 06-1, the Escrow Agent
shall provide a notice, in substantially the form attached hereto as Schedule I-B of redemption
with respect to the Prior Bonds not more than 60 days or less than 30 days prior to the
Redemption Date in accordance with the procedures set forth in the Prior Fiscal Agent
Agreement.
SECTION 8. Notice of Possible Deficiencies. If at any time the Escrow Agent has actual
knowledge that the moneys and securities in the Escrow Fund will not be sufficient to make all
payments required by Section 6 hereof, the Escrow Agent shall notify CFD No. 06-1 in writing as
soon as is reasonably practicable, of such fact, the amount of such deficiency and if known, the
reason therefor; provided, however, that CFD No.06-1 shall have no liability for any such
deficiency.
SECTION 9. Fees and Costs. The Escrow Agent shall receive its reasonable fees and
expenses as previously agreed to by the Escrow Agent and CFD No.06-1 and any other
reasonable fees and expenses of the Escrow Agent approved by CFD No. 06-1, such approval
not to be unreasonably withheld. The parties hereto agree that the duties and obligations of
the Escrow Agent shall be as expressly provided herein, and no implied duties or obligations
shall be read into this Escrow Agreement against the Escrow Agent. The fees of and the costs
incurred by the Escrow Agent shall in no event be deducted or payable from, or constitute a lien
against, the Escrow Fund.
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SECTION 10. Merger or Consolidation. Any company into which the Escrow Agent may
be merged or converted or with which it may be consolidated or any company resulting from
any merger, conversion or consolidation to which it shall be a party or any company to which
the Escrow Agent may sell or transfer all or substantially all of its corporate trust business and
assets as a whole or substantially as a whole, provided such company shall be eligible under this
Escrow Agreement, shall be the successor of such Escrow Agent without the execution or filing
of any paper or any further act on the part of any of the parties hereto except where an
instrument of transfer or assignment is required by law to effect such succession,
notwithstanding anything herein to the contrary.
SECTION 11. Severability. If any section, paragraph, sentence, clause or provision of
this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity
or unenforceability of such section, paragraph, sentence, clause or provisions shall not affect any
of the remaining provisions of this Escrow Agreement.
SECTION 12. Execution of Counterparts. This Escrow Agreement may be executed in
any number of counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall together constitute but one and the same instrument. The exchange of
copies of this Escrow Agreement and of signature pages by facsimile or PDF transmission shall
constitute effective execution and delivery of this Escrow Agreement as to the parties hereto and
may be used in lieu of the original Escrow Agreement and signature pages for all purposes.
SECTION 13. Applicable Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 14. Indemnification. CFD No. 06-1 agrees to indemnify, hold harmless and
defend the Escrow Agent, its officers, employees, directors, and agents, to the extent permitted
by law from and against any and all losses, damages, claims, actions, liabilities, costs and
expenses of whatever nature, kind or character (including, without limitation, attorneys' fees or
expenses, litigation and court costs, amounts paid in settlement and amounts paid to discharge
judgments) which may be imposed on, or incurred by or asserted against the Escrow Agent
directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or
action commenced or threatened as a result of the execution by the Escrow Agent of this Escrow
Agreement, the performance of its obligations hereunder, or of the payment of the Prior Bonds;
provided, however, that this indemnification shall not cover any losses, damages, claims, actions,
liabilities, costs, taxes or expenses incurred by the Escrow Agent as a result of its negligence or
willful misconduct. The agreement of CFD No. 06-1 hereunder shall survive the discharge of the
Prior Fiscal Agent Agreement and the payment of the Redemption Price and the resignation or
removal of the Prior Fiscal Agent.
SECTION 15. Immunities and Liability of Escrow Agent.
(a) The Escrow Agent undertakes to perform only such duties as are expressly
and specifically set forth in this Escrow Agreement, and no implied duties or obligations shall be
read into this Escrow Agreement against Escrow Agent. The permissive rights of the Escrow
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Agent to do the things enumerated in this Escrow Agreement shall not be construed as a duty
and, with respect to such permissive rights, the Escrow Agent shall not be answerable for other
than its negligence or willful misconduct.
(b) The Escrow Agent shall not have any liability hereunder except to the
extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable
for any special, indirect, punitive, incidental or consequential loss or damages of any kind
whatsoever, (including, but not limited to, loss of profit), even if the Escrow Agent, or CFD
No. 06-1 knows of the possibility of such damages and regardless of the form of action. The
Escrow Agent shall have no duty or responsibility under this Escrow Agreement in the case of
any default in the performance of the covenants or agreements contained in the resolutions
relating to the Prior Bonds or the Prior Fiscal Agent Agreement. The Escrow Agent is not
required to resolve conflicting demands to money or property in its possession under this
Escrow Agreement. The Escrow Agent shall not be liable for any action taken or omitted by it or
any of its officers, employees or agents in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Escrow Agreement. The
Escrow Agent shall not be liable for any error of judgement made in good faith by a responsible
officer, unless it shall be proved that the Escrow Agent was negligent in ascertaining the
pertinent facts.
(c) The Escrow Agent may consult with counsel of its own choice, and the
opinion of such counsel shall be full and complete authorization to take or suffer in good faith
any action hereunder in accordance with such opinion of counsel.
(d) The Escrow Agent shall not be responsible for any of the recitals or
representations contained herein.
(e) The Escrow Agent may become the owner of, or acquire any interest in,
any of the Prior Bonds with the same rights that it would have if it were not the Escrow Agent
and may engage or be interested in any financial or other transaction with the Authority or CFD
No. 06-1.
(f) The Escrow Agent shall not be liable for the accuracy of any calculations
provided as to the sufficiency of the moneys and securities deposited with it to pay the
prescribed Prior Bonds.
(g) The Escrow Agent shall not be liable for any action or omission of the CFD
No. 06-1 under this Escrow Agreement.
(h) Whenever in the administration of this Escrow Agreement the Escrow
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 be deemed to be conclusively proved and established by a
certificate of any authorized representative of CFD No. 06-1 and/or opinion of counsel, and such
certificate or opinion shall, in the absence of negligence or willful misconduct on the part of the
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Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered by it under
the provisions of this Escrow Agreement.
(i) The Escrow Agent may conclusively rely, as to the truth and accuracy of
the statements and correctness of, any written notice, instruction, request, certificate, document,
or opinion furnished to it and the calculations provided to it in connection with this Escrow
Agreement and shall be fully protected in acting, or refraining from acting, upon any written
notice, instruction, request, certificate, document, calculations or opinion furnished to the
Escrow Agent in compliance with this Escrow Agreement and reasonably believed by the Escrow
Agent to have been signed or presented by the proper party, and it need not investigate any
fact or matter stated in such notice, instruction, request, certificate or opinion.
0) The Escrow Agent shall incur no liability for losses, fees, taxes or other
charges arising from any investment, reinvestment or liquidation made pursuant to this Escrow
Agreement. The parties hereto acknowledge that the Escrow Agent is not providing investment
supervision, recommendations, or advice.
(k) No provision of this Escrow Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the performance or
exercise of any of its duties hereunder, or in the exercise of its rights or powers.
(1) The liability of the Escrow Agent to make the payments required by this
Escrow Agreement shall be limited to the moneys and securities in the Escrow Fund.
(m) The Escrow Agent shall furnish CFD No. 06-1 periodic cash transaction
statements which include detail for all investment transactions effected by the Escrow Agent or
brokers selected by CFD No.06-1. Upon CFD No.06-1's election, such statements will be
delivered via the Escrow Agent's online service and upon electing such service, paper statements
will be provided only upon request. CFD No.06-1 waives the right to receive brokerage
confirmations of security transactions effected by the Escrow Agent as they occur, to the extent
permitted by law. CFD No.06-1 further understands that trade confirmations for securities
transactions effected by the Escrow Agent will be available upon request and at no additional
cost and other trade confirmations may be obtained from the applicable broker.
(n) The Escrow Agent shall not be responsible or liable for any failure or delay
in the performance of its obligations under this Escrow Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its control, including without limitation, any act or
provision of any present or future law or regulation or governmental authority; acts of God;
earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics;
pandemics; recognized public emergencies; quarantine restrictions; strikes; work stoppages;
nuclear or natural catastrophes; riots; interruptions, loss or malfunctions of utilities, computer
(hardware or software) or communications service; accidents; labor disputes; acts of civil or
military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire
or telex or other wire or communication facility.
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(o) The Escrow Agent shall be under no obligation to exercise any of the
rights or powers vested in it by this Escrow Agreement at the request or direction of CFD
No. 06-1, pursuant to the provisions of this Escrow Agreement, unless such parties shall have
offered to the Escrow Agent security or indemnity (satisfactory to the Escrow Agent in its sole
and absolute discretion) against the costs, expenses and liabilities which may be incurred by it in
compliance with such request or direction.
(p) The Escrow Agent shall possess the rights, powers, privileges, protections,
benefits, indemnities and immunities possessed by the Fiscal Agent under Article VII of the Prior
Fiscal Agent Agreement.
SECTION 16. Termination and Modification of Agreement. Upon final payment in full
of the principal of and interest on the Prior Bonds pursuant to this Escrow Agreement, all
obligations of the Escrow Agent under this Escrow Agreement shall cease and terminate, except
for the obligation of the Escrow Agent to pay or cause to be paid to the owners of the Prior
Bonds not presented for payment all sums due thereon and the obligation of the Authority or
the Districts to pay to the Escrow Agent any amounts due and owing to the Escrow Agent
hereunder. This Escrow Agreement may not be amended or modified in any manner which is
materially adverse to the Owners of the Prior Bonds without the unanimous prior written
consent of the Owners of the Prior Bonds.
8
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IN WITNESS WHEREOF, Tustin Financing Authority, City of Tustin Community Facilities
District No. 06-1 (Tustin Legacy/Columbus Villages), and U.S. Bank Trust Company, National
Association, as Escrow Agent, have caused this Escrow Agreement to be executed each on its
behalf by duly authorized officers as of the day and year first above written.
ATTEST:
City Clerk of the City of Tustin, acting for the
legislative body of City of Tustin Community
Facilities District No.06-1 (Tustin
Legacy/Columbus Villages)
ATTEST:
Secretary of the Tustin Financing Authority
CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO. 06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES)
in
City Manager of the City of Tustin, acting for
the legislative body of City of Tustin
Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages)
TUSTIN FINANCING AUTHORITY
0
Chair
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Escrow Agent
Authorized Officer
9
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SCHEDULE I -A
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE OF
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2015A
and
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2015B
Special Tax Refunding Bonds, Series 2015A
Maturity
Amount
Interest
CUSIP
Date
Defeased
Rate
Number
9/1/2025
$1,690,000
5.000%
901047 FS4
9/1/2026
1,865,000
5.000
901047 FT2
9/1/2027
2,050,000
5.000
901047 FU9
9/1/2028
2,235,000
5.000
901047 FV7
9/1/2029
2,440,000
5.000
901047 FW5
9/1/2030
2,655,000
5.000
901047 FX3
9/1/2031
2,885,000
5.000
901047 FY1
9/1 /2032
3,130,000
5.000
901047 FZ8
9/1/2033
3,385,000
5.000
901047 GA2
9/1/2034
1,000,000
3.625
901047 GF1
9/1/2034
2,655,000
5.000
901047 GBO
9/1/2035
1,000,000
3.750
901047 GG9
9/1/2035
2,930,000
5.000
901047 GC8
9/1/2037
7,760,000
5.000
901047 GD6
9/1/2037
1,000,000
3.750
901047 GH7
9/1/2039
685,000
4.000
901047 GE4
Special Tax Bonds, Series 2015B
Maturity
Amount
Interest
CUSIP
Date
Defeased
Rate
Number
9/1/2025
$115,000
3.000%
901047 GT1
9/1/2026
120,000
3.000
901047 GU8
9/1/2027
125,000
3.250
901047 GV6
9/1/2028
125,000
3.375
901047 GW4
9/1 /2029
130,000
3.500
901047 GX2
9/1/2030
135,000
3.625
901047 GYO
9/1 /2031
140,000
3.625
901047 GZ7
9/1/2032
145,000
3.625
901047 HA1
9/1/2033
150,000
3.750
901047 H139
9/1/2035
315,000
3.750
901047 HC7
9/1/2037
345,000
3.750
901047 HD5
SCHEDULE I-A-1
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Notice is hereby given to the holders of all of the outstanding City of Tustin Community Facilities
District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2015A, and City
of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds,
Series 2015B, as listed above (the "Refunded Bonds") (i) that there has been deposited with U.S. Bank
Trust Company, National Association, as escrow agent (the "Escrow Agent"), moneys and securities under
the Escrow Agreement, dated June 11, 2025 (the "Escrow Agreement"), by and among the Tustin
Financing Authority (the "Authority"), City of Tustin Community Facilities District No.06-1 (Tustin
Legacy/Columbus Villages) ("CFD No. 06-1") and the Escrow Agent, which will provide moneys sufficient
and available to pay on September 1, 2025, the principal and interest due on the Refunded Bonds and to
redeem the Refunded Bonds maturing on and after September 1, 2025, at a redemption price equal to
100% of the principal amount thereof; (ii) that the Escrow Agent has been irrevocably instructed to
redeem on September 1, 2025 such Refunded Bonds; and (iii) that the Refunded Bonds are deemed to be
paid in accordance with the Fiscal Agent Agreement, by and between the City of Tustin for and on behalf
of CFD No. 06-1, and U.S. Bank Trust Company, National Association, as successor fiscal agent, dated as of
December 1, 2015, pursuant to which the Refunded Bonds were issued.
CONTINUING DISCLOSURE FILINGS: As a consequence of the defeasance of the Refunded Bonds
listed herein, CFD No. 06-1 will no longer file annual reports, or notices of certain enumerated events for
the Refunded Bonds pursuant to the continuing disclosure undertaking for the Refunded Bonds.
The CUSIP numbers are included solely for the convenience of the holders of the Refunded
Bonds. Neither CFD No. 06-1 nor the Escrow Agent shall be responsible for any error of any nature
relating to such numbers.
Dated this day of 12025.
CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO. 06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES)
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as
Escrow Agent
SCHEDULE I-A-2
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SCHEDULE 1-13
FORM OF NOTICE OF REDEMPTION
NOTICE OF REDEMPTION OF
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2015A
and
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2015E
NOTICE IS HEREBY GIVEN to the owners of the above -captioned Bonds (the "Bonds") of the City
of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) ("CFD No. 06-1") issued
on December 15, 2015, pursuant to the Fiscal Agent Agreement, dated as of December 1, 2015, by and
between the City of Tustin, for and on behalf of CFD No.06-1, and MUFG Union Bank, N.A., since
succeeded by U.S. Bank Trust Company, National Association, as fiscal agent (the "Fiscal Agent"), that the
Bonds listed below in the amount of $ have been selected on a conditional basis for redemption
on September 1, 2025 (the "Redemption Date").
Special Tax Refunding Bonds, Series 2015A
Issue
Maturity
Amount
Interest
Redemption
CUSIP
Date
Date
Redeemed
Rate
Price
Number
12/15/2015
9/1/2026
$1,865,000
5.000%
100.000
901047 FT2
12/15/2015
9/1/2027
2,050,000
5.000
100.000
901047 FU9
12/15/2015
9/1/2028
2,235,000
5.000
100.000
901047 FV7
12/15/2015
9/1/2029
2,440,000
5.000
100.000
901047 FW5
12/15/2015
9/1/2030
2,655,000
5.000
100.000
901047 FX3
12/15/2015
9/1/2031
2,885,000
5.000
100.000
901047 FY1
12/15/2015
9/1/2032
3,130,000
5.000
100.000
901047 FZ8
12/15/2015
9/1/2033
3,385,000
5.000
100.000
901047 GA2
12/15/2015
9/1/2034
1,000,000
3.625
100.000
901047 GF1
12/15/2015
9/1/2034
2,655,000
5.000
100.000
901047 GBO
12/15/2015
9/1/2035
1,000,000
3.750
100.000
901047 GG9
12/15/2015
9/1/2035
2,930,000
5.000
100.000
901047 GC8
12/15/2015
9/1/2037
7,760,000
5.000
100.000
901047 GD6
12/15/2015
9/1/2037
1,000,000
3.750
100.000
901047 GH7
12/15/2015
9/1/2039
685,000
4.000
100.000
901047 GE4
SCHEDULE I-B-1
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Special Tax Bonds, Series 2015B
Issue
Maturity
Amount
Interest
Redemption
CUSIP
Date
Date
Redeemed
Rate
Price
Number
12/15/2015
9/1/2026
$120,000
3.000%
100.000
901047 GU8
12/15/2015
9/1/2027
125,000
3.250
100.000
901047 GV6
12/15/2015
9/1/2028
125,000
3.375
100.000
901047
GW4
12/15/2015
9/1/2029
130,000
3.500
100.000
901047 GX2
12/15/2015
9/1/2030
135,000
3.625
100.000
901047 GYO
12/15/2015
9/1/2031
140,000
3.625
100.000
901047 GZ7
12/15/2015
9/1/2032
145,000
3.625
100.000
901047 HA1
12/15/2015
9/1/2033
150,000
3.750
100.000
901047 HB9
12/15/2015
9/1/2035
315,000
3.750
100.000
901047 HC7
12/15/2015
9/1/2037
345,000
3.750
100.000
901047 HD5
The Bonds will be payable on the Redemption Date at a redemption price equal to 100% of the
principal amount to be redeemed (the "Redemption Price"). Subject to rescission as provided below, the
Redemption Price of the Bonds will become due and payable on the Redemption Date. Interest with
respect to the Bonds to be redeemed will cease to accrue on and after the Redemption Date, and such
Bonds will be surrendered to the Fiscal Agent.
All Bonds are required to be surrendered to the designated corporate trust office of the Fiscal
Agent, on the Redemption Date at the following location. If the Bonds are mailed, the use of registered,
insured mail is recommended:
U.S. Bank Trust Company, National Association
Global Corporate Trust
111 Fillmore Avenue E
St. Paul, Minnesota 55107
For a list of redemption requirements please visit our website at www.usbank.com/corporatetrust and
click on the "Bondholder Information" link for Redemption instructions. You may also contact our
Bondholder Communications team at 1-800-934-6802 Monday through Friday from 8 AM to 6 PM CST.
Under the Tax Cuts and Jobs Act of 2017, 24% of the Redemption Price will be withheld if tax
identification number is not properly certified. The Form W-9 may be obtained from the Internal Revenue
Service.
None of the City, CFD No. 06-1, or U.S. Bank Trust Company, National Association, as Fiscal Agent, shall be
held responsible for the selection or use of the CUSIP number, nor is any representation made as to its
correctness as shown in the Redemption Notice. It is included solely for convenience of the Owners.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
DATED this _ day of , 2025.
SCHEDULE I-B-2
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SCHEDULE II
FEDERAL SECURITIES
Principal Interest
Security Type of SLGS Maturity Amount Rate
SCHEDULE II
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SCHEDULE III
REDEMPTION PRICE OF PRIOR BONDS
Payment
Date Principal Due
09/01/2025
Principal
Redeemed
Interest
Debt Payment
Cash deposited on June _, 2025 in the Escrow Fund in the amount of $ of which
$ will be used to purchase the Federal Securities listed in Schedule II hereto and
$ s to be held uninvested.
SCHEDULE III
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Stradling Yocca Carlson & Rauth LLP
04/25/25
City of Tustin Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific) Special Tax Bonds, Series 2015A
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement"), made and entered into as of
June 1, 2025, by and among the TUSTIN FINANCING AUTHORITY (the "Authority"), CITY
OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 2014-1 (TUSTIN
LEGACY/STANDARD PACIFIC) ("CFD No. 2014-1"), and THE BANK OF NEW YORK
MELLON TRUST COMPANY, N.A., as escrow agent (the "Escrow Agent"), a national banking
association organized and existing under the laws of the United States of America and being
qualified to accept and administer the escrow hereby created.
WITNESSETH:
WHEREAS, CFD No. 2014-1 has previously issued its $27,665,000 City of Tustin
Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax
Refunding Bonds, Series 2015A (the "Prior Bonds") to finance certain capital improvements in
CFD No. 2014-1; and
WHEREAS, CFD No. 2014-1 has determined to cause the issuance and sale of City of
Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax
Refunding Bonds, Series 2025 (the "2025 CFD No. 2014-1 Bonds") for the purpose of providing
moneys to the Escrow Agent, which amount will be sufficient (when combined with moneys to
be provided from other sources) to pay the principal of and interest due on the Prior Bonds on
September 1, 2025, and to redeem on September 1, 2025 (the "Redemption Date") the Prior
Bonds maturing on and after September 1, 2026, at a redemption price equal to 100% of the
principal amount to be redeemed (the "Redemption Price"); and
WHEREAS, a portion of the proceeds of the sale by the Authority of its Tustin Financing
Authority Special Tax Revenue Refunding Bonds, Series 2025 (the "Authority Bonds"), will be
used by the Authority to purchase the 2025 CFD No. 2014-1 Bonds and provide the funds
required hereunder; and
WHEREAS, pursuant to Section 2 of this Escrow Agreement, CFD No. 2014-1 will cause
a prescribed portion of the proceeds of the 2025 CFD No. 2014-1 Bonds, together with certain
funds held by the trustee with respect to the Prior Bonds (the "Prior Trustee"), to be set aside
with the Escrow Agent, in order to pay the principal of and interest due on the Prior Bonds on
September 1, 2025, and to pay, on the Redemption Date, the Redemption Price of the Prior
Bonds maturing on and after September 1, 2026, such proceeds and funds to be deposited in an
escrow fund to be created hereunder designated as the "CFD No. 2014-1 Escrow Fund," to be
maintained by the Escrow Agent (the "Escrow Fund") which moneys will be used to purchase
securities as described on Schedule I1 hereto (the "Federal Securities"), provided the principal of
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and the interest on which when paid will provide money which, together with the moneys
deposited with the Escrow Agent at the same time pursuant to this Escrow Agreement, will be
sufficient to pay the principal of and interest due on the Prior Bonds on September 1, 2025, and
to pay, on the Redemption Date, the Redemption Price of the Prior Bonds maturing on and after
September 1, 2026, as set forth in Schedule III hereto; and
NOW, THEREFORE, the Authority, CFD No. 2014-1 and the Escrow Agent hereby agree
as follows:
SECTION 1. Establishment and Maintenance of Escrow Fund. The Escrow Agent
agrees to establish and maintain, until the Prior Bonds have been paid in full, the Escrow Fund,
and to hold the moneys and securities therein at all times as a special and separate escrow fund
(wholly segregated from all other securities, investments or moneys on deposit with the Escrow
Agent). All moneys and securities in the Escrow Fund are hereby irrevocably pledged, subject
to the provisions of Section 2 hereof, to secure the Redemption Price of the Prior Bonds.
SECTION 2. Funding of the Escrow Fund.
(a) CFD No. 2014-1 agrees that, not later than June _, 2025 (the "Closing
Date"), CFD No. 2014-1 will cause to be transferred to the Escrow Agent from the Prior Trustee
$ from amounts held in under the indenture relating to the Prior Bonds (the "Prior
Indenture") for deposit in the Escrow Fund.
(b) CFD No. 2014-1 agrees that, not later than the Closing Date, CFD No.
2014-1 will cause to be transferred to the Escrow Agent for deposit in the Escrow Fund from The
Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") under the Bond
Indenture dated as of June 1, 2025 (the "CFD No. 2014-1 Bond Indenture"), by and between
CFD No. 2014-1 and the Trustee, the amount of $ from the proceeds of sale of the
2025 CFD No. 2014-1 Bonds; and
(c) CFD No. 2014-1 hereby directs the Escrow Agent to immediately apply
$ to acquire, on the Closing Date, the Federal Securities set forth in Schedule II
and to hold $ uninvested as cash.
SECTION 3. Investment of Moneys. The Escrow Agent acknowledges receipt of the
moneys described in Section 2 and agrees immediately to invest such moneys in the Federal
Securities listed on Schedule II hereto and to deposit such Federal Securities in the Escrow
Fund. The Escrow Agent shall be entitled to rely upon the conclusion of Causey Public Finance
LLC (the "Verification Agent"), that the Federal Securities listed on Schedule II hereto mature
and bear interest payable in such amounts and at such times as, together with cash on deposit in
the Escrow Fund, will be sufficient to pay on the Redemption Date, the Redemption Price of the
Prior Bonds.
SECTION 4. Investment of Any Remaining Moneys. At the written direction of CFD
No. 2014-1, the Escrow Agent shall reinvest any other amount of principal and interest, or any
portion thereof, received from the Federal Securities prior to the date on which such payment is
required for the purposes set forth herein, in noncallable Federal Securities maturing not later
than the date on which such payment or portion thereof is required for the purposes set forth in
2
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Section 6, at the written direction of CFD No. 2014-1, as verified in a report prepared by an
independent certified public accountant or firm of certified public accountants of favorable
national reputation experienced in the refunding of obligations of political subdivisions to the
effect that the reinvestment described in said report will not adversely effect the sufficiency of
the amounts of securities, investments and money in the Escrow Fund to pay on the
Redemption Date, the Redemption Price of the Prior Bonds, as set forth in Schedule III hereto,
and provided that CFD No. 2014-1 has obtained and delivered to the Escrow Agent an
unqualified opinion of Stradling Yocca Carlson & Rauth LLP that such reinvestment will not
adversely effect the exclusion from gross income for federal income tax purposes or of the
interest with respect to the Authority Bonds. Any interest income resulting from investment or
reinvestment of moneys pursuant to this Section 4 which is not required for the purposes set
forth in Section 6, as verified in the letter of the Verification Agent originally obtained by CFD
No. 2014-1 with respect to the refunding of the Prior Bonds or in any other report prepared by
an independent certified public accountant or firm of certified public accountants of favorable
national reputation experienced in the refunding of tax-exempt obligations of political
subdivisions, shall be paid to CFD No. 2014-1 promptly upon the receipt of such interest income
by the Escrow Agent. The determination of CFD No. 2014-1 as to whether an accountant
qualifies under this Escrow Agreement shall be conclusive.
SECTION 5. Substitution of Securities. Upon the written request of CFD No. 2014-1,
and subject to the conditions and limitations herein set forth and applicable governmental rules
and regulations, the Escrow Agent shall sell, redeem or otherwise dispose of the Federal
Securities, provided that there are substituted therefor from the proceeds of the Federal
Securities other Federal Securities, but only after CFD No. 2014-1 has obtained and delivered to
the Escrow Agent: (i) an unqualified opinion of Stradling Yocca Carlson & Rauth. LLP to the
effect that the substitution of securities is permitted under the legal documents in effect with
respect to the Prior Bonds and that such reinvestment will not adversely effect the exclusion
from gross income for federal income tax purposes of the interest with respect to the Authority
Bonds; and (ii) a report by a firm of independent certified public accountants to the effect that
the reinvestment described in said report will not adversely effect the sufficiency of the
amounts of securities, investments and money in the Escrow Fund to pay on the Redemption
Date, the Redemption Price of the Prior Bonds, as set forth in Schedule III hereto. The Escrow
Agent shall not be liable or responsible for any loss resulting from any reinvestment made
pursuant to this Escrow Agreement and in full compliance with the provisions hereof.
SECTION 6. Payment and Redemption of the Prior Bonds. CFD No. 2014-1 hereby
requests and irrevocably instructs the Escrow Agent to pay on the Redemption Date, from the
amounts on deposit in the Escrow Fund, the Redemption Price of the Prior Bonds, as set forth in
Schedule III hereto. Upon payment in full of the Prior Bonds, the Escrow Agent shall transfer
any moneys remaining in the Escrow Fund to CFD No. 2014-1 and, after provision for payment
of amounts due to the Prior Trustee and the Escrow Agent pursuant to Section 6 and 9 hereof,
this Escrow Agreement shall terminate. The Escrow Fund cash flow for the Escrow Fund is set
forth in Schedule III attached hereto. Pursuant to the Prior Indenture, as a result of the
irrevocable deposit in the Escrow Fund pursuant to Section 2 of this Escrow Agreement to pay
and redeem all of the Prior Bonds, the entire indebtedness of the outstanding Prior Bonds has
been discharged within the meaning of the Prior Indenture.
3
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SECTION 7. Notices of Defeasance and Redemption of the Prior Bonds. CFD No. 2014-
1 hereby instructs the Escrow Agent to mail, first class, postage prepaid, a notice to the owners
of the Prior Bonds, in the form attached hereto as Schedule I -A, stating that the defeasance of
the Prior Bonds has occurred. Pursuant to instructions provided by CFD No. 2014-1, the Escrow
Agent shall provide a notice, in substantially the form attached hereto as Schedule I-B of
redemption with respect to the Prior Bonds not more than 60 days or less than 30 days prior to
the Redemption Date in accordance with the procedures set forth in the Prior Indenture.
SECTION 8. Notice of Possible Deficiencies. If at any time the Escrow Agent has actual
knowledge that the moneys and securities in the Escrow Fund will not be sufficient to make all
payments required by Section 6 hereof, the Escrow Agent shall notify CFD No. 2014-1 in writing
as soon as is reasonably practicable, of such fact, the amount of such deficiency and if known,
the reason therefor; provided, however, that CFD No. 2014-1 shall have no liability for any such
deficiency.
SECTION 9. Fees and Costs. The Escrow Agent shall receive its reasonable fees and
expenses as previously agreed to by the Escrow Agent, CFD No. 2014-1 and any other
reasonable fees and expenses of the Escrow Agent approved by CFD No. 2014-1. The parties
hereto agree that the duties and obligations of the Escrow Agent shall be as expressly provided
herein, and no implied duties or obligations shall be read into this Escrow Agreement against
the Escrow Agent. The fees of and the costs incurred by the Escrow Agent shall in no event be
deducted or payable from, or constitute a lien against, the Escrow Fund.
SECTION 10. Merger or Consolidation. Any company into which the Escrow Agent
may be merged or converted or with which it may be consolidated or any company resulting
from any merger, conversion or consolidation to which it shall be a party or any company to
which the Escrow Agent may sell or transfer all or substantially all of its corporate trust
business, provided such company shall be eligible under this Escrow Agreement, shall be the
successor of such Escrow Agent without the execution or filing of any paper or any further act
on the part of any of the parties hereto except where an instrument of transfer or assignment is
required by law to effect such succession, notwithstanding anything herein to the contrary.
SECTION 11. Severability. If any section, paragraph, sentence, clause or provision of
this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the
invalidity or unenforceability of such section, paragraph, sentence, clause or provisions shall
not affect any of the remaining provisions of this Escrow Agreement.
SECTION 12. Execution of Counterparts. This Escrow Agreement may be executed in
any number of counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall together constitute but one and the same instrument.
SECTION 13. Applicable Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 14. Indemnification. CFD No. 2014-1 agrees to indemnify, hold harmless and
defend the Escrow Agent, its officers, employees, directors, and agents, to the extent permitted
by law from and against any and all losses, damages, claims, actions, liabilities, costs and
expenses of whatever nature, kind or character (including, without limitation, attorneys' fees,
4
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litigation and court costs, amounts paid in settlement and amounts paid to discharge
judgments) which may be imposed on, or incurred by or asserted against the Escrow Agent
directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or
action commenced or threatened as a result of the execution by the Escrow Agent of this Escrow
Agreement, the performance of its obligations hereunder, or of the payment of the Prior Bonds;
provided, however, that this indemnification shall not cover any losses or expenses incurred by
the Escrow Agent as a result of its negligence or willful misconduct. The agreement of CFD No.
2014-1 hereunder shall survive the discharge of the Prior Indenture and the payment of the
Redemption Price and the resignation or removal of the Prior Trustee.
SECTION 15. Immunities and Liability of Escrow Agent.
(a) The Escrow Agent undertakes to perform only such duties as are
expressly and specifically set forth in this Escrow Agreement, and no implied duties or
obligations shall be read into this Escrow Agreement against Escrow Agent. The permissive
rights of the Escrow Agent to do the things enumerated in this Escrow Agreement shall not be
construed as a duty and, with respect to such permissive rights, the Escrow Agent shall not be
answerable for other than its negligence or willful misconduct.
(b) The Escrow Agent shall not have any liability hereunder except to the
extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable
for any special, indirect, punitive, incidental or consequential loss or damages of any kind
whatsoever, (including, but not limited to, loss of profit), even if the Escrow Agent, or CFD No.
2014-1 knows of the possibility of such damages and regardless of the form of action. The
Escrow Agent shall have no duty or responsibility under this Escrow Agreement in the case of
any default in the performance of the covenants or agreements contained in the resolutions
relating to the Prior Bonds or the Prior Indenture. The Escrow Agent is not required to resolve
conflicting demands to money or property in its possession under this Escrow Agreement. The
Escrow Agent shall not be liable for any action taken or omitted by it or any of its officers,
employees or agents in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture. The Escrow Agent shall not be liable for
any error of judgement made in good faith by a responsible officer, unless it shall be proved
that the Escrow Agent was negligent in ascertaining the pertinent facts.
(c) The Escrow Agent may consult with counsel of its own choice, and the
opinion of such counsel shall be full and complete authorization to take or suffer in good faith
any action hereunder in accordance with such opinion of counsel.
(d) The Escrow Agent shall not be responsible for any of the recitals or
representations contained herein.
(e) The Escrow Agent may become the owner of, or acquire any interest in,
any of the Prior Bonds with the same rights that it would have if it were not the Escrow Agent
and may engage or be interested in any financial or other transaction with the Authority or CFD
No. 2014-1.
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(f) The Escrow Agent shall not be liable for the accuracy of any calculations
provided as to the sufficiency of the moneys and securities deposited with it to pay the
prescribed Prior Bonds.
(g) The Escrow Agent shall not be liable for any action or omission of the
CFD No. 2014-1 under this Escrow Agreement.
(h) Whenever in the administration of this Escrow Agreement the Escrow
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 be deemed to be conclusively proved and established by a
certificate of any authorized representative of CFD No. 2014-1 and/or opinion of counsel, and
such certificate or opinion shall, in the absence of negligence or willful misconduct on the part
of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered by it
under the provisions of this Escrow Agreement.
(i) The Escrow Agent may conclusively rely, as to the truth and accuracy of
the statements and correctness of any written notice, instruction, request, certificate, document,
or opinion furnished to it and the calculations provided to it in connection with this Escrow
Agreement and shall be protected in acting, or refraining from acting, upon any written notice,
instruction, request, certificate, document, calculations or opinion furnished to the Escrow
Agent in compliance with this Escrow Agreement and reasonably believed by the Escrow Agent
to have been signed or presented by the proper party, and it need not investigate any fact or
matter stated in such notice, instruction, request, certificate or opinion.
0) The Escrow Agent shall incur no liability for losses arising from any
investment made pursuant to this Escrow Agreement. The parties hereto acknowledge that the
Escrow Agent is not providing investment supervision, recommendations, or advice.
(k) No provision of this Escrow Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the performance or
exercise of any of its duties hereunder, or in the exercise of its rights or powers.
(1) The liability of the Escrow Agent to make the payments required by this
Escrow Agreement shall be limited to the moneys and securities in the Escrow Fund.
(m) The Escrow Agent shall furnish CFD No. 2014-1 periodic cash transaction
statements which include detail for all investment transactions effected by the Escrow Agent or
brokers selected by CFD No. 2014-1. Upon CFD No. 2014-1's election, such statements will be
delivered via the Escrow Agent's online service and upon electing such service, paper
statements will be provided only upon request. CFD No. 2014-1 waives the right to receive
brokerage confirmations of security transactions effected by the Escrow Agent as they occur, to
the extent permitted by law. CFD No. 2014-1 further understands that trade confirmations for
securities transactions effected by the Escrow Agent will be available upon request and at no
additional cost and other trade confirmations may be obtained from the applicable broker.
(n) The Escrow Agent shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Escrow Agreement arising out of or
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caused, directly or indirectly, by circumstances beyond its control, including without limitation,
any act or provision of any present or future law or regulation or governmental authority; acts
of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage;
epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or
software) or communications service; accidents; labor disputes; acts of civil or military authority
or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other
wire or communication facility.
(o) The Escrow Agent shall be under no obligation to exercise any of the
rights or powers vested in it by this Escrow Agreement at the request or direction of CFD No.
2014-1, pursuant to the provisions of this Escrow Agreement, unless such parties shall have
offered to the Escrow Agent security or indemnity (satisfactory to the Escrow Agent in its sole
and absolute discretion) against the costs, expenses and liabilities which may be incurred by it
in compliance with such request or direction.
SECTION 16. Termination and Modification of Agreement. Upon final payment in full
of the principal of and interest on the Prior Bonds pursuant to this Escrow Agreement, all
obligations of the Escrow Agent under this Escrow Agreement shall cease and terminate, except
for the obligation of the Escrow Agent to pay or cause to be paid to the owners of the Prior
Bonds not presented for payment all sums due thereon and the obligation of the Authority or
the Districts to pay to the Escrow Agent any amounts due and owing to the Escrow Agent
hereunder. This Escrow Agreement may not be amended or modified in any manner which is
materially adverse to the Owners of the Prior Bonds without the unanimous prior written
consent of the Owners of the Prior Bonds.
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IN WITNESS WHEREOF, Tustin Financing Authority, City of Tustin Community
Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific), and The Bank of New York
Mellon Trust Company, N.A., as Escrow Agent, have caused this Escrow Agreement to be
executed each on its behalf by duly authorized officers as of the day and year first above
written.
CITY OF TUSTIN COMMUNITY FACILITIES
DISTRICT NO.2014-1 (TUSTIN
LEGACY/STANDARD PACIFIC)
ATTEST:
City Clerk of the City of Tustin, acting for
the legislative body of City of Tustin
Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific)
ATTEST:
Secretary of the Tustin Financing Authority
By:
City Manager of the City of Tustin, acting for
the legislative body of City of Tustin
Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific)
TUSTIN FINANCING AUTHORITY
By
Chair
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Escrow Agent
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Authorized Officer
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SCHEDULE I -A
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE OF
City of Tustin Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific) Special Tax Bonds, Series 2015A
Maturity
Amount
Interest
CUSIP
Date
Defeased
Rate
Number
9/1/2025
$ 430,000
5.000%
901047
EUO
9/1/2026
485,000
5.000
901047
EV8
9/1/2027
540,000
5.000
901047
EW6
9/1/2028
600,000
5.000
901047
EX4
9/1/2029
670,000
5.000
901047
EY2
9/1/2030
735,000
5.000
901047
EZ9
9/1/2031
810,000
3.750
901047
FA3
9/1/2032
880,000
4.000
901047
FB1
9/1/2033
950,000
4.000
901047
FC9
9/1/2034
1,030,000
4.000
901047
FD7
9/1/2035
1,110,000
4.000
901047
FE5
9/1/2040
7,040,000
5.000
901047
FF2
9/1/2045
10,215,000
5.000
901047
EGO
Notice is hereby given to the holders of all of the outstanding City of Tustin Community Facilities
District No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Bonds, Series 2015A, as listed above (the
"Refunded Bonds") (i) that there has been deposited with The Bank of New York Mellon Trust Company,
N.A., as Escrow Agent (the "Escrow Agent"), moneys and securities under the Escrow Agreement, dated
June 2025 (the "Escrow Agreement"), by and among the Tustin Financing Authority (the
"Authority"), City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific)
("CFD No, 2014-1") and the Escrow Agent, which will provide moneys sufficient and available to pay on
September 1, 2025, the principal and interest due on the Refunded Bonds and to redeem the Refunded
Bonds maturing on and after September 1, 2025, at a redemption price equal to 100% of the principal
amount thereof; (ii) that the Escrow Agent has been irrevocably instructed to redeem on September 1,
2025 such Refunded Bonds; and (iii) that the Refunded Bonds are deemed to be paid in accordance with
Section 10.01 of the Indenture of Trust by and between CFD No. 2014-1 and The Bank of New York
Mellon Trust Company, N.A., dated as of November 1, 2015, pursuant to which the Refunded Bonds
were issued.
CONTINUING DISCLOSURE FILINGS: As a consequence of the defeasance of the Refunded
Bonds listed herein, CFD No. 2014-1 will no longer file annual reports, or notices of certain enumerated
events for the Refunded Bonds pursuant to the continuing disclosure undertaking for the Refunded
Bonds.
SCHEDULE I -A
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The CUSIP numbers are included solely for the convenience of the Holders of the Refunded
Bonds. Neither CFD No. 2014-1 nor the Escrow Agent shall be responsible for any error of any nature
relating to such numbers.
Dated this day _ of 2025.
CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO.2014-1 (TUSTIN LEGACY/STANDARD PACIFIC)
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Escrow Agent
SCHEDULE I -A
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SCHEDULE I-B
FORM OF NOTICE OF REDEMPTION
NOTICE OF REDEMPTION OF
City of Tustin Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific) Special Tax Bonds, Series 2015A
NOTICE IS HEREBY GIVEN to the owners of the above -captioned Bonds (the 'Bonds") of the
City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) ("CFD No.
2014-1") issued on November 5, 2015, pursuant to the Indenture of Trust, dated as of November 1, 2015
(the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company,
N.A., as trustee (the "Trustee"), that the Bonds listed below in the amount of $25,065,000 have been
selected on a conditional basis for redemption on September 1, 2025 (the "Redemption Date").
Issue
Maturity
Amount
Interest
Redemption
CUSIP
Date
Date
Redeemed
Rate
Price
Number
11/5/2015
9/1/2026
$ 485,000
5.000%
100.000
901047
EV8
11/5/2015
9/1/2027
540,000
5.000
100.000
901047
EW6
11/5/2015
9/1/2028
600,000
5.000
100.000
901047
EX4
11/5/2015
9/1/2029
670,000
5.000
100.000
901047
EY2
11/5/2015
9/1/2030
735,000
5.000
100.000
901047
EZ9
11/5/2015
9/1/2031
810,000
3.750
100.000
901047
FA3
11/5/2015
9/1/2032
880,000
4.000
100.000
901047
FB1
11/5/2015
9/1/2033
950,000
4.000
100.000
901047
FC9
11/5/2015
9/1/2034
1,030,000
4.000
100.000
901047
FD7
11/5/2015
9/1/2035
1,110,000
4.000
100.000
901047
FE5
11/5/2015
9/1/2040
7,040,000
5.000
100.000
901047
FF2
11/5/2015
9/1/2045
10,215,000
5.000
100.000
901047
EGO
The Bonds will be payable on the Redemption Date at a redemption price equal to 100% of the
principal amount to be redeemed (the "Redemption Price"). Subject to rescission as provided below, the
Redemption Price of the Bonds will become due and payable on the Redemption Date. Interest with
respect to the Bonds to be redeemed will cease to accrue on and after the Redemption Date, and such
Bonds will be surrendered to the Trustee.
All Bonds are required to be surrendered to the principal corporate trust office of the Trustee, on
the Redemption Date at the following location. If the Bonds are mailed, the use of registered, insured mail
is recommended:
The Bank of New York Mellon Trust Company, N.A.
Attn: Transfers/Redemption
500 Ross Street, Suite 625
Pittsburgh, PA 15262
Additional information regarding the foregoing actions may be obtained from The Bank of New York
Mellon Trust Company, N.A., Corporate Trust Department, Bondholder Relations, telephone number
(800) 254-2826.
SCHEDULE I-B-1
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Under the Tax Cuts and Jobs Act of 2017, 24% of the Redemption Price will be withheld if tax
identification number is not properly certified. The Form W-9 may be obtained from the Internal Revenue
Service.
Neither CFD No. 2014-1 nor The Bank of New York Mellon Trust Company, N.A., as Trustee, shall be
held responsible for the selection or use of the CUSIP number, nor is any representation made as to its
correctness as shown in the Redemption Notice. It is included solely for convenience of the Owners.
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
DATED this _ day of , 2025.
SCHEDULE I-B-2
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Security
SCHEDULE II
FEDERAL SECURITIES
Type of
SLGS Maturity
SCHEDULE II
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Principal Interest
Amount Rate
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SCHEDULE III
REDEMPTION PRICE OF PRIOR BONDS
Payment
Date Principal Due
09/01/2025
Principal
Redeemed
Interest
Debt Payment
Cash deposited on June 2025 in the Escrow Fund in the amount of $ of which
$ will be used to purchase the Federal Securities listed in Schedule I1 hereto and
$ to be held uninvested.
SCHEDULE III
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Stradling Draft of 05-02-25
BONDINDENTURE
Between
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
SPECIAL TAX REFUNDING BONDS, SERIES 2025
Dated as of June 1, 2025
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Section 1.1. Definitions
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 2.7.
Section 2.8.
Section 2.9.
Section 2.10
Section 2.11
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
Section 3.7.
Section 3.8.
Table of Contents
ARTICLE I
DEFINITIONS
ARTICLE 11
GENERAL AUTHORIZATION AND BOND TERMS
Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds ....
Type and Nature of Bonds and Parity Bonds ........................................
Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes
Description of Bonds; Interest Rates ....................................................
Place and Form of Payment..................................................................
Form of Bonds and Parity Bonds..........................................................
Execution and Authentication...............................................................
BondRegister........................................................................................
Registration of Exchange or Transfer ...................................................
Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ...............
Validity of Bonds and Parity Bonds .....................................................
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Page
2
10
11
11
12
13
13
14
14
14
15
15
Creation of Funds; Application of Proceeds............................................................... 16
Deposits to and Disbursements from Special Tax Fund ............................................. 16
Administrative Expense Fund.....................................................................................17
Interest Account and Principal Account of the Special Tax Fund .............................. 18
Reserve Account of the Special Tax Fund..................................................................18
Redemption Account of the Special Tax Fund...........................................................19
SurplusFund............................................................................................................... 20
Investments................................................................................................................. 20
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds ......................................................
Section 4.2. Selection of Bonds and Parity Bonds for Redemption ....
Section 4.3. Notice of Redemption......................................................
Section 4.4. Partial Redemption of Bonds or Parity Bonds .................
Section 4.5. Effect of Notice and Availability of Redemption Money
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty.
Section 5.2. Covenants
22
23
24
25
25
26
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Table of Contents
(continued)
Page
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent ................... 30
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent .......................... 30
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity
Bonds.......................................................................................................................... 31
Section 6.4. Reliance on Opinion................................................................................................... 32
ARTICLE VII
TRUSTEE
Section7.1.
Trustee.........................................................................................................................
32
Section 7.2.
Removal of Trustee.....................................................................................................
33
Section 7.3.
Resignation of Trustee................................................................................................
33
Section 7.4.
Liability of Trustee.....................................................................................................
33
Section 7.5.
Merger or Consolidation.............................................................................................
37
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default........................................................................................................ 37
Section8.2. Remedies of Owners................................................................................................... 38
Section 8.3. Application of Revenues and Other Funds After Default ........................................... 39
Section 8.4. Control by Bond Insurer Upon Default....................................................................... 39
Section 8.5. Appointment of Receivers.......................................................................................... 40
Section8.6. Non-Waiver.................................................................................................................40
Section 8.7. Limitations on Rights and Remedies of Owners........................................................ 40
Section 8.8. Termination of Proceedings........................................................................................ 41
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section9.1. Defeasance.................................................................................................................. 41
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness................................................................................................................ 43
ARTICLE X
MISCELLANEOUS
Section 10.1.
Cancellation of Bonds and Parity Bonds....................................................................
45
Section 10.2.
Execution of Documents and Proof of Ownership.....................................................
45
Section 10.3.
Unclaimed Moneys.....................................................................................................
45
Section 10.4.
Provisions Constitute Contract....................................................................................46
Section 10.5.
[INSURER PROVISIONS TO COME].....................................................................
46
Section 10.6.
Future Contracts..........................................................................................................46
Section 10.7.
Further Assurances......................................................................................................
46
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Table of Contents
(continued)
Page
Section 10.8. Entire Agreement; Severability...................................................................................46
Section10.9. Notices........................................................................................................................ 47
SignaturePage................................................................................................................................... S-1
EXHIBIT A FORM OF 2025 SPECIAL TAX REFUNDING BOND.........................................A-1
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BONDINDENTURE
THIS BOND INDENTURE dated as of June 1, 2025 (the "Indenture"), is made and entered
into by City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages)
and The Bank of New York Mellon Trust Company, N.A., as trustee, and governs the terms of the
City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special
Tax Refunding Bonds, Series 2025 and any Parity Bonds issued in accordance herewith from time to
time.
RECITALS:
WHEREAS, the City Council of the City of Tustin, located in Orange County, California
(hereinafter sometimes referred to as the "legislative body of the District"), has heretofore
undertaken proceedings to form City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages) (the "District') pursuant to the terms and provisions of the Mello -Roos
Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the
Government Code of the State of California (the "Act'); and
WHEREAS, the District has previously issued its Prior Bonds (as defined herein) to finance
public improvements authorized to be funded by the District and refund certain special tax bonds of
the District; and
WHEREAS, on [May 20], 2025, the legislative body of the District adopted Resolution
No. (the "Resolution") authorizing the issuance and sale of special tax bonds for the District
pursuant to this Indenture designated as the "City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2025" (the "Bonds"); and
WHEREAS, it is in the public interest and for the benefit of the District, the persons
responsible for the payment of special taxes and the owners of the Bonds that the District enter into
this Indenture to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds,
the disposition of the special taxes securing the bonds, and the administration and payment of the
Bonds; and
WHEREAS, all things necessary to cause the Bonds, when authenticated by the Trustee and
issued as provided in the Act, the Resolution and this Indenture, to be legal, valid and binding and
limited obligations in accordance with their terms, and all things necessary to cause the creation,
authorization, execution and delivery of this Indenture and the creation, authorization, execution and
issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to
which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants
contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for
other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby
covenant and agree, for the benefit of the Owners of the Bonds as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
"Account" means any account created pursuant to this Indenture.
"Act" means the Mello -Roos Community Facilities Act of 1982, as amended, Sections 53311
et seq. of the California Government Code.
"Additional Reserve Policy" means a letter of credit, insurance policy, surety bond or other
such funding instrument other than the Reserve Policy which is approved by the Bond Insurer and
delivered to the Authority Trustee for the purpose of providing a portion of any reserve requirement
for Authority Bonds.
"Administrative Expenses" means the administrative costs with respect to the calculation and
collection of the Special Taxes, including all attorneys' fees and other costs related thereto, the fees
and expenses of the Trustee, any fees and related costs for credit enhancement for Bonds or which
are not otherwise paid as Costs of Issuance, any costs related to the District's compliance with state
and federal laws requiring continuing disclosure of information concerning the Bonds, the District,
and any other costs otherwise incurred by the City on behalf of the District in order to carry out the
purposes of the District as set forth in the Ordinance and any obligation of the District hereunder.
Administrative Expenses shall also include the administrative costs with respect to the collection of
Delinquency Proceeds.
"Administrative Expense Fund" means the fund by that name created and established
pursuant to Section 3.1 hereof.
"Administrative Expense Requirement" means $101,582.87, provided that at its option, the
District may establish the Administrative Expense Requirement for any Bond Year subsequent to the
initial Bond Year at any amount larger than $101,582.87 that is not in excess of 102% of the
Administrative Expense Requirement applicable in the immediately preceding Bond Year.
"Annual Debt Service" means the principal amount of any Outstanding Bonds or Parity
Bonds payable in a Bond Year either at maturity and any interest payable on any Outstanding Bonds
or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled.
"Authority" means the Tustin Financing Authority.
"Authority Bonds" means any bonds outstanding under the Authority Indenture, which are
secured in part by payments made on the Bonds and which may be secured in part by any Parity
Bonds.
"Authority Indenture" means that certain Indenture of Trust, dated as of June 1, 2025, by and
between the Authority and the Authority Trustee, pursuant to which the Authority Bonds are issued.
"Authority Trustee" means The Bank of New York Mellon Trust Company, N.A. or any
successor thereto appointed pursuant to the Authority Indenture.
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"Authorized Investments" means any of the following investments, if and to the extent the
same are at the time legal for investment of the District's funds (the Trustee is entitled to rely upon
investment direction from the District as a certification that such investment is an Authorized
Investment):
1. (a) Direct obligations (other than an obligation subject to variation in
principal repayment) of the United States of America ("United States Treasury Obligations"),
(b) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America, (c) obligations fully and unconditionally guaranteed
as to timely payment of principal and interest by any agency or instrumentality of the United
States of America when such obligations are backed by the full faith and credit of the United
States of America, or (d) evidences of ownership of proportionate interests in future interest
and principal payments on obligations described above held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has the
right to proceed directly and individually against the obligor and the underlying government
obligations are not available to any person claiming through the custodian or to whom the
custodian may be obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government -sponsored agencies which are not
backed by the full faith and credit of the United States of America:
(a)
(b)
(c)
(d)
(e)
Federal Home Loan Mortgage Corporation (FHLMC)
(i) Participation certificates (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
(ii) Senior Debt obligations
Farm Credit Banks (formerly: Federal Land Banks, Federal
(i) Intermediate Credit Banks and Banks for Cooperatives)
(ii) Consolidated system -wide bonds and notes
Federal Home Loan Banks (FHL Banks)
(i) Consolidated debt obligations
Federal National Mortgage Association (FNMA)
(i) Senior debt obligations
(ii) Mortgage -backed securities (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
Financing Corporation (FICO)
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(i) Debt obligations
(f) Resolution Funding Corporation (REFCORP)
(i) Debt obligations
4. Unsecured certificates of deposit, time deposits, demand deposits, including
interest bearing money market accounts, trust funds, trust accounts, overnight bank deposits,
interest -bearing deposits, other deposit products, certificates of deposit, including those
placed by a third party, or bankers acceptances of depository institutions, including the
Trustee or any of its affiliates, and bankers' acceptances (having maturities of not more than
30 days) of any bank (including the Trustee and any affiliate) the short-term obligations of
which are rated "A- I" or better by Standard & Poor's.
5. Deposits the aggregate amount of which are fully insured by the Federal
Deposit Insurance Corporation (FDIC), in banks (including the Trustee and any affiliate)
which have capital and surplus of at least $5 million.
6. Commercial paper (having original maturities of not more than 270 days rated
"A-1+" by Standard & Poor's and "Prime-1" by Moody's.
7. Money market mutual funds having a rating in the highest investment
category granted thereby from S&P or Moody's (including those for which the Trustee or it
affiliate received and retains a fee for services provided to the fund, whether as a custodian,
transfer agent, investment advisor or otherwise).
8. "State Obligations," which means:
(a) Direct general obligations of any state of the United States of
America or any subdivision or agency thereof to which is pledged the full faith and
credit of a state the unsecured general obligation debt of which is rated "A3" by
Moody's and "A" by Standard & Poor's, or better, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose unsecured
general obligation debt is so rated.
(b) Direct general short-term obligations of any state agency or
subdivision or agency thereof described in (A) above and rated "A-1+" by Standard
& Poor's and "Prime -I" by Moody's.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency or subdivision described in (A) above and rated
"AA" or better by Standard & Poor's and "Aa" or better by Moody's.
9. Pre -refunded municipal obligations rated "AAA" by Standard & Poor's and
"Aaa" by Moody's meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to
maturity or (2) the paying agent for the municipal obligations has been given
irrevocable instructions concerning their call and redemption and the issuer of the
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municipal obligations has covenanted not to redeem such municipal obligations other
than as set forth in such instructions;
(b) the municipal obligations are secured by cash or United States
Treasury Obligations which may be applied only to payment of the principal of,
interest and premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations
(plus any cash in the escrow) has been verified by the report of independent certified
public accountants to be sufficient to pay in full all principal of, interest, and
premium, if any, due and to become due on the municipal obligations
("Verification");
(d) the cash or United States Treasury Obligations serving as security for
the municipal obligations are held by an escrow agent or paying agent in trust for
owners of the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be
permitted except with another United States Treasury Obligation and upon delivery
of a new Verification; and
(f) the cash or United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the paying agent or escrow
agent.
10. Repurchase agreements:
With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt
of which is rated at least "A" by Standard & Poor's and Moody's; or (2) any broker -dealer
with "retail customers" or a related affiliate thereof which broker -dealer has, or the parent
company (which guarantees the provider) of which has, long-term debt rated at least "A" by
Standard & Poor's and Moody's, which broker -dealer falls under the jurisdiction of the
Securities Investors Protection Corporation; or (3) any other entity rated "A" or better by
Standard & Poor's and Moody's, provided that:
(a) The market value of the collateral is maintained at levels equal to
104% of the amount of cash transferred by the Trustee or the District to the provider
of the repurchase agreement plus accrued interest with the collateral being valued
weekly and marked -to -market at one current market price plus accrued interest;
(b) The Trustee or a third parry acting solely as agent therefor or for the
District (the "Holder of the Collateral") has possession of the collateral or the
collateral has been transferred to the Holder of the Collateral in accordance with
applicable state and federal laws (other than by means of entries on the transferor's
books);
(c) The repurchase agreement shall state and an opinion of counsel shall
be rendered at the time such collateral is delivered that the Holder of the Collateral
has a perfected first priority security interest in the collateral, any substituted
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collateral and all proceeds thereof (in the case of bearer securities, this means the
Holder of the Collateral is in possession);
(d) The repurchase agreement shall provide that if during its term the
provider's rating by either Moody's or Standard & Poor's is withdrawn or suspended
or falls below "A" by Standard & Poor's or "A3" by Moody's, as appropriate, the
provider must, at the direction of Trustee or the District, within 10 days of receipt of
such direction, repurchase all collateral and terminate the agreement, with no penalty
or premium to the Trustee or the District.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less
(with no evergreen provision), collateral levels need not be as specified in (a) above, so long
as such collateral levels are 103% or better and the provider is rated at least "A" by Standard
& Poor's and Moody's, respectively.
11. Investment agreements, including guaranteed investment contracts,
repurchase agreements and forward delivery agreements, that are obligations of an entity
rated, or whose obligations are rated, or guaranteed by an entity which is rated or whose
obligations are rated, (at the time the investment is entered into) not lower than "A-" by S&P
or Fitch, or "A3" by Moody's.
12. The State of California Local Agency Investment Fund.
"Authorized Representative of the City" means the means the Mayor, City Manager, the
Assistant City Manager, the Finance Director, or City Clerk of the City, or any other officer or
employee authorized by the City Council of the City or by an Authorized Officer to undertake the
action referenced in this Indenture as required to be undertaken by an Authorized Representative of
the City.
"Bond Counsel" means an attorney at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds
issued by states and their political subdivisions duly admitted to the practice of law before the highest
court of any state of the United States of America or the District of Columbia.
"Bond Insurer" means any municipal bond insurance company providing bond insurance
under the Authority Indenture.
"Bond Register" means the books which the Trustee shall keep or cause to be kept on which
the registration and transfer of the Bonds and any Parity Bonds shall be recorded.
"Bond Year" means the twelve month period commencing on September 1 of each year and
ending on September 1 of the following year, except that the first Bond Year for the Bonds or an
issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not
more than 12 months after the Delivery Date.
"Bondowner" or "Owner" means the person or persons in whose name or names any Bond or
Parity Bond is registered.
"Bonds" means the $ City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2025.
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"Business Day" means a day which is not a Saturday or Sunday or a day of the year on which
banks or trust companies in New York, New York, Wilmington, Delaware, Los Angeles, California,
or the city where the corporate trust office of the Trustee is located, are not required or authorized by
law, regulation or executive order to close or to remain closed.
"Certificate of an Authorized Representative" means a written certificate or warrant request
executed by an Authorized Representative of the City.
"CFD No. 06-1 Reserve Account" means the account by that name established by the
Authority Indenture.
"City" means the City of Tustin, County of Orange, California.
"City Council" means the City Council of the City.
"Code" means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings,
judicial decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Service interpreting and construing it.
"Costs of Issuance" shall have the meaning set forth in the Authority Indenture.
"Defeasance Securities" means any direct, noncallable general obligations of the United
States of America (including obligations issued or held in book -entry form on the books of the
Department of the Treasury of the United States of America), or noncallable obligations the timely
payment of principal of and interest on which are fully and unconditionally guaranteed by the United
States of America.
"Delinquency Proceeds" means the amounts collected from the redemption of delinquent
Special Taxes and from the sale of property sold as a result of the foreclosure of the lien of the
Special Tax resulting from the delinquency in the payment of Special Taxes due and payable on such
property.
"Delivery Date" means, with respect to the Bonds and each issue of Parity Bonds, the date on
which the bonds of such issue were issued and delivered to the initial purchasers thereof.
"District" means City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages) established pursuant to the Act and the Ordinance.
"Escrow Agent" means U.S. Bank Trust Company, National Association, acting as escrow
agent pursuant to the Escrow Agreement.
"Escrow Agreement" means that Escrow Agreement, dated as of June 1, 2025, between the
District and the Escrow Agent relating to the defeasance and refunding of the Prior Bonds.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
following June 30.
"Gross Special Taxes" means the amount of all Special Taxes received by the District,
together with the proceeds collected from the sale of property pursuant to the foreclosure provisions
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of this Indenture for the delinquency of such Special Taxes remaining after the payment of all costs
related to such foreclosure actions.
"Independent Financial Consultant" means a financial consultant or firm of such consultants
generally recognized to be well qualified in the financial consulting field, appointed and paid by the
District, who, or each of whom:
(1) is in fact independent and not under the domination of the District or the City;
(2) does not have any substantial interest, direct or indirect, in the District or the
City; and
(3) is not connected with the District or the City as a member, officer or
employee of the District or the City, but who may be regularly retained to make annual or other
reports to the District or the City.
"Indenture" means this Bond Indenture, together with any Supplemental Indenture approved
pursuant to Article 6 hereof.
"Insurance Policy" or "Policy" means the insurance policy issued by the Bond Insurer
guaranteeing the scheduled payment of principal of and interest on the Authority Bonds when due.
"Interest Payment Date" means each March 1 and September 1, commencing September 1,
2025, and the final maturity date of the Bonds; provided, however, that, if any such day is not a
Business Day, interest up to the Interest Payment Date, and in the case of the final Interest Payment
Date to and including such date, will be paid on the Business Day next preceding such date.
"Maximum Special Tax" has the meaning ascribed to it in the Rate and Method of
Apportionment.
"Moody's" means Moody's Investors Service, its successors and assigns.
"Net Special Taxes" means Gross Special Taxes minus amounts set aside to pay
Administrative Expenses.
"Ordinance" means Ordinance No. 1315 adopted by the legislative body of the District on
August 7, 2006, providing for the levying of the Special Tax.
"Outstanding" or "Outstanding Bonds and Parity Bonds" means all Bonds and Parity Bonds
theretofore issued by the District, except:
(1) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation
in accordance with Section 10.1 hereof;
(2) Bonds and Parity Bonds for payment or redemption of which moneys shall
have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date
of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been given as provided in this
Indenture or any applicable Supplemental Indenture for Parity Bonds; and
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(3) Bonds and Parity Bonds which have been surrendered to the Trustee for
transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued
pursuant to Section 2.10 hereof.
"Parity Bonds" mean bonds or other securities issued by the District and secured by a lien on
the Net Special Taxes which is on parity with the lien thereon securing the Bonds.
"Person" means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
"Policy Costs" means repayment of all amounts due under the Reserve Policy and all
amounts due with respect to any Additional Reserve Policy resulting from a failure by the District to
pay the principal of and interest on the Bonds when due.
"Prepayments" means any amounts paid by the District to the Trustee and designated by the
District as a prepayment of Special Taxes for one or more parcels in the District made in accordance
with the Rate and Method of Apportionment.
"Principal Office of the Trustee" means the principal corporate trust office of the Trustee in
Los Angeles, California, provided that for purposes of payment, redemption, exchange, transfer,
surrender and cancellation of Bonds and Parity Bonds, such term means the principal corporate trust
office of the Trustee in Los Angeles, California, or such other office as the Trustee may from time to
time designate in writing to the District and the Owners.
"Prior Bonds" means the District's Special Tax Refunding Bonds, Series 2015A currently
outstanding in the aggregate principal amount of $[38,680,000] and the District's Special Tax Bonds,
Series 2015B currently outstanding in the aggregate principal amount of $[1,845,000].
"Prior Fiscal Agent Agreement" means the Fiscal Agent Agreement dated as of December 1,
2015 by and between the Fiscal Agent and the District.
"Prior Fiscal Agent" means MUFG Union Bank, N.A., as fiscal agent under the Prior Fiscal
Agent Agreement.
"Project" means those public facilities described in the Ordinance, which have been acquired
or constructed within and outside of the District, including all engineering, planning and design
services and other incidental expenses related to such facilities and other facilities, if any, authorized
by the qualified electors within the District from time to time.
"Proportionate Share" means, as of the date of calculation, the portion of the reserve
requirement required under the Authority Indenture to be on deposit in the CFD No. 06-1 Reserve
Account of the Reserve Fund, including any proportionate share of any Policy Costs.
"Rate and Method of Apportionment" means that certain Rate and Method of Apportionment
of Special Tax approved pursuant to the Ordinance, as may be amended in accordance with the Act
and this Indenture.
"Rating Agency" means Moody's and Standard & Poor's, or both, as the context requires.
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"Record Date" means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
"Regulations" means the regulations adopted or proposed by the Department of Treasury
from time to time with respect to obligations issued pursuant to Section 103 of the Code.
hereof.
"Reserve Account" means the account by that name established pursuant to Section 3.1
"Reserve Fund" means the fund by that name established by the Authority Indenture.
"Reserve Policy" means the municipal bond debt service reserve insurance policy issued by
the Bond Insurer on the date of issuance of the Bonds representing 50% of the reserve requirement
established under the Authority Indenture.
"Reserve Requirement" means zero with respect to the Bonds and with respect to any Parity
Bonds the amount established by the District on the Delivery Date of such Parity Bonds.
"Special Tax Fund" means the fund by that name created and established pursuant to
Section 3.1 hereof.
"Special Taxes" means the taxes authorized to be levied by the District on property within
the District in accordance with the Ordinance, the Act and the voter approval obtained at the July 17,
2006 election in the District.
"Standard & Poor's" means S&P Global Ratings, a Standard & Poor's Financial Services
LLC business, its successors and assigns.
"Supplemental Indenture" means any supplemental indenture amending or supplementing
this Indenture.
"Surplus Fund" means the fund by that name created and established pursuant to Section 3.1
hereof.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., a national banking
association duly organized and existing under the laws of the United States of America, at its
principal corporate trust office in Los Angeles, California, and its successors or assigns, or any other
bank, association or trust company which may at any time be substituted in its place as provided in
Sections 7.2 or 7.3 and any successor thereto.
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds.
Under and pursuant to the Act, the Bonds in the aggregate principal amount of $ shall be
issued for the purposes of (a) refunding and defeasing the Prior Bonds, (b) utilizing a portion of the
debt service saving achieved through the issuance of the Bonds to finance the Project, and
(c) funding the District's share of the Costs of Issuance.
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Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit
nor the taxing power of the City, the State of California or any political subdivision thereof other
than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net
Special Taxes, no other taxes are pledged to the payment of the Bonds and Parity Bonds. The Bonds
and any Parity Bonds are not general or special obligations of the City nor general obligations of the
District, but are limited obligations of the District payable solely from certain amounts deposited by
the District in the Special Tax Fund, as more fully described herein. The District's limited obligation
to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from
amounts in the Special Tax Fund is absolute and unconditional, free of deductions and without any
abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any
Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the
Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on
the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of
the City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal
or equitable pledge, charge, lien, or encumbrance upon any of the District's property, or upon any of
its income, receipts or revenues, except the Net Special Taxes and other amounts in the Special Tax
Fund which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds
and interest thereon and neither the members of the legislative body of the District or the City
Council nor any persons executing the Bonds are liable personally on the Bonds by reason of their
issuance.
Notwithstanding anything to the contrary contained in this Indenture, the District shall not be
required to advance any money derived from any source of income other than the Net Special Taxes
for the payment of the interest on or the principal of or premium on the Bonds or any Parity Bonds,
or for the performance of any covenants contained herein. The District may, however, advance funds
for any such purpose, provided that such funds are derived from a source legally available for such
purpose.
Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes.
Subject only to the provisions of this Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth herein, in order to secure the payment of the principal of
and interest on the Bonds and any Parity Bonds in accordance with their terms, the provisions of this
Indenture and the Act, the District hereby pledges to the Owners, and grants thereto a lien on and a
security interest in, all of the Net Special Taxes and any other amounts held in the Special Tax Fund.
Said pledge shall constitute a first lien on and security interest in such assets, which shall
immediately attach to such assets and be effective, binding and enforceable against the District, its
successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the
extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have
notice of the pledge of, lien on and security interest in such assets and without the need for any
physical delivery, recordation, filing or further act. Pursuant to the Act and this Indenture, the Bonds
and any Parity Bonds shall be equally payable from the Net Special Taxes and other amounts in the
Special Tax Fund, without priority for number, date of the Bonds or Parity Bonds, date of sale, date
of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and
any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the
Net Special Taxes and other amounts in the Special Tax Fund, which are hereby set aside for the
payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund shall constitute a
trust fund held for the benefit of the Owners to be applied to the payment of the interest on and
principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or
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interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by
this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this
Indenture to the contrary, Net Special Taxes deposited in the Surplus Fund shall no longer be
considered to be pledged to the Bonds or any Parity Bonds, and none of the Surplus Fund or the
Administrative Expense Fund shall be construed as a trust fund held for the benefit of the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude; (a) subject to the
limitations herein, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and
redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued
under the Act as the same now exists or as hereafter amended, or under any other law of the State of
California; or (b) the issuance, subject to the limitations contained herein, of Parity Bonds which
shall be payable from Net Special Taxes.
Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds
shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.
The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.
The Bonds shall be designated "CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO. 06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES) SPECIAL TAX REFUNDING BONDS,
SERIES 2025." The Bonds shall be dated as of their Delivery Date and shall mature and be payable
on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall
bear interest at the rates set forth in the table below payable on September 1, 2025 and each Interest
Payment Date thereafter:
Maturity Date
(September 1) Principal Amount Interest Rate
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
Interest shall be payable on each Bond and Parity Bond from the date established in
accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum
of that Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any
Bond funds are available for the payment or redemption thereof in full, in accordance with the terms
of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the
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Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve
30-day months.
Section 2.5. Place and Form of Payment. The Bonds and Parity Bonds shall be payable
both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful
money of the United States of America. The principal of the Bonds and Parity Bonds and any
premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof
at the Principal Office of the Trustee, or at the designated office of any successor Trustee; provided
that so long as the Authority or the Authority Trustee on its behalf is the registered owner of all the
Bonds, such presentment is not required. Interest on any Bond shall be payable from the Interest
Payment Date next preceding the date of authentication of that Bond, unless (i) such date of
authentication is an Interest Payment Date in which event interest shall be payable from such date of
authentication, (ii) the date of authentication is after a Record Date but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment
Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to
the close of business on the first Record Date occurring after the issuance of such Bond or Parity
Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond;
provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in
default, interest on that Bond or Parity Bond shall be payable from the last Interest Payment Date to
which the interest has been paid or made available for payment or, if no interest has been paid or
made available for payment on that Bond or Parity Bond, interest on that Bond or Parity Bond shall
be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person
whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the
close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed on
the applicable Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or
her address as it appears on the Bond Register. In addition, upon a request in writing received by the
Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal
amount of the Bonds, payment shall be made on the Interest Payment Date by wire transfer in
immediately available funds to an account designated by such Owner.
Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds shall be
typewritten. The Bonds and the certificate of authentication shall be substantially in the form
attached hereto as Exhibit A, which forms are hereby approved and adopted as the forms of such
Bonds and any Parity Bonds and of the certificate of authentication.
Notwithstanding any provision in this Indenture to the contrary, the District may, in its sole
discretion, elect to issue the Bonds and any Parity Bonds in book entry form.
Until definitive Bonds or Parity Bonds shall be prepared, the District may cause to be
executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed,
printed, lithographed or engraved form and in fully registered form, subject to the same provisions,
limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except
that they may be in any denominations authorized by the District. Until exchanged for definitive
Bonds or Parity Bonds, any temporary bond shall be entitled and subject to the same benefits and
provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary
Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without
unnecessary delay and thereupon any temporary Bond or Parity Bond may be surrendered to the
Trustee at its office, without expense to the Owner, in exchange for a definitive Bond or Parity Bond
of the same issue, maturity, interest rate and principal amount in any authorized denomination. All
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temporary Bonds and Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be
reissued.
Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed
on behalf of the District by the manual or facsimile signature of the Mayor of the City and by the
manual or facsimile signature of the City Clerk, or any duly appointed deputy clerk, in their capacity
as officers of the District. In case any one or more of the officers who shall have signed or sealed
any of the Bonds or Parity Bonds shall cease to be such officer before the Bonds or Parity Bonds so
signed and sealed have been authenticated and delivered by the Trustee (including new Bonds or
Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange
of Bonds or Parity Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds or Parity
Bonds shall nevertheless be valid and may be authenticated and delivered as herein provided, and
may be issued as if the person who signed or sealed such Bonds had not ceased to hold such office.
Only the Bonds or Parity Bonds as shall bear thereon such certificate of authentication in the
form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this
Indenture, and no Bond or Parity Bond shall be valid or obligatory for any purpose until such
certificate of authentication shall have been duly executed by the Trustee.
Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office,
sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon
reasonable prior written notice be open to inspection by the District during all regular business hours,
and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the
Trustee shall, under such reasonable regulations as it may prescribe, with reasonable notice, register
or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as herein
provided.
The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name
appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all
purposes, and the District and the Trustee shall not be affected by any notice to the contrary. The
District and the Trustee may rely on the address of the Bondowner as it appears in the Bond Register
for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Trustee
of any change in the Bondowner's address so that the Bond Register may be revised accordingly.
Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth
in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its
terms, be transferred upon the Bond Register by the person in whose name it is registered, in person
or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for
cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in
a form acceptable to the Trustee and duly executed by the Bondowner or his or her duly authorized
attorney.
The transferor shall also provide or cause to be provided to the Trustee all information
necessary to allow the Trustee to comply with any applicable tax reporting obligations, including
without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045.
The Trustee may rely on the information provided to it and shall have no responsibility to verify or
ensure the accuracy of such information.
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Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate
principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity
and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond
issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or
transfer to pay any tax or other governmental charge required to be paid with respect to such
exchange or transfer. The cost of printing Bonds and any services rendered or expenses incurred by
the Trustee in connection with any transfer or exchange shall be paid by the District. Whenever any
Bonds or Parity Bonds shall be surrendered for registration of transfer or exchange, the District shall
execute and the Trustee shall authenticate and deliver a new Bond or Bonds or a new Parity Bond or
Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount;
provided that the Trustee shall not be required to register transfers or make exchanges of (i) Bonds or
Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be
redeemed, or (ii) any Bonds or Parity Bonds chosen for redemption.
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond
or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate
and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and
substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the
Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the
Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity
Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted
to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to
the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver, a
new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the
Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or
stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated,
lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all
other Bonds or Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or
Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of
determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated
and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds
Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as
one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new
Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the
Trustee may make payment with respect to such Bonds or Parity Bonds
Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and
issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any
proceedings taken by the District for the refunding of the Prior Bonds, and the recital contained in the
Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of
the State shall be conclusive evidence of their validity and of the regularity of their issuance.
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ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds.
(a) There is hereby created and established and shall be maintained by the
Trustee the following funds and accounts:
(1) The Community Facilities District No. 06-1 Special Tax Fund (the
"Special Tax Fund") (in which there shall be established and created an Interest Account, a Principal
Account, a Reserve Account and a Redemption Account);
(2) The Community Facilities District No. 06-1 Administrative Expense
Fund (the "Administrative Expense Fund"); and
(3) The Community Facilities District No. 06-1 Surplus Fund (the
"Surplus Fund")
The amounts on deposit in the foregoing funds and accounts shall be held by the Trustee on
behalf of the District and shall be invested and disbursed in accordance with the provisions of this
Article 3. The investment earnings thereon shall be disbursed in accordance with the provisions of
Section 3.8 hereof.
(b) Proceeds from the sale of the Bonds in the amount of $ (which amount
is net of $ paid or retained by the Authority Trustee to pay the District's share of the Costs of
Issuance (as defined in the Authority Indenture), net of $ representing the District's share of
the underwriter's discount and net of $ retained by the Authority Trustee as the cash -funded
portion of the District's Proportionate Share of the Reserve Fund), shall be received by the Trustee
and transferred to the Escrow Agent for deposit in the escrow fund created under the Escrow
Agreement; and
(c) The Trustee may, in its discretion, establish a temporary fund or account in its
books and records to facilitate such transfers.
Section 3.2. Deposits to and Disbursements from Special Tax Fund.
(a) The Trustee shall deposit Gross Special Taxes representing Delinquency
Proceeds as follows:
(1) the amount specified by the District as representing past due interest
on the Bonds shall be deposited to the Interest Account of the Special Tax Fund; and
(2) the amount specified by the District as representing past due principal
of the Bonds shall be deposited to the Principal Account of the Special Tax Fund.
(b) Except for the portion of any Prepayment to be deposited to the Redemption
Account, the District shall, as soon as practicable transfer the Special Taxes received by the District
to the Trustee for deposit in the Special Tax Fund to be held by the Trustee in trust for the Owners.
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The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in
the amounts set forth in the following Sections, in the following order of priority, to:
(1) the Administrative Expense Fund an amount equal to the
Administrative Expense Requirement or, if the Trustee receives written direction from the District to
transfer a lesser amount, then such lesser amount, provided that not more than one-half of the
Administrative Expense Requirement shall be so transferred in any Fiscal Year prior to the date on
which the balance on deposit in the Interest Account of the Special Tax Fund is at least equal to the
interest payable on the Bonds on March 1;
(2) the Interest Account of the Special Tax Fund the amount necessary to
cause the balance on deposit therein to be equal to the interest on the Bonds and any Parity Bonds
payable on the next succeeding Interest Payment Date;
(3) the Principal Account of the Special Tax Fund the amount necessary
to cause the balance on deposit therein to be equal to the principal amount of the Bonds and any
Parity Bonds; provided that not more than one-half of the principal amount shall be deposited in the
Principal Account prior to March 1 until (i) the balance on deposit in the Administrative Expense
Fund equals the Administrative Expense Requirement, or such lesser amount directed by the District
in writing to the Trustee, and (ii) the balance on deposit in the Interest Account equals the interest
payable on the Bonds and any Parity Bonds through September 1;
(4) the Reserve Account the amounts necessary to fund and pay the
amounts as set forth in Section 3.5 hereof,
(5) the Redemption Account of the Special Tax Fund; and
(6) the Surplus Fund.
At least ten (10) Business Days prior to each Interest Payment Date, the Trustee shall notify
the District in writing the amount of Special Taxes required to pay the principal of and interest on the
Bonds and any Parity Bonds on the next succeeding Interest Payment Date and the amount necessary
to cause the balance on deposit in the CFD No. 06-1 Reserve Account to equal the District's
Proportionate Share of the Reserve Requirement and to cause the balance in the Reserve Account to
equal the Reserve Requirement, if any. The Trustee shall notify the Authority Trustee at least five
(5) Business Days prior to each Interest Payment Date if there is not on deposit with the Trustee,
after making all of the transfers required hereunder, moneys sufficient to pay the principal of and
interest on the Bonds and any Parity Bonds.
Section 3.3. Administrative Expense Fund. The Trustee shall transfer from the first
available Special Taxes in the Special Tax Fund to the Administrative Expense Fund an amount such
that the total amounts so transferred in any Bond Year do not exceed the Administrative Expense
Requirement. In the event Administrative Expenses exceed the Administrative Expense
Requirement in any Bond Year, the total amount transferred in a Bond Year shall not exceed the
Administrative Expense Requirement until such time as there has been deposited to the Interest
Account and the Principal Account an amount, together with any amounts already on deposit therein,
that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond
Year, to restore the Reserve Account to the Reserve Requirement and to restore the CFD No. 06-1
Reserve Account to the Proportionate Share. Notwithstanding the foregoing, at the direction of the
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District, amounts in excess of the Administrative Expense Requirement may be transferred to the
Administrative Expense Fund prior to the transfers to the Interest Account, the Principal Account and
the Redemption Account pursuant to Sections 3.4 and 3.5 below to the extent necessary to collect
delinquent Special Taxes. Following the required transfers pursuant to Sections 3.4 and 3.5 below of
amounts sufficient to pay the interest and principal on all Bonds and Parity Bonds due in a Bond
Year, to restore the Reserve Account to the Reserve Requirement and to restore the CFD No. 06-1
Reserve Account to the Proportionate Share, an Authorized Representative of the City may direct the
Trustee, in writing, to transfer additional amounts from the Special Tax Fund to the Administrative
Expense Fund. Moneys in the Administrative Expense Fund may be held uninvested or invested in
any Authorized Investments.
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal
due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest
Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of
principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the
transfer required by Section 3.3, at least five Business Days prior to each March 1 and September 1,
the Trustee shall make the following transfers from the Special Tax Fund first to the Interest Account
and then to the Principal Account; provided, however, that to the extent that deposits have been made
in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the
Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made. At
least fifteen (15) days prior to an Interest Payment Date, the Trustee shall notify the Authority and
the Authority Trustee if there are insufficient funds to provide for the payment of principal and
interest due on the Bonds and any Parity Bonds on such Interest Payment Date.
Section 3.5. Reserve Account of the Special Tax Fund. After making the deposits
required by Section 3.4 above, the Trustee shall next transfer to the Reserve Account the amount, if
any, necessary to (i) pay Policy Costs with respect to the Reserve Policy then due and payable, (ii)
pay Policy Costs with respect to any Additional Reserve Policy then due and payable, and (iii) cause
the amount in the Reserve Account, taking into account the amounts then on deposit in the Reserve
Account, to be equal to the Reserve Requirement. Amounts deposited to the Reserve Account to pay
any Policy Costs due under the Reserve Policy or under any Additional Reserve Policy held by the
Authority Trustee shall be transferred by the Trustee to the Authority Trustee to be applied in
accordance with the Authority Indenture, and amounts deposited to the Reserve Account to pay
Policy Costs with respect to any other Additional Reserve Policy shall be disbursed by the Trustee to
the provider of such Additional Reserve Policy or as otherwise agreed to by such provider. If
subsequent to the issuance of the Bonds a Reserve Requirement is established by the District,
thereafter there shall be maintained in the Reserve Account of the Special Tax Fund an amount equal
to the Reserve Requirement to be applied as follows:
(a) Moneys in the Reserve Account shall be used solely for the purpose of paying
the principal of, and interest on any Parity Bonds when due in the event that the moneys in the
Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor and for
the purpose of making any required transfer to a rebate fund established in connection with the
issuance of Parity Bonds upon written direction from the District. If the amounts in the Interest
Account and the Principal Account of the Special Tax Fund are insufficient to pay the principal of, or
interest on any Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make
transfers to any rebate fund when required, the Trustee shall withdraw from the Reserve Account for
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deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax
Fund or a rebate fund, as applicable, moneys necessary for such purposes.
(b) Whenever moneys are withdrawn from the Reserve Account, after making the
required transfers referred to in Section 3.4 above, the Trustee shall transfer to the Reserve Account
from available moneys in the Special Tax Fund, or from any other legally available funds which the
District elects to apply to such purpose, the amount needed to restore the amount of such Reserve
Account to the Reserve Requirement; provided, however, that such amount so deposited shall be on a
pro rata basis with any amounts necessary to pay Policy Costs. Moneys in the Special Tax Fund
shall be deemed available for transfer to the Reserve Account only if the Trustee determines that
such amounts will not be needed to make the deposits required to be made to the Interest Account or
the Principal Account of the Special Tax Fund in accordance with Section 3.4 above. If amounts in
the Special Tax Fund or otherwise transferred to replenish the Reserve Account are inadequate to
restore the Reserve Account to the Reserve Requirement, then the District shall include the amount
necessary to restore the Reserve Account to the Reserve Requirement in the next annual Special Tax
levy to the extent of the maximum permitted Special Tax rates.
In connection with an optional redemption of Parity Bonds in accordance with any
Supplemental Indenture, or a partial defeasance of Parity Bonds in accordance with Section 9.1
hereof, amounts in the Reserve Account may be applied to such optional redemption or partial
defeasance so long as the amount on deposit in the Reserve Account following such optional
redemption or partial defeasance equals the Reserve Requirement. To the extent that the Reserve
Account is at the Reserve Requirement as of the first day of the final Bond Year for an issue of Parity
Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on an
issue of Parity Bonds in the final Bond Year for such issue. Moneys in the Reserve Account in
excess of the Reserve Requirement not transferred in accordance with the preceding provisions of
this paragraph shall be withdrawn from the Reserve Account on the fifth Business Day before each
March 1 and September I and transferred to the Interest Account of the Special Tax Fund.
Section 3.6. Redemption Account of the Special Tax Fund.
(a) After making the transfers and deposits required by Sections 3.4 and 3.5
above, and in accordance with the District's election to call Bonds for optional redemption as set
forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any
Supplemental Indenture for Parity Bonds, the Trustee shall transfer from the Special Tax Fund and
deposit in the Redemption Account moneys available for the purpose and sufficient to pay the
principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional
redemption; provided, however, that amounts in the Special Tax Fund may be applied to optionally
redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the
Reserve Account will equal the Reserve Requirement and the amount in the CFD No. 06-1 Reserve
Account will equal the Proportionate Share.
(b) Prepayments deposited to the Redemption Account shall be applied on the
redemption date established pursuant to Section 4.1(c) hereof for the use of such Prepayments to the
payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed
with such Prepayments.
(c) Moneys set aside in the Redemption Account shall be used solely for the
purpose of redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to
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the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon
presentation and surrender of such Bonds or Parity Bonds and in the case of an optional redemption
or an extraordinary redemption from Prepayments to pay the interest thereon; provided, however,
that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption
Account, other than Prepayments, may be used to purchase Outstanding Bonds or Parity Bonds in the
manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the
District at public or private sale as and when and at such prices as the District may in its discretion
determine but only at prices (including brokerage or other expenses) not more than par plus accrued
interest, plus, in the case of moneys set aside for an optional redemption, the premium applicable at
the next following call date according to the premium schedule established pursuant to Section 4.1(a)
hereof, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any
accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount
reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next
following Interest Payment Date.
Section 3.7. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5
and 3.6 hereof, as soon as practicable after each September 1, and in any event prior to each October
1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund,
unless on or prior to such date, it has received a Certificate of an Authorized Representative directing
that certain amounts be retained in the Special Tax Fund because the District has included such
amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special
Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund
will be transferred by the Trustee at the direction of an Authorized Representative of the City (i) to
the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to
pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds when due in
the event that moneys in the Special Tax Fund and the Reserve Account are insufficient therefor,
(ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement,
(iii) to the CFD No. 06-1 Reserve Account to restore the CFD No. 06-1 Reserve Account to the
Proportionate Share and to pay Policy Costs, (iv) to the Administrative Expense Fund to pay
Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense
Fund are insufficient to pay Administrative Expenses, (v) for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity
Bonds and may be used by the District for any lawful purpose. In the event that the District
reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any
Outstanding Bonds or Parity Bonds, the District will notify the Trustee in a Certificate of an
Authorized Representative and the Trustee will segregate such amount into a separate subaccount
and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written
direction of the District in Authorized Investments the interest on which is excludable from gross
income under Section 103 of the Code (other than bonds the interest on which is a tax preference
item for purposes of computing the alternative minimum tax of individuals under the Code) or in
Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to
which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher
yield will not adversely affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal
income tax purposes.
Section 3.8. Investments. Moneys held in any of the Accounts under this Indenture shall
be invested by the Trustee or the District, as applicable, in accordance with the limitations set forth
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below only in Authorized Investments which shall be deemed at all times to be a part of such
Accounts. Any loss resulting from such Authorized Investments shall be credited or charged to the
Account from which such investment was made, and any investment earnings on amounts deposited
in the Special Tax Fund, and each Account therein, and of the Surplus Fund shall be deposited in
those respective Funds and Accounts. Moneys in the Accounts held under this Indenture may be
invested by the District or the Trustee as directed in writing by the District, as applicable, from time
to time, in Authorized Investments subject to the following restrictions:
(a) Moneys in the Interest Account, the Principal Account, and the Redemption
Account of the Special Tax Fund shall be invested only in Authorized Investments which will by
their terms mature, or are available for withdrawal without penalty, on such dates so as to ensure the
payment of principal of, premium, if any, and interest on the Bonds as the same become due.
(b) In the absence of written directions from the District, the Trustee shall hold
such moneys uninvested.
The District or the Trustee, as applicable, shall sell, or present for redemption, any
Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet
any payment or transfer to such Accounts or from such Accounts to which such Authorized
Investments is credited. For the purpose of determining at any given time the balance in any such
Accounts, any such investments constituting a part of such Accounts shall be valued at the lower of
the cost or the market value thereof, exclusive of accrued interest, at least semiannually. In making
any valuations hereunder, the District or the Trustee, as applicable, may utilize such computerized
securities pricing services as may be available to it, including, without limitation, those available
through its regular accounting system, and conclusively rely thereon. The Trustee may make any and
all such investments through its own investment department or that of its affiliates or subsidiaries,
and may charge its ordinary and customary fees for such trades, including account maintenance fees.
Notwithstanding anything herein to the contrary, the District or the Trustee, as applicable, shall not
be responsible for any loss from investments, sales or transfers undertaken in accordance with the
provisions of this Indenture. In no event shall the Trustee be liable for the selection of investments or
for investment losses incurred thereon. The Trustee shall have no liability in respect of losses
incurred as a result of the liquidation of any investment prior to its stated maturity or the failure of
the District to provide timely written investment direction. The Trustee may conclusively rely upon
the District's written instructions as to both suitability and legality of the directed investments.
The Trustee or the District, as applicable, may act as principal or agent in the making or
disposing of any investment. The Trustee or the District, as applicable, may sell, or present for
redemption, any Authorized Investment so purchased whenever it shall be necessary to provide
moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or
account to which such Authorized Investment is credited, and, subject to the provisions of
Section 7.4, the Trustee or the District, as applicable, shall not be liable or responsible for any loss
resulting from such investment. For investment purposes, the Trustee or the District, as applicable,
may commingle the funds and accounts established hereunder, but shall account for each separately.
The District acknowledges that, to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the District the right to receive brokerage confirmations of
security transactions effected by the Trustee as they occur, the District specifically waives receipt of
such confirmations to the extent permitted by law. The District further understands that trade
confirmations for securities transactions effected by the Trustee will be available upon request and at
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no additional cost and other trade confirmations may be obtained from the applicable broker. The
Trustee will furnish the District periodic cash transaction statements which shall include detail for all
investment transactions made by the Trustee hereunder or brokers selected by the District. Upon the
District's election, such statements will be delivered via the Trustee's online service and upon
electing such service, paper statements will be provided only upon request. The Trustee and its
affiliates may act as sponsor, advisor, depository, principal or agent in the holding, acquisition or
disposition of any investment. The parties hereto acknowledge that the Trustee is not providing
investment supervision, recommendations, or advice.
Ratings of Authorized Investments referred to herein shall be determined at the time of
purchase of such Authorized Investments and without regard to rating subcategories. The Trustee
shall have no responsibility to monitor ratings of Authorized Investments after the initial purchase of
such Authorized Investments or the responsibility to validate the ratings of Authorized Investments
prior to the initial purchase.
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption.
The Bonds maturing on or after September 1, 20_ may be redeemed, at the option of
the District from any source of funds on any date on or after September 1, 20_, in whole, or in part
from such maturities as are selected by the District and by lot within a maturity, at a redemption price
equal to the principal amount to be redeemed, together with accrued interest to the date of
redemption, without premium. For so long as the Authority is the Owner of the Bonds, in connection
with the calculation of such redemption price, the District shall receive a credit from the Authority
from the reduction in the District's Proportionate Share resulting from the redemption of the Bonds
and the Authority Bonds so redeemed in connection therewith.
Notwithstanding the foregoing, upon the occurrence of an optional redemption of
Bonds in part, the selection of such Bonds to be redeemed shall be subject to the approval of the
Bond Insurer.
(b) Extraordinary Redemption.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata
basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from
Prepayments deposited to the Redemption Account pursuant to Section 3.2 at the following
redemption prices, expressed as a percentage of the principal amount to be redeemed, together with
accrued interest to the redemption date:
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Redemption Dates Redemption
Prices
Any Interest Payment Date from September 1, 20_ through March 1, 20_ 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
For so long as the Authority is the Owner of the Bonds, in connection with the calculation of
such redemption price, the District shall receive a credit from the Authority from the reduction in the
Proportionate Share of the Reserve Requirement resulting from the redemption of the Bonds and the
Authority Bonds so redeemed in connection therewith.
(c) Mandatory Sinking Fund Redemption.
The Bonds maturing on September 1, 20_ are subject to mandatory sinking fund redemption
prior to maturity, in part, on September 1, 20 , and on each September 1 thereafter by lot, from
sinking fund payments at a redemption price equal to the principal amount of Bonds to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
The Bonds maturing on September 1, 20_ are subject to mandatory sinking fund redemption
prior to maturity, in part, on September 1, 20, and on each September 1 thereafter by lot, from
sinking fund payments at a redemption price equal to the principal amount of Bonds to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the Bonds maturing September 1, 20 or September 1, 20 are redeemed
pursuant to Section 4.1(a) or (b) hereof, the sinking fund payments for such Bonds will be reduced as
nearly as practicable on a proportionate basis in integral multiples of $5,000.
(d) The redemption provisions for Parity Bonds shall be set forth in a
Supplemental Indenture.
Section 4.2. Selection of Bonds and Parity Bonds for Redemption. If less than all of
the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond
of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or
an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the
Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds
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or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such
Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity
Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity
Bonds. The Trustee shall promptly notify the District, in writing, of the Bonds or Parity Bonds, or
portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are due for redemption
under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture
relating to any Parity Bonds, the Trustee shall give notice, in the name of the District, of the
redemption of such Bonds or Parity Bonds; provided, however, that a notice of optional redemption
may be conditioned on there being on deposit on the redemption date sufficient money to pay the
redemption price of the Bonds or Parity Bonds to be redeemed. Such notice of redemption shall (a)
specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds or
Parity Bonds selected for redemption, except that where all of the Bonds or all of an issue of Parity
Bonds are subject to redemption, or all the Bonds or Parity Bonds of one maturity, are to be
redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed for
redemption and surrender of the Bonds or Parity Bonds to be redeemed; (c) state the redemption
price; (d) state the place or places where the Bonds or Parity Bonds are to be redeemed; (e) in the
case of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity
Bond which is to be redeemed; (f) state the date of issue of the Bonds or Parity Bonds as originally
issued; (g) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (h) state
any other descriptive information needed to identify accurately the Bonds or Parity Bonds being
redeemed as shall be specified by the Trustee. Such notice shall further state that on the date fixed
for redemption, there shall become due and payable on each Bond, Parity Bond or portion thereof
called for redemption, the principal thereof, together with any premium, and interest accrued to the
redemption date, and that from and after such date, interest thereon shall cease to accrue and be
payable. At least 20 days but no more than 45 days prior to the redemption date, the Trustee shall
send a copy of such notice to the respective Owners thereof at their addresses appearing on the Bond
Register, and to the original purchaser of the Bonds or Parity Bonds, as applicable. The actual
receipt by the Owner of any Bond or Parity Bond or the original purchaser of any Bond or Parity
Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the
failure to receive nor any defect in such notice shall affect the validity of the proceedings for the
redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A
certificate by the Trustee that notice of such redemption has been given as herein provided shall be
conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to
receive notice of such redemption. Notwithstanding the foregoing, so long as the Authority or the
Authority Trustee on the Authority's behalf is the registered owner of the Bonds, no such notices
need be provided.
In addition to the foregoing notice, further notice shall be given by the Trustee as set out
below if the Bonds or Parity Bonds are not owned by the Authority at the time the notice of
redemption is given pursuant to this Section 4.3, provided that 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 if notice thereof is given as above prescribed.
Each further notice of redemption shall be sent at least two days before notice of redemption
is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or certified
mail, overnight delivery service or any other means acceptable to the registered securities depository
listed below and to any other registered securities depositories then in the business of holding
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substantial amounts of obligations of types comprising the Bonds and Parity Bonds as shall be
specified by the Trustee and to any national information services that disseminate notice of
redemption of obligations such as the Bonds and Parity Bonds as determined by the Trustee:
Registered Securities Depositories
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: Redemption Area
Telecopy: (212) 855-7232 or (212) 855-7233
Any notice of optional redemption shall be cancelled and annulled if for any reason funds
will not be or are not available on the date fixed for redemption for the payment in full of the Bonds
then called for redemption, and such cancellation shall not constitute an Event of Default under this
Indenture. The District and the Trustee shall have no liability to the Owners or any other parry
related to or arising from such rescission of redemption. The Trustee shall mail notice of such
rescission of redemption in the same manner as the original notice of redemption was sent.
Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed,
each check or other transfer of funds issued for such purpose shall to the extent practicable bear the
CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with
the proceeds of such check or other transfer.
Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any
Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall
authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a
new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to
the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity
or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the
foregoing limitations.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date
fixed for such redemption:
(a) The Bonds and Parity Bonds, or portions thereof, designated for redemption
shall, on the date fixed for redemption, become due and payable at the redemption price thereof as
provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds,
anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding;
(b) Upon presentation and surrender thereof at the office of the Trustee, the
redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof, provided that
so long as the Authority or the Authority Trustee on the Authority's behalf is the registered owner of
the Bonds no such presentment is required;
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(c) As of the redemption date the Bonds or the Parity Bonds, or portions thereof
so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity
Bonds, or portions thereof, shall cease to bear further interest; and
(d) As of the date fixed for redemption no Owner of any of the Bonds, Parity
Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this
Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of
the redemption price and interest accrued to the redemption date from the amounts so made
available.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder
are Outstanding and unpaid, the District makes the following covenants with the Bondowners under
the provisions of the Act and this Indenture (to be performed by the District or its proper officers,
agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity
Bonds and tend to make them more marketable; provided, however, that said covenants do not
require the District to expend any funds or moneys other than the Special Taxes and other amounts
deposited to the Special Tax Fund:
(a) Punctual Payment; Against Encumbrances. The District covenants that it will
receive all Special Taxes in trust for the Owners and will cause to be deposited all Special Taxes with
the Trustee immediately upon their apportionment to the District, and the District shall have no
beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such
Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth
herein, and shall be accounted for separately and apart from all other money, funds, accounts or other
resources of the District.
The District covenants that it will duly and punctually pay or cause to be paid the
principal of and interest on every Bond and Parity Bond issued hereunder, together with the
premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the
Parity Bonds and in accordance with this Indenture to the extent that Net Special Taxes and other
amounts pledged hereunder are available therefor, and that the payments into the Funds and
Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any
Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions,
covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and
any Parity Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge
upon any of the Net Special Taxes except as provided in this Indenture, and will not issue any
obligation or security having a lien or charge upon the Net Special Taxes superior to or on a parity
with the Bonds, other than Parity Bonds. Nothing herein shall prevent the District from issuing or
incurring indebtedness which is payable from a pledge of Net Special Taxes which is subordinate in
all respects to the pledge of Net Special Taxes to repay the Bonds and the Parity Bonds.
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(b) Levy of Special Tax. So long as any Bonds or Parity Bonds issued under this
Indenture are Outstanding, the legislative body of the District covenants to levy the Special Tax in an
amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for
such purpose, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due,
(2) the Administrative Expenses, (3) any amounts required to maintain the Reserve Account of the
Special Tax Fund at the Reserve Requirement, (4) any amounts required to replenish the CFD No.
06-1 Reserve Account to the Proportionate Share and pay all Policy Costs resulting from the
delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds, and (5) any
amounts due to the Bond Insurer not included in (1) through (4) above. The District further
covenants that it will take no actions that would discontinue or cause the discontinuance of the
Special Tax levy or the District's authority to levy the Special Tax for so long as the Bonds and any
Parity Bonds are Outstanding.
(c) Commence Foreclosure Proceedings. The District covenants for the benefit of
the Owners of the Bonds and any Parity Bonds that it (i) will commence judicial foreclosure
proceedings against parcels with delinquent Special Taxes in excess of $10,000 by the October 1
following the close of each Fiscal Year in which such Special Taxes were due and (ii) will
commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the
October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount
which is less than 95% of the total Special Tax levied, and (iii) will diligently pursue such
foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding
the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the
amount in the Reserve Account is at least equal to the Reserve Requirement, the amount in the CFD
No. 06-1 Reserve Account is at least equal to the District's Proportionate Share and no amounts are
owed to the Bond Insurer in connection with the Reserve Policy or Insurance Policy. The District
may, but shall not be obligated to, advance funds from any source of legally available funds in order
to maintain the Reserve Account and the CFD No. 06-1 Reserve Account. The District may treat any
delinquent Special Tax sold to an independent third -party or to any funds of the City for at least
100% of the delinquent amount as having been paid. Proceeds of any such sale up to 100% of the
delinquent amount will be deposited in the Special Tax Fund.
The District covenants that it will deposit the net proceeds of any foreclosure and any
other Delinquency Proceeds in the Special Tax Fund and will apply such proceeds remaining after
the payment of Administrative Expenses to pay any delinquent installments of principal or interest
due on the Bonds and any Parity Bonds, to make current payments of principal and interest on the
Bonds and any Parity Bonds and to replenish any draw on the Reserve Account and the CFD No. 06-
1 Reserve Account, and to pay its proportionate share of Policy Costs resulting from the delinquency
in the payment of scheduled debt service on the Bonds or any Parity Bonds.
(d) Payment of Claims. The District will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net
Special Taxes or other funds in the Special Tax Fund, or which might impair the security of the
Bonds or any Parity Bonds then Outstanding; provided that nothing herein contained shall require the
District to make any such payments so long as the District in good faith shall contest the validity of
any such claims.
(e) Books and Accounts. The District will keep proper books of records and
accounts, separate from all other records and accounts of the District, in which complete and correct
entries shall be made of all transactions relating to the Project, the levy of the Special Tax and the
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deposits to the Special Tax Fund. Such books of records and accounts shall at all times during
business hours be subject to the inspection of the Trustee or of the Owners of not less than 10% of
the principal amount of the Bonds or the Owners of not less than 10% of any issue of Parity Bonds
then Outstanding or their representatives authorized in writing.
(f) Federal Tax Covenants. Notwithstanding any other provision of this
Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the
Authority Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely
affected for federal income tax purposes, the District covenants to comply with all applicable
requirements of the Code necessary to preserve such exclusion from gross income and specifically
covenants, without limiting the generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from
taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other
moneys or property which would cause the Authority Bonds issued on a tax-exempt basis for federal
income tax purposes to be "private activity bonds" within the meaning of Section 141 of the Code;
(2) Arbitrage. The District will make no use of the proceeds of the Bonds
or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action
or refrain from taking any action which will cause the Authority Bonds issued on a tax-exempt basis
for federal income tax purposes to be "arbitrage bonds" within the meaning of Section 148 of the
Code;
(3) Federal Guaranty. The District will make no use of the proceeds of
the Bonds or any Parity Bonds or take or omit to take any action that would cause the Authority
Bonds issued on a tax-exempt basis for federal income tax purposes to be "federally guaranteed"
within the meaning of Section 149(b) of the Code;
(4) Hedge Bonds. The District will make no use of the proceeds of the
Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any
action or refrain from taking any action that would cause the Authority Bonds issued on a tax-exempt
basis for federal income tax purposes to be considered "hedge bonds" within the meaning of Section
149(g) of the Code unless the District takes all necessary action to assure compliance with the
requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal
income tax purposes of interest on the Authority Bonds; and
(5) Other Tax Exempt Issues. The District will not use proceeds of other
tax exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written
opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal
income tax purposes of interest on the Authority Bonds issued on a tax-exempt basis.
(g) Reduction of Maximum Special Taxes. The District hereby finds and
determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the
Act in community facilities districts in Southern California have from time to time been at levels
requiring the levy of special taxes at the maximum authorized rates in order to make timely payment
of principal of and interest on the outstanding indebtedness of such community facilities districts.
For this reason, the District hereby determines that a reduction in the maximum Special Tax rates
authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g)
would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it
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to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to
the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall
not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in
connection therewith, (i) the District receives a certificate from one or more Independent Financial
Consultants which, when taken together, certify that, on the basis of the parcels of land and
improvements existing in the District as of the July 1 preceding the reduction, the maximum amount
of the Special Tax which may be levied on then existing Developed in each Bond Year for any
Bonds and Parity Bonds Outstanding will equal at least 110% of the sum of the estimated
Administrative Expenses and gross debt service in each Bond Year on all Bonds and Parity Bonds to
remain Outstanding after the reduction is approved, (ii) the District finds that any reduction made
under such conditions will not adversely affect the interests of the Owners of the Bonds and Parity
Bonds, and (iii) no Policy Costs or amounts under the Insurance Policy are due and payable to the
Bond Insurer and (iv) the District is not delinquent in the payment of the principal of or interest on
the Bonds or any Parity Bonds. For purposes of estimating Administrative Expenses for the
foregoing calculation, the Independent Financial Consultants shall compute the Administrative
Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each
subsequent Fiscal Year.
(h) Covenants to Defend. The District covenants that, in the event that any
initiative is adopted by the qualified electors in the District which purports to reduce the minimum or
the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of
the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will
commence and pursue legal action in order to preserve its ability to comply with such covenants.
(i) Limitation on Right to Tender Bonds. The District hereby covenants that it
will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or
Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have
first received a certificate from an Independent Financial Consultant that the acceptance of such a
tender will not result in the District having insufficient Special Tax revenues to pay the principal of
and interest on the Bonds and Parity Bonds when due.
0) Further Assurances. The District shall make, execute and deliver any and all
such further agreements, instruments and assurances as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance of this Indenture and for the better assuring
and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits
provided in this Indenture.
(k) Subordinate Debt. Any indebtedness of the District evidenced by any
subordinated debt and any renewals or extensions thereof (herein called "Subordinated
Indebtedness"), shall at all times be wholly subordinate and junior in right of payment to any and all
indebtedness of the District under this Indenture (herein called "Superior Indebtedness"). Following
an event of default under this Indenture, no Subordinated Indebtedness shall be paid prior to any
Superior Indebtedness in any fiscal year of the District. If the holder of the Subordinated
Indebtedness is a commercial bank, savings bank, savings and loan association or other financial
institution which is authorized by law to accept and hold deposits of money or issue certificates of
deposit, such holder must agree to waive any common law or statutory right of setoff with respect to
any deposits of the District maintained with or held by such holder.
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(1) Pledged Net Special Taxes. The District represents it has not heretofore made
a pledge of, granted a lien on or security interest in, or made an assignment or sale of the Net Special
Taxes that ranks on a parity with or prior to the pledge granted under this Indenture. The District,
except as may be provided otherwise in this Indenture, shall not hereafter make any pledge or
assignment of, lien on, or security interest in the Net Special Taxes payable senior to or on a parity
with the pledge of Net Special Taxes established under this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District may from time to time, and at any time, without notice to or consent of any of the
Bondowners, adopt Supplemental Indentures for any of the following purposes provided:
(a) to cure any ambiguity or formal defects or omissions or to correct any
inconsistent provisions in this Indenture or any Supplemental Indenture;
(b) to grant or confer upon the holders of the Bonds any additional rights,
remedies, powers, authority or security that may lawfully be granted to or conferred upon the holders
of the Bonds; or
(c) to add to the conditions, limitations and restrictions on the issuance of bonds
or other obligations under the provisions of the Indenture other conditions, limitations and
restrictions thereafter to be observed; or
(d) to add to the covenants and agreements of the District in this Indenture other
covenants and agreements thereafter to be observed by the District or to surrender any right or power
therein reserved to or conferred upon the District.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a
majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the
right to consent to and approve the adoption by the District of such Supplemental Indentures as shall
be deemed necessary or desirable by the District, for the purpose of waiving, modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an
extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity
Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity
Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Parity Bond over any
other Bond or Parity Bond, or (d) a reduction in the aggregate principal amount of the Bonds and
Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without
the consent of the Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms of this Section shall require the consent of the Bondowners, the District shall so notify the
Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee
shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be
mailed, by first class mail, postage prepaid, to all Bondowners at their addresses as they appear in the
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Bond Register (if the Authority or the Authority Trustee on the Authority's behalf is the owner of all
the Bonds, such amendment may be delivered by other communication methods). Such notice shall
briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof
is on file at the office of the Trustee for inspection by all Bondowners. The failure of any
Bondowners to receive such notice shall not affect the validity of such Supplemental Indenture when
consented to and approved by the Owners of not less than a majority in aggregate principal amount
of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever at any time within
one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or
instruments purporting to be executed by the Owners of not less than a majority in aggregate
principal amount of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall
refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent
to and approve the adoption thereof by the District substantially in the form of the copy referred to in
such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by
the District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any
Parity Bonds. In determining whether the Owners of a majority of the aggregate principal amount of
the Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or
Parity Bonds which are owned by the District or by any person directly or indirectly controlling or
controlled by or under the direct or indirect common control with the District, shall be disregarded
and shall be treated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the
provisions of this section, this Indenture shall be, and shall be deemed to be, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Indenture of the
District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications and amendments.
The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by Sections 6.1 and 6.2 which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Notwithstanding the foregoing, so long as the Insurance Policy is in full force and effect, any
amendment, supplement, modification to, or waiver of, this Indenture pursuant to this Section 6.2
shall be subject to the prior written consent of the Bond Insurer.
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or
Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may
determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved
by the District, as to such action, and in that case upon demand of the Owner of any Outstanding
Bond or Parity Bond at such effective date and presentation of his Bond or Parity Bond for the
purpose at the office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity
Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion
of the District, shall be necessary to conform to such action shall be prepared and executed, and in
that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date
such new Bonds or Parity Bonds shall be exchanged at the office of the Trustee or at such additional
offices as the Trustee may select and designate for that purpose, without cost to each Owner of
Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.
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Section 6.4. Reliance on Opinion. In executing, or accepting the additional trusts created
by any supplemental indenture permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an opinion of counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and complies with the terms hereof.
ARTICLE VII
TRUSTEE
Section 7.1. Trustee. The Bank of New York Mellon Trust Company, N.A., shall be the
Trustee for the Bonds and any Parity Bonds unless and until another Trustee is appointed by the
District hereunder. The District may, at any time, appoint a successor Trustee satisfying the
requirements of Section 7.2 below for the purpose of receiving all money which the District is
required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in
this Indenture; provided, however, that the Trustee shall be at all times the same entity as the
Authority Trustee.
The Bond Insurer shall receive prior written notice of any name change of the Trustee.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire
transfer in accordance with Section 2.5 above, interest payments to the Bondowners, to select Bonds
and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby
authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the
same are duly presented to it for payment at maturity or on call and redemption, to provide for the
registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to
provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to
provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned
to or imposed on it as provided in this Indenture. The Trustee shall keep accurate records of all funds
administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
The Trustee is hereby authorized to redeem the Bonds and Parity Bonds when duly presented
for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and
Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the
Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all
its advances and expenditures, including, but not limited to, advances to and fees, costs and expenses
of independent accountants or counsel employed by it in the exercise and performance of its powers
and duties hereunder, and indemnify and save the Trustee, its officers, officials, directors, employees
and agents, harmless from and against any losses, costs, damages, claims, expenses and liabilities,
including, without limitation fees, costs and expenses of its attorneys, not arising from its own
negligence or willful misconduct, in connection with the acceptance or administration of the trust or
trusts hereinunder, including the costs and expense of defending itself against any claim (other than
claims asserted by the District) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, or in connection with enforcing the provisions of this section. In no
event shall the Trustee be responsible or liable for any consequential, punitive, indirect, incidental or
special damages or loss of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and
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regardless of the form of action. The foregoing obligation of the District to indemnify the Trustee
shall survive the removal or resignation of the Trustee and the discharge of the Bonds.
Section 7.2. Removal of Trustee. No removal of the Trustee shall become effective until
a successor meeting the requirements below or otherwise acceptable to the Bond Insurer, so long as
the Insurance Policy is in full force and effect and the Bond Insurer has not defaulted on its
obligations thereunder, shall be qualified and appointed and shall have accepted its appointment. The
District may at any time at its sole discretion remove the Trustee initially appointed, upon 30 days
prior written notice, and any successor thereto, by delivering to the Trustee a written notice of its
decision to remove the Trustee and may appoint a successor or successors thereto; provided that any
such successor shall (a) national banking association that is supervised by the Office of the
Comptroller of the Currency and has at least Two Hundred Fifty Million Dollars ($250,000,000) of
assets; (b) a state -chartered commercial bank that is a member of the Federal Reserve System and has
at least $1 billion of assets; or (c) otherwise approved by the Bond Insurer in writing. If any bank,
association or trust company appointed as a successor 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,
association 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. Any removal of the Trustee and appointment of a
successor Trustee shall become effective only upon acceptance of appointment by the successor
Trustee and notice being sent by the successor Trustee to the Bondowners of the successor Trustee's
identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign and discharged
from its duties and obligations hereunder by giving written notice to the District and by giving to the
Owners notice of such resignation, which notice shall be sent to the Owners at their addresses
appearing in the registration books in the office of the Trustee. Upon receiving such notice of
resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in
Section 7.2 above by an instrument in writing. No resignation of the Trustee shall become effective
until a successor meeting the requirements of Section 7.2 above or otherwise acceptable to the Bond
Insurer, so long as the Insurance Policy is in full force and effect and the Bond Insurer has not
defaulted on its obligations thereunder, shall be qualified and appointed and shall have accepted its
appointment. If no successor Trustee shall have been appointed and have accepted appointment
within thirty (30) calendar days of giving notice of removal or notice of resignation as aforesaid, the
resigning Trustee or any Owner (on behalf of itself and all other Owners) may, at the sole expense of
the District petition any court of competent jurisdiction for the appointment of a successor Trustee,
and such court may thereupon, after such notice (if any) as it may deem proper, appoint such
successor Trustee. The Trustee shall be paid in full for any fees and expense owing to it prior to or
contemporaneously with the signing of any instrument or agreement to effect the transfer to a
successor Trustee.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and
agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements,
promises, covenants and agreements of the District, and the Trustee assumes no responsibility for the
correctness of the same and makes no representations as to the validity or sufficiency of this
Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other
than in connection with its duties or obligations specifically set forth herein, in the Bonds and any
Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The
Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds or any
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Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its
duties hereunder, except for its own negligence or willful misconduct. The Trustee shall not be liable
for any action taken or omitted by it or any of its officers, employees or agents in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon it by
this Indenture. The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts. The Trustee shall not be accountable for the use of any proceeds of sale of the Bonds
delivered hereunder.
The Trustee shall be entitled to request and receive written instructions from the District
and/or Owners and shall have no responsibility or liability for any losses or damages of any nature
that may arise from any action taken or not taken by the Trustee in accordance with the written
direction of any such party. The Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in accordance with the written direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee under this Indenture.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request or direction of an Owner and/or the District, pursuant to the
provisions of this Indenture, unless such party shall have offered to the Trustee security or indemnity
(satisfactory to the Trustee in its sole and absolute discretion) against the costs, expenses and
liabilities which may be incurred by it in compliance with such request or direction.
Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be
responsible for nor have any duty to monitor the performance or any action of the District or any of
its directors, members, officers, agents, affiliates or employee, nor shall it have any liability in
connection with the malfeasance or nonfeasance by such party. The Trustee may assume
performance by all such persons of their respective obligations. The Trustee shall have no
enforcement or notification obligations relating to breaches of representations or warranties of any
other person. The Trustee shall be conclusively protected in acting upon any notice, resolution,
request, direction, consent, order, certificate, opinion, requisition, report, bond, debenture, note, other
evidence of indebtedness (including any Bond or Parity Bond) or other paper or document believed
by it to be genuine and correct and to have been signed, sent or presented by the proper person or
persons, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy
of any information contained therein. The Trustee may consult with counsel, who may be counsel to
the District, 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 hereunder in good faith and in
accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity
Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title
thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)
may, be deemed to be conclusively proved and established by a written certificate of the District,
and/or opinion of counsel, and such certificate or opinion shall be full warrant to the Trustee for any
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action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its
discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such
additional evidence as to it may seem reasonable.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special
Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts
received, but its liability shall be limited to the proper accounting for such funds as it shall actually
receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of its rights or powers. The Trustee may refuse to perform any duty or exercise any right or
power which would require it to expend its own funds or risk any liability if it shall reasonably
believe that repayment of such funds or adequate indemnity against such risk is not reasonably
assured to it.
The Trustee shall not be deemed to have knowledge of (A) any events of other information,
or (B) any default or event of default until an officer at the Trustee's corporate trust officer
responsible for the administration of its duties hereunder shall have actual knowledge thereof or the
Trustee shall have received written notice thereof at its corporate trust office.
The Trustee shall not be considered in breach of or in default in its obligations hereunder or
progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of
such obligations due to unforeseeable causes beyond its control and without its fault or negligence,
including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government,
acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion, mob violence, riot, war, inability to procure or general sabotage or rationing
of labor, equipment, facilities, sources of energy, material or supplies in the open market, loss or
malfunctions of utilities, computer (hardware or software) or communications service, accidents,
labor disputes, the unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility, litigation or arbitration involving a party or others relating to zoning or other
governmental action or inaction pertaining to the project, malicious mischief, condemnation, and
unusually severe weather or delays of supplies or subcontractors due to such causes or any similar
event and/or occurrences beyond the control of the Trustee.
Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default,
the Trustee shall have a lien with right of payment prior to payment on account of principal of and
premium, if any, and interest on any Bond, upon the Net Special Taxes for the foregoing fees,
charges and expenses incurred by it. The Trustee's right to payment of such fees and expenses shall
survive the discharge and payment or defeasance of the Bonds and termination of this Indenture, and
the resignation or removal of the Trustee.
The Trustee shall have no responsibility or liability with respect to any information,
statements or recital in any offering memorandum or other disclosure material prepared or distributed
with respect to the issuance of the Bonds.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be
construed as a duty or in any way expand or impliedly expand the scope of the Trustee's duties
hereunder, and, with respect to such permissive rights, the Trustee shall not be answerable for other
than its negligence or willful misconduct.
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The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted
to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or
consulted by the Trustee. The Trustee may execute any of the trusts or powers hereof and perform
any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct
of the same if appointed by it with reasonable care.
The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds with the same
rights it would have if it were not Trustee.
The Trustee shall perform such duties and only such duties as are specifically set forth in this
Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee.
These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except
for the performance of such duties, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request, order or direction of any of the Owners pursuant to the provisions of
this Indenture unless such Owners shall have offered to the Trustee security or indemnity satisfactory
to the Trustee in its sole and exclusive direction against the costs, expenses and liabilities which may
be incurred therein or thereby.
The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of
all Events of Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which
has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request or direction of any of the Owners in connection with a default or
Event of Default hereunder pursuant to this Indenture, unless such Owners shall have offered to the
Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction.
The Trustee shall have the right to accept and act upon instructions, including funds transfer
instructions ("Instructions") given pursuant to this Indenture and related financing documents and
delivered using Electronic Means ("Electronic Means" shall mean the following communications
methods: e-mail, secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Trustee, or another method or system specified
by the Trustee as available for use in connection with its services hereunder); provided, however, that
the District, shall provide to the Trustee an incumbency certificate listing officers with the authority
to provide such Instructions ("Authorized Officers") and containing specimen signatures of such
Authorized Officers, which incumbency certificate shall be amended by the District whenever a
person is to be added or deleted from the listing. If the District elects to give the Trustee Instructions
using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the
Trustee's understanding of such Instructions shall be deemed controlling. The District understands
and agree that the Trustee cannot determine the identity of the actual sender of such Instructions and
that the Trustee shall conclusively presume that directions that purport to have been sent by an
Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by
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such Authorized Officer. The District shall be responsible for ensuring that only Authorized Officers
transmit such Instructions to the Trustee and that the District and all Authorized Officers are solely
responsible to safeguard the use and confidentiality of applicable user and authorization codes,
passwords and/or authentication keys upon receipt by the District. The Trustee shall not be liable for
any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and
compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a
subsequent written instruction. The District agrees: (i) to assume all risks arising out of the use of
Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the
Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties;
(ii) that it is fully informed of the protections and risks associated with the various methods of
transmitting Instructions to the Trustee and that there may be more secure methods of transmitting
Instructions than the method(s) selected by the District; (iii) that the security procedures (if any) to be
followed in connection with its transmission of Instructions provide to it a commercially reasonable
degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee
immediately upon learning of any compromise or unauthorized use of the security procedures.
The Trustee agrees to accept and act upon written instructions and/or directions provided via
Electronic Means pursuant to this Indenture provided, however, that: (a) such originally executed
instructions and/or directions shall be signed by a person as may be designated and authorized to sign
for the party signing such instructions and/or directions, and (b) the Trustee shall have received a
current incumbency certificate containing the specimen signature of such designated person. Any
such instructions and directions furnished by electronic transmission shall be in the form of
attachments in PDF format.
Notwithstanding anything to the contrary herein, the Trustee shall have no duty to prepare or
file any Federal or state tax report or return with respect to any funds held pursuant to this Indenture
or any income earned thereon, except for the delivery and filing of tax information reporting forms
required to be delivered and filed with the Internal Revenue Service.
Section 7.5. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the
Trustee without the execution or filing of any paper or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute
an "event of default":
(a) Default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable,
whether at maturity as therein expressed, by declaration or otherwise;
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(b) Default in the due and punctual payment of the interest on any Bond or Parity
Bond when and as the same shall become due and payable; or
(c) Except as described in (a) or (b), default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in this Indenture,
the Bonds or any Parity Bonds, and such default shall have continued for a period of 30 days after the
District shall have been given notice in writing of such default by the Trustee or the Owners of 25%
in aggregate principal amount of the Outstanding Bonds and Parity Bonds; provided, however, that if
in the reasonable opinion of the District the default stated in the notice can be corrected, but not
within such thirty (30) day period, and corrective action is instituted by the District, with the written
approval of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under
the Insurance Policy) within such thirty (30) day period and diligently pursued in good faith until the
default is corrected, such default shall not be an Event of Default hereunder.
The Trustee agrees to give notice to the Owners immediately upon the occurrence of an event
of default under (a) or (b) above and within 30 days of the Trustee's knowledge of an event of default
under (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the
Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal
of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any
rights of the Trustee under or with respect to this Indenture, including:
(a) By mandamus or other suit or proceeding at law or in equity to enforce its
rights against the District and any of the members, officers and employees of the District, and to
compel the District or any such members, officers or employees to perform and carry out their duties
under the Act and their agreements with the Owners as provided in this Indenture;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate
the rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and
employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by the
Owners of at least twenty-five percent (25%) in aggregate principal amount Outstanding Bonds and
Parity Bonds and is indemnified to its satisfaction, the Trustee shall be obligated to exercise such one
or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by
counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Trustee or to the Owners 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 Act or any other law.
The Bonds and any Parity Bonds are not subject to acceleration prior to maturity
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When the Trustee incurs expenses or renders services after the occurrence of an Event of
Default, such expenses and the compensation for such services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency, arrangement, moratorium,
reorganization or other debtor relief law.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Owners any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to
vote in respect of the claim of any Owners in any such proceeding without the approval of the
Owners so affected.
Section 8.3. Application of Revenues and Other Funds After Default. All amounts
received by the Trustee pursuant to any right given or action taken by the Trustee under the
provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in
the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such
Event of Default and in carrying out the provisions of this Article VIII, including reasonable
compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees
and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds
and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest
to the extent permitted by law at the net effective rate of interest then borne by the Outstanding
Bonds and Parity Bonds; provided, however, that in the event such amounts shall be insufficient to
pay in full the full amount of such interest and principal, then such amounts shall be applied in the
following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity
Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing,
(b) second, to the payment of all installments of principal, of the Bonds and
Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing,
and
(c) third, to the payment of interest on overdue installments of principal and
interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and
owing.
Section 8.4. Control by Bond Insurer Upon Default. Anything herein notwithstanding,
so long as the Insurance Policy is in full force and effect and the Bond Insurer has not defaulted on
its obligations thereunder, upon the occurrence and continuance of a default or an Event of Default;
(a) the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies
granted to the holders of the Bonds or the Trustee for the benefit of the holders of the Bonds
hereunder; (b) no default or Event of Default may be waived without the Bond Insurer's written
consent; and (c) the Bond Insurer shall be deemed to be the sole owner of the Bonds for all purposes
hereunder, including, without limitations, for purposes of exercising remedies and approving
amendments.
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Section 8.5. Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the
rights of the Trustee and of the Owners of the Bonds and Parity Bonds under this Indenture, the
Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net
Special Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as
the court making such appointment shall confer.
Section 8.6. Non -Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District,
which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity
Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as
herein provided, out of the Net Special Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not
affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any
such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the
Bonds or Parity 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 Trustee or the Owners by the Act or by this
Article VIII may be enforced and exercised from time to time and as often as shall be deemed
expedient by the Trustee or the Owners, as the case may be.
Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond
or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the
Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have
tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses
and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused
or omitted to comply with such request for a period of sixty (60) days after such written request shall
have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of
any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and
Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right
under this Indenture, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any provision of this Indenture shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity
Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of
and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute
suit for the enforcement of any such payment, shall not be impaired or affected without the written
consent of such Owner, notwithstanding the foregoing provisions of this Section or any other
provision of this Indenture.
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Section 8.8. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the District, the Trustee and the Owners shall be
restored to their former positions and rights hereunder, respectively, with regard to the property
subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no
such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and
the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental
Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net
Special Taxes, and, other than as set forth below, all covenants, agreements and other obligations of
the District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental
Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be
discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds
pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as
may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or
deliver to the District's general fund all money or securities held by it pursuant to this Indenture
which are not required for the payment of the principal of, premium, if any, and interest due on such
Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning
expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or
more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest
on such Bond or Parity Bond, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money which,
together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative
Expense Fund) and available for such purpose, is fully sufficient to pay the principal of, premium, if
any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable
on and prior to the maturity date or redemption date thereof, as applicable; or
(c) by depositing with the Trustee or another escrow bank appointed by the
District, in trust, Defeasance Securities, in which the District may lawfully invest its money, in such
amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit
in the Special Tax Fund (exclusive of the Administrative Expense Fund) and available for such
purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium,
if any, and interest on such Bond or Parity Bond, as and when the same shall become due and
payable on and prior to the maturity date or redemption date thereof, as applicable;
then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity
Bonds shall not have been surrendered for payment, all obligations of the District under this
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Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and
terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any
such Bond or Parity Bond not so surrendered and paid, all sums due thereon. Notice of such election
shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such
shorter period of time as may be acceptable to the Trustee. [The District shall deliver to the Trustee
and the Bond Insurer draft copies of (A) an escrow agreement with respect to the deposits under (b)
or (c) above, (B) an opinion of Bond Counsel, to the effect that the requirements of this Indenture
have been satisfied with respect to such discharge of Bonds, and (C) with respect to a deposit under
(c) above, a verification report of an Independent Accountant (a "Verification Report"), regarding the
sufficiency of the escrow fund.) The Bond Insurer shall be provided with final drafts of the above -
referenced documentation not less than three Business Days prior to any defeasance with respect to
the Bonds. The opinion and Verification Report shall be addressed to the Bond Insurer and shall be
in form and substance satisfactory to the Bond Insurer. In addition, the escrow agreement shall
provide (a) that any substitution of securities following the execution and delivery of the escrow
agreement shall require the delivery of (i) a Verification Report; (ii) an opinion of Bond Counsel
that such substitution will not adversely affect the exclusion (if interest on the Bonds is excludable)
from gross income of the holders of the Bonds of the interest on the Bonds for federal income tax
purposes; and (iii) the prior written consent of the Bond Insurer, which consent will not be
unreasonably withheld; (b) the District will not exercise any prior optional redemption of the Bonds
secured by the escrow agreement or any redemption unless (i) the right to make any such redemption
has been expressly reserved in the escrow agreement and such reservation has been disclosed in
detail in the official statement for the refunding bonds, and (ii) as a condition to any such redemption
there shall be provided to the Bond Insurer a Verification Report as to the sufficiency of the escrow
receipts without reinvestment to meet the escrow requirements remaining following any such
redemption; and (iii) the District shall not amend the escrow agreement or enter into a forward
purchase agreement or other agreement with respect to rights in the escrow without the prior written
consent of the Bond Insurer.]
The Bonds shall be deemed Outstanding under this Indenture unless and until they are in fact
paid and retired or the above criteria are met.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the
Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any
Supplemental Indenture and execute and deliver to the District all such instruments as may be
desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder
of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any
funds held by the Trustee at the time of a defeasance, which are not required for the purpose of
paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The
Trustee shall, at the written direction of the District, send a notice to the Bondowners whose Bonds
or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance
has occurred.
This Indenture shall not be discharged until Policy Costs due to the Bond Insurer (to the
extent the responsibility of the District as a result of the District's failure to pay principal of, or
interest on the Bonds when due) shall have been paid in full. The District's obligation to pay such
amounts shall expressly survive payment in full of the payments of principal of and interest on the
Bonds.
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Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder
issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund
and secured by a lien and charge upon such amounts equal to the lien and charge securing the
Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any
Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of
refunding all or a portion of the Bonds or Parity Bonds then Outstanding subject to the following
specific conditions, which are hereby made conditions precedent to the issuance of any such Parity
Bonds:
(a) The District shall be in compliance with all covenants set forth in this
Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect
shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued
notwithstanding that the District is not in compliance with all such covenants so long as immediately
following the issuance of such Parity Bonds the District will be in compliance with all such
covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant
to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for
by a Supplemental Indenture duly adopted by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to be issued and the fund
or funds into which the proceeds thereof are to be deposited;
(2) the authorized principal amount of such Parity Bonds;
(3) the date and the maturity date or dates of such Parity Bonds; provided
that (i) each maturity date shall fall on a September 1, (ii) all such Parity Bonds of like maturity shall
be identical in all respects, except as to number, and (iii) fixed serial maturities or mandatory sinking
fund payments, or any combination thereof, shall be established to provide for the retirement of all
such Parity Bonds on or before their respective maturity dates;
(4) the description of the Parity Bonds, the place of payment thereof and
the procedure for execution and authentication;
(5) the denominations and method of numbering of such Parity Bonds;
(6) the amount and due date of each mandatory sinking fund payment, if
any, for such Parity Bonds;
(7) the amount, if any, to be deposited from the proceeds of such Parity
Bonds in the Reserve Account to increase the amount therein to the Reserve Requirement or to the
CFD No. 06-1 Reserve Account to increase the amount therein to the Proportionate Share, provided
that if the interest on such Parity Bonds is intended by the District to be excluded from the gross
income of the recipients thereof for federal income tax purposes, such amount shall not exceed the
maximum amount of proceeds that, in the opinion of Bond Counsel, can be so deposited without
causing the interest on such Parity Bonds to be included in the gross income of the recipients thereof
for federal income tax;
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(8) the form of such Parity Bonds; and
(9) such other provisions as are necessary or appropriate and not
inconsistent with this Indenture.
(c) The District shall have received the following documents or money or
securities, all of such documents dated or certified, as the case may be, as of the date of delivery of
such Parity Bonds by the Trustee (unless the Trustee shall accept any of such documents bearing a
prior date):
(1) a certified copy of the Supplemental Indenture authorizing the
issuance of such Parity Bonds;
(2) a written request of the District as to the delivery of such Parity
Bonds;
(3) an opinion of Bond Counsel to the District to the effect that (i) the
District has the right and power under the Act to adopt the Supplemental Indenture relating to such
Parity Bonds, and the Supplemental Indenture has been duly and lawfully adopted by the District, is
in full force and effect and is valid and binding upon the District and enforceable in accordance with
its terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other
similar laws relating to the enforcement of creditors' rights); (ii) the Indenture creates the valid
pledge which it purports to create of the Net Special Taxes and other amounts as provided in the
Indenture, subject to the application thereof to the purposes and on the conditions permitted by the
Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District,
enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and
the terms of the Indenture and all Supplemental Indentures thereto and are entitled to the benefits of
the Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and
validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture
and all such Supplemental Indentures; and a further opinion of Bond Counsel to the effect that,
assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will
not adversely affect the exclusion from gross income for federal income tax purposes of interest on
the Bonds and any Parity Bonds theretofore issued on a tax exempt basis, or the exemption from
State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds
theretofore issued;
(4) a certificate of the District containing such statements as may be
reasonably necessary to show compliance with the requirements of this Indenture;
(5) a certificate of an Independent Financial Consultant certifying that in
each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding
following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service
on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and
(6) Such further documents, money and securities as are required by the
provisions of this Indenture and the Supplemental Indenture providing for the issuance of Parity
Bonds.
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(d) So long as any Bonds remain outstanding or any amounts are owed to the
Bond Insurer by the District, without the prior written consent of the Bond Insurer, the District shall
not issue any Parity Bonds that permits or requires the Owner to tender such Parity Bonds for
purchase prior to the stated maturity thereof without the prior written consent of the Bond Insurer.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds
surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment
therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to
the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee
shall destroy such Bonds and Parity Bonds, as provided by law, and furnish to the District a
certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
to be signed or executed by Bondowners may be in any number of concurrent instruments of similar
tenor may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such
attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this
Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any
such instrument and of any instrument appointing any such attorney, may be proved by a signature
guarantee of any bank or trust company located within the United States of America. Where any
such instrument is executed by an officer of a corporation or association or a member of a partnership
on behalf of such corporation, association or partnership, such signature guarantee shall also
constitute sufficient proof of his authority.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be
registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all
purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the
interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her
legal representative. All such payments shall be valid and effectual to satisfy and discharge the
liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to
be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District
to such proof, it being intended that the Trustee or the District may accept any other evidence of the
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent
of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity
Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of
such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the
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Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such
Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the
Trustee in trust at such date, or for two years after the date of deposit of such money if deposited with
the Trustee in trust after the date when such Outstanding Bonds or Parity Bonds become due and
payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and
the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look
only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however,
that, before being required to make any such payment to the District, the Trustee at the written
request of the District or the Authority Trustee shall, at the expense of the District, cause to be mailed
by first-class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity
Bonds at their addresses as they appear on the registration books of the Trustee a notice that said
money remains unclaimed and that, after a date named in said notice, which date shall not be less
than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed
will be returned to the District. Any money held by the Trustee pursuant to this paragraph shall be
held uninvested and without any liability for interest.
Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District and the Bondowners and the provisions hereof shall be
construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined
adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall
be restored to their former positions, rights and remedies as if such suit, action or proceeding had not
been brought or taken.
After the issuance and delivery of the Bonds this Indenture shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5. [INSURER PROVISIONS TO COME]
Section 10.6. Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Net Special Taxes which is subordinate to the pledge hereunder, or which is payable
from the general fund of the District or from taxes or any source other than the Net Special Taxes and
other amounts pledged hereunder.
Section 10.7. Further Assurances. The District 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 Indenture, and for the better assuring
and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in
this Indenture.
Section 10.8. Entire Agreement; Severability. This Agreement and the exhibits hereto set
forth the entire agreement and understanding of the parties related to this transaction and supersedes
all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or
any portion thereof, contained in this Indenture, or the application thereof to any person or
circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture
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and the application of any such covenant, agreement or provision, or portion thereof, to other persons
or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the
Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall
retain all valid rights and benefits accorded to them under the laws of the State of California.
Section 10.9. Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class , postage prepaid, or personally delivered to the
City Manager of the City, 1 300 Centennial Way, Tustin, CA 92780, and all notices to the Trustee
shall be sent via courier or Electronic Means or electronic transmission or mailed, first class, postage
prepaid, or personally delivered to the Trustee, The Bank of New York Mellon Trust Company,
N.A., 333 S. Hope St., Ste. 2525, Los Angeles, CA 90071, Attention: Corporate Trust Services. Any
such notices or other communications furnished by electronic transmission shall be in the form of
attachments in PDF format. Any notices required to be given to the Bond Insurer with respect to the
Bonds or this Indenture shall be mailed, first class, postage prepaid, personally delivered or sent via
facsimile or electronic (email) transmission (with a portable document format or similar attachment)
to [INSURER], Attention: Re: Policy No. , Telephone: , Telecopier:
email:
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IN WITNESS WHEREOF, CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO. 06-1 (TUSTIN LEGACY/COLUMBUS VILLAGES) has caused this Bond Indenture to be
signed by its City Manager and Clerk, and The Bank of New York Mellon Trust Company, N.A. in
token of its acceptance of the duties of the Trustee created hereunder, has caused this Bond Indenture
to be signed in its corporate name by its officer identified below, all as of the day and year first above
written.
CITY OF TUSTIN COMMUNITY FACILITIES
DISTRICT NO. 06-1 (TUSTIN
LEGACY/COLUMBUS VILLAGES)
City Manager of the City of Tustin, acting as the
legislative body of City of Tustin Community
Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages)
ATTEST:
City Clerk of the City of Tustin, acting as the
legislative body of City of Tustin Community
Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages)
[SIGNATURES CONTINUED ON NEXT PAGE.]
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[SIGNATURE PAGE CONTINUED.]
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
Authorized Officer
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EXHIBIT A
FORM OF 2025 SPECIAL TAX REFUNDING BOND
No. $[PRINCIPAL AMOUNT]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
SPECIAL TAX REFUNDING BOND, SERIES 2025
INTEREST RATE: MATURITYDATE: DATED DATE:
% September 1, 20 , 2025
REGISTERED OWNER: The Bank of New York Mellon Trust Company, N.A., as Trustee
under that certain Indenture of Trust dated as of June 1, 2025 by and
between the Tustin Financing Authority and The Bank of New York
Mellon Trust Company, N.A.
PRINCIPAL AMOUNT:
AND NO/100 DOLLARS
CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 06-1 (TUSTIN
LEGACY/COLUMBUS VILLAGES) (the "District") situated in the County of Orange, State of
California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held
under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered
assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided,
the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest
Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the
date of authentication is an Interest Payment Date in which event interest shall be payable from such
date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined)
but prior to the immediately succeeding Interest Payment Date, in which event interest shall be
payable from the Interest Payment Date immediately succeeding the date of authentication, or
(iii) the date of authentication is prior to the close of business on the first Record Date in which event
interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at
the time of authentication of this Bond interest is in default, interest on this Bond shall be payable
from the last Interest Payment Date to which the interest has been paid or made available for
payment or, if no interest has been paid or made available for payment, interest on this Bond shall be
payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and
September 1 and the final maturity date of the Bonds (each an "Interest Payment Date"),
commencing September 1, 2025 at the Interest Rate set forth above, until the Principal Amount
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hereof is paid or made available for payment. Except as otherwise provided in the Indenture, the
principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful
money of the United States of America upon presentation and surrender of this Bond at the Principal
Office of the Trustee, initially The Bank of New York Mellon Trust Company, N.A. (the "Trustee").
Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage
prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within
the United States of America, to the Registered Owner hereof as of the close of business on the
fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the
"Record Date") at such Registered Owner's address as it appears on the registration books
maintained by the Trustee.
This Bond is one of a duly authorized issue of "City of Tustin Community Facilities District
No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2025" (the
"Bonds") issued in the aggregate principal amount of $ pursuant to the Mello -Roos
Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California
Government Code (the "Act") for the purpose of refinancing outstanding special tax bonds of the
District, utilizing a portion of the debt service saving achieved through the issuance of the Bonds to
finance the Project, and paying certain costs related to the issuance of the Bonds. The issuance of the
Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City
Council of the City, acting in its capacity as the legislative body of the District (the "Legislative
Body"), on [May 20], 2025, and a Bond Indenture, dated as of June 1, 2025, by and between the
District and the Trustee, executed in connection therewith (the "Indenture"), and this reference
incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond
assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under,
and both are to be construed in accordance with, the laws of the State of California. Capitalized
terms not defined herein shall have the meanings set forth in the Indenture.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this
Bond are payable solely from the portion (the "Net Special Taxes") of the annual special taxes
authorized under the Act to be levied and collected within the District (the "Special Taxes") and
certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any
amounts for the payment hereof shall be limited to the Net Special Taxes pledged and collected,
which include foreclosure proceeds received following a default in payment of the Special Taxes and
other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent
that other provision for payment has been made by the Legislative Body, as may be permitted by law.
The District has covenanted for the benefit of the owners of the Bonds that under certain
circumstances described in the Indenture it will commence and diligently pursue to completion
appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied
for payment of principal and interest on the Bonds.
The Bonds maturing on or after September 1, 20_ may be redeemed, at the option of the
District from any source of funds on any date on or after September 1, 20 , in whole, or in part from
such maturities as are selected by the District and by lot within a maturity, at a redemption price
equal to the principal amount to be redeemed, together with accrued interest to the date of
redemption, without premium.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis
among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from
Prepayments deposited to the Redemption Account at the following redemption prices, expressed as
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a percentage of the principal amount to be redeemed, together with accrued interest to the redemption
date:
Redemption Dates
Redemption
Prices
Any Interest Payment Date from September 1, 20 through March 1, 20 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
The Bonds maturing on September 1, 20_ and September 1, 20_ are subject to mandatory
sinking fund redemption prior to maturity, in part on September 1, 20_ and September 1, 20_ and
on each September 1 thereafter by lot, in accordance with the schedules of sinking fund payments set
forth in the Indenture at a redemption price equal to the principal amount of the Bonds to be
redeemed, together with accrued interest to the redemption date, without premium.
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than 20 nor more than 45 days prior to the redemption date by first
class mail, postage prepaid, to the addresses set forth in the registration books. Notwithstanding the
foregoing, so long as the Authority or the Authority Trustee on the Authority's behalf is the
registered owner of the Bonds, no such notices need be provided. Neither a failure of the Registered
Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings
for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest
on the specified redemption date; provided that funds for the redemption are on deposit with the
Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights
except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both
principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the
absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any
integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of
other authorized denominations of the same issue and maturity, all as more fully set forth in the
Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or
denominations for the same aggregate principal amount of the same issue and maturity will be issued
to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of (i) any Bonds for
a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds
chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be
amended at any time, and in certain cases without notice to or the consent of the registered owners, to
the extent and upon the terms provided in the Indenture.
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THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF TUSTIN OR
OF THE DISTRICT FOR WHICH THE CITY OF TUSTIN OR THE DISTRICT IS OBLIGATED
TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES,
OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED
OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL
TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A
DEBT OF THE CITY OF TUSTIN, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as required by
law, and that the amount of this Bond, together with all other indebtedness of the District, does not
exceed any debt limit prescribed by the laws or Constitution of the State of California.
IN WITNESS WHEREOF, Community Facilities District No. 06-1 of the City of Tustin
(Tustin Legacy/Columbus Villages) has caused this Bond to be dated as of , 2025, to be signed
on behalf of the District by the Mayor by his facsimile signature and attested by the facsimile
signature of the City Clerk.
Mayor of the City of Tustin
ATTEST:
City Clerk of the City of Tustin
[FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within -defined Indenture.
Dated: , 2025 The Bank of New York Mellon Trust Company, N.A.,
as Trustee
M.
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth
LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the
Bonds. A signed copy is on file in my office.
City Clerk of the City of Tustin
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is
the within -mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same on the books of the Trustee with full power of substitution in the
premises.
Dated:
Signature guaranteed:
NOTE: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Trustee.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any change
whatsoever.
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Stradling Draft of 05-2-25
BONDINDENTURE
Between
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
SPECIAL TAX REFUNDING BONDS, SERIES 2025
Dated as of June 1, 2025
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Section 1.1. Definitions
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 2.7.
Section 2.8.
Section 2.9.
Section 2.10
Section 2.11
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
Section 3.7.
Section 3.8.
Table of Contents
ARTICLE I
DEFINITIONS
ARTICLE 11
GENERAL AUTHORIZATION AND BOND TERMS
Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds ....
Type and Nature of Bonds and Parity Bonds ........................................
Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes
Description of Bonds; Interest Rates ....................................................
Place and Form of Payment..................................................................
Form of Bonds and Parity Bonds..........................................................
Execution and Authentication...............................................................
BondRegister........................................................................................
Registration of Exchange or Transfer ...................................................
Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ...............
Validity of Bonds and Parity Bonds .....................................................
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Page
2
10
10
11
12
13
13
14
14
14
15
15
Creation of Funds; Application of Proceeds............................................................... 16
Deposits to and Disbursements from Special Tax Fund ............................................. 16
Administrative Expense Fund.....................................................................................17
Interest Account and Principal Account of the Special Tax Fund .............................. 18
Reserve Account of the Special Tax Fund..................................................................18
Redemption Account of the Special Tax Fund...........................................................19
SurplusFund............................................................................................................... 20
Investments................................................................................................................. 20
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds ......................................................
Section 4.2. Selection of Bonds and Parity Bonds for Redemption ....
Section 4.3. Notice of Redemption......................................................
Section 4.4. Partial Redemption of Bonds or Parity Bonds .................
Section 4.5. Effect of Notice and Availability of Redemption Money
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty.
Section 5.2. Covenants
22
23
24
25
25
26
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Table of Contents
(continued)
Page
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent ................... 30
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent .......................... 30
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity
Bonds.......................................................................................................................... 31
Section 6.4. Reliance on Opinion................................................................................................... 32
ARTICLE VII
TRUSTEE
Section7.1.
Trustee.........................................................................................................................
32
Section 7.2.
Removal of Trustee.....................................................................................................
33
Section 7.3.
Resignation of Trustee................................................................................................
33
Section 7.4.
Liability of Trustee.....................................................................................................
33
Section 7.5.
Merger or Consolidation.............................................................................................
37
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default........................................................................................................ 37
Section8.2. Remedies of Owners................................................................................................... 38
Section 8.3. Application of Revenues and Other Funds After Default ........................................... 39
Section 8.4. Control by Bond Insurer Upon Default....................................................................... 39
Section 8.5. Appointment of Receivers.......................................................................................... 40
Section8.6. Non-Waiver.................................................................................................................40
Section 8.7. Limitations on Rights and Remedies of Owners........................................................ 40
Section 8.8. Termination of Proceedings........................................................................................ 41
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section9.1. Defeasance.................................................................................................................. 41
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness................................................................................................................ 43
ARTICLE X
MISCELLANEOUS
Section 10.1.
Cancellation of Bonds and Parity Bonds....................................................................
45
Section 10.2.
Execution of Documents and Proof of Ownership.....................................................
45
Section 10.3.
Unclaimed Moneys.....................................................................................................
45
Section 10.4.
Provisions Constitute Contract....................................................................................46
Section 10.5.
[INSURER PROVISIONS TO COME].....................................................................
46
Section 10.6.
Future Contracts..........................................................................................................46
Section 10.7.
Further Assurances......................................................................................................
46
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Table of Contents
(continued)
Page
Section 10.8. Entire Agreement; Severability...................................................................................46
Section10.9. Notices........................................................................................................................ 47
SignaturePage................................................................................................................................... S-1
EXHIBIT A FORM OF 2025 SPECIAL TAX REFUNDING BOND.........................................A-1
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BONDINDENTURE
THIS BOND INDENTURE dated as of June 1, 2025 (the "Indenture"), is made and entered
into by City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific)
and The Bank of New York Mellon Trust Company, N.A., as trustee, and governs the terms of the
City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special
Tax Refunding Bonds, Series 2025 and any Parity Bonds issued in accordance herewith from time to
time.
RECITALS:
WHEREAS, the City Council of the City of Tustin, located in Orange County, California
(hereinafter sometimes referred to as the "legislative body of the District"), has heretofore
undertaken proceedings to form City of Tustin Community Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific) (the "District") pursuant to the terms and provisions of the Mello -Roos
Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the
Government Code of the State of California (the "Act"); and
WHEREAS, the District has previously issued its Prior Bonds (as defined herein) to finance
certain infrastructure improvements and school facilities authorized to be funded by the District; and
WHEREAS, on [May 20], 2025, the legislative body of the District adopted Resolution
No. (the "Resolution") authorizing the issuance and sale of special tax bonds for the District
pursuant to this Indenture designated as the "City of Tustin Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific) Special Tax Refunding Bonds, Series 2025" (the "Bonds"); and
WHEREAS, it is in the public interest and for the benefit of the District, the persons
responsible for the payment of special taxes and the owners of the Bonds that the District enter into
this Indenture to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds,
the disposition of the special taxes securing the bonds, and the administration and payment of the
Bonds; and
WHEREAS, all things necessary to cause the Bonds, when authenticated by the Trustee and
issued as provided in the Act, the Resolution and this Indenture, to be legal, valid and binding and
limited obligations in accordance with their terms, and all things necessary to cause the creation,
authorization, execution and delivery of this Indenture and the creation, authorization, execution and
issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to
which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants
contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for
other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby
covenant and agree, for the benefit of the Owners of the Bonds as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
"Account" means any account created pursuant to this Indenture.
"Act" means the Mello -Roos Community Facilities Act of 1982, as amended, Sections 53311
et seq. of the California Government Code.
"Additional Reserve Policy" means a letter of credit, insurance policy, surety bond or other
such funding instrument other than the Reserve Policy which is approved by the Bond Insurer and
delivered to the Authority Trustee for the purpose of providing a portion of any reserve requirement
for Authority Bonds.
"Administrative Expenses" means the administrative costs with respect to the calculation and
collection of the Special Taxes, including all attorneys' fees and other costs related thereto, the fees
and expenses of the Trustee, any fees and related costs for credit enhancement for Bonds or which
are not otherwise paid as Costs of Issuance, any costs related to the District's compliance with state
and federal laws requiring continuing disclosure of information concerning the Bonds, the District,
and any other costs otherwise incurred by the City on behalf of the District in order to carry out the
purposes of the District as set forth in the Ordinance and any obligation of the District hereunder.
Administrative Expenses shall also include the administrative costs with respect to the collection of
Delinquency Proceeds.
"Administrative Expense Fund" means the fund by that name created and established
pursuant to Section 3.1 hereof.
"Administrative Expense Requirement" means $36,569.83, provided that at its option, the
District may establish the Administrative Expense Requirement for any Bond Year subsequent to the
initial Bond Year at any amount larger than $36,569.83 that is not in excess of 102% of the
Administrative Expense Requirement applicable in the immediately preceding Bond Year.
"Annual Debt Service" means the principal amount of any Outstanding Bonds or Parity
Bonds payable in a Bond Year either at maturity and any interest payable on any Outstanding Bonds
or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled.
"Authority" means the Tustin Financing Authority.
"Authority Bonds" means any bonds outstanding under the Authority Indenture, which are
secured in part by payments made on the Bonds and which may be secured in part by any Parity
Bonds.
"Authority Indenture" means that certain Indenture of Trust, dated as of June 1, 2025, by and
between the Authority and the Authority Trustee, pursuant to which the Authority Bonds are issued.
"Authority Trustee" means The Bank of New York Mellon Trust Company, N.A. or any
successor thereto appointed pursuant to the Authority Indenture.
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"Authorized Investments" means any of the following investments, if and to the extent the
same are at the time legal for investment of the District's funds (the Trustee is entitled to rely upon
investment direction from the District as a certification that such investment is an Authorized
Investment):
1. (a) Direct obligations (other than an obligation subject to variation in
principal repayment) of the United States of America ("United States Treasury Obligations"),
(b) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America, (c) obligations fully and unconditionally guaranteed
as to timely payment of principal and interest by any agency or instrumentality of the United
States of America when such obligations are backed by the full faith and credit of the United
States of America, or (d) evidences of ownership of proportionate interests in future interest
and principal payments on obligations described above held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has the
right to proceed directly and individually against the obligor and the underlying government
obligations are not available to any person claiming through the custodian or to whom the
custodian may be obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government -sponsored agencies which are not
backed by the full faith and credit of the United States of America:
(a)
(b)
(c)
(d)
(e)
Federal Home Loan Mortgage Corporation (FHLMC)
(i) Participation certificates (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
(ii) Senior Debt obligations
Farm Credit Banks (formerly: Federal Land Banks, Federal
(i) Intermediate Credit Banks and Banks for Cooperatives)
(ii) Consolidated system -wide bonds and notes
Federal Home Loan Banks (FHL Banks)
(i) Consolidated debt obligations
Federal National Mortgage Association (FNMA)
(i) Senior debt obligations
(ii) Mortgage -backed securities (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
Financing Corporation (FICO)
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(i) Debt obligations
(f) Resolution Funding Corporation (REFCORP)
(i) Debt obligations
4. Unsecured certificates of deposit, time deposits, demand deposits, including
interest bearing money market accounts, trust funds, trust accounts, overnight bank deposits,
interest -bearing deposits, other deposit products, certificates of deposit, including those
placed by a third party, or bankers acceptances of depository institutions, including the
Trustee or any of its affiliates, and bankers' acceptances (having maturities of not more than
30 days) of any bank (including the Trustee and any affiliate) the short-term obligations of
which are rated "A- I" or better by Standard & Poor's.
5. Deposits the aggregate amount of which are fully insured by the Federal
Deposit Insurance Corporation (FDIC), in banks (including the Trustee and any affiliate)
which have capital and surplus of at least $5 million.
6. Commercial paper (having original maturities of not more than 270 days rated
"A-1+" by Standard & Poor's and "Prime-1" by Moody's.
7. Money market mutual funds having a rating in the highest investment
category granted thereby from S&P or Moody's (including those for which the Trustee or it
affiliate received and retains a fee for services provided to the fund, whether as a custodian,
transfer agent, investment advisor or otherwise).
8. "State Obligations," which means:
(a) Direct general obligations of any state of the United States of
America or any subdivision or agency thereof to which is pledged the full faith and
credit of a state the unsecured general obligation debt of which is rated "A3" by
Moody's and "A" by Standard & Poor's, or better, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose unsecured
general obligation debt is so rated.
(b) Direct general short-term obligations of any state agency or
subdivision or agency thereof described in (A) above and rated "A-1+" by Standard
& Poor's and "Prime -I" by Moody's.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency or subdivision described in (A) above and rated
"AA" or better by Standard & Poor's and "Aa" or better by Moody's.
9. Pre -refunded municipal obligations rated "AAA" by Standard & Poor's and
"Aaa" by Moody's meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to
maturity or (2) the paying agent for the municipal obligations has been given
irrevocable instructions concerning their call and redemption and the issuer of the
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municipal obligations has covenanted not to redeem such municipal obligations other
than as set forth in such instructions;
(b) the municipal obligations are secured by cash or United States
Treasury Obligations which may be applied only to payment of the principal of,
interest and premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations
(plus any cash in the escrow) has been verified by the report of independent certified
public accountants to be sufficient to pay in full all principal of, interest, and
premium, if any, due and to become due on the municipal obligations
("Verification");
(d) the cash or United States Treasury Obligations serving as security for
the municipal obligations are held by an escrow agent or paying agent in trust for
owners of the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be
permitted except with another United States Treasury Obligation and upon delivery
of a new Verification; and
(f) the cash or United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the paying agent or escrow
agent.
10. Repurchase agreements:
With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt
of which is rated at least "A" by Standard & Poor's and Moody's; or (2) any broker -dealer
with "retail customers" or a related affiliate thereof which broker -dealer has, or the parent
company (which guarantees the provider) of which has, long-term debt rated at least "A" by
Standard & Poor's and Moody's, which broker -dealer falls under the jurisdiction of the
Securities Investors Protection Corporation; or (3) any other entity rated "A" or better by
Standard & Poor's and Moody's, provided that:
(a) The market value of the collateral is maintained at levels equal to
104% of the amount of cash transferred by the Trustee or the District to the provider
of the repurchase agreement plus accrued interest with the collateral being valued
weekly and marked -to -market at one current market price plus accrued interest;
(b) The Trustee or a third parry acting solely as agent therefor or for the
District (the "Holder of the Collateral") has possession of the collateral or the
collateral has been transferred to the Holder of the Collateral in accordance with
applicable state and federal laws (other than by means of entries on the transferor's
books);
(c) The repurchase agreement shall state and an opinion of counsel shall
be rendered at the time such collateral is delivered that the Holder of the Collateral
has a perfected first priority security interest in the collateral, any substituted
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collateral and all proceeds thereof (in the case of bearer securities, this means the
Holder of the Collateral is in possession);
(d) The repurchase agreement shall provide that if during its term the
provider's rating by either Moody's or Standard & Poor's is withdrawn or suspended
or falls below "A" by Standard & Poor's or "A3" by Moody's, as appropriate, the
provider must, at the direction of Trustee or the District, within 10 days of receipt of
such direction, repurchase all collateral and terminate the agreement, with no penalty
or premium to the Trustee or the District.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less
(with no evergreen provision), collateral levels need not be as specified in (a) above, so long
as such collateral levels are 103% or better and the provider is rated at least "A" by Standard
& Poor's and Moody's, respectively.
11. Investment agreements, including guaranteed investment contracts,
repurchase agreements and forward delivery agreements, that are obligations of an entity
rated, or whose obligations are rated, or guaranteed by an entity which is rated or whose
obligations are rated, (at the time the investment is entered into) not lower than "A-" by S&P
or Fitch, or "A3" by Moody's.
12. The State of California Local Agency Investment Fund.
"Authorized Representative of the City" means the means the Mayor, City Manager, the
Assistant City Manager, the Finance Director, or City Clerk of the City, or any other officer or
employee authorized by the City Council of the City or by an Authorized Officer to undertake the
action referenced in this Agreement as required to be undertaken by an Authorized Representative of
the City.
"Bond Counsel" means an attorney at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds
issued by states and their political subdivisions duly admitted to the practice of law before the highest
court of any state of the United States of America or the District of Columbia.
"Bond Insurer" means any municipal bond insurance company providing bond insurance
under the Authority Indenture.
"Bond Register" means the books which the Trustee shall keep or cause to be kept on which
the registration and transfer of the Bonds and any Parity Bonds shall be recorded.
"Bond Year" means the twelve month period commencing on September 1 of each year and
ending on September 1 of the following year, except that the first Bond Year for the Bonds or an
issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not
more than 12 months after the Delivery Date.
"Bondowner" or "Owner" means the person or persons in whose name or names any Bond or
Parity Bond is registered.
"Bonds" means the $ City of Tustin Community Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific) Special Tax Refunding Bonds, Series 2025.
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"Business Day" means a day which is not a Saturday or Sunday or a day of the year on which
banks or trust companies in New York, New York, Wilmington, Delaware, Los Angeles, California,
or the city where the corporate trust office of the Trustee is located, are not required or authorized by
law, regulation or executive order to close or to remain closed.
"Certificate of an Authorized Representative" means a written certificate or warrant request
executed by an Authorized Representative of the City.
"CFD No. 2014-1 Reserve Account" means the account by that name established by the
Authority Indenture.
"City" means the City of Tustin, County of Orange, California.
"City Council" means the City Council of the City.
"Code" means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings,
judicial decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Service interpreting and construing it.
"Costs of Issuance" shall have the meaning set forth in the Authority Indenture.
"Defeasance Securities" means any direct, noncallable general obligations of the United
States of America (including obligations issued or held in book -entry form on the books of the
Department of the Treasury of the United States of America), or noncallable obligations the timely
payment of principal of and interest on which are fully and unconditionally guaranteed by the United
States of America.
"Delinquency Proceeds" means the amounts collected from the redemption of delinquent
Special Taxes and from the sale of property sold as a result of the foreclosure of the lien of the
Special Tax resulting from the delinquency in the payment of Special Taxes due and payable on such
property.
"Delivery Date" means, with respect to the Bonds and each issue of Parity Bonds, the date on
which the bonds of such issue were issued and delivered to the initial purchasers thereof.
"District" means City of Tustin Community Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific) established pursuant to the Act and the Ordinance.
"Escrow Agent" means The Bank of New York Mellon Trust Company, N.A., acting as
escrow agent pursuant to the Escrow Agreement.
"Escrow Agreement" means that Escrow Agreement, dated as of June 1, 2025, between the
District and the Escrow Agent relating to the defeasance and refunding of the Prior Bonds.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
following June 30.
"Gross Special Taxes" means the amount of all Special Taxes received by the District,
together with the proceeds collected from the sale of property pursuant to the foreclosure provisions
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of this Indenture for the delinquency of such Special Taxes remaining after the payment of all costs
related to such foreclosure actions.
"Independent Financial Consultant" means a financial consultant or firm of such consultants
generally recognized to be well qualified in the financial consulting field, appointed and paid by the
District, who, or each of whom:
(1) is in fact independent and not under the domination of the District or the City;
(2) does not have any substantial interest, direct or indirect, in the District or the
City; and
(3) is not connected with the District or the City as a member, officer or
employee of the District or the City, but who may be regularly retained to make annual or other
reports to the District or the City.
"Indenture" means this Bond Indenture, together with any Supplemental Indenture approved
pursuant to Article 6 hereof.
"Insurance Policy" or "Policy" means the insurance policy issued by the Bond Insurer
guaranteeing the scheduled payment of principal of and interest on the Authority Bonds when due.
"Interest Payment Date" means each March 1 and September 1, commencing [September 1,
2025], and the final maturity date of the Bonds; provided, however, that, if any such day is not a
Business Day, interest up to the Interest Payment Date, and in the case of the final Interest Payment
Date to and including such date, will be paid on the Business Day next preceding such date.
"Maximum Special Tax" has the meaning ascribed to it in the Rate and Method of
Apportionment.
"Moody's" means Moody's Investors Service, its successors and assigns.
"Net Special Taxes" means Gross Special Taxes minus amounts set aside to pay
Administrative Expenses.
"Ordinance" means Ordinance No. 1445 adopted by the legislative body of the District on
July 1, 2014, providing for the levying of the Special Tax.
"Outstanding" or "Outstanding Bonds and Parity Bonds" means all Bonds and Parity Bonds
theretofore issued by the District, except:
(1) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation
in accordance with Section 10.1 hereof;
(2) Bonds and Parity Bonds for payment or redemption of which moneys shall
have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date
of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been given as provided in this
Indenture or any applicable Supplemental Indenture for Parity Bonds; and
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(3) Bonds and Parity Bonds which have been surrendered to the Trustee for
transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued
pursuant to Section 2.10 hereof.
"Parity Bonds" mean bonds or other securities issued by the District and secured by a lien on
the Net Special Taxes which is on parity with the lien thereon securing the Bonds.
"Person" means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
"Policy Costs" means repayment of all amounts due under the Reserve Policy and all
amounts due with respect to any Additional Reserve Policy resulting from a failure by the District to
pay the principal of and interest on the Bonds when due.
"Prepayments" means any amounts paid by the District to the Trustee and designated by the
District as a prepayment of Special Taxes for one or more parcels in the District made in accordance
with the Rate and Method of Apportionment.
"Principal Office of the Trustee" means the principal corporate trust office of the Trustee in
Los Angeles, California, provided that for purposes of payment, redemption, exchange, transfer,
surrender and cancellation of Bonds and Parity Bonds, such term means the principal corporate trust
office of the Trustee in Los Angeles, California, or such other office as the Trustee may from time to
time designate in writing to the District and the Owners.
"Prior Bonds" means the District's Special Tax Bonds, Series 2015A currently outstanding in
the aggregate principal amount of $[24,495,000].
"Prior Indenture of Trust" means the Indenture of Trust dated as of November 1, 2015 by and
between the Prior Trustee and the District.
"Prior Trustee" means The Bank of New York Mellon Trust Company, N.A., as trustee under
the Prior Indenture of Trust.
"Project" means those public facilities described in the Ordinance, which have been acquired
or constructed within and outside of the District, including all engineering, planning and design
services and other incidental expenses related to such facilities and other facilities, if any, authorized
by the qualified electors within the District from time to time.
"Proportionate Share" means, as of the date of calculation, the portion of the reserve
requirement required under the Authority Indenture to be on deposit in the CFD No. 2014-1 Reserve
Account of the Reserve Fund, including any proportionate share of any Policy Costs.
"Rate and Method of Apportionment" means that certain Rate and Method of Apportionment
of Special Tax approved pursuant to the Ordinance, as may be amended in accordance with the Act
and this Indenture.
"Rating Agency" means Moody's and Standard & Poor's, or both, as the context requires.
"Record Date" means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
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"Regulations" means the regulations adopted or proposed by the Department of Treasury
from time to time with respect to obligations issued pursuant to Section 103 of the Code.
hereof.
"Reserve Account" means the account by that name established pursuant to Section 3.1
"Reserve Fund" means the fund by that name established by the Authority Indenture.
"Reserve Policy" means the municipal bond debt service reserve insurance policy issued by
the Bond Insurer on the date of issuance of the Bonds representing 50% of the reserve requirement
established under the Authority Indenture.
"Reserve Requirement" means zero with respect to the Bonds and with respect to any Parity
Bonds the amount established by the District on the Delivery Date of such Parity Bonds.
"Special Tax Fund" means the fund by that name created and established pursuant to
Section 3.1 hereof.
"Special Taxes" means the taxes authorized to be levied by the District on property within
the District in accordance with the Ordinance, the Act and the voter approval obtained at the June 17,
2014 election in the District.
"Standard & Poor's" means S&P Global Ratings, a Standard & Poor's Financial Services
LLC business, its successors and assigns.
"Supplemental Indenture" means any supplemental indenture amending or supplementing
this Indenture.
"Surplus Fund" means the fund by that name created and established pursuant to Section 3.1
hereof.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., a national banking
association duly organized and existing under the laws of the United States of America, at its
principal corporate trust office in Los Angeles, California, and its successors or assigns, or any other
bank, association or trust company which may at any time be substituted in its place as provided in
Sections 7.2 or 7.3 and any successor thereto.
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds.
Under and pursuant to the Act, the Bonds in the aggregate principal amount of $ shall be
issued for the purposes of (a) refunding and defeasing the Prior Bonds, (b) utilizing a portion of the
debt service saving achieved through the issuance of the Bonds to finance the Project, and
(c) funding the District's share of the Costs of Issuance.
Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit
nor the taxing power of the City, the State of California or any political subdivision thereof other
than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net
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Special Taxes, no other taxes are pledged to the payment of the Bonds and Parity Bonds. The Bonds
and any Parity Bonds are not general or special obligations of the City nor general obligations of the
District, but are limited obligations of the District payable solely from certain amounts deposited by
the District in the Special Tax Fund, as more fully described herein. The District's limited obligation
to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from
amounts in the Special Tax Fund is absolute and unconditional, free of deductions and without any
abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any
Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the
Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on
the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of
the City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal
or equitable pledge, charge, lien, or encumbrance upon any of the District's property, or upon any of
its income, receipts or revenues, except the Net Special Taxes and other amounts in the Special Tax
Fund which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds
and interest thereon and neither the members of the legislative body of the District or the City
Council nor any persons executing the Bonds are liable personally on the Bonds by reason of their
issuance.
Notwithstanding anything to the contrary contained in this Indenture, the District shall not be
required to advance any money derived from any source of income other than the Net Special Taxes
for the payment of the interest on or the principal of or premium on the Bonds or any Parity Bonds,
or for the performance of any covenants contained herein. The District may, however, advance funds
for any such purpose, provided that such funds are derived from a source legally available for such
purpose.
Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes.
Subject only to the provisions of this Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth herein, in order to secure the payment of the principal of
and interest on the Bonds and any Parity Bonds in accordance with their terms, the provisions of this
Indenture and the Act, the District hereby pledges to the Owners, and grants thereto a lien on and a
security interest in, all of the Net Special Taxes and any other amounts held in the Special Tax Fund.
Said pledge shall constitute a first lien on and security interest in such assets, which shall
immediately attach to such assets and be effective, binding and enforceable against the District, its
successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the
extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have
notice of the pledge of, lien on and security interest in such assets and without the need for any
physical delivery, recordation, filing or further act. Pursuant to the Act and this Indenture, the Bonds
and any Parity Bonds shall be equally payable from the Net Special Taxes and other amounts in the
Special Tax Fund, without priority for number, date of the Bonds or Parity Bonds, date of sale, date
of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and
any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the
Net Special Taxes and other amounts in the Special Tax Fund, which are hereby set aside for the
payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund shall constitute a
trust fund held for the benefit of the Owners to be applied to the payment of the interest on and
principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or
interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by
this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this
Indenture to the contrary, Net Special Taxes deposited in the Surplus Fund shall no longer be
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considered to be pledged to the Bonds or any Parity Bonds, and none of the Surplus Fund or the
Administrative Expense Fund shall be construed as a trust fund held for the benefit of the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude; (a) subject to the
limitations herein, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and
redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued
under the Act as the same now exists or as hereafter amended, or under any other law of the State of
California; or (b) the issuance, subject to the limitations contained herein, of Parity Bonds which
shall be payable from Net Special Taxes.
Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds
shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.
The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.
The Bonds shall be designated "CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO. 2014-1 (TUSTIN LEGACY/STANDARD PACIFIC) SPECIAL TAX REFUNDING BONDS,
SERIES 2025." The Bonds shall be dated as of their Delivery Date and shall mature and be payable
on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall
bear interest at the rates set forth in the table below payable on September 1, 2025 and each Interest
Payment Date thereafter:
Maturity Date
(September 1) Principal Amount Interest Rate
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
Interest shall be payable on each Bond and Parity Bond from the date established in
accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum
of that Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any
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Bond funds are available for the payment or redemption thereof in full, in accordance with the terms
of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the
Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve
30-day months.
Section 2.5. Place and Form of Payment. The Bonds and Parity Bonds shall be payable
both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful
money of the United States of America. The principal of the Bonds and Parity Bonds and any
premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof
at the Principal Office of the Trustee, or at the designated office of any successor Trustee; provided
that so long as the Authority or the Authority Trustee on its behalf is the registered owner of all the
Bonds, such presentment is not required. Interest on any Bond shall be payable from the Interest
Payment Date next preceding the date of authentication of that Bond, unless (i) such date of
authentication is an Interest Payment Date in which event interest shall be payable from such date of
authentication, (ii) the date of authentication is after a Record Date but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment
Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to
the close of business on the first Record Date occurring after the issuance of such Bond or Parity
Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond;
provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in
default, interest on that Bond or Parity Bond shall be payable from the last Interest Payment Date to
which the interest has been paid or made available for payment or, if no interest has been paid or
made available for payment on that Bond or Parity Bond, interest on that Bond or Parity Bond shall
be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person
whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the
close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed on
the applicable Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or
her address as it appears on the Bond Register. In addition, upon a request in writing received by the
Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal
amount of the Bonds, payment shall be made on the Interest Payment Date by wire transfer in
immediately available funds to an account designated by such Owner.
Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds shall be
typewritten. The Bonds and the certificate of authentication shall be substantially in the form
attached hereto as Exhibit A, which forms are hereby approved and adopted as the forms of such
Bonds and any Parity Bonds and of the certificate of authentication.
Notwithstanding any provision in this Indenture to the contrary, the District may, in its sole
discretion, elect to issue the Bonds and any Parity Bonds in book entry form.
Until definitive Bonds or Parity Bonds shall be prepared, the District may cause to be
executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed,
printed, lithographed or engraved form and in fully registered form, subject to the same provisions,
limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except
that they may be in any denominations authorized by the District. Until exchanged for definitive
Bonds or Parity Bonds, any temporary bond shall be entitled and subject to the same benefits and
provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary
Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without
unnecessary delay and thereupon any temporary Bond or Parity Bond may be surrendered to the
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Trustee at its office, without expense to the Owner, in exchange for a definitive Bond or Parity Bond
of the same issue, maturity, interest rate and principal amount in any authorized denomination. All
temporary Bonds and Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be
reissued.
Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed
on behalf of the District by the manual or facsimile signature of the Mayor of the City and by the
manual or facsimile signature of the City Clerk, or any duly appointed deputy clerk, in their capacity
as officers of the District. In case any one or more of the officers who shall have signed or sealed
any of the Bonds or Parity Bonds shall cease to be such officer before the Bonds or Parity Bonds so
signed and sealed have been authenticated and delivered by the Trustee (including new Bonds or
Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange
of Bonds or Parity Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds or Parity
Bonds shall nevertheless be valid and may be authenticated and delivered as herein provided, and
may be issued as if the person who signed or sealed such Bonds had not ceased to hold such office.
Only the Bonds or Parity Bonds as shall bear thereon such certificate of authentication in the
form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this
Indenture, and no Bond or Parity Bond shall be valid or obligatory for any purpose until such
certificate of authentication shall have been duly executed by the Trustee.
Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office,
sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon
reasonable prior written notice be open to inspection by the District during all regular business hours,
and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the
Trustee shall, under such reasonable regulations as it may prescribe, with reasonable notice, register
or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as herein
provided.
The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name
appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all
purposes, and the District and the Trustee shall not be affected by any notice to the contrary. The
District and the Trustee may rely on the address of the Bondowner as it appears in the Bond Register
for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Trustee
of any change in the Bondowner's address so that the Bond Register may be revised accordingly.
Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth
in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its
terms, be transferred upon the Bond Register by the person in whose name it is registered, in person
or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for
cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in
a form acceptable to the Trustee and duly executed by the Bondowner or his or her duly authorized
attorney.
The transferor shall also provide or cause to be provided to the Trustee all information
necessary to allow the Trustee to comply with any applicable tax reporting obligations, including
without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045.
The Trustee may rely on the information provided to it and shall have no responsibility to verify or
ensure the accuracy of such information.
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Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate
principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity
and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond
issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or
transfer to pay any tax or other governmental charge required to be paid with respect to such
exchange or transfer. The cost of printing Bonds and any services rendered or expenses incurred by
the Trustee in connection with any transfer or exchange shall be paid by the District. Whenever any
Bonds or Parity Bonds shall be surrendered for registration of transfer or exchange, the District shall
execute and the Trustee shall authenticate and deliver a new Bond or Bonds or a new Parity Bond or
Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount;
provided that the Trustee shall not be required to register transfers or make exchanges of (i) Bonds or
Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be
redeemed, or (ii) any Bonds or Parity Bonds chosen for redemption.
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond
or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate
and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and
substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the
Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the
Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity
Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted
to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to
the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver, a
new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the
Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or
stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated,
lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all
other Bonds or Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or
Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of
determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated
and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds
Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as
one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new
Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the
Trustee may make payment with respect to such Bonds or Parity Bonds
Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and
issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any
proceedings taken by the District for the refunding of the Prior Bonds, and the recital contained in the
Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of
the State shall be conclusive evidence of their validity and of the regularity of their issuance.
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ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds.
(a) There is hereby created and established and shall be maintained by the
Trustee the following funds and accounts:
(1) The Community Facilities District No. 2014-1 Special Tax Fund (the
"Special Tax Fund") (in which there shall be established and created an Interest Account, a Principal
Account, a Reserve Account and a Redemption Account);
(2) The Community Facilities District No. 2014-1 Administrative
Expense Fund (the "Administrative Expense Fund"); and
(3) The Community Facilities District No.2014-1 Surplus Fund (the
"Surplus Fund")
The amounts on deposit in the foregoing funds and accounts shall be held by the Trustee on
behalf of the District and shall be invested and disbursed in accordance with the provisions of this
Article 3. The investment earnings thereon shall be disbursed in accordance with the provisions of
Section 3.8 hereof.
(b) Proceeds from the sale of the Bonds in the amount of $ (which amount
is net of $ paid or retained by the Authority Trustee to pay the District's share of the Costs of
Issuance (as defined in the Authority Indenture), net of $ representing the District's share of
the underwriter's discount and net of $ retained by the Authority Trustee as the cash -funded
portion of the District's Proportionate Share of the Reserve Fund), shall be received by the Trustee
and transferred to the Escrow Agent for deposit in the escrow fund created under the Escrow
Agreement; and
(c) The Trustee may, in its discretion, establish a temporary fund or account in its
books and records to facilitate such transfers.
Section 3.2. Deposits to and Disbursements from Special Tax Fund.
(a) The Trustee shall deposit Gross Special Taxes representing Delinquency
Proceeds as follows:
(1) the amount specified by the District as representing past due interest
on the Bonds shall be deposited to the Interest Account of the Special Tax Fund; and
(2) the amount specified by the District as representing past due principal
of the Bonds shall be deposited to the Principal Account of the Special Tax Fund.
(b) Except for the portion of any Prepayment to be deposited to the Redemption
Account, the District shall, as soon as practicable transfer the Special Taxes received by the District
to the Trustee for deposit in the Special Tax Fund to be held by the Trustee in trust for the Owners.
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The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in
the amounts set forth in the following Sections, in the following order of priority, to:
(1) the Administrative Expense Fund an amount equal to the
Administrative Expense Requirement or, if the Trustee receives written direction from the District to
transfer a lesser amount, then such lesser amount, provided that not more than one-half of the
Administrative Expense Requirement shall be so transferred in any Fiscal Year prior to the date on
which the balance on deposit in the Interest Account of the Special Tax Fund is at least equal to the
interest payable on the Bonds on March 1;
(2) the Interest Account of the Special Tax Fund the amount necessary to
cause the balance on deposit therein to be equal to the interest on the Bonds and any Parity Bonds
payable on the next succeeding Interest Payment Date;
(3) the Principal Account of the Special Tax Fund the amount necessary
to cause the balance on deposit therein to be equal to the principal amount of the Bonds and any
Parity Bonds; provided that not more than one-half of the principal amount shall be deposited in the
Principal Account prior to March 1 until (i) the balance on deposit in the Administrative Expense
Fund equals the Administrative Expense Requirement, or such lesser amount directed by the District
in writing to the Trustee, and (ii) the balance on deposit in the Interest Account equals the interest
payable on the Bonds and any Parity Bonds through September 1;
(4) the Reserve Account the amounts necessary to fund and pay the
amounts as set forth in Section 3.5 hereof,
(5) the Redemption Account of the Special Tax Fund; and
(6) the Surplus Fund.
At least ten (10) Business Days prior to each Interest Payment Date, the Trustee shall notify
the District in writing the amount of Special Taxes required to pay the principal of and interest on the
Bonds and any Parity Bonds on the next succeeding Interest Payment Date and the amount necessary
to cause the balance on deposit in the CFD No. 2014-1 Reserve Account to equal the District's
Proportionate Share of the Reserve Requirement and to cause the balance in the Reserve Account to
equal the Reserve Requirement, if any. The Trustee shall notify the Authority Trustee at least five
(5) Business Days prior to each Interest Payment Date if there is not on deposit with the Trustee,
after making all of the transfers required hereunder, moneys sufficient to pay the principal of and
interest on the Bonds and any Parity Bonds.
Section 3.3. Administrative Expense Fund. The Trustee shall transfer from the first
available Special Taxes in the Special Tax Fund to the Administrative Expense Fund an amount such
that the total amounts so transferred in any Bond Year do not exceed the Administrative Expense
Requirement. In the event Administrative Expenses exceed the Administrative Expense
Requirement in any Bond Year, the total amount transferred in a Bond Year shall not exceed the
Administrative Expense Requirement until such time as there has been deposited to the Interest
Account and the Principal Account an amount, together with any amounts already on deposit therein,
that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond
Year, to restore the Reserve Account to the Reserve Requirement and to restore the CFD No. 2014-1
Reserve Account to the Proportionate Share. Notwithstanding the foregoing, at the direction of the
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District, amounts in excess of the Administrative Expense Requirement may be transferred to the
Administrative Expense Fund prior to the transfers to the Interest Account, the Principal Account and
the Redemption Account pursuant to Sections 3.4 and 3.5 below to the extent necessary to collect
delinquent Special Taxes. Following the required transfers pursuant to Sections 3.4 and 3.5 below of
amounts sufficient to pay the interest and principal on all Bonds and Parity Bonds due in a Bond
Year, to restore the Reserve Account to the Reserve Requirement and to restore the CFD No. 2014-1
Reserve Account to the Proportionate Share, an Authorized Representative of the City may direct the
Trustee, in writing, to transfer additional amounts from the Special Tax Fund to the Administrative
Expense Fund. Moneys in the Administrative Expense Fund may be held uninvested or invested in
any Authorized Investments.
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal
due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest
Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of
principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the
transfer required by Section 3.3, at least five Business Days prior to each March 1 and September 1,
the Trustee shall make the following transfers from the Special Tax Fund first to the Interest Account
and then to the Principal Account; provided, however, that to the extent that deposits have been made
in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the
Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made. At
least fifteen (15) days prior to an Interest Payment Date, the Trustee shall notify the Authority and
the Authority Trustee if there are insufficient funds to provide for the payment of principal and
interest due on the Bonds and any Parity Bonds on such Interest Payment Date.
Section 3.5. Reserve Account of the Special Tax Fund. After making the deposits
required by Section 3.4 above, the Trustee shall next transfer to the Reserve Account the amount, if
any, necessary to (i) pay Policy Costs with respect to the Reserve Policy then due and payable, (ii)
pay Policy Costs with respect to any Additional Reserve Policy then due and payable, and (iii) cause
the amount in the Reserve Account, taking into account the amounts then on deposit in the Reserve
Account, to be equal to the Reserve Requirement. Amounts deposited to the Reserve Account to pay
any Policy Costs due under the Reserve Policy or under any Additional Reserve Policy held by the
Authority Trustee shall be transferred by the Trustee to the Authority Trustee to be applied in
accordance with the Authority Indenture, and amounts deposited to the Reserve Account to pay
Policy Costs with respect to any other Additional Reserve Policy shall be disbursed by the Trustee to
the provider of such Additional Reserve Policy or as otherwise agreed to by such provider. If
subsequent to the issuance of the Bonds a Reserve Requirement is established by the District,
thereafter there shall be maintained in the Reserve Account of the Special Tax Fund an amount equal
to the Reserve Requirement to be applied as follows:
(a) Moneys in the Reserve Account shall be used solely for the purpose of paying
the principal of, and interest on any Parity Bonds when due in the event that the moneys in the
Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor and for
the purpose of making any required transfer to a rebate fund established in connection with the
issuance of Parity Bonds upon written direction from the District. If the amounts in the Interest
Account and the Principal Account of the Special Tax Fund are insufficient to pay the principal of, or
interest on any Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make
transfers to any rebate fund when required, the Trustee shall withdraw from the Reserve Account for
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deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax
Fund or a rebate fund, as applicable, moneys necessary for such purposes.
(b) Whenever moneys are withdrawn from the Reserve Account, after making the
required transfers referred to in Section 3.4 above, the Trustee shall transfer to the Reserve Account
from available moneys in the Special Tax Fund, or from any other legally available funds which the
District elects to apply to such purpose, the amount needed to restore the amount of such Reserve
Account to the Reserve Requirement; provided, however, that such amount so deposited shall be on a
pro rata basis with any amounts necessary to pay Policy Costs. Moneys in the Special Tax Fund
shall be deemed available for transfer to the Reserve Account only if the Trustee determines that
such amounts will not be needed to make the deposits required to be made to the Interest Account or
the Principal Account of the Special Tax Fund in accordance with Section 3.4 above. If amounts in
the Special Tax Fund or otherwise transferred to replenish the Reserve Account are inadequate to
restore the Reserve Account to the Reserve Requirement, then the District shall include the amount
necessary to restore the Reserve Account to the Reserve Requirement in the next annual Special Tax
levy to the extent of the maximum permitted Special Tax rates.
In connection with an optional redemption of Parity Bonds in accordance with any
Supplemental Indenture, or a partial defeasance of Parity Bonds in accordance with Section 9.1
hereof, amounts in the Reserve Account may be applied to such optional redemption or partial
defeasance so long as the amount on deposit in the Reserve Account following such optional
redemption or partial defeasance equals the Reserve Requirement. To the extent that the Reserve
Account is at the Reserve Requirement as of the first day of the final Bond Year for an issue of Parity
Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on an
issue of Parity Bonds in the final Bond Year for such issue. Moneys in the Reserve Account in
excess of the Reserve Requirement not transferred in accordance with the preceding provisions of
this paragraph shall be withdrawn from the Reserve Account on the fifth Business Day before each
March 1 and September I and transferred to the Interest Account of the Special Tax Fund.
Section 3.6. Redemption Account of the Special Tax Fund.
(a) After making the transfers and deposits required by Sections 3.4 and 3.5
above, and in accordance with the District's election to call Bonds for optional redemption as set
forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any
Supplemental Indenture for Parity Bonds, the Trustee shall transfer from the Special Tax Fund and
deposit in the Redemption Account moneys available for the purpose and sufficient to pay the
principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional
redemption; provided, however, that amounts in the Special Tax Fund may be applied to optionally
redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the
Reserve Account will equal the Reserve Requirement and the amount in the CFD No. 2014-1
Reserve Account will equal the Proportionate Share.
(b) Prepayments deposited to the Redemption Account shall be applied on the
redemption date established pursuant to Section 4.1(d) hereof for the use of such Prepayments to the
payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed
with such Prepayments.
(c) Moneys set aside in the Redemption Account shall be used solely for the
purpose of redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to
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the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon
presentation and surrender of such Bonds or Parity Bonds and in the case of an optional redemption
or an extraordinary redemption from Prepayments to pay the interest thereon; provided, however,
that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption
Account, other than Prepayments, may be used to purchase Outstanding Bonds or Parity Bonds in the
manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the
District at public or private sale as and when and at such prices as the District may in its discretion
determine but only at prices (including brokerage or other expenses) not more than par plus accrued
interest, plus, in the case of moneys set aside for an optional redemption, the premium applicable at
the next following call date according to the premium schedule established pursuant to Section 4.1(a)
hereof, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any
accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount
reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next
following Interest Payment Date.
Section 3.7. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5
and 3.6 hereof, as soon as practicable after each September 1, and in any event prior to each October
1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund,
unless on or prior to such date, it has received a Certificate of an Authorized Representative directing
that certain amounts be retained in the Special Tax Fund because the District has included such
amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special
Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund
will be transferred by the Trustee at the direction of an Authorized Representative of the City (i) to
the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to
pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds when due in
the event that moneys in the Special Tax Fund and the Reserve Account are insufficient therefor,
(ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement,
(iii) to the CFD No. 2014-1 Reserve Account to restore the CFD No. 2014-1 Reserve Account to the
Proportionate Share and to pay Policy Costs, (iv) to the Administrative Expense Fund to pay
Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense
Fund are insufficient to pay Administrative Expenses, (v) for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity
Bonds and may be used by the District for any lawful purpose. In the event that the District
reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any
Outstanding Bonds or Parity Bonds, the District will notify the Trustee in a Certificate of an
Authorized Representative and the Trustee will segregate such amount into a separate subaccount
and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written
direction of the District in Authorized Investments the interest on which is excludable from gross
income under Section 103 of the Code (other than bonds the interest on which is a tax preference
item for purposes of computing the alternative minimum tax of individuals under the Code) or in
Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to
which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher
yield will not adversely affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal
income tax purposes.
Section 3.8. Investments. Moneys held in any of the Accounts under this Indenture shall
be invested by the Trustee or the District, as applicable, in accordance with the limitations set forth
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below only in Authorized Investments which shall be deemed at all times to be a part of such
Accounts. Any loss resulting from such Authorized Investments shall be credited or charged to the
Account from which such investment was made, and any investment earnings on amounts deposited
in the Special Tax Fund, and each Account therein, and of the Surplus Fund shall be deposited in
those respective Funds and Accounts. Moneys in the Accounts held under this Indenture may be
invested by the District or the Trustee as directed in writing by the District, as applicable, from time
to time, in Authorized Investments subject to the following restrictions:
(a) Moneys in the Interest Account, the Principal Account, and the Redemption
Account of the Special Tax Fund shall be invested only in Authorized Investments which will by
their terms mature, or are available for withdrawal without penalty, on such dates so as to ensure the
payment of principal of, premium, if any, and interest on the Bonds as the same become due.
(b) In the absence of written directions from the District, the Trustee shall hold
such moneys uninvested.
The District or the Trustee, as applicable, shall sell, or present for redemption, any
Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet
any payment or transfer to such Accounts or from such Accounts to which such Authorized
Investments is credited. For the purpose of determining at any given time the balance in any such
Accounts, any such investments constituting a part of such Accounts shall be valued at the lower of
the cost or the market value thereof, exclusive of accrued interest, at least semiannually. In making
any valuations hereunder, the District or the Trustee, as applicable, may utilize such computerized
securities pricing services as may be available to it, including, without limitation, those available
through its regular accounting system, and conclusively rely thereon. The Trustee may make any and
all such investments through its own investment department or that of its affiliates or subsidiaries,
and may charge its ordinary and customary fees for such trades, including account maintenance fees.
Notwithstanding anything herein to the contrary, the District or the Trustee, as applicable, shall not
be responsible for any loss from investments, sales or transfers undertaken in accordance with the
provisions of this Indenture. In no event shall the Trustee be liable for the selection of investments or
for investment losses incurred thereon. The Trustee shall have no liability in respect of losses
incurred as a result of the liquidation of any investment prior to its stated maturity or the failure of
the District to provide timely written investment direction. The Trustee may conclusively rely upon
the District's written instructions as to both suitability and legality of the directed investments.
The Trustee or the District, as applicable, may act as principal or agent in the making or
disposing of any investment. The Trustee or the District, as applicable, may sell, or present for
redemption, any Authorized Investment so purchased whenever it shall be necessary to provide
moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or
account to which such Authorized Investment is credited, and, subject to the provisions of
Section 7.4, the Trustee or the District, as applicable, shall not be liable or responsible for any loss
resulting from such investment. For investment purposes, the Trustee or the District, as applicable,
may commingle the funds and accounts established hereunder, but shall account for each separately.
The District acknowledges that, to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the District the right to receive brokerage confirmations of
security transactions effected by the Trustee as they occur, the District specifically waives receipt of
such confirmations to the extent permitted by law. The District further understands that trade
confirmations for securities transactions effected by the Trustee will be available upon request and at
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no additional cost and other trade confirmations may be obtained from the applicable broker. The
Trustee will furnish the District periodic cash transaction statements which shall include detail for all
investment transactions made by the Trustee hereunder or brokers selected by the District. Upon the
District's election, such statements will be delivered via the Trustee's online service and upon
electing such service, paper statements will be provided only upon request. The Trustee and its
affiliates may act as sponsor, advisor, depository, principal or agent in the holding, acquisition or
disposition of any investment. The parties hereto acknowledge that the Trustee is not providing
investment supervision, recommendations, or advice.
Ratings of Authorized Investments referred to herein shall be determined at the time of
purchase of such Authorized Investments and without regard to rating subcategories. The Trustee
shall have no responsibility to monitor ratings of Authorized Investments after the initial purchase of
such Authorized Investments or the responsibility to validate the ratings of Authorized Investments
prior to the initial purchase.
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption.
The Bonds maturing on or after September 1, 20_ may be redeemed, at the option of
the District from any source of funds on any date on or after September 1, 20_, in whole, or in part
from such maturities as are selected by the District and by lot within a maturity, at a redemption price
equal to the principal amount to be redeemed, together with accrued interest to the date of
redemption, without premium. For so long as the Authority is the Owner of the Bonds, in connection
with the calculation of such redemption price, the District shall receive a credit from the Authority
from the reduction in the District's Proportionate Share resulting from the redemption of the Bonds
and the Authority Bonds so redeemed in connection therewith.
Notwithstanding the foregoing, upon the occurrence of an optional redemption of
Bonds in part, the selection of such Bonds to be redeemed shall be subject to the approval of the
Bond Insurer.
(b) Extraordinary Redemption.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata
basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from
Prepayments deposited to the Redemption Account pursuant to Section 3.2 at the following
redemption prices, expressed as a percentage of the principal amount to be redeemed, together with
accrued interest to the redemption date:
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Redemption Dates Redemption
Prices
Any Interest Payment Date from September 1, 20_ through March 1, 20_ 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
For so long as the Authority is the Owner of the Bonds, in connection with the calculation of
such redemption price, the District shall receive a credit from the Authority from the reduction in the
Proportionate Share of the Reserve Requirement resulting from the redemption of the Bonds and the
Authority Bonds so redeemed in connection therewith.
(c) Mandatory Sinking Fund Redemption.
The Bonds maturing on September 1, 20_ are subject to mandatory sinking fund redemption
prior to maturity, in part, on September 1, 20 , and on each September 1 thereafter by lot, from
sinking fund payments at a redemption price equal to the principal amount of Bonds to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
The Bonds maturing on September 1, 20_ are subject to mandatory sinking fund redemption
prior to maturity, in part, on September 1, 20, and on each September 1 thereafter by lot, from
sinking fund payments at a redemption price equal to the principal amount of Bonds to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the Bonds maturing September 1, 20 or September 1, 20 are redeemed
pursuant to Section 4.1(a) or (b) hereof, the sinking fund payments for such Bonds will be reduced as
nearly as practicable on a proportionate basis in integral multiples of $5,000.
(d) The redemption provisions for Parity Bonds shall be set forth in a
Supplemental Indenture.
Section 4.2. Selection of Bonds and Parity Bonds for Redemption. If less than all of
the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond
of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or
an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the
Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds
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or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such
Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity
Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity
Bonds. The Trustee shall promptly notify the District, in writing, of the Bonds or Parity Bonds, or
portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are due for redemption
under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture
relating to any Parity Bonds, the Trustee shall give notice, in the name of the District, of the
redemption of such Bonds or Parity Bonds; provided, however, that a notice of optional redemption
may be conditioned on there being on deposit on the redemption date sufficient money to pay the
redemption price of the Bonds or Parity Bonds to be redeemed. Such notice of redemption shall (a)
specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds or
Parity Bonds selected for redemption, except that where all of the Bonds or all of an issue of Parity
Bonds are subject to redemption, or all the Bonds or Parity Bonds of one maturity, are to be
redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed for
redemption and surrender of the Bonds or Parity Bonds to be redeemed; (c) state the redemption
price; (d) state the place or places where the Bonds or Parity Bonds are to be redeemed; (e) in the
case of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity
Bond which is to be redeemed; (f) state the date of issue of the Bonds or Parity Bonds as originally
issued; (g) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (h) state
any other descriptive information needed to identify accurately the Bonds or Parity Bonds being
redeemed as shall be specified by the Trustee. Such notice shall further state that on the date fixed
for redemption, there shall become due and payable on each Bond, Parity Bond or portion thereof
called for redemption, the principal thereof, together with any premium, and interest accrued to the
redemption date, and that from and after such date, interest thereon shall cease to accrue and be
payable. At least 20 days but no more than 45 days prior to the redemption date, the Trustee shall
send a copy of such notice to the respective Owners thereof at their addresses appearing on the Bond
Register, and to the original purchaser of the Bonds or Parity Bonds, as applicable. The actual
receipt by the Owner of any Bond or Parity Bond or the original purchaser of any Bond or Parity
Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the
failure to receive nor any defect in such notice shall affect the validity of the proceedings for the
redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A
certificate by the Trustee that notice of such redemption has been given as herein provided shall be
conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to
receive notice of such redemption. Notwithstanding the foregoing, so long as the Authority or the
Authority Trustee on the Authority's behalf is the registered owner of the Bonds, no such notices
need be provided.
In addition to the foregoing notice, further notice shall be given by the Trustee as set out
below if the Bonds or Parity Bonds are not owned by the Authority at the time the notice of
redemption is given pursuant to this Section 4.3, provided that 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 if notice thereof is given as above prescribed.
Each further notice of redemption shall be sent at least two days before notice of redemption
is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or certified
mail, overnight delivery service or any other means acceptable to the registered securities depository
listed below and to any other registered securities depositories then in the business of holding
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substantial amounts of obligations of types comprising the Bonds and Parity Bonds as shall be
specified by the Trustee and to any national information services that disseminate notice of
redemption of obligations such as the Bonds and Parity Bonds as determined by the Trustee:
Registered Securities Depositories
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: Redemption Area
Telecopy: (212) 855-7232 or (212) 855-7233
Any notice of optional redemption shall be cancelled and annulled if for any reason funds
will not be or are not available on the date fixed for redemption for the payment in full of the Bonds
then called for redemption, and such cancellation shall not constitute an Event of Default under this
Indenture. The District and the Trustee shall have no liability to the Owners or any other parry
related to or arising from such rescission of redemption. The Trustee shall mail notice of such
rescission of redemption in the same manner as the original notice of redemption was sent.
Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed,
each check or other transfer of funds issued for such purpose shall to the extent practicable bear the
CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with
the proceeds of such check or other transfer.
Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any
Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall
authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a
new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to
the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity
or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the
foregoing limitations.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date
fixed for such redemption:
(a) The Bonds and Parity Bonds, or portions thereof, designated for redemption
shall, on the date fixed for redemption, become due and payable at the redemption price thereof as
provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds,
anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding;
(b) Upon presentation and surrender thereof at the office of the Trustee, the
redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof, provided that
so long as the Authority or the Authority Trustee on the Authority's behalf is the registered owner of
the Bonds no such presentment is required;
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(c) As of the redemption date the Bonds or the Parity Bonds, or portions thereof
so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity
Bonds, or portions thereof, shall cease to bear further interest; and
(d) As of the date fixed for redemption no Owner of any of the Bonds, Parity
Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this
Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of
the redemption price and interest accrued to the redemption date from the amounts so made
available.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder
are Outstanding and unpaid, the District makes the following covenants with the Bondowners under
the provisions of the Act and this Indenture (to be performed by the District or its proper officers,
agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity
Bonds and tend to make them more marketable; provided, however, that said covenants do not
require the District to expend any funds or moneys other than the Special Taxes and other amounts
deposited to the Special Tax Fund:
(a) Punctual Payment; Against Encumbrances. The District covenants that it will
receive all Special Taxes in trust for the Owners and will cause to be deposited all Special Taxes with
the Trustee immediately upon their apportionment to the District, and the District shall have no
beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such
Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth
herein, and shall be accounted for separately and apart from all other money, funds, accounts or other
resources of the District.
The District covenants that it will duly and punctually pay or cause to be paid the
principal of and interest on every Bond and Parity Bond issued hereunder, together with the
premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the
Parity Bonds and in accordance with this Indenture to the extent that Net Special Taxes and other
amounts pledged hereunder are available therefor, and that the payments into the Funds and
Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any
Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions,
covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and
any Parity Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge
upon any of the Net Special Taxes except as provided in this Indenture, and will not issue any
obligation or security having a lien or charge upon the Net Special Taxes superior to or on a parity
with the Bonds, other than Parity Bonds. Nothing herein shall prevent the District from issuing or
incurring indebtedness which is payable from a pledge of Net Special Taxes which is subordinate in
all respects to the pledge of Net Special Taxes to repay the Bonds and the Parity Bonds.
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(b) Levy of Special Tax. So long as any Bonds or Parity Bonds issued under this
Indenture are Outstanding, the legislative body of the District covenants to levy the Special Tax in an
amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for
such purpose, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due,
(2) the Administrative Expenses, (3) any amounts required to maintain the Reserve Account of the
Special Tax Fund at the Reserve Requirement, (4) any amounts required to replenish the CFD No.
2014-1 Reserve Account to the Proportionate Share and pay all Policy Costs resulting from the
delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds, and (5) any
amounts due to the Bond Insurer not included in (1) through (4) above. The District further
covenants that it will take no actions that would discontinue or cause the discontinuance of the
Special Tax levy or the District's authority to levy the Special Tax for so long as the Bonds and any
Parity Bonds are Outstanding.
(c) Commence Foreclosure Proceedings. The District covenants for the benefit of
the Owners of the Bonds and any Parity Bonds that it (i) will commence judicial foreclosure
proceedings against parcels with delinquent Special Taxes in excess of $10,000 by the October 1
following the close of each Fiscal Year in which such Special Taxes were due and (ii) will
commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the
October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount
which is less than 95% of the total Special Tax levied, and (iii) will diligently pursue such
foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding
the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the
amount in the Reserve Account is at least equal to the Reserve Requirement, the amount in the CFD
No. 2014-1 Reserve Account is at least equal to the District's Proportionate Share and no amounts
are owed to the Bond Insurer in connection with the Reserve Policy or Insurance Policy. The District
may, but shall not be obligated to, advance funds from any source of legally available funds in order
to maintain the Reserve Account and the CFD No. 2014-1 Reserve Account. The District may treat
any delinquent Special Tax sold to an independent third -party or to any funds of the City for at least
100% of the delinquent amount as having been paid. Proceeds of any such sale up to 100% of the
delinquent amount will be deposited in the Special Tax Fund.
The District covenants that it will deposit the net proceeds of any foreclosure and any
other Delinquency Proceeds in the Special Tax Fund and will apply such proceeds remaining after
the payment of Administrative Expenses to pay any delinquent installments of principal or interest
due on the Bonds and any Parity Bonds, to make current payments of principal and interest on the
Bonds and any Parity Bonds and to replenish any draw on the Reserve Account and the CFD No.
2014-1 Reserve Account, and to pay its proportionate share of Policy Costs resulting from the
delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds.
(d) Payment of Claims. The District will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net
Special Taxes or other funds in the Special Tax Fund, or which might impair the security of the
Bonds or any Parity Bonds then Outstanding; provided that nothing herein contained shall require the
District to make any such payments so long as the District in good faith shall contest the validity of
any such claims.
(e) Books and Accounts. The District will keep proper books of records and
accounts, separate from all other records and accounts of the District, in which complete and correct
entries shall be made of all transactions relating to the Project, the levy of the Special Tax and the
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deposits to the Special Tax Fund. Such books of records and accounts shall at all times during
business hours be subject to the inspection of the Trustee or of the Owners of not less than 10% of
the principal amount of the Bonds or the Owners of not less than 10% of any issue of Parity Bonds
then Outstanding or their representatives authorized in writing.
(f) Federal Tax Covenants. Notwithstanding any other provision of this
Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the
Authority Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely
affected for federal income tax purposes, the District covenants to comply with all applicable
requirements of the Code necessary to preserve such exclusion from gross income and specifically
covenants, without limiting the generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from
taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other
moneys or property which would cause the Authority Bonds issued on a tax-exempt basis for federal
income tax purposes to be "private activity bonds" within the meaning of Section 141 of the Code;
(2) Arbitrage. The District will make no use of the proceeds of the Bonds
or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action
or refrain from taking any action which will cause the Authority Bonds issued on a tax-exempt basis
for federal income tax purposes to be "arbitrage bonds" within the meaning of Section 148 of the
Code;
(3) Federal Guaranty. The District will make no use of the proceeds of
the Bonds or any Parity Bonds or take or omit to take any action that would cause the Authority
Bonds issued on a tax-exempt basis for federal income tax purposes to be "federally guaranteed"
within the meaning of Section 149(b) of the Code;
(4) Hedge Bonds. The District will make no use of the proceeds of the
Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any
action or refrain from taking any action that would cause the Authority Bonds issued on a tax-exempt
basis for federal income tax purposes to be considered "hedge bonds" within the meaning of Section
149(g) of the Code unless the District takes all necessary action to assure compliance with the
requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal
income tax purposes of interest on the Authority Bonds; and
(5) Other Tax Exempt Issues. The District will not use proceeds of other
tax exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written
opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal
income tax purposes of interest on the Authority Bonds issued on a tax-exempt basis.
(g) Reduction of Maximum Special Taxes. The District hereby finds and
determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the
Act in community facilities districts in Southern California have from time to time been at levels
requiring the levy of special taxes at the maximum authorized rates in order to make timely payment
of principal of and interest on the outstanding indebtedness of such community facilities districts.
For this reason, the District hereby determines that a reduction in the maximum Special Tax rates
authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g)
would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it
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to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to
the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall
not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in
connection therewith, (i) the District receives a certificate from one or more Independent Financial
Consultants which, when taken together, certify that, on the basis of the parcels of land and
improvements existing in the District as of the July 1 preceding the reduction, the maximum amount
of the Special Tax which may be levied on then existing Developed in each Bond Year for any
Bonds and Parity Bonds Outstanding will equal at least 110% of the sum of the estimated
Administrative Expenses and gross debt service in each Bond Year on all Bonds and Parity Bonds to
remain Outstanding after the reduction is approved, (ii) the District finds that any reduction made
under such conditions will not adversely affect the interests of the Owners of the Bonds and Parity
Bonds, and (iii) no Policy Costs or amounts under the Insurance Policy are due and payable to the
Bond Insurer and (iv) the District is not delinquent in the payment of the principal of or interest on
the Bonds or any Parity Bonds. For purposes of estimating Administrative Expenses for the
foregoing calculation, the Independent Financial Consultants shall compute the Administrative
Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each
subsequent Fiscal Year.
(h) Covenants to Defend. The District covenants that, in the event that any
initiative is adopted by the qualified electors in the District which purports to reduce the minimum or
the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of
the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will
commence and pursue legal action in order to preserve its ability to comply with such covenants.
(i) Limitation on Right to Tender Bonds. The District hereby covenants that it
will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or
Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have
first received a certificate from an Independent Financial Consultant that the acceptance of such a
tender will not result in the District having insufficient Special Tax revenues to pay the principal of
and interest on the Bonds and Parity Bonds when due.
0) Further Assurances. The District shall make, execute and deliver any and all
such further agreements, instruments and assurances as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance of this Indenture and for the better assuring
and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits
provided in this Indenture.
(k) Subordinate Debt. Any indebtedness of the District evidenced by any
subordinated debt and any renewals or extensions thereof (herein called "Subordinated
Indebtedness"), shall at all times be wholly subordinate and junior in right of payment to any and all
indebtedness of the District under this Indenture (herein called "Superior Indebtedness"). Following
an event of default under this Indenture, no Subordinated Indebtedness shall be paid prior to any
Superior Indebtedness in any fiscal year of the District. If the holder of the Subordinated
Indebtedness is a commercial bank, savings bank, savings and loan association or other financial
institution which is authorized by law to accept and hold deposits of money or issue certificates of
deposit, such holder must agree to waive any common law or statutory right of setoff with respect to
any deposits of the District maintained with or held by such holder.
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(1) Pledged Net Special Taxes. The District represents it has not heretofore made
a pledge of, granted a lien on or security interest in, or made an assignment or sale of the Net Special
Taxes that ranks on a parity with or prior to the pledge granted under this Indenture. The District,
except as may be provided otherwise in this Indenture, shall not hereafter make any pledge or
assignment of, lien on, or security interest in the Net Special Taxes payable senior to or on a parity
with the pledge of Net Special Taxes established under this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District may from time to time, and at any time, without notice to or consent of any of the
Bondowners, adopt Supplemental Indentures for any of the following purposes provided:
(a) to cure any ambiguity or formal defects or omissions or to correct any
inconsistent provisions in this Indenture or any Supplemental Indenture;
(b) to grant or confer upon the holders of the Bonds any additional rights,
remedies, powers, authority or security that may lawfully be granted to or conferred upon the holders
of the Bonds; or
(c) to add to the conditions, limitations and restrictions on the issuance of bonds
or other obligations under the provisions of the Indenture other conditions, limitations and
restrictions thereafter to be observed; or
(d) to add to the covenants and agreements of the District in this Indenture other
covenants and agreements thereafter to be observed by the District or to surrender any right or power
therein reserved to or conferred upon the District.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a
majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the
right to consent to and approve the adoption by the District of such Supplemental Indentures as shall
be deemed necessary or desirable by the District, for the purpose of waiving, modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an
extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity
Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity
Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Parity Bond over any
other Bond or Parity Bond, or (d) a reduction in the aggregate principal amount of the Bonds and
Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without
the consent of the Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms of this Section shall require the consent of the Bondowners, the District shall so notify the
Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee
shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be
mailed, by first class mail, postage prepaid, to all Bondowners at their addresses as they appear in the
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Bond Register (if the Authority or the Authority Trustee on the Authority's behalf is the owner of all
the Bonds, such amendment may be delivered by other communication methods). Such notice shall
briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof
is on file at the office of the Trustee for inspection by all Bondowners. The failure of any
Bondowners to receive such notice shall not affect the validity of such Supplemental Indenture when
consented to and approved by the Owners of not less than a majority in aggregate principal amount
of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever at any time within
one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or
instruments purporting to be executed by the Owners of not less than a majority in aggregate
principal amount of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall
refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent
to and approve the adoption thereof by the District substantially in the form of the copy referred to in
such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by
the District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any
Parity Bonds. In determining whether the Owners of a majority of the aggregate principal amount of
the Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or
Parity Bonds which are owned by the District or by any person directly or indirectly controlling or
controlled by or under the direct or indirect common control with the District, shall be disregarded
and shall be treated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the
provisions of this section, this Indenture shall be, and shall be deemed to be, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Indenture of the
District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications and amendments.
The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by Sections 6.1 and 6.2 which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Notwithstanding the foregoing, so long as the Insurance Policy is in full force and effect, any
amendment, supplement, modification to, or waiver of, this Indenture pursuant to this Section 6.2
shall be subject to the prior written consent of the Bond Insurer.
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or
Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may
determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved
by the District, as to such action, and in that case upon demand of the Owner of any Outstanding
Bond or Parity Bond at such effective date and presentation of his Bond or Parity Bond for the
purpose at the office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity
Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion
of the District, shall be necessary to conform to such action shall be prepared and executed, and in
that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date
such new Bonds or Parity Bonds shall be exchanged at the office of the Trustee or at such additional
offices as the Trustee may select and designate for that purpose, without cost to each Owner of
Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.
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Section 6.4. Reliance on Opinion. In executing, or accepting the additional trusts created
by any supplemental indenture permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an opinion of counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and complies with the terms hereof.
ARTICLE VII
TRUSTEE
Section 7.1. Trustee. The Bank of New York Mellon Trust Company, N.A., shall be the
Trustee for the Bonds and any Parity Bonds unless and until another Trustee is appointed by the
District hereunder. The District may, at any time, appoint a successor Trustee satisfying the
requirements of Section 7.2 below for the purpose of receiving all money which the District is
required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in
this Indenture; provided, however, that the Trustee shall be at all times the same entity as the
Authority Trustee.
The Bond Insurer shall receive prior written notice of any name change of the Trustee.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire
transfer in accordance with Section 2.5 above, interest payments to the Bondowners, to select Bonds
and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby
authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the
same are duly presented to it for payment at maturity or on call and redemption, to provide for the
registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to
provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to
provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned
to or imposed on it as provided in this Indenture. The Trustee shall keep accurate records of all funds
administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
The Trustee is hereby authorized to redeem the Bonds and Parity Bonds when duly presented
for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and
Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the
Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all
its advances and expenditures, including, but not limited to, advances to and fees, costs and expenses
of independent accountants or counsel employed by it in the exercise and performance of its powers
and duties hereunder, and indemnify and save the Trustee, its officers, officials, directors, employees
and agents, harmless from and against any losses, costs, damages, claims, expenses and liabilities,
including, without limitation fees, costs and expenses of its attorneys, not arising from its own
negligence or willful misconduct, in connection with the acceptance or administration of the trust or
trusts hereinunder, including the costs and expense of defending itself against any claim (other than
claims asserted by the District) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, or in connection with enforcing the provisions of this section. In no
event shall the Trustee be responsible or liable for any consequential, punitive, indirect, incidental or
special damages or loss of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and
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regardless of the form of action. The foregoing obligation of the District to indemnify the Trustee
shall survive the removal or resignation of the Trustee and the discharge of the Bonds.
Section 7.2. Removal of Trustee. No removal of the Trustee shall become effective until
a successor meeting the requirements below or otherwise acceptable to the Bond Insurer, so long as
the Insurance Policy is in full force and effect and the Bond Insurer has not defaulted on its
obligations thereunder, shall be qualified and appointed and shall have accepted its appointment. The
District may at any time at its sole discretion remove the Trustee initially appointed, upon 30 days
prior written notice, and any successor thereto, by delivering to the Trustee a written notice of its
decision to remove the Trustee and may appoint a successor or successors thereto; provided that any
such successor shall (a) national banking association that is supervised by the Office of the
Comptroller of the Currency and has at least Two Hundred Fifty Million Dollars ($250,000,000) of
assets; (b) a state -chartered commercial bank that is a member of the Federal Reserve System and has
at least $1 billion of assets; or (c) otherwise approved by the Bond Insurer in writing. If any bank,
association or trust company appointed as a successor 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,
association 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. Any removal of the Trustee and appointment of a
successor Trustee shall become effective only upon acceptance of appointment by the successor
Trustee and notice being sent by the successor Trustee to the Bondowners of the successor Trustee's
identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign and discharged
from its duties and obligations hereunder by giving written notice to the District and by giving to the
Owners notice of such resignation, which notice shall be sent to the Owners at their addresses
appearing in the registration books in the office of the Trustee. Upon receiving such notice of
resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in
Section 7.2 above by an instrument in writing. No resignation of the Trustee shall become effective
until a successor meeting the requirements of Section 7.2 above or otherwise acceptable to the Bond
Insurer, so long as the Insurance Policy is in full force and effect and the Bond Insurer has not
defaulted on its obligations thereunder, shall be qualified and appointed and shall have accepted its
appointment. If no successor Trustee shall have been appointed and have accepted appointment
within thirty (30) calendar days of giving notice of removal or notice of resignation as aforesaid, the
resigning Trustee or any Owner (on behalf of itself and all other Owners) may, at the sole expense of
the District petition any court of competent jurisdiction for the appointment of a successor Trustee,
and such court may thereupon, after such notice (if any) as it may deem proper, appoint such
successor Trustee. The Trustee shall be paid in full for any fees and expense owing to it prior to or
contemporaneously with the signing of any instrument or agreement to effect the transfer to a
successor Trustee.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and
agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements,
promises, covenants and agreements of the District, and the Trustee assumes no responsibility for the
correctness of the same and makes no representations as to the validity or sufficiency of this
Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other
than in connection with its duties or obligations specifically set forth herein, in the Bonds and any
Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The
Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds or any
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Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its
duties hereunder, except for its own negligence or willful misconduct. The Trustee shall not be liable
for any action taken or omitted by it or any of its officers, employees or agents in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon it by
this Indenture. The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts. The Trustee shall not be accountable for the use of any proceeds of sale of the Bonds
delivered hereunder.
The Trustee shall be entitled to request and receive written instructions from the District
and/or Owners and shall have no responsibility or liability for any losses or damages of any nature
that may arise from any action taken or not taken by the Trustee in accordance with the written
direction of any such party. The Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in accordance with the written direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee under this Indenture.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request or direction of an Owner and/or the District, pursuant to the
provisions of this Indenture, unless such party shall have offered to the Trustee security or indemnity
(satisfactory to the Trustee in its sole and absolute discretion) against the costs, expenses and
liabilities which may be incurred by it in compliance with such request or direction.
Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be
responsible for nor have any duty to monitor the performance or any action of the District or any of
its directors, members, officers, agents, affiliates or employee, nor shall it have any liability in
connection with the malfeasance or nonfeasance by such party. The Trustee may assume
performance by all such persons of their respective obligations. The Trustee shall have no
enforcement or notification obligations relating to breaches of representations or warranties of any
other person. The Trustee shall be conclusively protected in acting upon any notice, resolution,
request, direction, consent, order, certificate, opinion, requisition, report, bond, debenture, note, other
evidence of indebtedness (including any Bond or Parity Bond) or other paper or document believed
by it to be genuine and correct and to have been signed, sent or presented by the proper person or
persons, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy
of any information contained therein. The Trustee may consult with counsel, who may be counsel to
the District, 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 hereunder in good faith and in
accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity
Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title
thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)
may, be deemed to be conclusively proved and established by a written certificate of the District,
and/or opinion of counsel, and such certificate or opinion shall be full warrant to the Trustee for any
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action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its
discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such
additional evidence as to it may seem reasonable.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special
Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts
received, but its liability shall be limited to the proper accounting for such funds as it shall actually
receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of its rights or powers. The Trustee may refuse to perform any duty or exercise any right or
power which would require it to expend its own funds or risk any liability if it shall reasonably
believe that repayment of such funds or adequate indemnity against such risk is not reasonably
assured to it.
The Trustee shall not be deemed to have knowledge of (A) any events of other information,
or (B) any default or event of default until an officer at the Trustee's corporate trust officer
responsible for the administration of its duties hereunder shall have actual knowledge thereof or the
Trustee shall have received written notice thereof at its corporate trust office.
The Trustee shall not be considered in breach of or in default in its obligations hereunder or
progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of
such obligations due to unforeseeable causes beyond its control and without its fault or negligence,
including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government,
acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion, mob violence, riot, war, inability to procure or general sabotage or rationing
of labor, equipment, facilities, sources of energy, material or supplies in the open market, loss or
malfunctions of utilities, computer (hardware or software) or communications service, accidents,
labor disputes, the unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility, litigation or arbitration involving a party or others relating to zoning or other
governmental action or inaction pertaining to the project, malicious mischief, condemnation, and
unusually severe weather or delays of supplies or subcontractors due to such causes or any similar
event and/or occurrences beyond the control of the Trustee.
Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default,
the Trustee shall have a lien with right of payment prior to payment on account of principal of and
premium, if any, and interest on any Bond, upon the Net Special Taxes for the foregoing fees,
charges and expenses incurred by it. The Trustee's right to payment of such fees and expenses shall
survive the discharge and payment or defeasance of the Bonds and termination of this Indenture, and
the resignation or removal of the Trustee.
The Trustee shall have no responsibility or liability with respect to any information,
statements or recital in any offering memorandum or other disclosure material prepared or distributed
with respect to the issuance of the Bonds.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be
construed as a duty or in any way expand or impliedly expand the scope of the Trustee's duties
hereunder, and, with respect to such permissive rights, the Trustee shall not be answerable for other
than its negligence or willful misconduct.
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The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted
to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or
consulted by the Trustee. The Trustee may execute any of the trusts or powers hereof and perform
any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct
of the same if appointed by it with reasonable care.
The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds with the same
rights it would have if it were not Trustee.
The Trustee shall perform such duties and only such duties as are specifically set forth in this
Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee.
These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except
for the performance of such duties, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request, order or direction of any of the Owners pursuant to the provisions of
this Indenture unless such Owners shall have offered to the Trustee security or indemnity satisfactory
to the Trustee in its sole and exclusive direction against the costs, expenses and liabilities which may
be incurred therein or thereby.
The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of
all Events of Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which
has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request or direction of any of the Owners in connection with a default or
Event of Default hereunder pursuant to this Indenture, unless such Owners shall have offered to the
Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction.
The Trustee shall have the right to accept and act upon instructions, including funds transfer
instructions ("Instructions") given pursuant to this Indenture and related financing documents and
delivered using Electronic Means ("Electronic Means" shall mean the following communications
methods: e-mail, secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Trustee, or another method or system specified
by the Trustee as available for use in connection with its services hereunder); provided, however, that
the District, shall provide to the Trustee an incumbency certificate listing officers with the authority
to provide such Instructions ("Authorized Officers") and containing specimen signatures of such
Authorized Officers, which incumbency certificate shall be amended by the District whenever a
person is to be added or deleted from the listing. If the District elects to give the Trustee Instructions
using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the
Trustee's understanding of such Instructions shall be deemed controlling. The District understands
and agree that the Trustee cannot determine the identity of the actual sender of such Instructions and
that the Trustee shall conclusively presume that directions that purport to have been sent by an
Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by
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such Authorized Officer. The District shall be responsible for ensuring that only Authorized Officers
transmit such Instructions to the Trustee and that the District and all Authorized Officers are solely
responsible to safeguard the use and confidentiality of applicable user and authorization codes,
passwords and/or authentication keys upon receipt by the District. The Trustee shall not be liable for
any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and
compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a
subsequent written instruction. The District agrees: (i) to assume all risks arising out of the use of
Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the
Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties;
(ii) that it is fully informed of the protections and risks associated with the various methods of
transmitting Instructions to the Trustee and that there may be more secure methods of transmitting
Instructions than the method(s) selected by the District; (iii) that the security procedures (if any) to be
followed in connection with its transmission of Instructions provide to it a commercially reasonable
degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee
immediately upon learning of any compromise or unauthorized use of the security procedures.
The Trustee agrees to accept and act upon written instructions and/or directions provided via
Electronic Means pursuant to this Indenture provided, however, that: (a) such originally executed
instructions and/or directions shall be signed by a person as may be designated and authorized to sign
for the party signing such instructions and/or directions, and (b) the Trustee shall have received a
current incumbency certificate containing the specimen signature of such designated person. Any
such instructions and directions furnished by electronic transmission shall be in the form of
attachments in PDF format.
Notwithstanding anything to the contrary herein, the Trustee shall have no duty to prepare or
file any Federal or state tax report or return with respect to any funds held pursuant to this Indenture
or any income earned thereon, except for the delivery and filing of tax information reporting forms
required to be delivered and filed with the Internal Revenue Service.
Section 7.5. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the
Trustee without the execution or filing of any paper or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute
an "event of default":
(a) Default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable,
whether at maturity as therein expressed, by declaration or otherwise;
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(b) Default in the due and punctual payment of the interest on any Bond or Parity
Bond when and as the same shall become due and payable; or
(c) Except as described in (a) or (b), default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in this Indenture,
the Bonds or any Parity Bonds, and such default shall have continued for a period of 30 days after the
District shall have been given notice in writing of such default by the Trustee or the Owners of 25%
in aggregate principal amount of the Outstanding Bonds and Parity Bonds; provided, however, that if
in the reasonable opinion of the District the default stated in the notice can be corrected, but not
within such thirty (30) day period, and corrective action is instituted by the District, with the written
approval of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under
the Insurance Policy) within such thirty (30) day period and diligently pursued in good faith until the
default is corrected, such default shall not be an Event of Default hereunder.
The Trustee agrees to give notice to the Owners immediately upon the occurrence of an event
of default under (a) or (b) above and within 30 days of the Trustee's knowledge of an event of default
under (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the
Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal
of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any
rights of the Trustee under or with respect to this Indenture, including:
(a) By mandamus or other suit or proceeding at law or in equity to enforce its
rights against the District and any of the members, officers and employees of the District, and to
compel the District or any such members, officers or employees to perform and carry out their duties
under the Act and their agreements with the Owners as provided in this Indenture;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate
the rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and
employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by the
Owners of at least twenty-five percent (25%) in aggregate principal amount Outstanding Bonds and
Parity Bonds and is indemnified to its satisfaction, the Trustee shall be obligated to exercise such one
or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by
counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Trustee or to the Owners 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 Act or any other law.
The Bonds and any Parity Bonds are not subject to acceleration prior to maturity
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When the Trustee incurs expenses or renders services after the occurrence of an Event of
Default, such expenses and the compensation for such services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency, arrangement, moratorium,
reorganization or other debtor relief law.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Owners any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to
vote in respect of the claim of any Owners in any such proceeding without the approval of the
Owners so affected.
Section 8.3. Application of Revenues and Other Funds After Default. All amounts
received by the Trustee pursuant to any right given or action taken by the Trustee under the
provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in
the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such
Event of Default and in carrying out the provisions of this Article VIII, including reasonable
compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees
and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds
and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest
to the extent permitted by law at the net effective rate of interest then borne by the Outstanding
Bonds and Parity Bonds; provided, however, that in the event such amounts shall be insufficient to
pay in full the full amount of such interest and principal, then such amounts shall be applied in the
following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity
Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing,
(b) second, to the payment of all installments of principal, of the Bonds and
Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing,
and
(c) third, to the payment of interest on overdue installments of principal and
interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and
owing.
Section 8.4. Control by Bond Insurer Upon Default. Anything herein notwithstanding,
so long as the Insurance Policy is in full force and effect and the Bond Insurer has not defaulted on
its obligations thereunder, upon the occurrence and continuance of a default or an Event of Default;
(a) the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies
granted to the holders of the Bonds or the Trustee for the benefit of the holders of the Bonds
hereunder; (b) no default or Event of Default may be waived without the Bond Insurer's written
consent; and (c) the Bond Insurer shall be deemed to be the sole owner of the Bonds for all purposes
hereunder, including, without limitations, for purposes of exercising remedies and approving
amendments.
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Section 8.5. Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the
rights of the Trustee and of the Owners of the Bonds and Parity Bonds under this Indenture, the
Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net
Special Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as
the court making such appointment shall confer.
Section 8.6. Non -Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District,
which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity
Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as
herein provided, out of the Net Special Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not
affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any
such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the
Bonds or Parity 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 Trustee or the Owners by the Act or by this
Article VIII may be enforced and exercised from time to time and as often as shall be deemed
expedient by the Trustee or the Owners, as the case may be.
Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond
or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the
Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have
tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses
and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused
or omitted to comply with such request for a period of sixty (60) days after such written request shall
have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of
any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and
Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right
under this Indenture, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any provision of this Indenture shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity
Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of
and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute
suit for the enforcement of any such payment, shall not be impaired or affected without the written
consent of such Owner, notwithstanding the foregoing provisions of this Section or any other
provision of this Indenture.
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Section 8.8. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the District, the Trustee and the Owners shall be
restored to their former positions and rights hereunder, respectively, with regard to the property
subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no
such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and
the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental
Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net
Special Taxes, and, other than as set forth below, all covenants, agreements and other obligations of
the District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental
Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be
discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds
pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as
may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or
deliver to the District's general fund all money or securities held by it pursuant to this Indenture
which are not required for the payment of the principal of, premium, if any, and interest due on such
Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning
expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or
more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest
on such Bond or Parity Bond, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money which,
together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative
Expense Fund) and available for such purpose, is fully sufficient to pay the principal of, premium, if
any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable
on and prior to the maturity date or redemption date thereof, as applicable; or
(c) by depositing with the Trustee or another escrow bank appointed by the
District, in trust, Defeasance Securities, in which the District may lawfully invest its money, in such
amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit
in the Special Tax Fund (exclusive of the Administrative Expense Fund) and available for such
purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium,
if any, and interest on such Bond or Parity Bond, as and when the same shall become due and
payable on and prior to the maturity date or redemption date thereof, as applicable;
then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity
Bonds shall not have been surrendered for payment, all obligations of the District under this
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Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and
terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any
such Bond or Parity Bond not so surrendered and paid, all sums due thereon. Notice of such election
shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such
shorter period of time as may be acceptable to the Trustee. [The District shall deliver to the Trustee
and the Bond Insurer draft copies of (A) an escrow agreement with respect to the deposits under (b)
or (c) above, (B) an opinion of Bond Counsel, to the effect that the requirements of this Indenture
have been satisfied with respect to such discharge of Bonds, and (C) with respect to a deposit under
(c) above, a verification report of an Independent Accountant (a "Verification Report"), regarding the
sufficiency of the escrow fund.) The Bond Insurer shall be provided with final drafts of the above -
referenced documentation not less than three Business Days prior to any defeasance with respect to
the Bonds. The opinion and Verification Report shall be addressed to the Bond Insurer and shall be
in form and substance satisfactory to the Bond Insurer. In addition, the escrow agreement shall
provide (a) that any substitution of securities following the execution and delivery of the escrow
agreement shall require the delivery of (i) a Verification Report; (ii) an opinion of Bond Counsel
that such substitution will not adversely affect the exclusion (if interest on the Bonds is excludable)
from gross income of the holders of the Bonds of the interest on the Bonds for federal income tax
purposes; and (iii) the prior written consent of the Bond Insurer, which consent will not be
unreasonably withheld; (b) the District will not exercise any prior optional redemption of the Bonds
secured by the escrow agreement or any redemption unless (i) the right to make any such redemption
has been expressly reserved in the escrow agreement and such reservation has been disclosed in
detail in the official statement for the refunding bonds, and (ii) as a condition to any such redemption
there shall be provided to the Bond Insurer a Verification Report as to the sufficiency of the escrow
receipts without reinvestment to meet the escrow requirements remaining following any such
redemption; and (iii) the District shall not amend the escrow agreement or enter into a forward
purchase agreement or other agreement with respect to rights in the escrow without the prior written
consent of the Bond Insurer.]
The Bonds shall be deemed Outstanding under this Indenture unless and until they are in fact
paid and retired or the above criteria are met.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the
Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any
Supplemental Indenture and execute and deliver to the District all such instruments as may be
desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder
of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any
funds held by the Trustee at the time of a defeasance, which are not required for the purpose of
paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The
Trustee shall, at the written direction of the District, send a notice to the Bondowners whose Bonds
or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance
has occurred.
This Indenture shall not be discharged until Policy Costs due to the Bond Insurer (to the
extent the responsibility of the District as a result of the District's failure to pay principal of, or
interest on the Bonds when due) shall have been paid in full. The District's obligation to pay such
amounts shall expressly survive payment in full of the payments of principal of and interest on the
Bonds.
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Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder
issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund
and secured by a lien and charge upon such amounts equal to the lien and charge securing the
Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any
Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of
refunding all or a portion of the Bonds or Parity Bonds then Outstanding subject to the following
specific conditions, which are hereby made conditions precedent to the issuance of any such Parity
Bonds:
(a) The District shall be in compliance with all covenants set forth in this
Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect
shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued
notwithstanding that the District is not in compliance with all such covenants so long as immediately
following the issuance of such Parity Bonds the District will be in compliance with all such
covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant
to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for
by a Supplemental Indenture duly adopted by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to be issued and the fund
or funds into which the proceeds thereof are to be deposited;
(2) the authorized principal amount of such Parity Bonds;
(3) the date and the maturity date or dates of such Parity Bonds; provided
that (i) each maturity date shall fall on a September 1, (ii) all such Parity Bonds of like maturity shall
be identical in all respects, except as to number, and (iii) fixed serial maturities or mandatory sinking
fund payments, or any combination thereof, shall be established to provide for the retirement of all
such Parity Bonds on or before their respective maturity dates;
(4) the description of the Parity Bonds, the place of payment thereof and
the procedure for execution and authentication;
(5) the denominations and method of numbering of such Parity Bonds;
(6) the amount and due date of each mandatory sinking fund payment, if
any, for such Parity Bonds;
(7) the amount, if any, to be deposited from the proceeds of such Parity
Bonds in the Reserve Account to increase the amount therein to the Reserve Requirement or to the
CFD No. 2014-1 Reserve Account to increase the amount therein to the Proportionate Share,
provided that if the interest on such Parity Bonds is intended by the District to be excluded from the
gross income of the recipients thereof for federal income tax purposes, such amount shall not exceed
the maximum amount of proceeds that, in the opinion of Bond Counsel, can be so deposited without
causing the interest on such Parity Bonds to be included in the gross income of the recipients thereof
for federal income tax;
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(8) the form of such Parity Bonds; and
(9) such other provisions as are necessary or appropriate and not
inconsistent with this Indenture.
(c) The District shall have received the following documents or money or
securities, all of such documents dated or certified, as the case may be, as of the date of delivery of
such Parity Bonds by the Trustee (unless the Trustee shall accept any of such documents bearing a
prior date):
(1) a certified copy of the Supplemental Indenture authorizing the
issuance of such Parity Bonds;
(2) a written request of the District as to the delivery of such Parity
Bonds;
(3) an opinion of Bond Counsel to the District to the effect that (i) the
District has the right and power under the Act to adopt the Supplemental Indenture relating to such
Parity Bonds, and the Supplemental Indenture has been duly and lawfully adopted by the District, is
in full force and effect and is valid and binding upon the District and enforceable in accordance with
its terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other
similar laws relating to the enforcement of creditors' rights); (ii) the Indenture creates the valid
pledge which it purports to create of the Net Special Taxes and other amounts as provided in the
Indenture, subject to the application thereof to the purposes and on the conditions permitted by the
Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District,
enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and
the terms of the Indenture and all Supplemental Indentures thereto and are entitled to the benefits of
the Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and
validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture
and all such Supplemental Indentures; and a further opinion of Bond Counsel to the effect that,
assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will
not adversely affect the exclusion from gross income for federal income tax purposes of interest on
the Bonds and any Parity Bonds theretofore issued on a tax exempt basis, or the exemption from
State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds
theretofore issued;
(4) a certificate of the District containing such statements as may be
reasonably necessary to show compliance with the requirements of this Indenture;
(5) a certificate of an Independent Financial Consultant certifying that in
each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding
following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service
on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and
(6) Such further documents, money and securities as are required by the
provisions of this Indenture and the Supplemental Indenture providing for the issuance of Parity
Bonds.
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(d) So long as any Bonds remain outstanding or any amounts are owed to the
Bond Insurer by the District, without the prior written consent of the Bond Insurer, the District shall
not issue any Parity Bonds that permits or requires the Owner to tender such Parity Bonds for
purchase prior to the stated maturity thereof without the prior written consent of the Bond Insurer.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds
surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment
therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to
the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee
shall destroy such Bonds and Parity Bonds, as provided by law, and furnish to the District a
certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
to be signed or executed by Bondowners may be in any number of concurrent instruments of similar
tenor may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such
attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this
Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any
such instrument and of any instrument appointing any such attorney, may be proved by a signature
guarantee of any bank or trust company located within the United States of America. Where any
such instrument is executed by an officer of a corporation or association or a member of a partnership
on behalf of such corporation, association or partnership, such signature guarantee shall also
constitute sufficient proof of his authority.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be
registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all
purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the
interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her
legal representative. All such payments shall be valid and effectual to satisfy and discharge the
liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to
be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District
to such proof, it being intended that the Trustee or the District may accept any other evidence of the
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent
of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity
Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of
such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the
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Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such
Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the
Trustee in trust at such date, or for two years after the date of deposit of such money if deposited with
the Trustee in trust after the date when such Outstanding Bonds or Parity Bonds become due and
payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and
the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look
only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however,
that, before being required to make any such payment to the District, the Trustee at the written
request of the District or the Authority Trustee shall, at the expense of the District, cause to be mailed
by first-class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity
Bonds at their addresses as they appear on the registration books of the Trustee a notice that said
money remains unclaimed and that, after a date named in said notice, which date shall not be less
than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed
will be returned to the District. Any money held by the Trustee pursuant to this paragraph shall be
held uninvested and without any liability for interest.
Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District and the Bondowners and the provisions hereof shall be
construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined
adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall
be restored to their former positions, rights and remedies as if such suit, action or proceeding had not
been brought or taken.
After the issuance and delivery of the Bonds this Indenture shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5. [INSURER PROVISIONS TO COME]
Section 10.6. Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Net Special Taxes which is subordinate to the pledge hereunder, or which is payable
from the general fund of the District or from taxes or any source other than the Net Special Taxes and
other amounts pledged hereunder.
Section 10.7. Further Assurances. The District 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 Indenture, and for the better assuring
and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in
this Indenture.
Section 10.8. Entire Agreement; Severability. This Agreement and the exhibits hereto set
forth the entire agreement and understanding of the parties related to this transaction and supersedes
all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or
any portion thereof, contained in this Indenture, or the application thereof to any person or
circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture
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and the application of any such covenant, agreement or provision, or portion thereof, to other persons
or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the
Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall
retain all valid rights and benefits accorded to them under the laws of the State of California.
Section 10.9. Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class , postage prepaid, or personally delivered to the
City Manager of the City, 1 300 Centennial Way, Tustin, CA 92780, and all notices to the Trustee
shall be sent via courier or Electronic Means or electronic transmission or mailed, first class, postage
prepaid, or personally delivered to the Trustee, The Bank of New York Mellon Trust Company,
N.A., 333 S. Hope St., Ste. 2525, Los Angeles, CA 90071, Attention: Corporate Trust Services. Any
such notices or other communications furnished by electronic transmission shall be in the form of
attachments in PDF format. Any notices required to be given to the Bond Insurer with respect to the
Bonds or this Indenture shall be mailed, first class, postage prepaid, personally delivered or sent via
facsimile or electronic (email) transmission (with a portable document format or similar attachment)
to [INSURER], Attention: Re: Policy No. , Telephone: , Telecopier:
email:
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IN WITNESS WHEREOF, CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT
NO. 2014-1 (TUSTIN LEGACY/STANDARD PACIFIC) has caused this Bond Indenture to be
signed by its City Manager and Clerk, and The Bank of New York Mellon Trust Company, N.A. in
token of its acceptance of the duties of the Trustee created hereunder, has caused this Bond Indenture
to be signed in its corporate name by its officer identified below, all as of the day and year first above
written.
CITY OF TUSTIN COMMUNITY FACILITIES
DISTRICT NO. 2014-1 (TUSTIN
LEGACY/STANDARD PACIFIC)
City Manager of the City of Tustin, acting as the
legislative body of City of Tustin Community
Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific)
ATTEST:
City Clerk of the City of Tustin, acting as the
legislative body of City of Tustin Community
Facilities District No. 2014-1 (Tustin
Legacy/Standard Pacific)
[SIGNATURES CONTINUED ON NEXT PAGE.]
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[SIGNATURE PAGE CONTINUED.]
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
Authorized Officer
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EXHIBIT A
FORM OF 2025 SPECIAL TAX REFUNDING BOND
No. $[PRINCIPAL AMOUNT]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
SPECIAL TAX REFUNDING BOND, SERIES 2025
INTEREST RATE: MATURITYDATE: DATED DATE:
% September 1, 20 , 2025
REGISTERED OWNER: The Bank of New York Mellon Trust Company, N.A., as Trustee
under that certain Indenture of Trust dated as of June 1, 2025 by and
between the Tustin Financing Authority and The Bank of New York
Mellon Trust Company, N.A.
PRINCIPAL AMOUNT:
AND NO/100 DOLLARS
CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 2014-1 (TUSTIN
LEGACY/STANDARD PACIFIC) (the "District") situated in the County of Orange, State of
California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held
under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered
assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided,
the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest
Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the
date of authentication is an Interest Payment Date in which event interest shall be payable from such
date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined)
but prior to the immediately succeeding Interest Payment Date, in which event interest shall be
payable from the Interest Payment Date immediately succeeding the date of authentication, or
(iii) the date of authentication is prior to the close of business on the first Record Date in which event
interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at
the time of authentication of this Bond interest is in default, interest on this Bond shall be payable
from the last Interest Payment Date to which the interest has been paid or made available for
payment or, if no interest has been paid or made available for payment, interest on this Bond shall be
payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and
September 1 and the final maturity date of the Bonds (each an "Interest Payment Date"),
commencing [September 1, 2025] at the Interest Rate set forth above, until the Principal Amount
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hereof is paid or made available for payment. Except as otherwise provided in the Indenture, the
principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful
money of the United States of America upon presentation and surrender of this Bond at the Principal
Office of the Trustee, initially The Bank of New York Mellon Trust Company, N.A. (the "Trustee").
Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage
prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within
the United States of America, to the Registered Owner hereof as of the close of business on the
fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the
"Record Date") at such Registered Owner's address as it appears on the registration books
maintained by the Trustee.
This Bond is one of a duly authorized issue of "City of Tustin Community Facilities District
No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Refunding Bonds, Series 2025" (the
"Bonds") issued in the aggregate principal amount of $ pursuant to the Mello -Roos
Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California
Government Code (the "Act") for the purpose of refinancing outstanding special tax bonds of the
District, utilizing a portion of the debt service saving achieved through the issuance of the Bonds to
finance the Project, and paying certain costs related to the issuance of the Bonds. The issuance of the
Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City
Council of the City, acting in its capacity as the legislative body of the District (the "Legislative
Body"), on [May 20], 2025, and a Bond Indenture, dated as of June 1, 2025, by and between the
District and the Trustee, executed in connection therewith (the "Indenture"), and this reference
incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond
assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under,
and both are to be construed in accordance with, the laws of the State of California. Capitalized
terms not defined herein shall have the meanings set forth in the Indenture.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this
Bond are payable solely from the portion (the "Net Special Taxes") of the annual special taxes
authorized under the Act to be levied and collected within the District (the "Special Taxes") and
certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any
amounts for the payment hereof shall be limited to the Net Special Taxes pledged and collected,
which include foreclosure proceeds received following a default in payment of the Special Taxes and
other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent
that other provision for payment has been made by the Legislative Body, as may be permitted by law.
The District has covenanted for the benefit of the owners of the Bonds that under certain
circumstances described in the Indenture it will commence and diligently pursue to completion
appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied
for payment of principal and interest on the Bonds.
The Bonds maturing on or after September 1, 20_ may be redeemed, at the option of the
District from any source of funds on any date on or after September 1, 20 , in whole, or in part from
such maturities as are selected by the District and by lot within a maturity, at a redemption price
equal to the principal amount to be redeemed, together with accrued interest to the date of
redemption, without premium.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis
among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from
Prepayments deposited to the Redemption Account at the following redemption prices, expressed as
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a percentage of the principal amount to be redeemed, together with accrued interest to the redemption
date:
Redemption Dates
Redemption
Prices
Any Interest Payment Date from September 1, 20 through March 1, 20 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
The Bonds maturing on September 1, 20_ and September 1, 20_ are subject to mandatory
sinking fund redemption prior to maturity, in part on September 1, 20_ and September 1, 20_ and
on each September 1 thereafter by lot, in accordance with the schedules of sinking fund payments set
forth in the Indenture at a redemption price equal to the principal amount of the Bonds to be
redeemed, together with accrued interest to the redemption date, without premium.
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than 20 nor more than 45 days prior to the redemption date by first
class mail, postage prepaid, to the addresses set forth in the registration books. Notwithstanding the
foregoing, so long as the Authority or the Authority Trustee on the Authority's behalf is the
registered owner of the Bonds, no such notices need be provided. Neither a failure of the Registered
Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings
for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest
on the specified redemption date; provided that funds for the redemption are on deposit with the
Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights
except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both
principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the
absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any
integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of
other authorized denominations of the same issue and maturity, all as more fully set forth in the
Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or
denominations for the same aggregate principal amount of the same issue and maturity will be issued
to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of (i) any Bonds for
a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds
chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be
amended at any time, and in certain cases without notice to or the consent of the registered owners, to
the extent and upon the terms provided in the Indenture.
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THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF TUSTIN OR
OF THE DISTRICT FOR WHICH THE CITY OF TUSTIN OR THE DISTRICT IS OBLIGATED
TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES,
OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED
OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL
TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A
DEBT OF THE CITY OF TUSTIN, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as required by
law, and that the amount of this Bond, together with all other indebtedness of the District, does not
exceed any debt limit prescribed by the laws or Constitution of the State of California.
IN WITNESS WHEREOF, Community Facilities District No. 2014-1 of the City of Tustin
(Tustin Legacy/Standard Pacific) has caused this Bond to be dated as of , 2025, to be signed on
behalf of the District by the Mayor by his facsimile signature and attested by the facsimile signature
of the City Clerk.
Mayor of the City of Tustin
ATTEST:
City Clerk of the City of Tustin
[FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within -defined Indenture.
Dated: , 2025 The Bank of New York Mellon Trust Company, N.A.,
as Trustee
M.
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth
LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the
Bonds. A signed copy is on file in my office.
City Clerk of the City of Tustin
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is
the within -mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same on the books of the Trustee with full power of substitution in the
premises.
Dated:
Signature guaranteed:
NOTE: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Trustee.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any change
whatsoever.
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o �
C �
NEW ISSUE -FULL BOOK ENTRY
Stradling Yocca Carlson & Rauth
Draft dated 5102125
Rating: S&P: "AA" (Insured Bonds)
S&P: "A+" (Underlying/Uninsured Bonds)
See the caption "MISCELLANEOUS —Ratings"
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, under existing
statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with
certain covenants and requirements described in this Official Statement, interest (and original issue discount) on the Bonds is
excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the
federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue
discount) on the Bonds is exempt from State of California personal income taxes. See the caption "LEGAL MATTERS — Tax
Matters" herein with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax
imposed on certain large corporations.
$55,895,000*
TUSTIN FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS, SERIES 2025
Dated: Date of Delivery
Due: September 1 as shown on inside cover
The Bonds described herein are being issued by the Tustin Financing Authority (the "Authority") to: (i) acquire certain
special tax obligations of two community facilities districts (collectively, the "Community Facilities Districts"), formed by the City
of Tustin (the "Local Obligations"); (ii) purchase a municipal bond insurance policy to guarantee payment of the principal of and
interest on the Bonds; (iii) purchase a debt service reserve insurance policy for deposit in the Reserve Fund to fund 50% of the initial
Reserve Requirement and fund a cash deposit for the remaining 50% of the initial Reserve Requirement; and (iv) pay costs of
issuance of the Bonds. The Local Obligations are being issued to refund three outstanding series of bonds issued by said community
facilities districts. See "FINANCING PLAN."
The Bonds are payable solely from Revenues pledged by the Authority pursuant to that certain Indenture of Trust, dated as
of [June] 1, 2025 (the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee"). Revenues consist primarily of debt service on the Local Obligations, which are payable from special taxes
levied in the Community Facilities Districts.
The Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Interest on the Bonds is payable
semiannually on March 1 and September 1 of each year commencing September 1, 2025. The Bonds will be initially issued only in
book -entry form and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York
("DTC"), which will act as securities depository of the Bonds. Principal and interest (and premium, if any) on the Bonds is payable
by the Trustee to DTC, which will remit such payments to its participants for subsequent distribution to the beneficial owners of the
Bonds. See "THE BONDS — General Provisions" and "— Book -Entry Only System" herein.
The Bonds are subject to redemption prior to maturity as described herein. See "THE BONDS — Redemption. "
The scheduled payment of principal of and interest when due on the Bonds maturing September 1 of the years 20—
through 20_ inclusive (the "Insured Bonds") will be guaranteed under a municipal bond insurance policy (the "Policy") to be issued
concurrently with the delivery of the Bonds by [Insurer] (the "Insurer" or "_"). The Insurer will also issue a debt service reserve
insurance policy concurrently with the issuance of the Bonds to be credited to the Reserve Fund for the Bonds to satisfy 50% of the
initial Reserve Requirement. See `BOND INSURANCE" herein.
[Insurer Logo]
CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE AUTHORITY TO PAY THE PRINCIPAL OF
AND INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT
INVESTMENT RISKS, AND THE BONDS MAY NOT BE SUITABLE INVESTMENTS FOR MANY INVESTORS. SEE
THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS" FOR A DISCUSSION OF
CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET
FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS.
Maturity Schedule
(see inside cover)
The Bonds are offered when, as and if issued and accepted by Stifel, Nicolaus & Company, Incorporated, the Underwriter,
subject to the approval as to their legality by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, as Bond Counsel.
Certain legal matters will be passed upon for the Authority and the Community Facilities Districts by Woodruff, Spradlin & Smart, A
Professional Corporation, Costa Mesa, California, and by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, as
Disclosure Counsel, for the Underwriter by its counsel, Anzel Galvan LLP, San Francisco, California, and for the Trustee by its
counsel. It is anticipated that the Bonds in definitive form will be available for delivery to DTC or its agent on or about 2025.
Dated: 12025
[STIFEL LOGO]
Preliminary, subject to change.
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MATURITY SCHEDULE
TUSTIN FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS, SERIES 2025
Serial Bonds
Maturity Principal Interest
(September 1) Amount Rate Yield Price
$ % Term Bonds maturing September 1, ; Price: , to yield
$ % Term Bonds maturing September 1, ; Price: , to yield
I Insured Bond
%; CUSIPt
%; CUSIP f
c Priced to the optional redemption date of September 1, 20_, at par.
t CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf
of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2025 CUSIP Global Services. All rights
reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does
not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only.
None of the Authority, the City, the Community Facilities Districts, the Underwriter or their agents or counsel assume
responsibilityfor the accuracy ofsuch numbers.
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TUSTIN FINANCING AUTHORITY
BOARD OF DIRECTORS
Austin Lumbard, President
John Nielsen, Vice President
Ryan Gallagher, Director
Ray Schnell, Director
Lee K. Fink, Director
CITY OF TUSTIN
CITY COUNCIL
Austin Lumbard, Mayor
John Nielsen, Mayor Pro-Tem
Ryan Gallagher, Council Member
Ray Schnell, Council Member
Lee K. Fink, Council Member
CITY OFFICIALS
Aldo E. Schindler, City Manager
Jennifer King, Director of Finance/City Treasurer
David E. Kendig, City Attorney
PROFESSIONAL SERVICES
BOND COUNSEL / DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
AUTHORITY TRUSTEE / DISTRICT TRUSTEE
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc.
Irvine, California
SPECIAL TAX CONSULTANT
Webb Municipal Finance, LLC
Riverside, California
VERIFICATION AGENT
Causey Public Finance LLC
Denver, Colorado
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Investment in the Bonds, involves risks which are not appropriate for certain investors. Therefore,
only persons with substantial financial resources (in net worth or income) who understand (either alone or
with competent investment advice) those risks should consider such an investment.
Except where otherwise indicated, all information contained in this Official Statement has been
provided by the Tustin Financing Authority, the City of Tustin, and the Community Facilities Districts. No
dealer, broker, salesperson or other person has been authorized by the Authority, the City, the Community
Facilities Districts, the Trustee or the Underwriter to give any information or to make any representations in
connection with the offer or sale of the Bonds other than those contained herein; and, if given or made, such
other information or representations must not be relied upon as having been authorized by the Authority, the
City, the Community Facilities Districts, the Trustee or the Underwriter. 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 Bonds by a
person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
The information set forth herein which has been obtained from third party sources is believed to be
reliable but is not guaranteed as to accuracy or completeness by the Community Facilities Districts, the City or
the Authority. This Official Statement is not to be construed as a contract with the purchasers or Owners of the
Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of
opinion, whether or not expressly so described herein, are intended solely as such are not to be construed as
representations of fact.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as a
part of, its responsibilities to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Underwriter does not guarantee the accuracy of
completeness of such information.
The information and expressions of opinion herein are subject to change without notice and neither the
delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Authority, the City, the Community Facilities
Districts or any other parties described herein since the date hereof. All summaries of the Indenture, the Local
Obligation Indentures or other documents are made subject to the provisions of such documents respectively
and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to
such documents on file with the City for further information in connection therewith. While the City maintains
an internet website for various purposes, none of the information on that website is incorporated by reference
herein or intended to assist investors in making any investment decision or to provide any continuing
information with respect to the Bonds or any other bonds or obligations of the Authority, the City or the
Community Facilities Districts. Any such information that is inconsistent with the information set forth in this
Official Statement should be disregarded.
Certain statements included or incorporated by reference in this Official Statement constitute
"forward -looking statements" within the meaning of the United States Private Securities Litigation Reform Act
of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of
the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the
terminology used such as "plan," "expect," "estimate," "project," "budget" or other similar words.
The achievement of certain results or other expectations contained in such forward -looking statements
involve known and unknown risks, uncertainties and other factors which may cause actual results, performance
or achievements described to be materially different from any future results, performance or achievements
expressed or implied by such forward -looking statements. The Authority does not plan to issue any updates or
revisions to the forward -looking statements set forth in this Official Statement. The Authority is obligated to
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provide continuing disclosure for certain historical information only. See the caption "MISCELLANEOUS
Continuing Disclosure" herein.
[Insurer] ("_") makes no representation regarding the Bonds or the advisability of investing in the
Bonds. In addition, _ has not independently verified, makes no representation regarding, and does not accept
any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure
contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding
supplied by _ and presented under the heading `BOND INSURANCE" and Appendix H — "SPECIMEN
MUNICIPAL BOND INSURANCE POLICY."]
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE
BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE.
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[INSERT AGGREGATE MAP]
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TABLE OF CONTENTS
Page
INTRODUCTION................................................................................................................................................1
FinancingPurpose............................................................................................................................................1
TheBonds; The Local Obligations...................................................................................................................2
LegalAuthority ................................................................................................................................................. 3
Sources of Payment for the Bonds and the Local Obligations.......................................................................... 3
Descriptionof the Bonds.................................................................................................................................. 4
TheCity ............................................................................................................................................................ 4
TheAuthority ....................................................................................................................................................4
Professionals Involved in the Offering.............................................................................................................4
ContinuingDisclosure...................................................................................................................................... 5
FINANCINGPLAN.............................................................................................................................................5
Purpose of Issue and the Refunding Plan......................................................................................................... 5
Estimated Sources and Uses of Funds.............................................................................................................. 6
THEBONDS........................................................................................................................................................7
GeneralProvisions............................................................................................................................................ 7
Redemption....................................................................................................................................................... 7
Payment, Registration, Transfer and Exchange of Bonds..............................................................................10
Book -Entry Only System................................................................................................................................11
Estimated Debt Service Schedules: Bonds and Local Obligations................................................................11
Debt Service Coverage for the Bonds.............................................................................................................14
SECURITY FOR THE BONDS.........................................................................................................................14
General............................................................................................................................................................14
Revenuesand Flow of Funds..........................................................................................................................14
ReserveFund..................................................................................................................................................16
SurplusFund...................................................................................................................................................18
No Additional Bonds Except to Refund Bonds..............................................................................................18
[BOND INSURANCE]......
19
SECURITY FOR THE LOCAL OBLIGATIONS.............................................................................................19
General............................................................................................................................................................19
LocalObligation Indentures...........................................................................................................................20
LocalObligation Parity Bonds.......................................................................................................................21
Priorityof Lien...............................................................................................................................................22
Covenants of the Community Facilities Districts...........................................................................................22
Special Taxes Are Not Within Teeter Plan.....................................................................................................22
THE COMMUNITY FACILITIES DISTRICTS...............................................................................................23
The Community Facilities Districts in the Aggregate....................................................................................23
TheLocal Obligations....................................................................................................................................26
SPECIALRISK FACTORS...............................................................................................................................26
Risks of Real Estate Secured Investments Generally.....................................................................................27
The Bonds are Limited Obligations of the Authority .....................................................................................27
NoObligation of the City ...............................................................................................................................27
Varying Maturities of the Local Obligations..................................................................................................28
No Cross-Collateralization Between Community Facilities Districts............................................................28
Potential Early Redemption of Bonds from Prepayments or Other Sources..................................................28
PropertyValues..............................................................................................................................................28
NaturalDisasters.............................................................................................................................................29
HazardousSubstances....................................................................................................................................31
Cybersecurity.................................................................................................................................................. 32
Parity Taxes and Special Assessments...........................................................................................................32
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TABLE OF CONTENTS
(continued)
Page
Payment of the Special Tax is not a Personal Obligation of the Owners .......................................................
32
Disclosures to Future Purchasers....................................................................................................................33
SpecialTax Delinquencies..............................................................................................................................33
Insufficiencyof Special Taxes........................................................................................................................34
Risks Associated with Bond Insurance...........................................................................................................35
FDIC/Federal Government Interests in Properties..........................................................................................35
Bankruptcyand Foreclosure...........................................................................................................................36
Funds Invested in the County Investment Pool..............................................................................................37
NoAcceleration Provision..............................................................................................................................37
Limitationson Remedies................................................................................................................................
37
Lossof Tax Exemption...................................................................................................................................37
LimitedSecondary Market.............................................................................................................................38
Proposition218...............................................................................................................................................38
BallotInitiatives..............................................................................................................................................40
LEGALMATTERS............................................................................................................................................40
TaxMatters..................................................................................................................................................... 40
Absenceof Litigation.....................................................................................................................................41
LegalOpinion................................................................................................................................................. 41
MISCELLANEOUS...........................................................................................................................................42
Ratings............................................................................................................................................................ 42
Verification of Mathematical Accuracy..........................................................................................................42
Underwriting................................................................................................................................................... 43
MunicipalAdvisor..........................................................................................................................................43
ContinuingDisclosure....................................................................................................................................43
AdditionalInformation................................................................................................................................... 45
APPENDIX A INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS.............A-1
APPENDIX B SUMMARY OF PRINCIPAL LEGAL DOCUMENTS....................................................... B-1
APPENDIX C DEMOGRAPHIC INFORMATION REGARDING THE COUNTY OF ORANGE
AND THE CITY OF TUSTIN.............................................................................................. C-1
APPENDIX D-1 RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
COMMUNITY FACILITIES DISTRICT NO. 06-1..........................................................D-1-1
APPENDIX D-2 RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
COMMUNITY FACILITIES DISTRICT NO.2014-01....................................................D-2-1
APPENDIX E FORM OF BOND COUNSEL OPINION............................................................................. E-1
APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT..................................................F-1
APPENDIX G DTC AND THE BOOK -ENTRY -ONLY SYSTEM.............................................................G-1
APPENDIX H SPECIMEN MUNICIPAL BOND INSURANCE POLICY.................................................H-1
ii
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OFFICIAL STATEMENT
$55,895,000*
TUSTIN FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS, SERIES 2025
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and Appendices hereto (the
"Official Statement'), is to provide certain information concerning the sale and issuance of $55,895,000*
Tustin Financing Authority Special Tax Revenue Refunding Bonds, Series 2025 (the "Bonds").
This Introduction is not a summary of this Official Statement. It is only a brief description of and
guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement
and the documents summarized or described herein. A full review should be made of the entire Official
Statement. The offering of the Bonds to potential investors is made only by means of the entire Official
Statement.
Financing Purpose
Purpose of the Bonds. The Bonds are being issued by the Tustin Financing Authority (the
"Authority") to:
(i) acquire the "Local Obligations" described below (see "FINANCING PLAN" herein);
(ii) purchase a municipal bond insurance policy (the "Policy") issued by [Insurer] (the
"Insurer" or "_") for the purpose of paying the principal of and interest on the Insured Bonds when due;
(iii) purchase a reserve policy issued by the Insurer to be credited to the Reserve Fund for
the Bonds (the "Reserve Policy") to satisfy 50% of the Reserve Requirement as of the date of issuance of the
Bonds;
(iv) fund a cash deposit to the Reserve Fund for the remaining 50% of the Reserve
Requirement as of the date of issuance of the Bonds; and
(v) pay the costs of issuing the Bonds.
Purpose of the Local Obligations. The net proceeds of the Local Obligations, along with other
available funds, will be used to make deposits into (a) an escrow fund (the "CFD No. 06-1 Escrow Fund") to
be held by U.S. Bank Trust Company, National Association, as escrow agent (the "CFD No. 06-1 Escrow
Agent') pursuant to an Escrow Agreement dated as of [June] 1, 2025 (the "CFD No. 06-1 Escrow
Agreement') relating to the Prior CFD No. 06-1 Bonds (defined below) for the purpose of redeeming all of the
outstanding Prior CFD No. 06-1 Bonds, and (b) an escrow fund (the "CFD No. 2014-1 Escrow Fund") to be
held by The Bank of New York Mellon Trust Company, N.A., as escrow agent (the "CFD No. 2014-1 Escrow
Agent') pursuant to an Escrow Agreement, dated as of [June] 1, 2025 (the "CFD No. 2014-1 Escrow
Agreement') entered into with respect to the Prior CFD No. 2014-1 Bonds (defined below) for the purpose of
redeeming all of the outstanding Prior CFD No. 2014-1 Bonds. See "FINANCING PLAN" herein.
* Preliminary, subject to change.
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The Bonds; The Local Obligations
The Bonds. The Bonds are payable from "Revenues," as defined below, generally consisting of
revenues received by the Authority as the result of the payment of debt service on the Local Obligations, and
amounts held in the funds and accounts established and held for the benefit of the Bonds under the Indenture
(as defined below).
Local Obligations. The "Local Obligations" consist of the two separate series of special tax bonds
described below issued by the following two community facilities districts formed by the City of Tustin (the
"City") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1,
Division 2, Title 5 of the Government Code of the State of California (the "Mello -Roos Act"):
(a) The City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus
Villages) ("CFD No. 06-1"); and
(b) The City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard
Pacific) ("CFD No. 2014-1").
CFD No. 06-1 and CFD No. 2014-1 are each referred to herein as a "Community Facilities District"
and collectively as the "Community Facilities Districts."
CFD No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2025:
$[34,090,000]* The City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages)
Special Tax Refunding Bonds, Series 2025 (the "CFD No. 06-1 Bonds") are being issued by CFD No. 06-1 to
refund the outstanding City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus
Villages) Special Tax Refunding Bonds, Series 2015A and City of Tustin Community Facilities District No.
06-1 (Tustin Legacy/Columbus Villages) Special Tax Bonds, Series 2015B (together the "Prior CFD No. 06-1
Bonds"). The CFD No. 06-1 Bonds are payable from Special Tax A (as defined in the Rate and Method with
respect to CFD No. 06-1) levied on Taxable Property (as defined in the Rate and Method with respect to CFD
No. 06-1) in CFD No. 06-1. Special Tax B (as defined in the Rate and Method for CFD No. 06-1) is levied to
pay for services and maintenance and does not secure, and is not available to pay, the CFD No. 06-1 Bonds.
CFD No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Refunding Bonds, Series 2025:
$[21,805,000]* The City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific)
Special Tax Refunding Bonds, Series 2025 (the "CFD No. 2014-1 Bonds") are being issued by CFD No. 2014-
1 to refund the outstanding City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard
Pacific) Special Tax Bonds, Series 2015A (the "Prior CFD No. 2014-1 Bonds," and together with the Prior
CFD No. 06-1 Bonds, the "Prior Bonds"). The CFD No. 2014-1 Bonds are payable from Special Tax A (as
defined in the Rate and Method with respect to CFD No. 2014-1) levied on Taxable Property (as defined in the
Rate and Method with respect to CFD No. 2014-1) in CFD No. 2014-1. Special Tax B (as defined in the Rate
and Method for CFD No. 2014-1) is levied to pay for services and maintenance and does not secure, and is not
available to pay, the CFD No. 2014-1 Bonds.
When referred to herein, "Special Tax" refers solely to the "Special Tax A" as defined in the Rate and
Method for each of the Local Obligations, as appliable.
See Appendix D-1 — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
COMMUNITY FACILITIES DISTRICT NO. 06-1," and Appendix D-2 — "RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAXES FOR COMMUNITY FACILITIES DISTRICTS CFD NO. 2014-
1."
Preliminary, subject to change.
2
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Legal Authority
The Bonds. The Bonds are being issued under Article 4 of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the "Act") and an Indenture of Trust dated as of [June] 1, 2025
(the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee").
The Local Obligations. The Local Obligations are being issued pursuant to the Mello -Roos Act and
two separate bond indentures, each dated as of [June] 1, 2025 and each by and between a Community Facilities
District and The Bank of New York Mellon Trust Company, N.A., as trustee (each, a "Local Obligation
Indenture" and together, the "Local Obligation Indentures")
Sources of Payment for the Bonds and the Local Obligations
The Bonds. The Bonds are secured by a first lien on and pledge of all of the Revenues. "Revenues"
are defined in the Indenture to include:
(a) all amounts received by the Trustee from the Local Obligations;
(b) any proceeds of the Bonds originally deposited with the Trustee and all moneys deposited and
held from time to time by the Trustee in the funds and accounts established under the Indenture with respect to
the Bonds (other than the Costs of Issuance Fund, Administrative Expense Fund, the Rebate Fund and the
Surplus Fund); and
(c) investment income with respect to any moneys held by the Trustee in the funds and accounts
established under the Indenture with respect to the Bonds (other than investment income on moneys held in the
Costs of Issuance Fund, Administrative Expense Fund, the Rebate Fund and the Surplus Fund).
Certain Funds Not Pledged. Amounts held in the Costs of Issuance Fund, Administrative Expense
Fund, the Rebate Fund and the Surplus Fund are not pledged to the repayment of the Bonds.
See "SECURITY FOR THE BONDS — Revenues and Flow of Funds" herein.
Reserve Fund for the Bonds. A Reserve Fund for the Bonds is established pursuant to the Indenture
in an amount equal to the Reserve Requirement. The Reserve Requirement for the Bonds, as of the date of
issuance of the Bonds, equals $ . The Indenture establishes within the Reserve Fund an account with
respect to each series of Local Obligations (each a "Reserve Account"). The Insurer has made a commitment
to issue, simultaneously with the issuance of the Bonds, the Reserve Policy in the amount equal to 50% of the
Reserve Requirement as of the date of issuance of the Bonds which will be credited to the Reserve Accounts in
the amount of each Community Facilities District's Proportionate Share (as defined below), effective as of the
date of issuance of the Bonds. The remaining 50% of the Reserve Requirement as of the date of issuance of
the Bonds will be funded from the proceeds of the Local Obligations in the amount of each Community
Facilities District's Proportionate Share as of the date of issuance of the Bonds. See "SECURITY FOR THE
BONDS — Revenues and Flow of Funds" and "— Reserve Fund" herein.
Bond Insurance. Concurrently with the issuance of the Bonds, the Insurer will issue the Policy for the
Insured Bonds. See the caption `BOND INSURANCE." A specimen of the Policy is set forth in Appendix H.
Local Obligations. Each series of Local Obligations is secured by Net Special Taxes collected in the
applicable Community Facilities District as a result of the levy of the respective Special Taxes. Net Special
Taxes are the respective Gross Taxes which remain after the payment of respective Administrative Expenses
up to the amount permitted by the applicable Local Obligation Indenture. See "SECURITY FOR THE
LOCAL OBLIGATIONS — Local Obligation Indentures.
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The Local Obligations are not cross -collateralized. In other words, Special Taxes from one
Community Facilities District cannot be used to cover any shortfall in the payment of debt service on the
Local Obligation of another Community Facilities District. However, the Reserve Fund and the Reserve
Accounts therein held by the Trustee and funded with the deposit therein of the Reserve Policy and proceeds
of the Local Obligations will be available in the event of delinquent Revenues to the extent set forth in the
Indenture. See "SECURITY FOR THE BONDS — Reserve Fund" herein.
Description of the Bonds
Payments. Interest is payable semiannually on March 1 and September 1 of each year, commencing
September 1, 2025. Principal of and premium, if any, on the Bonds shall be payable by the Trustee. See
"THE BONDS — General Provisions" and "— Book -Entry Only System" herein.
Denominations. The Bonds will be issued in denominations of $5,000 each or integral multiples
thereof.
Redemption. The Bonds are subject to redemption prior to their maturity. See "THE BONDS —
Redemption" herein.
Registration, Transfers and Exchanges. The Bonds will be issued as fully registered bonds,
registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York
("DTC"), and will be available to actual purchasers of the Bonds (the "Beneficial Owners") under the
book -entry system maintained by DTC. See "THE BONDS — Payment, Registration, Transfer and Exchange
of Bonds" and "— Book -Entry Only System."
The City
The City is located in the central portion of the County of Orange (the "County"), California and
encompasses approximately 11 square miles. The City was incorporated on September 21, 1927 as a general
law city. As of [January 1, 2024], the City had a population of approximately [78,844].
Neither the Bonds nor the Local Obligations are a debt of the City, and no revenues of the City
are pledged to repayment of the Bonds or the Local Obligations.
The Authority
The Authority was formed pursuant to the provisions of Articles 1, 2 and 4 of Chapter 5 of Division 7
of Title 1 of the Government Code of the State of California (the "Act") and the Joint Exercise of Powers
Agreement, dated as of March 1, 2025 (the "JPA Agreement"), by and between the City and the Tustin
Housing Authority to assist in financing public capital improvements undertaken by either member. The City
Council of the City serves as the Governing Board of the Authority.
Professionals Involved in the Offering
All proceedings in connection with the issuance of the Bonds are subject to the approval of Stradling
Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel. Woodruff, Spradlin & Smart, A
Professional Corporation, Costa Mesa, California, will render a legal opinion on certain matters for the
Authority and the Community Facilities Districts. Stradling Yocca Carlson & Rauth LLP, Newport Beach,
California, will serve as Disclosure Counsel to the Authority and the Community Facilities Districts. Webb
Municipal Finance, LLC, Riverside, California is acting as Special Tax Consultant to the Community Facilities
Districts. The Bank of New York Mellon Trust Company, N.A., Los Angeles, California, will act as Trustee
with respect to the Bonds and the Local Obligations and Escrow Agent. Stifel, Nicolaus & Company,
Incorporated, is acting as underwriter in connection with the issuance and delivery of the Bonds. Anzel
4
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Galvan LLP, San Francisco, California, is serving as Underwriter's Counsel. Causey Public Finance LLC, will
provide escrow verification services.
Payment of the fees of Bond Counsel, Disclosure Counsel, the Municipal Advisor, the Underwriter
and counsel to the Underwriter is contingent upon issuance of the Bonds. Stradling Yocca Carlson & Rauth
LLP, represents the Underwriter in connection with financings unrelated to the Authority, the City and the
Community Facilities Districts.
Continuing Disclosure
The Authority will enter into a Continuing Disclosure Agreement with Webb Municipal Finance,
LLC, and will covenant therein for the benefit of holders and beneficial owners of the Bonds to provide certain
financial information and operating data relating to the Authority and the Community Facilities Districts by
not later than April 1 following the end of its fiscal year (which currently ends June 30), commencing with the
report for the 2024-25 Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain
enumerated events. The first Annual Report will be due April 1, 2026. The Annual Report and notices of
certain listed events (the "Listed Events") will be filed with the Electronic Municipal Market Access System of
the Municipal Securities Rulemaking Board available on the Internet at http://emma.msrb.org ("EMMA").
The specific nature of the information to be contained in each Annual Report and any notices of the Listed
Events is set forth in Appendix F — "FORM OF CONTINUING DISCLOSURE AGREEMENT." These
covenants will be made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5) (the
"Rule"). See "MISCELLANEOUS — Continuing Disclosure" herein.
FINANCING PLAN
Purpose of Issue and the Refunding Plan
Acquisition of the Local Obligations. The Authority is issuing the Bonds to purchase the Local
Obligations.
Refunding of the Prior CFD No. 06-1 Bonds: Proceeds of the CFD No. 06-1 Bonds will be
deposited into the CFD No. 06-1 Escrow Fund and will be used to defease the outstanding Prior CFD No. 06-1
Bonds and pay the scheduled principal and interest coming due on the Prior CFD No. 06-1 Bonds on
September 1, 2025 and redeem the Prior CFD No. 06-1 Bonds maturing on and after September 1, 2026 on
September 1, 2025, at a redemption price equal to the principal amount of the Prior CFD No. 06-1 Bonds to be
redeemed, together with accrued interest thereon to the redemption date, which will result in the defeasance
and redemption of the outstanding Prior CFD No. 06-1 Bonds.
Refunding of the Prior CFD No. 2014-1 Bonds: Proceeds of the CFD No. 2014-1 Bonds will be
deposited into the CFD No. 2014-1 Escrow Fund and will be used to defease the outstanding Prior CFD No.
2014-1 Bonds and pay the scheduled principal and interest coming due on the Prior CFD No. 2014-1 Bonds on
September 1, 2025 and redeem the Prior CFD No. 2014-1 Bonds maturing on and after September 1, 2026 on
September 1, 2025, at a redemption price equal to the principal amount of the Prior CFD No. 2014-1 Bonds to
be redeemed, together with accrued interest thereon to the redemption date, which will result in the defeasance
and redemption of the outstanding Prior CFD No. 2014-1 Bonds.
Certain moneys in the existing funds and accounts relating to the Prior Bonds also will be transferred
to the CFD No. 06-1 Escrow Fund and the CFD No. 2014-1 Escrow Fund, as applicable, and be applied to the
defeasance and redemption of the applicable Prior Bonds. See "— Estimated Sources and Uses of Funds"
below. See also "MISCELLANEOUS — Verification of Mathematical Accuracy" below.
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Estimated Sources and Uses of Funds
The Bonds. The anticipated sources and uses of funds relating to the Bonds are as follows:
Total
Sources:
Principal Amount of the Bonds
[Plus/Less] Original Issue [Premium/Discount]
Less Underwriter's Discount
Total Sources
Uses:
Purchase of Local Obligations(')
Costs of Issuance(')
Reserve Fund0)
Total Uses
(1) Proceeds of the Bonds will be used to acquire the Local Obligations. See the sources and uses of funds for the Local
Obligations below.
(2) The Trustee will retain and deposit in the Costs of Issuance Fund each Community Facilities District's Proportionate Share
of the costs of issuance of the Bonds.
(3) Equal to 50% of the Reserve Requirement as of the date of issuance of the Bonds. The remaining 50% will be satisfied by
the Reserve Policy. The Trustee will retain and deposit in the Reserve Accounts of the Reserve Fund each Community
Facilities District's Proportionate Share of the Reserve Requirement. See "SECURITY FOR THE BONDS —Reserve
Fund."
Local Obligations. The anticipated sources and uses of funds relating to the Local Obligations and
prior funds on hand are as follows:
CFD No.
CFD No. 2014-1
06-1 Bonds Bonds
Sources
Principal Amount
Plus Original Issue
Plus Prior Funds
Total Sources
Uses
Escrow Fund(')
Underwriter's Discount
Costs of Issuance(')
Administrative Expense Fund
Interest Account
Reserve Fun&')
Total Uses
(1) See "—Purpose of Issue and the Refunding Plan."
(2) Reflects each Community Facilities District's proportionate share of the costs of issuance of the Bonds, including fees for
the Trustee, legal fees, printing costs, rating agency fees, bond insurance and reserve surety premiums and other costs of
issuance.
(3) Represents each Local Obligation's deposit into such Community Facilities District's Reserve Account. Additionally, the
Issuer has made a commitment to issue, simultaneously with the issuance of the Bonds, the Reserve Policy in the amount
equal to 50% of the Reserve Requirement as of the date of issuance of the Bonds which will be credited to the Reserve
Accounts in the amount of each Community Facilities District's Proportionate Share, effective as of the date of issuance of
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the Bonds. The remaining 50% of the Reserve Requirement as of the date of issuance of the Bonds will be funded from the
proceeds of the Local Obligations in the amount of each Community Facilities District's Proportionate Share as of the date
of issuance of the Bonds.
THE BONDS
General Provisions
The Bonds will be dated their date of delivery, and the Bonds will be issued in the aggregate principal
amounts set forth on the inside front cover hereof. The Bonds will bear interest from their dated date at the
rates per annum set forth on the inside front cover hereof, payable semiannually on each March 1 and
September 1, commencing September 1, 2025 (each, an "Interest Payment Date"), and will mature in the
amounts and on the dates set forth on the inside front cover hereof. The Bonds will be issued in fully
registered form in denominations of $5,000 each or any integral multiple thereof.
Interest on the Bonds will be payable on each Interest Payment Date to the person whose name
appears on the Bond Register as the Owner as of the Record Date immediately preceding each Interest
Payment Date. Interest will be paid by check of the Trustee mailed on the Interest Payment Date by first class
mail, postage prepaid, to the Owner at the address as it appears on the Bond Register or by wire transfer to an
account in the United States of America made on the Interest Payment Date upon written instructions of any
Owner of $1,000,000 or more in aggregate principal amount of Bonds of a Series provided to the Trustee in
writing at least five (5) Business Days before the Record Date for such Interest Payment Date. The Bonds are
issued in fully registered form and will be registered in the name of Cede & Co., as nominee of DTC. DTC
will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book -
entry form only in denominations of $5,000 and any integral multiple. See the subsection hereof entitled "—
Book -Entry Only System."
Principal of and premium (if any) on any Bond will be paid upon presentation and surrender thereof,
at maturity or the prior redemption thereof, at the Trust Office of the Trustee.
Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication
thereof, unless (a) it is authenticated after a Record Date (the 15th calendar day of the month preceding the
month in which such Interest Payment Date occurs, whether or not such day is a Business Day) and on or
before the following Interest Payment Date, in which event it will bear interest from such Interest Payment
Date; or (b) it is authenticated on or before the first Record Date, in which event it will bear interest from the
Dated Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in
default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid
or made available for payment thereon, or from the Dated Date if no interest has been paid or made available
for payment.
Redemption'
Optional Redemption. The Bonds maturing on or before September 1, 20 are not subject to
optional redemption prior to maturity. The Bonds maturing on or after September 1, 20— may be redeemed at
the option of the Authority, from any source of available funds, prior to maturity on any date on or after
September 1, 20 as a whole, or in part from maturities of the Local Obligations simultaneously redeemed, if
any redemption of Local Obligations is being made in conjunction with such optional redemption, and
otherwise from such maturities as are selected by the Authority, and by lot within a maturity, at a redemption
price equal to the par amount of the Bonds to be redeemed, together with accrued interest thereon to the date of
redemption, without premium.
Preliminary, subject to change.
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If the source of funds to optionally redeem the Bonds is to be from a redemption of a Local
Obligation, then prior to consenting to the optional redemption of any Local Obligation which it has purchased
and is held under the Indenture, the Authority will deliver to the Trustee a certificate of an Independent
Accountant or an Independent Financial Consultant verifying that, following such optional redemption of the
Local Obligations and redemption of Bonds, the principal and interest generated from the remaining Local
Obligations is adequate to make the timely payment of principal and interest due on the Bonds remaining
Outstanding following such optional redemption.
Special Redemption. The Bonds are subject to special redemption on any Interest Payment Date from
proceeds of early redemption of Local Obligations from the prepayment of Special Taxes within a Community
Facilities District, as applicable, in whole or in part, from maturities corresponding proportionately to the
maturities of the Local Obligations simultaneously redeemed, at the principal amount thereof, plus a premium
expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of
redemption thereof:
Redemption Dates Redemption Prices
Any Interest Payment Date from September 1, 2025 through March 1, 2033 103%
September 1, 2033 and March 1, 2034 102
September 1, 2034 and March 1, 2035 101
September 1, 2035 and any Interest Payment Date thereafter 100
Fourteen parcels located in CFD No. 06-1, including one parcel consisting of 240 apartment units,
were previously subject to the levy of Special Tax A but have prepaid Special Tax A applicable to such parcels
in full. See "SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Prepayments or Other
Sources."
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20_ are subject to
mandatory sinking fund redemption prior to maturity, in part, on September 1, 20 , and on each September 1
thereafter by lot, from sinking fund payments at a redemption price equal to the principal amount of Bonds to
be redeemed, together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
The Bonds maturing on September 1, 20— are subject to mandatory sinking fund redemption prior to
maturity, in part, on September 1, 20—, and on each September 1 thereafter by lot, from sinking fund
payments at a redemption price equal to the principal amount of Bonds to be redeemed, together with accrued
interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the Bonds maturing September 1, 20_ or September 1, 20_ are redeemed pursuant
to the Indenture, the sinking fund payments for such Bonds will be reduced as nearly as practicable on a
proportionate basis in integral multiples of $5,000.
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Notice of Redemption. So long as the Bonds are held in book -entry form, notice of redemption will
be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book -entry only
system. Neither the Authority nor the Trustee is responsible for notifying the Beneficial Owners, who are to
be notified in accordance with the procedures in effect for the DTC book -entry system. See Appendix G —
"DTC AND THE BOOK -ENTRY -ONLY SYSTEM."
The Trustee on behalf, and at the expense of, the Authority shall send notice of any redemption to the
respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Bond
Register, and to the Securities Depositories and to the Information Services, at least twenty (20) but not more
than sixty (60) days prior to the date fixed for redemption; provided, however, so long as the Bonds are
registered in the name of the nominee of DTC, notice shall be given in such manner as complies with the
requirements of DTC. Neither failure to receive any such notice so sent nor any defect therein shall affect the
validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon.
Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption
price and shall designate the CUSIP numbers, Bond numbers and the maturity or maturities (in the event of
redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall
require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption
price, giving notice also that further interest on such Bonds will not accrue after the redemption date.
In addition to the foregoing notice, further notice shall be sent by the Trustee in said form to any
Bondowner whose Bond has been called for redemption but who has failed to submit his Bond for payment by
the date which is sixty days after the redemption date, but no defect in said further notice nor any failure to
give or receive all or any portion of such further notice shall in any manner defeat the effectiveness of a call for
redemption.
Unless funds for the optional redemption of any Bonds are irrevocably deposited with the Trustee
prior to rendering notice of redemption to the Bondowners, such notice shall state that such redemption is
subject to the deposit of funds by the Authority. Any notice of optional redemption shall be cancelled and
annulled if for any reason funds will not be or are not available on the date fixed for redemption for the
payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of
Default under the Indenture. The Authority and the Trustee shall have no liability to the Owners or any other
party related to or arising from such rescission of redemption. The Trustee shall send notice of such rescission
of redemption in the same manner as the original notice of redemption was sent.
Selection of Bonds of a Maturity for Redemption. Unless otherwise provided under the Indenture,
whenever provision is made in the Indenture for the redemption of less than all of the Bonds of a maturity, the
Trustee shall select the Bonds to be redeemed from all Bonds of such maturity not previously called for
redemption, by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For
purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 authorized
denominations, and such separate authorized denominations shall be treated as separate Bonds which may be
separately redeemed.
Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then
upon surrender of such Bond the Authority shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same maturity date, of authorized
denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the
payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have
been duly provided, such Bonds so called will cease to be entitled to any benefit under the Indenture other than
the right to receive payment of the redemption price, and no interest will accrue thereon from and after the
redemption date specified in such notice. All Bonds redeemed pursuant to the Indenture will be cancelled and
destroyed.
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See "SUMMARY OF THE LOCAL OBLIGATION INDENTURES —Redemption of Bonds and
Parity Bonds" in Appendix B hereto for a description of the redemption provisions of the Local Obligations.
Payment, Registration, Transfer and Exchange of Bonds
Book Entry Only System. The Bonds will be issued as fully registered bonds, registered in the name
of Cede & Co. as nominee of DTC, and will be available to actual purchasers of the Bonds (the `Beneficial
Owners") in the denominations set forth above, under the book -entry system maintained by DTC, only through
brokers and dealers who are or act through DTC Participants (as defined in Appendix B) as described herein.
Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See "THE BONDS —
Book -Entry Only System." In the event that the book -entry -only system is no longer used with respect to the
Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See "THE BONDS —
Book -Entry Only System."
Transfer of Bonds. Subject to the book -entry only provisions of the Indenture, any Bond may in
accordance with its terms, be transferred, upon the Bond Register, by the person in whose name it is registered,
in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by
delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any
Bond is surrendered for transfer, the Authority will execute and the Trustee will thereupon authenticate and
deliver to the transferee a new Bond or Bonds of like tenor, maturity and aggregate principal amount. No
Bonds selected for redemption will be subject to transfer pursuant to the Indenture nor will any Bond be
subject to transfer during the fifteen days prior to the selection of Bonds for redemption.
The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in
connection with any transfer or exchange will be paid by the Authority. However, the Owners of the Bonds
will be required to pay any tax or other governmental charge required to be paid for any exchange or
registration of transfer and the Owners of the Bonds will be required to pay the reasonable fees and expenses
of the Trustee and Authority in connection with the replacement of any mutilated, lost or stolen Bonds.
The transferor will also provide or cause to be provided to the Trustee all information necessary to
allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any
cost basis reporting obligations under Internal Revenue Code Section 6045. The Trustee may rely on the
information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Exchange of Bonds. Subject to the book -entry only provisions of the Indenture, Bonds may be
exchanged at the Trust Office of the Trustee for Bonds of the same tenor and maturity and of other authorized
denominations. No Bonds selected for redemption will be subject to exchange pursuant to the Indenture, nor
will any Bond be subject to exchange during the fifteen days prior to the selection of Bonds for redemption.
The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with
any transfer or exchange will be paid by the Authority.
Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive
Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, will be of
such denominations as may be determined by the Authority and may contain such reference to any of the
provisions of the Indenture as may be appropriate. Every temporary Bond will be executed by the Authority
and be registered and authenticated by the Trustee upon the same conditions and in substantially the same
manner as the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive
Bonds without delay, and thereupon the temporary Bonds may be surrendered for cancellation, in exchange
therefor at the Trust Office of the Trustee, and the Trustee will authenticate and deliver in exchange for such
temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until
so exchanged, the temporary Bonds will be entitled to the same benefits under the Indenture as definitive
Bonds authenticated and delivered thereunder.
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Bond Register. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the
registration and transfer of the Bonds, which will be the Bond Register and will at all times during regular
business hours be open to inspection by the Authority upon reasonable prior written notice; and, upon
presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register
or transfer or cause to be registered or transferred, on said records, Bonds as provided in the Indenture.
Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond becomes mutilated, the Authority, at the
expense of the Owner of said Bond, will execute, and the Trustee will thereupon authenticate and deliver, a
new Bond of like tenor and authorized denomination in exchange and substitution for the Bond so mutilated,
but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the
Trustee will be cancelled by it and destroyed in accordance with the retention policy of the Trustee then in
effect. If any Bond issued under the Indenture is lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it
is given, at the expense of the Bond Owner, the Authority will execute, and the Trustee will thereupon
authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed
or stolen (or if any such Bond has matured or has been called for redemption, instead of issuing a substitute
Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the
Trustee). The Trustee may require payment of a reasonable fee for each new Bond issued under the Indenture
and of the expenses which may be incurred by the Authority and the Trustee. Any Bond issued under the
Indenture in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original contractual
obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen be at any
time enforceable by anyone, and will be equally and proportionately entitled to the benefits of the Indenture
with all other Bonds secured by the Indenture.
Book -Entry Only System
While the Bonds are subject to the book -entry system, the principal, interest and any redemption
premium with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such
payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds, as described
in Appendix G — "DTC AND THE BOOK -ENTRY -ONLY SYSTEM" herein. So long as Cede & Co. is the
registered owner of the Bonds, references herein to the Owners of the Bonds shall mean Cede & Co. and not
the Beneficial Owners of the Bonds. The Authority gives no assurance that DTC or the DTC Participants
will distribute payments or notices to Beneficial Owners.
Estimated Debt Service Schedules: Bonds and Local Obligations
The following table presents the debt service schedule for the Bonds, assuming there are no
redemptions of Bonds prior to maturity:
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TABLE 1
ANNUALIZED DEBT SERVICE SCHEDULE FOR THE BONDS
Year Ending Total
September I Principal Interest Debt Service
2025 $ $ $
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
Total $ $ $
Source: Underwriter.
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The following table summarizes the anticipated debt service payments to be received by the Authority as the result of its ownership of the Local
Obligations, assuming there are no optional or special redemptions of Local Obligations prior to their respective maturities:
TABLE 2
ANNUALIZED DEBT SERVICE SCHEDULE FOR THE LOCAL OBLIGATIONS*
Total
Bond Year
Debt Service
Total
Ending
CFD
CFD
on the Local
Debt Service
September 1
No. 06-1 Bonds
No. 2014-1 Bonds
Obligations')
on the Bonds
2025
$
$
$
$
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
Total
$
$
$
$
+ Preliminary, subject to change.
(1) Represents Revenues pledged to pay debt service on the Bonds.
Source: Underwriter.
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Debt Service Coverage for the Bonds
Scheduled payments of principal of and interest on the Bonds equals 100% of the projected Revenues
that will be generated by the anticipated payment of debt service on all of the Local Obligations while the
Bonds are outstanding. According to the Special Tax Consultant, based on the annual debt service for the
Local Obligations, with respect to each Community Facilities District, the Special Taxes levied at the
maximum Special Tax rates under the related Rate and Method (as defined below), less estimated
Administrative Expenses and assuming no delinquencies, will generate in each Fiscal Year not less than 110%
of debt service payable with respect to each related series of Local Obligations. See Appendix A —
"INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS." However, under the
Mello -Roos Act, under no circumstances may Special Taxes levied against any parcel of property used for
private residential purposes in a Community Facilities District be increased by more than ten percent (10%) as
a consequence of delinquency or default by the owner of any other parcel within in such Community Facilities
District. See "SECURITY FOR THE LOCAL OBLIGATIONS."
SECURITY FOR THE BONDS
General
As described below, the Bonds are payable primarily from Revenues consisting primarily of amounts
received by the Authority as the result of its ownership of the Local Obligations.
The Bonds are special obligations of the Authority payable solely from and secured solely by the
Revenues and amounts in certain funds and accounts pledged therefor in the Indenture. The Bonds are
not a debt or liability of the City, the State of California or any political subdivisions thereof other than
the Authority to the limited extent described herein. The faith and credit of the Authority is not pledged
to secure the payment of Bonds, nor is any of its political subdivisions liable therefor, nor in any event
shall the Bonds or any interest or redemption premium thereunder be payable out of any funds or
properties other than those of the Authority as set forth in the Indenture. The Authority has no taxing
power.
Revenues and Flow of Funds
Bonds; Revenues. Subject to the provisions of the Indenture, the Bonds are secured by a first lien on
and pledge (which shall be effected in the manner and to the extent provided in the Indenture) of all of the
Revenues. The Bonds are equally secured by a pledge, charge and lien upon the Revenues without priority for
any Bond over any other Bond; and the payment of the interest on and principal of the Bonds and any
premiums upon the redemption of any Bonds is secured by an exclusive pledge, charge and lien upon the
Revenues. So long as any of the Bonds are Outstanding, the Revenues shall not be used for any purpose
except as is expressly permitted by the Indenture.
Collection by the Trustee. The Authority has transferred in trust, granted a security interest in and
assigned to the Trustee, for the benefit of the Owners from time to time of the Bonds, respectively, all of the
Revenues and all of the right, title and interest of the Authority in the Local Obligations, subject to the terms of
the Indenture. The Trustee is entitled to and will collect and receive all of the Revenues, and any Revenues
collected or received by the Authority will be deemed to be held, and to have been collected or received, by the
Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee. The Trustee
also is entitled to and, subject to the provisions of the Indenture, the Trustee will take all steps, actions and
proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all
of the rights of the Authority and all of the obligations of the City and the Community Facilities Districts under
the Local Obligations.
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Deposit of Revenues. All Revenues derived from the Local Obligations, other than Local Obligation
Delinquency Revenues, will be promptly deposited by the Trustee upon receipt thereof in the Revenue Fund.
Any Revenues which represent the payment of delinquent principal of or interest on an issue of Local
Obligations will be first applied to make payments required pursuant to the Indenture upon the occurrence of
an Event of Default and next to be deposited to the Reserve Fund and the Reserve Accounts therein to
replenish the amount on deposit therein to the Reserve Requirement, or to reimburse the Insurer for Policy
Costs.
Application of Revenues. On each Interest Payment Date, the Trustee will transfer from the Revenue
Fund, and deposit into the following respective accounts for the Bonds, the following amounts in the following
order of priority, the requirements of each such account (including the making up of any deficiencies in any
such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of
deposit to be satisfied before any transfer is made to any account subsequent in priority:
Interest Account. On each Interest Payment Date, the Trustee shall deposit in the Interest
Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the
amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds on such
date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of
paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds
redeemed prior to maturity). In the event that the amounts on deposit in the Interest Account on any Interest
Payment Date, after any transfers from the Reserve Fund and the Reserve Accounts therein pursuant to the
Indenture, are insufficient for any reason to pay the aggregate amount of interest then coming due and payable
on the Outstanding Bonds, the Trustee shall apply such amounts to the payment of interest on each of the
Outstanding Bonds on a pro rata basis.
Principal Account. On each September 1 on which principal of the Bonds shall be payable,
the Trustee shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit
in the Principal Account to equal the principal amount of, and premium (if any) on, the Bonds coming due and
payable on such date, or required to be redeemed on such date pursuant to the Indenture; provided, however,
that no amount shall be deposited to effect an optional redemption of Bonds pursuant to the Indenture unless
the Trustee has first received a certificate of an Independent Accountant or an Independent Financial
Consultant certifying that such deposit to effect an optional redemption of the Bonds will not impair the ability
of the Authority to make timely payment of the principal of and interest on the Bonds, assuming for such
purposes that the Community Facilities Districts continue to make timely payments on all Local Obligations
not then in default. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for
the purpose of (i) paying the principal of the Bonds at the maturity thereof or (ii) paying the principal of and
premium (if any) on any Bonds upon the redemption thereof pursuant to the Indenture.
Reserve Fund. On each Interest Payment Date on which the balance in the Reserve Fund is
less than the Reserve Requirement, or amounts are due to an insurer under a Reserve Credit Facility (as such
term is defined in the Authority Indenture), after making deposits to the Interest Account and the Principal
Account as described above, the Trustee shall transfer from the Revenue Fund, an amount sufficient to
increase the balance in the Reserve Fund to the Reserve Requirement, by depositing the amount necessary to
make the various accounts therein equal to, together, the Reserve Requirement, provided the value of the
moneys deposited therein, as invested, shall be valued at market value on such transfer date for purposes of
making such determination; and provided, further, that the replenishment of the Reserve Accounts shall be
made in accordance with the Indenture as described under "—Reserve Fund" below.
Deficiencies. If on any Interest Payment Date or date for redemption the amount on deposit in the
Revenue Fund is inadequate to make the transfers above as a result of a payment default on an issue of Local
Obligations, the Trustee will immediately notify the issuer of such Local Obligations of the amount needed to
make the required deposits under "— Application of Revenues." In the event that following such notice the
Trustee receives Local Obligations Delinquency Revenues from the issuer of such Local Obligation to cure
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such shortfall, the Trustee shall deposit such amounts to the Revenue Fund for application in accordance with
the Indenture. The Trustee shall disburse or transfer all Revenues representing Local Obligations Delinquency
Revenues of a Community Facilities District first to cure any event of default on the Bonds caused by the
nonpayment of the Local Obligations of such Community Facilities District and then to replenish the amount
in the Reserve Fund to the Reserve Requirement, subject to the limitations described under the caption "—
Reserve Fund" below.
Rebate Fund. On each Interest Payment Date after making the transfers required under the Indenture
as described above, upon receipt of a Request of the Authority to do so, the Trustee shall transfer from the
Revenue Fund to the Rebate Fund for deposit in the accounts therein the amounts specified in such Request of
the Authority.
Surplus Fund. On September 1 of each year, after making the deposits described above, and upon
reimbursement to the Insurer for any amounts owed under the Policy, the Trustee will transfer all amounts
remaining on deposit in the Revenue Fund to the Administrative Expense Fund unless the Trustee has received
a request of the Authority directing it to transfer all or a portion of the said amounts to the Surplus Fund, in
which case the Trustee shall make the transfer to the Surplus Fund. See "—Surplus Fund" below.
Reserve Fund
An account for each issue of Local Obligations will be established in the Reserve Fund (each, a
"Reserve Account"). The Reserve Policy in the amount of $ and cash in the amount of $ will be
deposited into the Reserve Fund and allocated to the Reserve Accounts as provided below, which in the
aggregate, equals the Reserve Requirement as of the date of issuance of the Bonds. Each Local Obligation's
initial Proportionate Share (as defined below) will initially be as follows:
in the CFD No. 06-1 Reserve Account
in the CFD No. 2014-1 Reserve Account
The Indenture defines "Proportionate Share" to mean (i) as of any date of calculation, for the CFD No.
2014-1 Bonds, the ratio derived by dividing the maximum annual debt service of such Local Obligation by the
Reserve Requirement, and (ii) as of the same date of calculation, for the CFD No. 06-1 Bonds, one (1) minus
the ratio derived in clause (i).
The aggregate of the Proportionate Share of each Local Obligation is equal to the Reserve
Requirement as of the date of issuance of the Bonds, which is an amount equal to the lowest of (i) 10% of the
initial principal amount of the Bonds, (ii) Maximum Annual Debt Service on the Outstanding Bonds, or
(iii) 125% of average Annual Debt Service on the Outstanding Bonds. Pursuant to the Indenture, the Reserve
Requirement shall never be greater than the initial Reserve Requirement. In the event that the amount of the
Reserve Requirement is changed, the Trustee will, upon receipt of a Request of the Authority, adjust the shares
of each Reserve Account to reflect the new Reserve Requirement.
The Reserve Requirement may be satisfied in whole or in part by the Reserve Surety Bond and one or
more additional Reserve Credit Facilities. [[INSURER] has made a commitment to issue, simultaneously with
the issuance of the Bonds, the Reserve Policy in the amount equal to 50% of the Reserve Requirement as of
the date of issuance of the Bonds for deposit in the Reserve Fund, effective as of the date of issuance of the
Bonds. Under the terms of the Reserve Policy, [INSURER] will unconditionally and irrevocably guarantee to
pay that portion of the scheduled payments of principal of and interest on the Bonds that becomes due for
payment but shall be unpaid by reason of nonpayment by the Authority, to the extent set forth in the Reserve
Policy and in the Indenture. The Authority will have no obligation to replace the Reserve Policy or to fund the
Reserve Fund or the Reserve Accounts therein with cash if, at any time that the Bonds are Outstanding, any
rating assigned to the Insurer is downgraded, suspended or withdrawn or amounts are not available under the
Reserve Policy, other than in connection with a draw on the Reserve Policy.]
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See Appendix B — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — AUTHORITY INDENTURE
— REVENUES; FLOW OF FUNDS — Reserve Fund" for provisions relating to the Reserve Policy. The
remaining 50% of the Reserve Requirement, effective as of the date of issuance of the Bonds, will be funded
with cash from proceeds of the Local Obligations.
Subject to the limitations set forth in the following paragraph, moneys in the Reserve Fund may be
applied to pay the principal of and interest on the Bonds when the moneys in the Interest Account and the
Principal Account of the Revenue Fund are insufficient therefor. In addition, moneys in the Reserve Fund not
constituting funds drawn on the Reserve Fund Surety Bond or any other Reserve Credit Facility may be
applied (i) in connection with an optional redemption of Bonds or a defeasance thereof, (ii) when the balance
therein equals the principal and interest due on the Bonds to and including maturity, (iii) when the amount in a
Reserve Account is transferred to the Interest Account and the Principal Account as a credit against the
payments due on the Local Obligations secured by such account on the transfer dates specified in the
Indenture, or (iv) when a recalculation of the Reserve Requirement results in a reduction thereof and amounts
on deposit in the Reserve Fund in excess of the Reserve Requirement (exclusive of interest earnings, which are
governed by the Indenture) are transferred to the Interest Account and the Principal Account as a credit against
the payments due on the Local Obligations as specified in the Indenture.
If the amounts in the Interest Account or the Principal Account of the Revenue Fund are insufficient to
pay the principal of or interest on the Bonds when due or mandatory sinking fund payments on the Bonds
when due, the Trustee shall withdraw from the applicable Reserve Account or Reserve Accounts an amount
equal to the deficiency resulting from the delinquency in the payment of scheduled debt service on the
applicable Series of Local Obligations and transfer such amount to the Interest Account, the Principal Account
or both, as applicable. If there are insufficient funds on deposit in a Reserve Account to cover a deficiency
resulting from the delinquency in the payment of scheduled debt service on the applicable Series of Local
Obligations, the Trustee shall withdraw from the other Reserve Account the amount of such remaining
deficiency and transfer such amount to the Interest Account, the Principal Account or both, as applicable.
Upon the transfer by the Trustee to the Reserve Fund of delinquent Revenues, such Revenues shall be
allocated to the Reserve Accounts as follows:
First, to the Insurer to reimburse it for all Policy Costs due as a result of a draw on the Reserve Policy
and reimbursement of amounts with respect to any other Reserve Credit Facility due as a result of
delinquencies on the Local Obligations of the Community Facilities Districts. Such reimbursements shall be
credited first to the Reserve Account for the Series of Local Obligations to which such delinquent Revenues do
not relate on, if such reimbursements are owing as a result from draws due to delinquencies in the payment of
scheduled debt service on the other series of Local Obligations. Such reimbursements will next be credited to
the Reserve Account for the series of Local Obligations from which the delinquent Revenues were received.
Second, to the Reserve Account for the Series of Local Obligations to which such Local Obligations
Delinquency Revenues do not relate, that amount necessary to increase the amount on deposit in such account
to the Reserve Requirement, if the deficiency in the amount on deposit in such account resulted from draws on
such Reserve Account due to delinquencies in the payment of scheduled debt service on the other Series of
Local Obligations.
Third, after increasing the amount on deposit in the applicable Reserve Account to the Reserve
Requirement pursuant to the second step, to the Reserve Account for the series of Local Obligations from
which the Local Obligations Delinquency Revenues were received that amount necessary to replenish the
amount on deposit in such Reserve Account to the applicable Reserve Requirement.
Fourth, to the Revenue Fund.
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In the Bond Year in which any Local Obligation matures, cash on deposit in the Reserve Account
related to such Local Obligations, will be transferred to the Interest Account and the Principal Account as a
credit against the payments due on such Local Obligations, with the amount transferred from a Reserve
Account being deposited first to the Interest Account as a credit on the interest due on such Local Obligations
on such date and the balance being deposited to the Principal Account as a credit on the principal due on such
Local Obligations on such date. Notwithstanding the foregoing, the Trustee shall retain an amount sufficient
to ensure that the Reserve Requirement is met in the subsequent Bond Year. Amounts on deposit in a Reserve
Account for which the related Local Obligations are no longer outstanding may be transferred to any other
Reserve Account as set forth in a Certificate of the Authority.
On September 1 of each year, in connection with the annual recalculation of the Reserve Requirement,
amounts on deposit in the Reserve Accounts (exclusive of interest earnings, which are governed by the
Indenture) in excess of each Reserve Account's Proportionate Share of the Reserve Requirement will be
transferred first to the Interest Account and then to the Principal Account as a credit against the payments due
on the CFD No. 06-1 Bonds on such date, until the CFD No. 06-1 Bonds have been paid in full, and then as a
credit against the payment due on the CFD No. 2014-Bonds.
Surplus Fund
Any amounts transferred to the Surplus Fund pursuant to the Indenture shall no longer be considered
Revenues and are not pledged to repay the Bonds. So long as Local Obligations are outstanding, on
September 1 of each year after setting aside any amount specified in a Request of the Authority as necessary to
pay Administrative Expenses, the remaining balance, if any, in the Surplus Fund shall (i) be transferred by the
Trustee to the City for credit to the special tax fund for the Local Obligations, and each Community Facilities
District shall be credited a percentage of the total amount available on each September 1 that is equal to the
percentage which each series of its outstanding Local Obligation represents of all outstanding Local
Obligations held by the Trustee as of the date of disbursement or (ii) as set forth in a Request of the City be
applied to the redemption of Local Obligations pursuant to the terms of the Local Obligation Indenture with
each series of Local Obligations to be credited a percentage of the total amount available on each September 1
that is equal to the percentage which a series of outstanding Local Obligations represents of all outstanding
Local Obligations held by the Trustee as of the date of disbursement. In the event that the Local Obligations
have been redeemed or defeased in whole or in part, then such credit shall be applied to the Local Obligation
that remains outstanding. In the event all Community Facilities Districts are no longer obligated to levy
Special Taxes to repay Local Obligations, then any amounts in the Surplus Fund may be used by the Authority
for any lawful purpose, including, but not limited to, the payment of expenses of the Authority, the City or the
Community Facilities Districts relating to the Bonds, the Local Obligations, the Community Facilities
Districts, or any other purpose as specified in a Request of the Authority delivered to the Trustee.
No Additional Bonds Except to Refund Bonds
The Authority may issue Additional Bonds in such principal amount as will be determined by the
Authority, pursuant to a Supplemental Indenture adopted or entered into by the Authority.
Additional Bonds may only be issued subject to the following conditions precedent established by the
Indenture:
(a) The Authority is in compliance with all covenants set forth in the Indenture and all
Supplemental Indentures.
(b) The proceeds of such Additional Bonds will be applied to accomplish a refunding of all or a
portion of the Bonds or any Additional Bonds Outstanding.
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(c) The Supplemental Indenture providing for the issuance of such Additional Bonds will provide
that interest thereon will be payable on September 1 and March 1, and principal thereof will be payable on
September 1 in any year in which principal is payable.
(d) Prior to the delivery of any Additional Bonds, a written certificate must be provided to the
Authority and the Trustee by an Independent Financial Consultant which certifies that following the issuance
of the Series of Additional Bonds and the Local Obligations, the principal and interest generated from the
Local Obligations is adequate to make the timely payment of principal and interest due on the Bonds and the
Series of Additional Bonds to be issued under the Indenture.
(e) The Supplemental Indenture providing for the issuance of Additional Bonds may provide for
the establishment of separate funds and accounts.
(f) No Event of Default has occurred and be continuing with respect to the Bonds or any of the
Local Obligations.
(g) The Authority will deliver to the Trustee a written Certificate of the Authority certifying that
the conditions precedent to the issuance of such Additional Bonds set forth in subsections (a), (b), (c), (d) and
(f) above have been satisfied and that, upon the issuance of such Additional Bonds an amount equal to the
Reserve Requirement, as adjusted (if necessary) to reflect the issuance of such Additional Bonds will be on
deposit in the Reserve Fund and the Reserve Accounts therein.
[BOND INSURANCE]
[TO COME]
SECURITY FOR THE LOCAL OBLIGATIONS
General
Each series of Local Obligations is a limited obligation of the respective Community Facilities District
payable solely from Net Special Taxes (defined below) collected in the applicable Community Facilities
District and amounts deposited by the Community Facilities Districts in the applicable Special Tax Fund. The
Community Facilities Districts' limited obligation to pay the principal of, premium, if any, and interest on the
applicable Local Obligations from Net Special Taxes collected in the applicable Community Facilities District
and amounts in the applicable Special Tax Fund is absolute and unconditional.
No Local Obligation (and no obligations issued on a parity therewith under the Local Obligation
Indentures relating to the Local Obligations, each a "Local Obligation Parity Bond") is a legal or equitable
pledge, charge, lien or encumbrance upon any of the Community Facilities Districts' respective property, or
upon any of their income, receipts or revenues, except the Net Special Taxes collected in the applicable
Community Facilities District and other amounts in the applicable Special Tax Fund which are, under the
terms of each Local Obligation Indenture and the Mello -Roos Act, set aside for the payment of the applicable
Local Obligations and interest thereon and neither the respective members of the legislative body of each
Community Facilities District or the City Council nor any persons executing the Bonds are liable personally on
the Bonds by reason of their issuance.
The "Special Taxes" for each Community Facilities District are levied and collected according to the
rate and method of apportionment (each, a "Rate and Method") established for such Community Facilities
District. See Appendix A — "INFORMATION REGARDING THE COMMUNITY FACILITIES
DISTRICTS," Appendix D-1 — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES
FOR COMMUNITY FACILITIES DISTRICT NO. 06-1," and Appendix D-2 — "RATE AND METHOD OF
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APPORTIONMENT OF SPECIAL TAXES FOR COMMUNITY FACILITIES DISTRICTS CFD NO. 2014-
1."
The Local Obligations are not cross -collateralized. In other words, Special Taxes collected in
one Community Facilities District cannot be used to cover any shortfall in the payment of debt service
on the Local Obligations of another Community Facilities District. However, the Reserve Fund and the
Reserve Accounts therein held by the Trustee and collectively funded at the Reserve Requirement will
be available in the event of delinquent Revenues. See "SECURITY FOR THE BONDS — Reserve
Fund" herein.
Except for the foregoing, no other taxes are pledged to the payment of the Local Obligations and
Local Obligation Parity Bonds. The Local Obligations and any Local Obligation Parity Bonds are not
general or special obligations of the City nor general obligations of the Community Facilities Districts,
but are limited obligations of the Community Facilities Districts payable solely from amounts deposited
by the Community Facilities Districts in certain funds established under the applicable Local Obligation
Indentures, as more fully described herein. The Community Facilities Districts' limited obligation to
pay the principal of, premium, if any, and interest on the Local Obligations and any Local Obligation
Parity Bonds from amounts in certain funds established under the applicable Local Obligation
Indenture is absolute and unconditional, free of deductions and without any abatement, offset,
recoupment, diminution or set-off whatsoever. The Authority, as Owner of the Local Obligations, or
any Owner of any Local Obligation Parity Bonds may not compel the exercise of the taxing power by the
Community Facilities Districts (except as pertains to the Special Taxes) or the City or the forfeiture of
any of their property. The principal of and interest on the Local Obligations and any Local Obligation
Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of
California or any of its political subdivisions within the meaning of any constitutional or statutory
limitation or restriction.
The Special Taxes are collected in the manner and at the same time as ad valorem property taxes are
collected and is subject to the same penalties and the same procedure, sale, and lien priority in case of
delinquency as is provided for ad valorem property taxes; provided, however, that the Community Facilities
Districts may directly bill the Special Tax within the applicable Community Facilities District, and may collect
Special Taxes at a different time or in a different manner as determined by the City Council.
Under the Mello -Roos Act under no circumstances will the Special Taxes levied against any parcel in
a Community Facilities District for which an occupancy permit for private residential use has been issued be
increased by more than ten percent (10%) per fiscal year as a consequence of delinquency or default by the
owner of any other parcel within such Community Facilities District. Therefore, even though the maximum
Special Tax rates may allow for Special Tax increases greater than 10%, in the event of high delinquencies in a
Community Facilities District, a Community Facilities District may not increase the Special Taxes in such
Community Facilities District in the fiscal year following such delinquencies by more than 10% on the
residential units. See "SPECIAL RISK FACTORS — Special Tax Delinquencies."
Local Obligation Indentures
The Local Obligations will be issued under separate Local Obligation Indentures to be executed and
delivered in connection with such issuance. The following describes certain provisions of each Local
Obligation Indenture, which are substantially similar.
Under the Local Obligation Indentures, the "Net Special Taxes" pledged by the Community Facilities
District to the Local Obligations (and any related Local Obligation Parity Bonds) is defined as "Gross Special
Taxes" minus amounts set aside to pay Administrative Expenses.
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"Gross Special Taxes" is defined in each Local Obligation Indenture as the amount of all Special
Taxes received by the Community Facilities District, together with the proceeds collected from the sale of
property pursuant to the foreclosure provisions of the Local Obligation Indenture for the delinquency of such
Special Taxes remaining after the payment of all costs related to such foreclosure actions.
"Administrative Expenses" are the administrative costs with respect to the calculation and collection
of the Special Taxes, including all attorneys' fees and other costs related thereto, the fees and expenses of the
Trustee, any fees and related costs for credit enhancement for the Local Obligations or which are not otherwise
paid as Costs of Issuance, any costs related to the Community Facilities District's compliance with state and
federal laws requiring continuing disclosure of information concerning the Local Obligations, the Community
Facilities District, and any other costs otherwise incurred by the City on behalf of the Community Facilities
District, in order to carry out the purposes of the Community Facilities District, as set forth in the Resolution
of Formation and any obligation of the Community Facilities District under the Local Obligation Indenture.
Administrative Expenses also include the administrative costs with respect to the collection of Delinquency
Proceeds.
The portion of any Prepayment received by the Community Facilities District that is to be applied to
the redemption of Local Obligations will be identified as such by the Community Facilities District and
transferred to the Trustee for deposit in the Redemption Account. Except for the foregoing portion of any
Prepayment to be deposited to the Redemption Account, the Community Facilities District will, as soon as
practicable transfer the Special Taxes received by the Community Facilities District to the Trustee for deposit
in the applicable Special Tax Fund to be held by the Trustee in trust for the Owners of the Local Obligations.
The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts
set forth in the Local Obligation Indenture, in the following order of priority, to:
(1) The Administrative Expense Fund;
(2) The Interest Account of the Special Tax Fund;
(3) The Principal Account of the Special Tax Fund;
(4) The Trustee for deposit in the Reserve Account under the Authority Indenture the amount
necessary to cause the balance on deposit therein to equal the Community Facilities District
Proportionate Share of the Reserve Requirement;
(5) The Redemption Account of the Special Tax Fund; and
(6) The Surplus Fund.
Each Local Obligation Indenture creates and establishes a Surplus Fund to be maintained by the
Trustee. As soon as practicable after each September 1, and in any event prior to each October 1, the Trustee
will transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such
date, it has received a Certificate of an Authorized Representative directing that certain amounts be retained in
the Special Tax Fund because the Community Facilities District has included such amounts as being available
in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year. The
amounts in the Surplus Fund are not pledged to the repayment of the Local Obligations or any related Local
Obligation Parity Bonds and may be used by the Community Facilities District for any lawful purpose.
Local Obligation Parity Bonds
The Local Obligation Indentures authorize the Community Facilities Districts to issue Local
Obligation Parity Bonds which are additional bonds payable from Special Taxes on a parity with the related
Local Obligations but only for the purpose of refunding all or a portion of the applicable Local Obligations or
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Local Obligation Parity Bonds. Local Obligations will only be refunded if a corresponding amount of Bonds
is refunded and only if an Independent Accountant or an Independent Financial Consultant verifies that,
following such optional redemption of the Local Obligations and redemption of Bonds, the principal and
interest generated from the remaining Local Obligations is adequate to make the timely payment of principal
and interest due on the Bonds remaining Outstanding following such optional redemption. For a description of
the conditions established in each Local Obligation Indenture for the issuance of Local Obligation Parity
Bonds, see Appendix B — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS."
Priority of Lien
Each installment of the Special Taxes and any interest and penalties thereon, constitutes a lien on the
parcel of land on which it was imposed until the same is paid. Such lien is co -equal to and independent of the
lien for general taxes and any other community facilities district special taxes. See "THE COMMUNITY
FACILITIES DISTRICTS — The Community Facilities Districts in the Aggregate" herein.
Covenants of the Community Facilities Districts
In their respective Local Obligation Indenture, each Community Facilities District has made certain
covenants, certain of which are described below.
Punctual Payment. The Community Facilities District will duly and punctually pay or cause to be
paid the principal of and interest on every Local Obligation and Local Obligation Parity Bond issued under its
Local Obligation Indenture, together with the premium, if any, thereon on the date, at the place and in the
manner set forth in the Local Obligations and Local Obligation Parity Bonds and in accordance with its Local
Obligation Indenture to the extent that Net Special Taxes and other amounts pledged thereunder are available
therefor, and that the payments into the Funds and Accounts created under its Local Obligation Indenture will
be made, all in strict conformity with the terms of the Local Obligations, any Local Obligation Parity Bonds,
and the Local Obligation Indenture, and that it will faithfully observe and perform all of the conditions,
covenants and requirements of its Local Obligation Indenture and all Supplemental Indentures and of the Local
Obligations and any Local Obligation Parity Bonds issued under its Local Obligation Indenture.
Against Encumbrance. The Community Facilities District will not mortgage or otherwise encumber,
pledge or place any charge upon any of the Net Special Taxes except as provided in the Local Obligation
Indenture, and will not issue any obligation or security having a lien or charge upon the Net Special Taxes
superior to or on a parity with the Local Obligations, other than Local Obligation Parity Bonds. Nothing in the
Local Obligation Indenture shall prevent the Community Facilities District from issuing or incurring
indebtedness which is payable from a pledge of Net Special Taxes which is subordinate in all respects to the
pledge of Net Special Taxes to repay the Local Obligations and the Local Obligation Parity Bonds.
Levy of Special Tax. So long as any Local Obligations or Local Obligation Parity Bonds issued are
Outstanding, the Community Facilities District covenants to levy the Special Tax in an amount sufficient,
together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay (1) the
principal of and interest on the Local Obligations and Local Obligation Parity Bonds when due, (2) the
Administrative Expenses, (3) any amounts required to maintain the Reserve Account of the Special Tax Fund
established under its Local Obligation Indenture at the Reserve Requirement, (4) any amounts required to
replenish the Reserve Account under the Authority Indenture to the Proportionate Share and pay all Policy
Costs resulting from the delinquency in the payment of scheduled debt service on the Local Obligations and
any Local Obligation Parity Bonds, (5) and any amounts due to the Bond Insurer not included in (1) through
(4) above. The Community Facilities District further covenants that it will take no actions that would
discontinue or cause the discontinuance of the Special Tax levy or the Community Facilities District's
authority to levy the Special Tax for so long as the Local Obligations and any Local Obligation Parity Bonds
are Outstanding.
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Commence Foreclosure Proceedings. The Community Facilities District covenants for the benefit of
the Owners of the Local Obligations and any Local Obligation Parity Bonds that it (i) will commence judicial
foreclosure proceedings against parcels with delinquent Special Taxes in excess of $10,000 by the October 1
following the close of each Fiscal Year in which such Special Taxes were due and (ii) will commence judicial
foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close
of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special
Tax levied, and (iii) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are
paid; provided that, notwithstanding the foregoing, the Community Facilities District may elect to defer
foreclosure proceedings on any parcel so long as the amount in the Reserve Account under the Local
Obligation Indenture is at least equal to the Reserve Requirement and the amount in the Reserve Account
under the Indenture is at least equal to the Community Facilities District's Proportionate Share. The
Community Facilities District may, but shall not be obligated to, advance funds from any source of legally
available funds in order to maintain such Reserve Accounts. The Community Facilities District may treat any
delinquent Special Tax sold to an independent third -party or to any funds of the City for at least 100% of the
delinquent amount as having been paid. Proceeds of any such sale up to 100% of the delinquent amount will
be deposited in the Special Tax Fund.
Special Taxes Are Not Within Teeter Plan
The Special Taxes are not encompassed within the alternate procedure for the distribution of certain
property tax levies on the secured roll pursuant to Chapter 3, Part 8, Division 1 of the California Revenue and
Taxation Code (Section 4701 et seq.), commonly referred to as the "Teeter Plan." The County has adopted a
Teeter Plan under which a tax distribution procedure is implemented and secured roll taxes are distributed to
taxing agencies within the County on the basis of the tax levy, rather than on the basis of actual tax collections.
However, by policy, the County does not include special taxes, assessments or assessments in its Teeter Plan.
The Special Taxes of the Community Facilities Districts are not included in the County's Teeter Plan.
See Table 7 below for the aggregate Special Tax delinquencies in the combined Community Facilities
Districts for the last five Fiscal Years and see Tables A-5 and A-12 in Appendix A for information regarding
Special Tax delinquencies in each of the Community Facilities Districts for the last five Fiscal Years.
THE COMMUNITY FACILITIES DISTRICTS
The Community Facilities Districts in the Aggregate
Introduction. Set forth under this caption is certain information describing the Community Facilities
Districts in the aggregate. See Appendix A hereto for more information with respect to each Community
Facilities District. Although the Authority believes the information with respect to the Community Facilities
Districts, in the aggregate, is relevant to an informed decision to purchase the Bonds, investors should be
aware that the debt service on one series of Local Obligations may not be used to make up any shortfall in the
debt service on another series of Local Obligations. Moreover, the parcels in each Community Facilities
District are taxed according to the applicable Rate and Method, and the applicable Special Taxes may only be
applied to pay the debt service on the Local Obligations related to the Community Facilities District in which
such Special Taxes are levied and not on the debt service of any other Local Obligations.
Potential investors should further be aware that Special Taxes are levied against individual parcels
within each Community Facilities District and that any such parcel may have a value -to -lien ratio less than the
overall value -to -lien ratio for such Community Facilities District and less than the value -to -lien ratio of the
Community Facilities Districts in the aggregate.
Property Values & Development Status. The most recent aggregate assessed value reported by the
County Assessor for the property in the Community Facilities Districts for the Fiscal Year 2024-25 was
$1,610,248,588. The planned developments within the Community Facilities Districts are complete with
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residential homes. In total, there are currently 1,670 completed homes conveyed to individual owners that are
subject to the Special Taxes (not including parcels that have prepaid their Special Taxes). Table 3 below
shows the development status within the Community Facilities Districts as of March 1, 2025.
TABLE 3
CITY OF TUSTIN
THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE
DEVELOPMENT STATUS AS OF MARCH 1, 2025
Total Acres of
Community Facilities
Approximate
Developed
Parcels Under
Undeveloped
Undeveloped
Total
District
Net Acres
Parcels
Development
Parcels
Land
Parcels
CFD No. 06-1
109.0
1295
0
0
0
1295
CFD No. 2014-1
43.1
375
0
0
0
375
Totals:
152.1
1,670
0
0
0
1670
Source: Webb Municipal Finance, LLC
Value -To -Lien Ratios. The aggregate assessed value of all of the Taxable Property in the Community
Facilities Districts as established by the County Assessor for Fiscal Year 2024-25 was $1,610,248,588. The
aggregate principal amount of the Local Obligations is $55,895,000*. The following tables set forth the
aggregate assessed value -to -lien ratios of all the Taxable Property in the Community Facilities Districts based
on Fiscal Year 2024-25 assessed values in each of the Community Facilities Districts and the principal amount
of direct and overlapping land -secured debt, including the Local Obligations.
TABLE 4
CITY OF TUSTIN
COMMUNITY FACILITIES DISTRICTS IN AGGREGATE
ASSESSED VALUE -TO -LIEN RATIOS
Assessed
Community Facilities The Local Other Total
Assessed
Value -to -Lien
Districts Obligations*0) Bonds() Debt*
Value()
Ratio(4)
CFD No. 06-1 $ 34,090,000 $ 12,086,267 $ 46,176,267
$ 1,095,536,524
23.71:1
CFD No. 2014-1 21,805,000 0 21,805,000
514,712,064
23.61:1
Total $ 55,895,000 $12,0896,267 $ 67,981,267
$ 1,610,248,588
23.69:1
* Preliminary, subject to change.
G) Includes the initial principal amount of the Local Obligations.
(2) Includes outstanding land -secured bonds issued by the Tustin Unified School District CFD No. 06-1. Does not include General
Obligation Bonded indebtedness as shown in Tables A-3 and A-10.
(3) Reflects Fiscal Year 2024-25 assessed value of all Taxable Property in each District.
(4) Calculated by dividing the Assessed Value column by the Total Debt column.
Source: Webb Municipal Finance, LLC.
The annual debt service on the CFD No. 06-1 Bonds decreases by approximately $4,000,000* to
$279,500* in Bond Year 2037-38 and the final maturity of the CFD No. 06-1 Bonds is September 1, 2039.
Therefore, starting in Bond Year 2037-38, CFD No. 2014-1 Special Taxes will pay the majority of the debt
service on the Bonds and after September 1, 2039, the CFD No. 2014-1 Bonds is expected to be the only
source of Revenues to pay the Bonds. See Table 4 for the Fiscal Year 2024-25 assessed value -to -lien ratio for
CFD No. 2014-1 and see Appendix A for additional information about CFD No. 2014-1. For a description of
the total debt service on the Bonds provided by each Local Obligation, see Table 2 under the heading "THE
BONDS — Estimated Debt Service Schedules: Bonds and Local Obligations" herein.
* Preliminary, subject to change.
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Effective Tax Rates. Table 5 below shows the average effective tax rates of property with completed
homes within the Community Facilities Districts based on the average Fiscal Year 2024-25 assessed values,
the average Fiscal Year 2024-25 actual levies for all other overlapping community facilities district and the
estimated Fiscal Year 2025-26 special tax levy for each Community Facilities District. Based on the
foregoing, the projected average effective tax rate for the parcels within the Community Facilities Districts
ranges from approximately 1.52% to 1.62%. Individual parcels will be higher or lower than this average
depending on a variety of parcel -specific information.
TABLE 5
CITY OF TUSTIN
THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE
AVERAGE DWELLING UNIT EFFECTIVE TAX RATES
Average Average Other
Average Assessed Ad Valorem Taxes and Average Effective
Community Facilities Value — Developed Average CFD Taxes Per Assessments Tax Rate
Districts Property Special Tax() Parcel(2) Per Parcel() Per Parcel
CFD No. 06-1 $ 845,974 $3,904 $ 8,956 $ 822 1.62%
CFD No. 2014-1 1,372,566 5,646 15,020 159 1.52
0) Includes City of Tustin estimated Fiscal Year 2025-26 average Special Tax A and Special Tax B.
(2) Includes Fiscal Year 2024-25 average Overlapping General Obligation and Ad -valorem Taxes per Completed Dwelling Unit.
(3) Includes Fiscal Year 2024-25 Non -Bonded or Land Secured Assessments and Taxes per Completed Dwelling Unit.
Source: Webb Municipal Finance, LLC.
Top Taxpayers within the Community Facilities Districts. No single owner owns more than three
parcels within any one Community Facilities District, and no single taxpayer is projected to be responsible for
more than 0.64% of Fiscal Year 2025-26 Special Taxes within any one Community Facilities District. The top
ten taxpayers within the Community Facilities Districts are projected to account for 6.6% of the projected
Fiscal Year 2025-26 Special Tax levy. Table 6 below sets forth the projected Fiscal Year 2025-26 Special Tax
levy of each Community Facilities District and the projected Fiscal Year 2025-26 Special Tax levy of the top
ten taxpayers within each Community Facilities District.
TABLE 6
CITY OF TUSTIN
THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE
ESTIMATED PERCENTAGE OF ESTIMATED LEVY FOR TOP 10 TAXPAYERS
Top 10 Taxpayers as
Percentage of Total Projected Fiscal Year a Percentage of Total
Projected Projected Fiscal Year 2025-26 Special Tax Projected Fiscal Year
Community Facilities Fiscal Year 2025-26 2025-26 Special Tax Levy of Top 10 2025-26 Special Tax
Districts Special Tax Levy Levy Taxpayers"' Levy (2)
CFD No. 06-1 $3,506,083 69.7% $90,358 2.6%
CFD No. 2014-1 1,526,820 30.3 61,687 4.0
Total $5,032,903 100% $152,045 3.0%
Top taxpayers from each Community Facilities District for Fiscal Year 2024-25 by percent of Special Tax, as applied to the
projected Fiscal Year 2025-26 Special Tax levy.
(2) Top 10 taxpayers by percent of total Special Tax for the Community Facilities Districts. In the case of many taxpayers with
the same charge, the top 10 charges were calculated with taxpayers in alphabetical order.
Source: Webb Municipal Finance, LLC.
Delinquencies. Special Taxes were levied against 1,670 parcels in the Community Facilities Districts
in Fiscal Year 2024-25. For the Fiscal Year 2024-25 Special Tax levy, as of February 24, 2025, 9 parcels were
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delinquent in the payment of the Special Tax levy. The following table is a summary of Special Tax levies,
collections and delinquency rates in the Community Facilities Districts for Fiscal Years 2020-21 through 2024-
25. For the Special Tax levies, collections and delinquency rates for the last five fiscal years in each of the
Community Facilities Districts, see APPENDIX A — "INFORMATION REGARDING THE COMMUNITY
FACILITIES DISTRICTS."
TABLE 7
CITY OF TUSTIN
THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE
SPECIAL TAX LEVY, DELINQUENCY, AND DELINQUENCY RATE
FISCAL YEARS 2020-21 THROUGH FIRST INSTALLMENT 2024-25
Delinquencies Following Fiscal Year End
Delinquencies as of February 24, 2025
Fiscal
Amount
Parcels
Parcels
Amount
Percent
Parcels
Amount
Percent
Year
Levied
Levied
Delinquent
Delinquent
Delinquent
Delinquent
Delinquent
Delinquent
2020-21
$5,106,613.11
1670
13
$23,743.99
0.46%
0
$ 0.00
0.00%
2021-22
5,214,005.91
1670
11
18,207.33
0.35
0
0.00
0.00
2022-23
5,331,185.54
1670
51
103,649.45
1.94
1
2,233.54
0.04
2023-24
5,431,387.65
1670
31
53,465.95
0.98
2
7,047.49
0.13
2024-250)
2,768,797.84
1670
N/A
N/A
N/A
9
14,939.45
0.54
0) Information reflects the
first installment
only.
Source: Webb Municipal Finance, LLC.
The Local Obligations
The table below summarizes the final maturity dates of the Local Obligations and the principal
amount of each Local Obligation. For a description of the total debt service on the Bonds provided by each
Local Obligation, see Table 2 under the heading "THE BONDS — Estimated Debt Service Schedules: Bonds
and Local Obligations" herein.
TABLE 8
CITY OF TUSTIN
SUMMARY OF LOCAL OBLIGATIONS
District
CFD No. 06-1
CFD No. 2014-1
Total
Maturity Date
(September 1)
2039
2045
* Preliminary, subject to change.
Source: Webb Municipal Finance, LLC.
SPECIAL RISK FACTORS
Principal
Amount*
$ 34,090,000
21,805,000
$ 55,895,000
The purchase of the Bonds involves significant risks and is not a suitable investment for all investors.
The following is a discussion of certain risk factors which should be considered, in addition to other matters
set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be
comprehensive or definitive and does not purport to be a complete statement of all factors which may be
considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events
discussed herein could adversely affect the ability or willingness of property owners in the Community
Facilities Districts to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the
inability of the Community Facilities Districts to make full and punctual payments of debt service on the Local
Obligations which comprise the Revenues available to pay debt service on the Bonds. In addition, the
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occurrence of one or more of the events discussed herein could adversely affect the value of the property in the
Community Facilities Districts.
Risks of Real Estate Secured Investments Generally
Because the timely payment of debt service on the Bonds will be dependent upon the timely payment
of the Local Obligations and the timely payment of the Local Obligations will be dependent upon the timely
payment of Special Taxes, which are secured ultimately by the Taxable Property within the Community
Facilities Districts, the Bond Owners will be subject to the risks generally incident to an investment secured by
real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the
market value of real property in and around the vicinity of the Community Facilities Districts, the supply of or
demand for competitive properties in such area, and the market value of residential property or buildings
and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses,
governmental rules (including, without limitation, zoning laws and laws relating to endangered species and
hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, severe
earthquakes, wildfires (including smoke damage), floods, drought, and windstorms), which may result in
uninsured losses; and (iv) increased delinquencies due to rising mortgage costs or other factors.
The Bonds are Limited Obligations of the Authority
The Bonds are limited obligations of the Authority payable only from amounts pledged under the
Indenture, which consist primarily of payments made to the Trustee on the Local Obligations and the Reserve
Fund and the Reserve Accounts therein. Funds for the payment of the principal of and the interest on the Local
Obligations are derived only from payments of Special Taxes. The amount of Special Taxes that are collected
could be insufficient to pay principal of and interest on the Local Obligations due to non-payment of the
Special Taxes levied or due to insufficient proceeds received from a judicial foreclosure sale of land within the
Community Facilities Districts following delinquency. The Community Facilities Districts' legal obligations
with respect to any delinquent Special Taxes is limited to the institution of judicial foreclosure proceedings
under certain circumstances with respect to any parcels for which Special Taxes is delinquent. The Bonds
cannot be accelerated in the event of any default.
Failure by owners of the parcels within the Community Facilities Districts to pay Special Tax
installments when due, delay in foreclosure proceedings, or the inability of the Community Facilities Districts
to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the
delinquent installments of Special Taxes levied against such parcels may result in the inability of the
Community Facilities Districts to make full or timely payments of debt service on the Local Obligations,
which may, in turn, result in the depletion of the Reserve Fund and the Reserve Accounts therein and the
inability of the Authority to make full or timely payment on the Bonds.
No Obligation of the City
The Local Obligations and the interest thereon, and in turn, the Bonds, are not payable from the
general funds of the City. Except with respect to the Special Taxes, neither the credit nor the taxing power of
the Community Facilities Districts or the City is pledged for the payment of the Local Obligations or the
interest thereon, and except to compel a levy of the Special Taxes securing the Local Obligations, no Owner of
the Bonds may compel the exercise of any taxing power by the Community Facilities Districts or the City or
force the forfeiture of any property of the City or the Community Facilities Districts. The principal of,
premium, if any, and interest on the Bonds are not a debt of the City or the Community Facilities Districts or a
legal or equitable pledge, charge, lien or encumbrance upon any of the City's or the Community Facilities
Districts' property or upon any of the City's or the Community Facilities Districts' income, receipts or
revenues, except the Revenues and other amounts pledged under the Indenture.
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Varying Maturities of the Local Obligations
The Local Obligations mature at different times. Because the Bonds are payable solely from moneys
received by the Authority as debt service on the Local Obligations, the credit quality of the Bonds at any one
time depends upon the credit quality of the remaining outstanding Local Obligations. The annual debt service
on the CFD No. 06-1 Bonds decreases by approximately $4,000,000* to approximately $279,500.00* in Bond
Year 2037-38 and the final maturity of the CFD No. 06-1 Bonds is September 1, 2039. Therefore, starting in
Bond Year 2037-38, CFD No. 2014-1 Special Taxes will pay the majority of the debt service on the Bonds and
after September 1, 2039, the CFD No. 2014-1 Bonds are expected to be the only source of Revenues to pay the
Bonds. See Table 4 for the Fiscal Year 2024-25 assessed value -to -lien ratio for CFD No. 2014-1 and see
Appendix A for additional information about CFD No. 2014-1. For a description of the total debt service on
the Bonds provided by each Local Obligation, see Table 2 under the heading "THE BONDS — Estimated
Debt Service Schedules: Bonds and Local Obligations" herein.
No Cross-Collateralization Between Community Facilities Districts
The Local Obligations are not cross -collateralized. In other words, the Special Taxes from one
Community Facilities District cannot be used directly to cover any shortfall in the payment of debt service on
the Local Obligations of the other Community Facilities District. However, all amounts in the Reserve Fund
and the Reserve Accounts therein are available to pay debt service on the Bonds if the amounts in the Interest
Account or the Principal Account of the Revenue Fund are insufficient to pay the principal of or interest on the
Bonds when due. See the caption "SECURITY FOR THE BONDS — Reserve Fund."
Potential Early Redemption of Bonds from Prepayments or Other Sources
Property owners within the Community Facilities Districts are permitted to prepay their Special Taxes
at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an
overlapping community facilities district. Such prepayments will result in a redemption of Local Obligations
on the first March 1 or September 1 which is more than 30 days following the receipt of the prepayment. The
proceeds of the Local Obligations so redeemed will then be used to make a mandatory redemption of the
Bonds. Such mandatory redemption of Bonds that were purchased at a price greater than par could reduce the
otherwise expected yield on such Bonds. See "THE BONDS —Redemption —Special Redemption."
Fourteen parcels located in CFD No. 06-1, including one parcel consisting of 240 apartment units,
were previously subject to the levy of Special Tax A but have prepaid Special Tax A applicable to such parcels
in full.
Property Values
The value of property within the Community Facilities Districts is an important factor in evaluating
the investment quality of the Bonds. In the event that a property owner defaults in the payment of a Special
Tax installments, a Community Facilities District's only remedy is to judicially foreclose on that property.
Prospective purchasers of the Bonds should not assume that the property within the Community Facilities
Districts could be sold for the assessed values described herein at a foreclosure sale for delinquent Special Tax
installments or for an amount adequate to pay delinquent Special Tax installments.
The assessed values set forth in this Official Statement do not represent market values arrived at
through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current
owner, increased or decreased annually by an amount determined by the Orange County Assessor based on
current market conditions, generally not to exceed an increase of more than 2% per fiscal year from the date of
* Preliminary, subject to change.
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purchase (except in the case of new construction subsequent to such acquisition). No assurance can be given
that a parcel could actually be sold for its assessed value.
The actual market value of the property is subject to future events such as downturn in the economy,
occurrences of certain acts of nature and the decisions of various governmental agencies as to land use, all of
which could adversely impact the value of the land in the Community Facilities Districts which is the security
for the Local Obligations, which secure the Bonds. As discussed herein, many factors could adversely affect
property values or prevent or delay further land development within the Community Facilities Districts.
Natural Disasters
Seismic Risks. The Community Facilities Districts, like the rest of southern California, are located
within a seismically active region. Faults and earthquakes present direct hazards from fault rupture and ground
shaking as well as indirect hazards. The most significant known active fault zones that are capable of seismic
ground shaking and can impact the City are the Whittier -Elsinore Fault Zone, Newport -Inglewood Fault Zone,
and the San Andreas Fault Zone.
According to the Hazard Mitigation Plan of the City, four Alquist-Priolo Earthquake Fault Zones are
located near the City. The Whittier Fault runs along the Chino Hills range between Chino Hills and Whittier,
the Elsinore Fault trends along the eastern base of the Santa Ana Mountains, the Newport -Inglewood Fault
runs from the City of Inglewood through Huntington Beach and out into the Pacific Ocean near the Newport
Beach area and the San Andreas Fault traverses the southern California region and is located east of the City.
An earthquake on these faults, or in any other location near the City, would be particularly damaging to
residential buildings, especially to those of older wooden or unreinforced masonry construction, or to mobile
homes. An earthquake along one of the faults in the vicinity of the Community Facilities Districts, either
known or unknown, could cause a number of casualties and extensive property damage. The effects of such a
quake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure,
liquefaction and other threats to public health, safety and welfare. The potential direct and indirect
consequences of a major earthquake can easily exceed the resources of the City and would require a high level
of self-help, coordination and cooperation.
Fire Hazard. In recent years, wildfires have caused extensive damage throughout the State. Certain
of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes.
In some instances entire neighborhoods have been destroyed. Several fires in recent years damaged or
destroyed property in areas that were not previously considered to be at risk from such events. In particular,
certain electrical operators in the State have seen their distribution/transmission lines cause widespread fires,
resulting in billions of dollars in property damage and the loss of lives. In 2023, as in several prior years, for
example, devastating wildfires burned in various communities in the State, causing wide -spread damage. In
2025, communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena, experienced
widespread devastation from wildfires causing losses of life, thousands of burned homes, and billions of
dollars in property damage. Areas affected by wildfires are more prone to flooding and mudslides that can
lead to the destruction of homes. Property damage due to wildfire could result in a significant decrease in the
market value of property within the City.
On January 16, 2025, Governor Gavin Newsom issued Executive Order N-10-25 (the "Governor's
Order) which canceled penalties, costs and interest on overdue property taxes (including special taxes) within
certain zip codes affected by the Palisades, Malibu, and Altadena fires during calendar year 2025. This will
likely cause a delay in the payment of special taxes by certain property owners in the community facilities
districts affected by Governor's Order. Unless the majority of property owners within the community facilities
districts pay their special taxes voluntarily or have mortgage impound accounts, it is likely that the community
facilities districts will need to draw upon a reserve fund to make debt service payments on outstanding bonds
prior to the expiration of the Governor's Order and it is possible that outstanding bonds secured by such
special taxes will experience a payment default. In the event of a major fire or other natural disaster affecting
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the Community Facilities Districts, a similar order affecting the Community Facilities Districts could impact
the debt service payment for the Bonds.
Specific to the City, on October 21, 1996, 20 homes were destroyed when a fire was ignited in a
previously unincorporated portion of the City. The flames were fanned by the Santa Ana winds gusting up to
40 miles per hour.
On November 7, 2023, a 17-story wooden former WWII blimp hangar located at former Marine Corps
Air Station Tustin near Armstrong Avenue and Valencia Avenue (the "Navy North Hangar") caught fire. The
Navy North Hangar and the 85-acre property on which the Navy North Hangar once stood is owned by the
U.S. Department of the Navy (the "Navy"). The Navy North Hangar burned for approximately one week and
reignited several times while it smoldered for 24 days. The Orange County Fire Authority coordinated all fire
management operations and declared the Navy North Hangar fire to be extinguished on December 1, 2023.
Both the City of Tustin and County of Orange issued proclamations of emergency on November 9, 2023.
Although the City's remediation response has concluded, the City's proclamation remains in effect while the
Navy completes its response on the Navy -owned property. Under a Cooperative Agreement with the Navy and
subsequent amendments, the City undertook appropriate emergency measures necessary to protect public
health. Extensive air monitoring performed from November 2023 through April 2025 at locations around the
Navy North Hangar site, including impacted Tustin neighborhoods, demonstrate no airborne asbestos fibers
have been detected as a consequence of the fire. The City also commissioned an independent study reviewed
by environmental regulators that found no lead or asbestos contamination in the surrounding area soils or
building interiors attributable to the Navy North Hangar fire. The Navy has committed up to $105.8 million to
reimburse the City for debris cleanup and related response activities.
The City mainly consists of urban terrain. The existence of several petroleum and hazardous materials
facilities within the City also contribute to the fire threat. In addition, the Santa Ana winds typically occur
during the fire season. These winds blow hot, dry air from the southern California deserts to the coasts, fueling
any regional wildfires and making fires much more difficult to contain. Urban fires often consume buildings
with the potential to spread to adjoining buildings; however, major urban fires are high unlikely.
The City is also susceptible to wildfires as it borders State parks on its northeast side. Wildfires are a
major environmental hazard that have historically cost California more than $800 million each year and
contribute to "bad air days" throughout the State. Heat and smoke from fires can be more dangerous than the
flames. Inhaling the smoke can sear the lungs, and fire also produces poisonous gases that cause disorientation
and drowsiness, eventually leading to asphyxiation. As a result, asphyxiation is the leading cause of fire
deaths, exceeding burns by a three -to -one ratio.
There is a risk of residential property within the Community Facilities Districts being destroyed by
urban fires and wildfires and no assurance can be given as to the severity or frequency of fires within the
vicinity of the Community Facilities Districts. Additionally, property located adjacent to burn areas can be
subject to mudslides and flooding, as well as smoke and contamination by toxic debris, which can cause
significant damage and destruction to property.
Flood Risk. According to the Hazard Mitigation Plan of the City, the City is not prone to urban
flooding. Due to light annual rain fall and the City's location on the flood plain protecting it from channel
overflow, dam failure is the most likely cause of flooding with the City. The Santiago Dam is in Orange
County, east of the City, and it is an earth/rock filled dam, which creates the Irvine Lake. The City is
geographically located such that it is in the potential inundation area for dam failures. However, the potential
for dam failure is expected to be low. Floods in the City can cause extensive damage to residential and
business properties, parks and recreational facilities, road and highway infrastructure, and critical utility
facilities.
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In the event of a severe earthquake, fire, flood, drought, windstorm, outbreak of disease or other
natural disaster, there may be significant damage to both property and infrastructure in the Community
Facilities Districts. As a result, a substantial portion of the property owners may be unable or unwilling to pay
the Special Taxes when due. In addition, the value of property in the Community Facilities Districts could be
diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in
the event of delinquencies in the payment of the Special Taxes.
Property Insurance
In recent years, homeowners in many areas in the State have experienced significant increases in
premiums for property and homeowners' insurance policies as well as difficulty in obtaining such insurance
from commercial insurance companies. Such increases in the overall cost of homeownership could have a
material adverse effect on a homeowner's willingness and/or ability to pay the Special Taxes.
In addition, no assurances can be made that adequate homeowners' insurance coverage will be
available in the future from reputable insurance companies, with premiums comparable to historical rates, or at
all. The inability to obtain adequate insurance coverage could impact the ability of the homeowners' in the
City to reconstruct their homes in the event of damage. See the caption "—Natural Disasters."
Drought
From time to time certain parts of California, including the City, may experience extended drought
conditions. Extended drought conditions may impact the market value of properties within the City and the
ability or willingness of property owners to pay Special Taxes when due.
Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel,
other less common claims may also be relevant. One of the most serious in terms of the potential reduction in
the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a
parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous
substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980,
sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known and widely applicable of
these laws, but California laws with regard to hazardous substances are also stringent and similar in effect.
Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a
parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous
substance. The effect, therefore, should any of the parcels within the Community Facilities Districts be
affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the
condition.
The Community Facilities Districts are not aware of the presence of any federally or state classified
hazardous substances in violation of any environmental laws, located on the property within the Community
Facilities Districts. However, it is possible that such materials do currently exist and that the Community
Facilities Districts are not aware of them.
Following the fire at the Navy North Hangar, the Navy continues removal of debris and waste
handling exclusively from the Navy -owned 85-acre property relating to the Navy North Hangar fire. The City
has concluded its cleanup efforts in the areas outside the Navy's 85-acre property. On -going air monitoring at
locations around the Navy North Hangar site, including outdoor areas in Tustin neighborhoods that had been
impacted by hangar fire debris, demonstrate no airborne asbestos fibers have been detected since the fire. An
independent study reviewed by environmental regulators of outdoor soil and indoor air identified no hazardous
substances associated with the Navy North Hangar fire incident beyond safe limits. Seethe caption "Natural
Disasters —Fire Hazard."
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It is possible that owners of property in the Community Facilities Districts may be liable for hazardous
substances in the future as a result of the existence, currently, of a substance presently classified as hazardous
but which has not been released or the release of which is not presently threatened, or the existence, currently,
on the property of a substance not presently classified as hazardous but which may in the future be so
classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but
from the method of handling such substance. All of these possibilities could have the effect of reducing the
value of the applicable property.
Cybersecurity
The City, like many other public and private entities, relies on a large and complex technology
environment to conduct its operations. As a recipient and provider of personal, private, or sensitive
information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses,
malware and other attacks on computer and other sensitive digital networks and systems. Entities or
individuals may attempt to gain unauthorized access to the City's digital systems for the purposes of
misappropriating assets or information or causing operational disruption and damage. To date, the City has not
experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity
systems that are in place. However, no assurances can be given that the City's efforts to manage cyber threats
and attacks will be successful or that any such attack will not materially impact the operations or finances of
the City. The City takes a multi -layered approach to defend against breaches. Additionally, the City carries
cybersecurity insurance.
Parity Taxes and Special Assessments
Property within the Community Facilities Districts is subject to taxes and other charges levied by
several other public agencies. See the discussion of direct and overlapping indebtedness in Appendix A —
"INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS." None of the Authority,
the Community Facilities Districts or the City has control over the ability of other entities and districts to issue
indebtedness secured by special taxes or assessments payable from all or a portion of the property within the
Community Facilities Districts.
The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land
on which they will be annually imposed until they are paid. Such lien is on a parity with the lien of all special
taxes and special assessments levied by other agencies and is co -equal to and independent of the lien for
general ad valorem property taxes regardless of when they are imposed upon the same property. The Special
Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens
or security interests held by the Federal Deposit Insurance Corporation. See "— Bankruptcy and Foreclosure"
below.
None of the Authority, the Community Facilities Districts or the City has control over the ability of
other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments
payable from all or a portion of the property within the Community Facilities Districts. In addition, the
landowners within the Community Facilities Districts may, without the consent or knowledge of the Authority,
the Community Facilities Districts or the City, petition other public agencies to issue public indebtedness
secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad valorem taxes or
assessments may have a lien on such property on a parity with the Special Taxes and could reduce the
estimated value -to -lien ratios for property within the Community Facilities Districts described in this Official
Statement.
Payment of the Special Tax is not a Personal Obligation of the Owners
An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special
Tax is an obligation which is secured only by a lien against the taxable parcel. If the proceeds received from
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the sale of a taxable parcel following a Special Tax delinquency are not sufficient, taking into account other
liens imposed by public agencies, to pay the full amount of the Special Tax delinquency, the Community
Facilities Districts have no recourse against the owner of the parcel.
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax even if the value is sufficient
may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time
the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the
Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy, has
the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special
Tax that may be levied against the taxable parcels in each Community Facilities District to be recorded in the
Office of the Recorder for the County. While title companies normally refer to such notices in title reports,
there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender
will consider such Special Tax obligation in the purchase of a property within the Community Facilities
Districts or lending of money thereon.
The Mello -Roos Act requires the subdivider (or its agent or representative) of a subdivision to notify a
prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello -Roos special tax of the
existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code
Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the
seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a
format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or
failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could
adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.
Special Tax Delinquencies
Under provisions of the Mello -Roos Act, the Special Taxes, from which funds necessary for the
payment of principal of and interest on the Local Obligations and, thus, the Bonds are derived, are customarily
billed to the properties within the Community Facilities Districts on the ad valorem property tax bills sent by
the County to owners of such properties. The Mello -Roos Act currently provides that such Special Tax
installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem
property tax installments.
See the delinquency tables in Appendix A — "INFORMATION REGARDING THE COMMUNITY
FACILITIES DISTRICTS" for the Special Tax delinquency history of each Community Facilities District over
the last five Fiscal Years and see Table 7 above for the aggregate Special Tax delinquencies in the combined
Community Facilities Districts for the last five Fiscal Years.
See "SECURITY FOR THE LOCAL OBLIGATIONS — Covenants of the Community Facilities
Districts — Commence Foreclosure Proceedings," for a discussion of the provisions which apply, and
procedures which the Community Facilities Districts are obligated to follow under the Local Obligation
Indentures, in the event of delinquencies in the payment of Special Taxes. See "— Bankruptcy and
Foreclosure" below for a discussion of the policy of the Federal Deposit Insurance Corporation (the "FDIC")
regarding the payment of special taxes and assessment and limitations on the Community Facilities Districts'
ability to foreclose on the lien of the Special Taxes in certain circumstances.
The Community Facilities Districts have the authority and the obligation, subject to the Mello -Roos
Act and the maximum Special Tax rates set forth in each Rate and Method, to increase the levy of Special
Taxes against non -delinquent property owners in the applicable Community Facilities District in the event
other owners within such Community Facilities District are delinquent. Pursuant to each Rate and Method,
under no circumstances may the Special Tax levied against any parcel for which an occupancy permit for
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private residential use has been issued be increased by more than 10% per fiscal year as a consequence of
delinquency or default by the owner of any other parcel or parcels within the Community Facilities District.
Thus, the Community Facilities Districts may not be able to increase Special Tax levies in future fiscal years
by enough to make up for delinquencies for prior fiscal years. This would result in draws on the Reserve Fund
and the Reserve Accounts therein, and if delinquencies continue and in the aggregate exceed the Reserve Fund
balance, defaults would occur in the payment of principal and interest on the Bonds.
Insufficiency of Special Taxes
Notwithstanding that the maximum Special Taxes that may be levied in the Community Facilities
Districts exceeds debt service due on the Local Obligations, the Special Taxes collected could be inadequate to
make timely payment of debt service either because of nonpayment or because property becomes exempt from
taxation. Each Rate and Method exempts certain specified property from the Special Tax levy. See
Appendix D-1 — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
COMMUNITY FACILITIES DISTRICT NO. 06-1," and Appendix D-2 — "RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAXES FOR COMMUNITY FACILITIES DISTRICTS CFD NO. 2014-
1."
If for any reason property within a Community Facilities District becomes exempt from taxation by
reason of ownership by a non-taxable entity such as the federal government, another public agency or other
organization determined to be exempt, subject to the limitations of the maximum authorized rates, the Special
Tax will be reallocated to the remaining taxable properties within such Community Facilities District. This
could result in certain owners of property paying a greater amount of the Special Tax and could have an
adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when
due.
The Mello -Roos Act provides that, if any property within a Community Facilities District not
otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by
gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that
acquired the property. In addition, the Mello -Roos Act provides that, if property subject to the Special Tax is
acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with
respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain
award. The constitutionality and operation of these provisions of the Mello -Roos Act have not been tested in
the courts. Due to problems of collecting taxes from public agencies, if a substantial portion of land within a
Community Facilities District became owned by public agencies, collection of the Special Tax might become
more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal
of and interest on the related Local Obligations when due, or if a substantial portion of land within a
Community Facilities District became exempt from the Special Tax because of public ownership, or otherwise,
the maximum Special Taxes which could be levied upon the remaining Taxable Property therein might not be
sufficient to pay principal of and interest on the related Local Obligations when due, and in either case a
default could occur with respect to the payment of such principal and interest, and, in turn, a default could
occur in the payment of the principal and interest on the Bonds.
Moreover, under no circumstances may the Special Tax levied against any parcel for which an
occupancy permit for private residential use has been issued within a Community Facilities District be
increased by more than 10% per fiscal year as a consequence of delinquency or default by the owner of any
other parcel or parcels within such Community Facilities District. Thus, the Community Facilities Districts
may not be able to increase Special Tax levies in a Community Facilities District in future fiscal years by
enough to make up for delinquencies within such Community Facilities District for prior fiscal years. This
may result in draws on the Reserve Fund and the Reserve Accounts therein, and if delinquencies continue and
in the aggregate exceed the Reserve Fund balance, defaults would occur in the payment of principal and
interest on the Bonds. See "SECURITY FOR THE LOCAL OBLIGATIONS."
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Risks Associated with Bond Insurance
[In the event that the Authority defaults in the payment of principal of or interest on the Insured Bonds
when due, the Owners of the Insured Bonds will have a claim under the Policy for such payments. See the
caption `BOND INSURANCE." In the event that the Insurer becomes obligated to make payments on the
Insured Bonds, no assurance can be given that such event will not adversely affect the market for the Insured
Bonds. In the event that the Insurer is unable to make payments of principal of or interest on the Insured
Bonds when due under the Policy or the Reserve Policy, the Insured Bonds will be payable solely from
Revenues and amounts that are held in certain funds and accounts established under the Indenture, as described
under the caption "SECURITY FOR THE BONDS."
The long-term credit rating on the Insured Bonds is dependent in part on the financial strength of the
Insurer and its claims -paying ability. The Insurer's financial strength and claims -paying ability are predicated
upon a number of factors which could change over time. If the long-term ratings of the Insurer are lowered,
such event could adversely affect the market for the Insured Bonds. See the caption "MISCELLANEOUS —
Ratings."
None of the Authority, the Community Facilities Districts, the City or the Underwriter has made an
independent investigation of the claims -paying ability of the Insurer, and no assurance or representation
regarding the financial strength or projected financial strength of the Insurer is being made by the Authority,
the Community Facilities Districts, the City or the Underwriter in this Official Statement. Therefore, when
making an investment decision with respect to the Insured Bonds, potential investors should carefully consider
the ability of the Authority to pay principal and interest on the Insured Bonds, assuming that the Policy is not
available to pay principal and interest on the Insured Bonds, and the claims -paying ability of the Insurer
through final maturity of the Insured Bonds.
So long as the Policy remains in effect and the Insurer is not in default of its obligations thereunder,
the Insurer has certain notice, consent and other rights under the Indenture and will have the right to control all
remedies in the event of a default under the Indenture as to the Bonds. The Insurer is not required to obtain the
consent of the Owners of the Insured Bonds with respect to the exercise of remedies. See Appendix B.]
FDIC/Federal Government Interests in Properties
The ability of the Community Facilities Districts to collect interest and penalties specified by the Act
and to foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to parcels
in which the Federal Deposit Insurance Corporation (the "FDIC"), or other federal government entities such as
Fannie Mae or Freddie Mac, has or obtains an interest.
In the case of FDIC, in the event that any financial institution making a loan which is secured by
parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the
Community Facilities Districts may be constrained. The FDIC's policy statement regarding the payment of
state and local real property taxes (the "Policy Statement") provides that taxes other than ad valorem taxes
which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid
unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides
that the FDIC generally will not pay installments of non -ad valorem taxes which are levied after the time the
FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in
certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31,
1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a
mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific
consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the
non-payment of taxes.
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The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings
brought against Orange County in United States Bankruptcy Court and in Federal District Court. The
Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that
ruling, and the FDIC cross -appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling
favorable to the FDIC except with respect to the payment of pre -receivership liens based upon delinquent
property tax.
The Community Facilities Districts are unable to predict what effect the application of the Policy
Statement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains
an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would
prevent or delay the foreclosure sale.
In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is owned by a
federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a
private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal
government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to
collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause
of the United States Constitution "this Constitution, and the Laws of the United States which shall be made in
Pursuance thereof, and all Treaties made, or which shall be made, under the Authority of the United States,
shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the
Constitution or Laws of any State to the contrary notwithstanding." In the absence of Congressional intent to
the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure
would impair the federal government interest. This means that, unless Congress has otherwise provided, if a
federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on
the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel
to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest
in the parcel and the Community Facilities Districts wish to foreclose on the parcel as a result of delinquent
Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to
pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's
mortgage interest. For a discussion of risks associated with taxable parcels within the Community Facilities
Districts becoming owned by the federal government, federal government entities or federal government
sponsored entities, see "— Insufficiency of Special Tax Revenues."
The Community Facilities Districts' remedies may also be limited in the case of delinquent Special
Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the
Drug Enforcement Administration) have or obtain an interest.
Bankruptcy and Foreclosure
In the event of a delinquency in the payment of the Special Taxes, the Community Facilities Districts,
under certain circumstances, are required to commence enforcement proceedings as described under the
heading "SECURITY FOR THE LOCAL OBLIGATIONS — Covenants of the Community Facilities
Districts." However, prosecution of such proceedings could be delayed due to crowded local court calendars,
dilatory legal tactics, or bankruptcy. It is also possible that the Community Facilities Districts will be unable
to realize proceeds in an amount sufficient to pay the applicable delinquency. Moreover, the ability of the
Community Facilities Districts to commence and prosecute enforcement proceedings may be limited by
bankruptcy, insolvency and other laws generally affecting creditors' rights (such as the Soldiers' and Sailors'
Relief Act of 1940) and by the laws of the State relating to judicial and non judicial foreclosure. Although
bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, the amount
and priority of any Special Tax liens could be modified if the value of the property falls below the value of the
lien. If the value of the property is less than the lien, such excess amount could be treated as an unsecured
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claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in the
enforcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and tax
sale proceedings. Any such delay could increase the likelihood of delay or default in payment of the principal
of and interest on the Local Obligations, and the possibility of delinquent tax installments not being paid in
full. The various legal opinions delivered in connection with the issuance of the Bonds, including Bond
Counsel's approving legal opinion, are qualified as to the enforceability of the Bonds, the Indenture, the Local
Obligations and the Local Obligation Indentures by reference to bankruptcy, reorganization, moratorium,
insolvency and other laws affecting the rights of creditors generally or against public corporations such as the
Community Facilities Districts.
Funds Invested in the County Investment Pool
On January 24, 1996, the United States Bankruptcy Court for the Central District of California held
that a State statute providing for a priority of distribution of property held in trust conflicted with, and was
preempted by, federal bankruptcy law. In that case, the court addressed the priority of the disposition of
moneys held in a county investment pool upon bankruptcy of the county. Following payment of the Special
Taxes to the Community Facilities Districts and prior to payment by the Trustee of debt service on the Local
Obligations, such funds may be invested in the name of the City or a Community Facilities District for a period
of time in the County investment pool. In the event of a petition of or the adjustment of County debts under
Chapter 9 of the Federal Bankruptcy Code, a court might hold that the Community Facilities Districts and in
turn the Authority and the Bond owners do not have a valid and/or prior lien on the Special Taxes or debt
service payments on the Local Obligations where such amounts are deposited in the County investment pool
and may not provide the Bond owners with a priority interest in such amounts. In that circumstance, unless the
Bond owners could "trace" the funds that have been deposited in the County investment pool, the Bond owners
would be unsecured (rather than secured) creditors of the County. There can be no assurance that the Bond
owners could successfully so trace the Special Taxes or debt service payments.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a
payment default or other default under the terms of the Bonds or the Indenture. Pursuant to the Indenture, an
Owner of the Bonds is given the right for the equal benefit and protection of all owners similarly situated to
pursue certain remedies described in Appendix B — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
— SUMMARY OF AUTHORITY INDENTURE — EVENTS OF DEFAULT AND REMEDIES."
Limitations on Remedies
Remedies available to the Owners of the Bonds may be limited by a variety of factors and may be
inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the exclusion
from gross income for federal income tax purposes of interest on the Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the
extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium, or other similar laws affecting generally the enforcement of creditors' rights, by
equitable principles, by the exercise of judicial discretion and by limitations on remedies against public
agencies in the State. The lack of availability of certain remedies or the limitation of remedies may entail risks
of delay, limitation or modification of the rights of the owners of the Bonds.
Loss of Tax Exemption
As discussed under the caption "LEGAL MATTERS — Tax Matters" herein, interest (and original
issue discount) on the Bonds could become includable in gross income for purposes of federal income taxation
retroactive to the date the Bonds were issued, as a result of future acts or omissions of the Authority, the City
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or the Community Facilities Districts in violation of covenants in the Indenture or the Local Obligation
Indentures, respectively. Should such an event of taxability occur, the Bonds are not subject to a special
redemption and will remain outstanding until maturity or until redeemed under one of the other redemption
provisions contained in the Indenture.
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause
interest (and original issue discount) on the Bonds to be subject, directly or indirectly, to federal income
taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners
from realizing the full current benefit of the tax status of such interest (and original issue discount). The
introduction or enactment of legislative proposals, clarification of the Code or court decisions may also affect
the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their
own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as
to which Bond Counsel expresses no opinion.
It is possible that subsequent to the issuance of the Bonds there might be federal, State, or local
statutory changes (or judicial or regulatory interpretations of federal, State, or local law) that affect the federal,
State, or local tax treatment of the Bonds or the market value of the Bonds. No assurance can be given that
subsequent to the issuance of the Bonds such changes or interpretations will not occur. See "LEGAL
MATTERS — Tax Matters" below.
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that such Bonds can be sold for any particular price. Although the Authority has committed to
provide certain statutorily required financial and operating information, there can be no assurance that such
information will be available to Bondowners on a timely basis. See "INTRODUCTION — Continuing
Disclosure" and Appendix F — "FORM OF CONTINUING DISCLOSURE AGREEMENT." Any failure to
provide annual financial information, if required, does not give rise to monetary damages but merely an action
for specific performance. Occasionally, because of general market conditions, lack of current information, the
absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a
particular issue, secondary marketing practices in connection with a particular issue are suspended or
terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could be substantially different from the original purchase price.
Proposition 218
An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was
approved by the voters of the State of California at the November 5, 1996 general election. The Initiative
added Article XIIIC and Article XIIID to the California Constitution. According to the "Title and Summary"
of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local
governments to impose taxes and property -related assessments, fees and charges." The provisions of the
Initiative continue to be interpreted by the courts. The Initiative could potentially impact the Special Taxes
available to the Community Facilities Districts to pay the principal of and interest on the Local Obligations as
described below.
Among other things, Section 3 of Article XIIIC states that "... the initiative power shall not be
prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge."
The Mello -Roos Act provides for a procedure which includes notice, hearing, protest and voting requirements
to alter the rate and method of apportionment of an existing special tax. However, the Mello -Roos Act
prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the
levy of any special tax pledged to repay any debt incurred pursuant to the Mello -Roos Act unless such
legislative body determines that the reduction or termination of the special tax would not interfere with the
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timely retirement of that debt. On August 1, 1997, a bill was signed into law by the Governor of the State
enacting Government Code Section 5854, which states that:
Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general
election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased
before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that
constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States
Constitution.
Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred
on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely
retirement of the Local Obligations.
It may be possible, however, for voters or the City Council acting as the legislative body of the
Community Facilities Districts, to reduce the Special Taxes in a manner which does not interfere with the
timely repayment of the Local Obligations, but which does reduce the maximum amount of Special Taxes that
may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the
levy of Special Taxes for Administrative Expenses. Furthermore, no assurance can be given with respect to
the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of
the Local Obligations. Nevertheless, to the maximum extent that the law permits it to do so, the Community
Facilities Districts will covenant in each Local Obligation Bond Indenture executed by it that it will not initiate
proceedings under the Mello -Roos Act to reduce the maximum Special Tax rates in a Community Facilities
District below an amount equal to 110 percent of the debt service for the Local Obligations of such
Community Facilities District in each Bond Year. The Community Facilities Districts also will covenant in
each Local Obligation Bond Indenture executed by it that, in the event an initiative is adopted which purports
to alter the Rate and Method of Apportionment of Special Tax for its Community Facilities Districts, it will
commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant.
However, no assurance can be given as to the enforceability of the foregoing covenants.
With respect to the approval of the Special Taxes, on August 1, 2014, the California Court of Appeal,
Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro, et al.
(D063997) (the "San Diego Decision"). The case involved a Convention Center Facilities District (the
"CCFD") established by the City of San Diego. The CCFD is a financing district much like the Community
Facilities Districts established under the provisions of the Act. The CCFD is comprised of all of the real
property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel
properties located within the CCFD.
The election authorizing the special tax was limited to owners of hotel properties and lessees of real
property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered
voter election. Such approach to determining who would constitute the qualified electors of the CCFD was
modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be
apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by
the landowners of the proposed district whose property would be subject to the special tax. The Court held that
the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4
thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters
within the district.
The facts of the San Diego Decision show that there were hundreds of thousands of registered voters
within the CCFD (viz., all of the registered voters in San Diego). The elections held in the Community
Facilities Districts had no registered voters at the time of the elections to authorize the respective Special
Taxes. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of
landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12
registered voters. Thus, by its terms, the Court's holding does not apply to the Special Tax elections in the
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Community Facilities Districts. Moreover, Section 53341 of the Act provides that any "action or proceeding
to attack, review, set aside, void or annul the levy of a special tax ... shall be commenced within 30 days after
the special tax is approved by the voters." Similarly, Section 53359 of the Act provides that any action to
determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving
the issuance of such bonds. Voters in the Community Facilities Districts approved their respective Special
Taxes more than 30 days ago. Based on Sections 53341 and 53359 of the Act and analysis of existing laws,
regulations, rulings and court decisions, Bond Counsel is of the opinion that no successful challenge to the
Special Taxes being levied in accordance with the applicable Rate and Method may now be brought.
The interpretation and application of the Initiative will ultimately be determined by the courts with
respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty
the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL
RISK FACTORS — Limitations on Remedies."
Ballot Initiatives
Articles XIII A, XIII B, XIII C and XIII D, all of which placed certain limitations on the power of
local agencies to tax, collect and expend revenues, were adopted pursuant to measures qualified for the ballot
pursuant to California's constitutional initiative process and the State Legislature has in the past enacted
legislation which has altered the spending limitations or established minimum funding provisions for particular
activities. From time to time, other initiative measures could be adopted by California voters or legislation
enacted by the legislature. The adoption of any such initiative or legislation might place limitations on the
ability of the State, the City, or the Community Facilities Districts to increase revenues or to increase
appropriations or on the ability of the landowners within the Community Facilities Districts to complete
proposed future development.
LEGAL MATTERS
Tax Matters
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel,
under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain
representations and compliance with certain covenants and requirements described herein, interest (and
original issue discount) on the Bonds is excluded from gross income for federal income tax purposes, and is
not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on
individuals. However, it should be noted that with respect to applicable corporations as defined in Section
59(k) of the Internal Revenue Code of 1986, as amended (the "Code"), generally certain corporations with
more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue
discount) with respect to the Bonds might be taken into account in determining adjusted financial statement
income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such
corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is
exempt from State of California personal income tax.
The excess of the stated redemption price at maturity of a Bond over the issue price of a Bond (the
first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) constitutes
original issue discount. Original issue discount accrues under a constant yield method, and original issue
discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The
amount of original issue discount deemed received by the Beneficial Owner will increase the Beneficial
Owner's basis in the applicable Bond.
Bond Counsel's opinion as to the exclusion from gross income for federal income tax purposes of
interest (and original issue discount) on the Bonds is based upon certain representations of fact and
certifications made by the Authority, the Community Facilities Districts and others and is subject to the
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condition that the Authority and the Community Facilities Districts comply with all requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of
the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross
income for federal income tax purposes. Failure to comply with such requirements of the Code might cause
the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax
purposes retroactive to the date of issuance of the Bonds. The Authority and the Community Facilities
Districts will covenant to comply with all such requirements.
The amount by which a Beneficial Owner's original basis for determining loss on sale or exchange in
the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier
call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code;
such amortizable bond premium reduces the Beneficial Owner's basis in the applicable Bond (and the amount
of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as
a result of the amortization of bond premium may result in a Beneficial Owner realizing a taxable gain when a
Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the
original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their own tax
advisors as to the treatment, computation and collateral consequences of amortizable bond premium.
Bond Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not
occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person,
whether any such actions or events are taken or do occur. The Indenture, the Local Obligations Indentures and
the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable
opinion of a bond counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect
on the exclusion from gross income for federal income tax purposes of interest on any Bond if any such action
is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP .
Although Bond Counsel will render an opinion that interest on the Bonds is excluded from gross
income for federal income tax purposes provided that the Authority and the Community Facilities Districts
continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or
receipt of interest with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond
Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of
the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences
relating to the Bonds.
The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-
exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected
for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such
an audit of the Bonds (or by an audit of similar bonds). No assurance can be given that in the course of an
audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation
thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross
income of interest on the Bonds or their market value.
SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE,
OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR
INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL,
STATE, OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE IMPOSITION OF
ADDITIONAL FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX-
EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD
ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE
CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES
WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS
WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF
THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS
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REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR
INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE
BONDS.
See Appendix E — "FORM OF BOND COUNSEL OPINION" for a form of the opinion to be
provided by Bond Counsel on the date of issuance of the Bonds.
Absence of Litigation
The Authority will certify at the time the Bonds are issued that no litigation is pending or threatened
concerning the validity of the Bonds or the Local Obligations and that no action, suit or proceeding is known
by the Authority to be pending that would restrain or enjoin the delivery of the Bonds or the Local Obligations,
or contest or affect the validity of the Bonds or the Local Obligations or any proceedings of the Authority
taken with respect to the Bonds or the Local Obligations. The Community Facilities Districts will also each
certify at the time the Bonds are issued that no litigation is pending or threatened concerning the validity the
Local Obligations and that no action, suit or proceeding is known by the Community Facilities District to be
pending that would restrain or enjoin the delivery of the Local Obligations, or contest or affect the validity of
the Local Obligations or any proceedings of the Community Facilities Districts taken with respect to the Local
Obligations. The City and Navy have received claims related to the Navy North Hangar fire, but no litigation
has been initiated.
Legal Opinion
Certain proceedings in connection with the issuance of the Bonds are subject to the approval as to
their legality of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel for the
Authority in connection with the issuance of the Bonds. The opinion of Bond Counsel approving the validity
of the Bonds substantially in the form attached as Appendix E hereto will be attached to each Bond. Bond
Counsel's employment is limited to a review of legal procedures required for the approval of the Bonds and to
rendering an opinion as to the validity of the Bonds and the exemption of interest (and original issue discount)
on the Bonds from income taxation. Bond Counsel expresses no opinion to the Owners of the Bonds as to the
accuracy, completeness or fairness of this Official Statement or other offering materials relating to the Bonds
and expressly disclaims any duty to do so.
Payment of the fees of Bond Counsel, Disclosure Counsel, the Underwriter and Underwriter's
Counsel is contingent upon issuance of the Bonds.
MISCELLANEOUS
Ratings
S&P Global Ratings, a Standard & Poor's Financial Services LLC business ("S&P"), has assigned the
rating of "AA" to the Insured Bonds based upon the delivery of the Policy by the Insurer at the time of
issuance of the Bonds. See `BOND INSURANCE" herein.
In addition, S&P has assigned its underlying rating of "A+" to the Bonds, independent of the delivery
of the Policy. There is no assurance that any credit rating given to the Bonds will be maintained for any period
of time or that the ratings may not be lowered or withdrawn entirely by S&P if, in the judgment of S&P,
circumstances so warrant. Any downward revision or withdrawal of such ratings may have an adverse effect
on the market price of the Bonds. Such ratings reflect only the views of S&P and an explanation of the
significance of such ratings may be obtained from S&P. Generally, rating agencies base their ratings on
information and materials furnished to them (which may include information and material from the City, the
Authority or the Community Facilities Districts which is not included in this Official Statement) and on
investigations, studies and assumptions by the rating agencies.
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The Authority has covenanted in a Continuing Disclosure Agreement to file notices of any rating
changes on the Bonds. See the caption "—Continuing Disclosure" and Appendix F. Notwithstanding such
covenant, information relating to rating changes on the Bonds may be publicly available from the rating
agencies prior to such information being provided to the Authority and prior to the date the Authority is
obligated to file a notice of rating change. Purchasers of the Bonds are directed to the rating agencies and their
respective websites and official media outlets for the most current ratings changes with respect to the Bonds
after the initial issuance of the Bonds.
None of the City, the Authority, the Community Facilities Districts or the Underwriter makes any
representation as to the Insurer's creditworthiness or any representation that the Insurer's credit rating will be
maintained in the future. The rating agencies have previously taken action to downgrade the ratings of certain
municipal bond insurers and have published various releases outlining the processes that they intend to follow
in evaluating the ratings of financial guarantors. For some financial guarantors, the result of such evaluations
could be a rating affirmation, a change in rating outlook, a review for downgrade or a downgrade. Potential
investors are directed to the rating agencies for additional information on the applicable rating agencies'
evaluations of the financial guaranty industry and individual financial guarantors, including the Insurer. See
the caption `BOND INSURANCE" for further information relating to the Insurer.
Verification of Mathematical Accuracy
Causey Public Finance LLC, upon delivery of the Bonds, will deliver a report on the mathematical
accuracy of certain computations, contained in schedules provided to them which were prepared by the
Underwriter, relating to the sufficiency of moneys and securities deposited into the Escrow Funds to pay, when
due, the principal, whether at maturity or upon prior redemption, and interest requirements of the Prior Bonds.
The report of Causey Public Finance LLC, will include the statement that the scope of its engagement
is limited to verifying the mathematical accuracy of the computations contained in such schedules provided to
it, and that it has no obligation to update its report because of events occurring, or data or information coming
to its attention, subsequent to the date of its report.
Underwriting
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), at
a purchase price of $ (representing the par amount of the Bonds, plus original issue [premium/discount]
of $ , less Underwriter's discount of $).
The purchase agreement relating to the Bonds between the Authority and the Underwriter provides
that all Bonds will be purchased if any are purchased, and that the obligation to make such purchase is subject
to certain terms and conditions set forth in said purchase contract, including, but not limited to, the approval of
certain legal matters by counsel.
Municipal Advisor
Fieldman, Rolapp & Associates, Inc. (the "Municipal Advisor") has acted as Municipal Advisor to the
City in conjunction with the issuance of the Bonds. The Municipal Advisor has assisted the City in the
preparation of this Official Statement and in other matters related to the planning, structuring, execution and
delivery of the Bonds. The Municipal Advisor will receive compensation contingent upon the sale and
delivery of the Bonds.
The Municipal Advisor has not audited, authenticated or otherwise independently verified the
information set forth in this Official Statement, or any other information related to the City with respect to the
accuracy or completeness of disclosure of such information. The Municipal Advisor makes no guaranty,
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warranty or other representation respecting the accuracy or completeness of this Official Statement or any
other matter related to this Official Statement.
Continuing Disclosure
The Authority will execute a Continuing Disclosure Agreement by and between the Authority and
Webb Municipal Finance, LLC, as Dissemination Agent, in the form attached hereto as Appendix F for the
benefit of the Owners and Beneficial Owners of the Bonds to provide certain financial information and
operating data relating to the Authority and the Community Facilities Districts (the "Annual Report") and to
provide notices of the occurrence of certain enumerated events (the "Listed Events"). The Annual Report will
be filed by the Dissemination Agent with the Electronic Municipal Market Access System of the Municipal
Securities Rulemaking Board ("EMMA") and notices of Listed Events will be filed by the Dissemination
Agent with EMMA. The specific nature of the information to be included in the Annual Reports and the
notices of Listed Events is set forth in Appendix F — "FORM OF CONTINUING DISCLOSURE
AGREEMENT." The Continuing Disclosure Agreement will be executed and delivered by the Authority in
order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5) (the "Rule"). The Annual Reports
are to be filed by the Authority no later than the April 1 after the end of the Authority's fiscal year, which is
currently June 30. The first Annual Report will be due April 1, 2026.
The City Council of the City serves as the governing board of the Authority, related entities of the
City and all of the City's Community Facilities Districts. [Within the past five years, the City, the related
entities of the City, and the Community Facilities Districts have not failed to comply in any material respects
with their respective continuing disclosure obligations.] [Confirm.] Additionally, the City has established and
implemented policies and procedures to ensure future compliance with its continuing disclosure obligations.
The City has retained Webb Municipal Finance, LLC to serve as Dissemination Agent for the
continuing disclosure undertaking related to the Bonds, and has adopted policies and procedures with respect
to its continuing disclosure practices.
The Continuing Disclosure Agreement will inure solely to the benefit of any Dissemination Agent, the
Underwriter and Owners or Beneficial Owners from time to time of the Bonds. A default under the
Continuing Disclosure Agreement is not a default under the Indenture and the sole remedy following a default
is an action to compel specific performance by the Authority with the terms of the Continuing Disclosure
Agreement.
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Additional Information
References are made herein to certain documents and reports which are brief summaries thereof which
do not purport to be complete or definitive, and reference is made to such documents and reports for full and
complete statements of the contents thereof.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so
stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as
a contract or agreement between the Authority and the purchasers or Owners of any of the Bonds.
The execution and delivery of this Official Statement has been duly authorized by the Authority.
TUSTIN FINANCING AUTHORITY
Executive Director
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APPENDIX A
INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS
Community Facilities District No. 06-1
Location and Description. The City formed CFD No. 06-1 on July 17, 2006. CFD No. 06-1 consists
of two non-contiguous areas referred to in this Official Statement as Zone 1 and Zone 2. Zone 1 is located on
the south side of Edinger Avenue, east of Red Hill Avenue, in the City. Zone 1 is commonly referred to as
Columbus Square, and currently includes 833 parcels on approximately 70 total acres of land subject to the
levy of Special Tax A. Zone 2 is located on the west side of Harvard Avenue between Moffett Avenue to the
north and Warner Avenue to the south, in the City. Zone 2 is commonly referred to as Columbus Grove, and
includes 462 parcels on approximately 56 total acres of land subject to the levy of Special Tax A. The Zone
designations were for the purpose of establishing varying Special Tax rates for the different dwelling unit
product types to be built in the District, and to account for the special tax burden in Zone 1 (but not Zone 2)
associated with a community facilities district formed by the Tustin Unified School District (see Tables A-1
and A-6). CFD No. 06-1 is fully built out and consists of 1,295 separate Orange County Assessor's parcels of
Taxable Property (excluding parcels that have prepaid all Special Tax A for such parcels) on approximately
126 acres. Fourteen parcels located in CFD No. 06-1, including one parcel consisting of 240 apartment units,
were previously subject to the levy of Special Tax A but have prepaid Special Tax A appliable to such parcels
in full.
[INSERT CFD NO.06-1 MAP.]
Assigned Special Taxes. Table A-1 below sets forth the maximum and projected Special Taxes to be
levied per parcel of Taxable Property within CFD No. 06-1 in Fiscal Year 2025-26, the total assessed value of
property within CFD No. 06-1 in Fiscal Year 2024-25, and the aggregate value -to -lien ratio for the Bonds in
CFD No. 06-1, allocated by land use class. The Special Taxes in CFD No. 06-1 may not be levied after Fiscal
Year 2045-46. The final maturity of the CFD No. 06-1 Bonds is September 1, 2039.
For the complete text of the CFD No. 06-1 Rate and Method, see Appendix D-1 — "RATE AND
METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR COMMUNITY FACILITIES DISTRICT
NO. 06-1."
A-1
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TABLE A-1
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
ASSIGNED SPECIAL TAXES
Fiscal Year
Total
2025-26
Projected
Projected
Maximum
Fiscal Year
Fiscal Year
Land
Special
2025-26
2025-26
Fiscal Year
Aggregate
Use
No. of
Tax A Per
Special Tax
Special Tax
Percent
2024-25
CFD No. 06-1
Value-to-
Description/Zone
Class
Residential Floor Area
Parcels
Parcel0)
A Per Parcel
A LetyO)
of Total
Assessed Value
Bonds*(')
Other Bonds(4)
Total Bonds
Lien
Zone 1
Single Family Detached Property
1
Greater than 3,600 s.f
21
$4,743
$3,461
$ 72,691
2.07%
$ 29,029,153
$ 706,779
$ 716,072
$ 1,422,851
20.40:1
Single Family Detached Property
2
3,226 - 3,600 s.f
30
4,142
3,022
90,672
2.59
38,449,996
881,613
911,037
1,792,650
21.45:1
Single Family Detached Property
3
2,851 - 3,225 s.f.
62
3,652
2,665
165,242
4.71
72,701,770
1,606,668
1,651,490
3,258,158
22.31:1
Single Family Detached Property
4
2,476 -2,850 s.f
64
3,639
2,656
169,960
4.85
62,751,721
1,652,542
1,465,994
3,118,536
20.12:1
Single Family Detached Property
5
2,101 - 2,475 s.f.
75
3,247
2,370
177,724
5.07
67,652,185
1,728,031
1,438,139
3,166,170
21.37:1
Single Family Detached Property
6
Less than or equal to 2,100 s.f
31
3,230
2,357
73,064
2.08
26,273,063
710,407
478,777
1,189,184
22.09:1
Single Family Attached Property
7
Greater than 2,550 s.f
0
3,511
0
0
0.00
0
0
0
0
N/A
Single Family Attached Property
8
2,301 - 2,550 s.f.
0
3,406
0
0
0.00
0
0
0
0
N/A
Single Family Attached Property
90)
2,051 - 2,300 s.f
17
3,230
1,981
33,683
0.96
11,683,906
327,502
278,822
606,324
19.27:1
Single Family Attached Property
10161
1,801 - 2,050 s.f.
62
2,775
1,894
117,410
3.35
47,362,936
1,141,589
890,715
2,032,304
23.31:1
Single Family Attached Property
11(7)
1,551 - 1,800 s.f
222
1,970
1,418
314,726
8.98
150,801,397
3,060,116
2,737,539
5,797,655
26.01:1
Single Family Attached Property
12
Less than or equal to 1,550 s.f.
136
1,304
951
129,401
3.69
76,681,832
1,258,178
1,402,312
2,660,490
28.82:1
Senior Units
13
N/A
0
1,069
0
0
0.00
0
0
0
0
N/A
Affordable Units - Moderate
14
N/A
24
510
372
8,930
0.25
8,392,872
86,828
43,605
130,432
64.35:1
Affordable Units - Low
15
N/A
64
291
213
13,608
0.39
11,323,662
132,309
58,139
190,449
59.46:1
Affordable Units - Very Low
16
N/A
25
73
53
1,329
0.04
2,276,757
12,921
13,626
26,547
85.76:1
Non -Residential Property
17
N/A
0
32,746
0
0
0.00
0
0
0
0
N/A
Zone 2
Single Family Detached Property
1
Greater than 4,300 s.f
19
10,850
7,918
150,442
4.29
35,225,976
1,462,761
0
1,462,761
24.08:1
Single Family Detached Property
2
3,951 - 4,300 s.f.
37
10,180
7,429
274,872
7.84
58,411,100
2,672,605
0
2,672,605
21.86:1
Single Family Detached Property
3
3,601 - 3,950 s.f.
25
9,657
7,047
176,183
5.03
35,556,116
1,713,042
0
1,713,042
20.76:1
Single Family Detached Property
4
3,251 - 3,600 s.f
23
8,913
6,504
149,593
4.27
30,359,631
1,454,512
0
1,454,512
20.87:1
Single Family Detached Property
5
2,901 - 3,250 s.f.
50
7,421
5,415
270,772
7.72
66,142,481
2,632,747
0
2,632,747
25.12:1
Single Family Detached Property
6
2,551 - 2,900 s.f
123
7,048
5,143
632,625
18.04
141,908,687
6,151,076
0
6,151,076
23.07:1
Single Family Detached Property
7
Less than or equal to 2,550 s.f.
0
6,675
0
0
0.00
0
0
0
0
N/A
Single Family Attached Property
8
Greater than 1,800 s.f
70
4,761
3,474
243,195
6.94
55,859,127
2,364,614
0
2,364,614
23.62:1
Single Family Attached Property
9
1,601 - 1,800 s.f.
70
4,314
3,148
220,349
6.28
50,880,724
2,142,479
0
2,142,479
23.75:1
Single Family Attached Property
10
Less than or equal to 1,600 s.f
3
3,568
2,604
7,811
0.22
1,673,756
75,943
0
75,943
22.04:1
Affordable Units - Moderate
11
N/A
30
510
372
11,163
0.32
11,172,928
108,535
0
108,535
102.94:1
Affordable Units - Very Low
12
N/A
12
73
53
638
0.02
2,964,748
6,202
0
6,202
478.03:1
Non -Residential Property
13
N/A
0
57,594
0
0
0.00
0
0
0
0
N/A
Total
1295
$3,506,083
100.00%
$ 1,095,536,524
$34,090,000
$12,086,267
$46,176,267
23.73:1
Preliminary, subject to change.
m The Maximum Special Tax A for each Land Use Class is per parcel except for Non -Residential Property in both Zones, the maximum Special Tax A for which is per Acre. (However, there is no Taxable Non -Residential Property in CFD No. 06-1.) On each July 1, the Maximum Special
Tax A increases by an amount equal to 2% of the amount in effect for the previous Fiscal Year. The Mello -Roos Act limits the actual maximum rate that can be applied to individually owned residential parcels to 10 % above what would have been charged if there were no delinquencies in
the Special Tax payment.
(2) Based upon the debt service requirement of the Bonds and includes estimated Fiscal Year 2025-26 Minimum Administrative Expense Requirement of $101,582.87. The CFD No. 06-1 Indenture provides that CFD No. 06-1 may, at its option, establish the Administrative Expense
Requirement for any Bond Year subsequent to the initial Bond Year at any amount larger than $101,582.87 that is not in excess of 102% of the Administrative Expense Requirement applicable in the immediately preceding Bond Year.
P) Includes initial principal of the Bonds.
0) Zone 1 includes outstanding bonds with respect to the Tustin Unified School District CFD No. 06-1. Zone 2 is not in the Tustin Unified School District CFD. Does not include General Obligation Bonded indebtedness as shown in Table A-3.
(s) There are four parcels in this Land Use Class which partially prepaid the special tax obligation. The Maximum Special Tax A Rates for these Parcels range from $940.50 to $1,221.49 per parcel.
(0 There are six parcels in this Land Use Class which partially prepaid the special tax obligation. The Maximum Special Tax A Rates for these Parcels range from $863.65 to $968.00 per parcel.
(7) There are four parcels in this Land Use Class which partially prepaid the special tax obligation. The Maximum Special Tax A Rates for these Parcels range from $462.46 to $503.24 per parcel.
See "SPECIAL RISK FACTORS Potential Early Redemption of Bonds from Prepayments or Other Sources."
Source: Webb Municipal Finance, LLC.
A-^
4932-3978-2181v13/202091-0001
Docusign Envelope ID: 3EFE5DE9-C71E-480B-80B0-BFC4B657B312
Value -to -Lien. Table A-2 below sets forth the stratification of value -to -lien of the Taxable Property
within CFD No. 06-1 based on Fiscal Year 2024-25 assessed value and each parcel's respective share of the
principal amount of the CFD No. 06-1 Bonds (allocated to each parcel based upon its respective share of the
projected Special Tax levy for Fiscal Year 2025-26) and the ratio of the assessed value to its share of the CFD
No. 06-1 Bonds. The ratio of the value of an individual lot within CFD No. 06-1 to its respective share of the
principal amount of the CFD No. 06-1 Bonds can be expected to vary.
A-3
4932-3978-2181v13/202091-0001
Docusign Envelope ID: 3EFE5DEg-C71E-480B-80B0-BFC4B657B312
TABLE A-2
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
VALUE -TO -LIEN STRATIFICATION
Projected
Percent of
Percent of
Fiscal Year
Projected
Percent
Total
2025-26
Fiscal Year
Allocation of
Aggregate
Assessed No. of of Total
Total
Assessed
Special Tax
2025-26
CFD No. 06-1
Value-to-
Value-to-Lien(l) Parcels Parcels
Assessed Value
Value
Levy*
Levy*
Bonds*(Z)
Other Bonds(
Total Bonds
Lien*
Less than 5.00:10) 3 0.23%
$ 385,909
0.04%
$ 6,420
0.18%
$ 62,423
$ 47,908
$ 110,331
3.50:1
5.00:1 to 19.99:1 211 16.29
175,178,327
15.99
703,934
20.08
6,844,418
2,927,705
9,772,123
17.93:1
20.00:1 to 34.99:1 887 68.49
840,753,858
76.74
2,688,356
76.68
26,139,162
8,571,613
34,710,775
24.22:1
35.00:1 to 49.99:1 55 4.25
44,425,034
4.06
74,983
2.14
729,066
426,783
1,155,849
38.43:1
50.00:1 to 64.99:1 41 3.17
8,569,226
0.78
10,790
0.31
104,917
49,055
153,972
55.65:1
65.00:1 to 79.99:1 33 2.55
8,801,917
0.80
7,939
0.23
77,188
48,668
125,857
69.94:1
Greater than 79.99:1(5) 65 5.02
17,422,253
1.59
13,661
0.39
132,826
14,535
147,361
118.23:1
Total 1295 100.00%
$1,095,536,524
100.00%
$ 3,506,083
100.00%
$ 34,090,000
$12,086,267
$46,176,267
23.73:1
* Preliminary, subject to change.
Assessed Value -to -Lien based upon the principal amount of the outstanding Bonds.
�2> Includes initial principal of the Bonds.
0) Includes outstanding bonds with respect to the Tustin Unified School District CFD No.
06-1. Does not include General Obligation Bonded indebtedness as shown in Table A-3.
0) The lowest value -to -lien in the less than 5.00:1
category is 2.43:1.
All parcels in the category have reduced assessed value pursuant
to Prop 60/90
exemptions.
0) The highest value -to -lien in the greater than 79.99:1
category is 673.98:1.
Source: Webb Municipal Finance, LLC.
A-4
4932-3978-218lvl3/202091-0001
Docusign Envelope ID: 3EFE5DE9-C71E-480B-80B0-BFC4B657B312
Direct and Overlapping Debt The Authority has obtained the assessed values of all of the Taxable
Property in CFD No. 06-1 subject to Special Tax A, as established by the County Assessor for Fiscal Year
2024-25, which totals $1,095,536,524.
CFD No. 06-1 is included within the boundaries of overlapping local agencies providing
governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue
bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and
assessments that may be levied upon the property within CFD No. 06-1 is shown in Table A-3 below. hi
addition to current debt, new community facilities districts and/or special assessment districts could be formed
in the future encompassing all or a portion of the property within CFD No. 06-1; and such districts or the
agencies that formed them could issue more bonds and levy additional special taxes or assessments. The
assessed value -to -lien ratio of the property within CFD No. 06-1, based on the Fiscal Year 2024-25 assessed
values and all such estimated direct and overlapping special tax and assessment indebtedness within CFD No.
06-1, and assuming that the CFD No. 06-1 Bonds have been issued to refund the Prior CFD No. 06-1 Bonds,
equals approximately 23.73:1*. This ratio does not include overlapping general obligation debt within CFD
No. 06-1. If general obligation debt is included, the value -to -lien ratio is 15.56:1*.
* Preliminary, subject to change.
A-5
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Docusign Envelope ID: 3EFE5DEg-C71E-480B-80B0-BFC4B657B312
TABLE A-3
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
DIRECT AND OVERLAPPING DEBT
I. Assessed Value
2024-2025 Secured Roll Assessed Valuation
$1,095,536,524
II. Land Secured Bond Indebtedness
Parcels
Outstanding Direct and
%
in CFD
Amount
Overlapping Bonded Debt Type
Issued
Outstanding Applicable
No. 06-1
Applicable
City of Tustin CFD No. 06-1 CFD
$57,980,000
$ 34,090,000* 100.000%
1,295
$ 34,090,000
Tustin Unified School District CFD No. 06-1(2) CFD
13,560,000
12,115,000 99.763
833
12,086,267
TOTAL LAND SECURED BONDED DEBT(3)
$ 46,176,267
Parcels
Authorized and Unissued
%
in CFD
Amount
Direct and Overlapping Indebtedness Type
Authorized
Unissued Applicable
No. 06-1
Applicable
City of Tustin CFD No. 06-1 CFD
$65,000,000
$ 0(4) 100.000%
1,295
$ 0
Tustin Unified School District CFD No. 06-1 CFD
25,000,000
11,440,000 99.763
833
11,412,868
TOTAL UNISSUED LAND SECURED INDEBTEDNESS(3)
$ 11,412,868
TOTAL OUTSTANDING AND UNISSUED LAND SECURED INDEBTEDNESS(3)
$ 57,589,136
III. General Obligation Bond Indebtedness
Parcels
Outstanding Direct and
%
in CFD
Amount
Overlapping Bonded Debt Type
Issued
Outstanding Applicable(5)
No. 06-1
Applicable
Tustin Unified School District SFID No. 2002-1 (0.01931%) GO
$79,998,528
$ 45,060,000 2.382318%
831
$ 1,073,472
Metropolitan Water District (0.00700%) GO
850,000,000
17,155,000 0.026963
1,295
4,626
Irvine Ranch Water District Water ID No. 113 (0.04000%)(6) GO
14,800,000
12,706,000 63.527597
1,295
8,071,816
Irvine Ranch Water District Water ID No. 213 (0.05900%)(6) GO
23,800,000
19,580,000 63.527597
1,295
12,438,703
Irvine Unified School District SFID No. 1 (0.02687%) GO
241,000,000
207,575,000 1.275431
456
2,647,476
TOTAL GENERAL OBLIGATION BONDED DEBT(3)
$ 24,236,093
Parcels
Authorized and Unissued
%
in CFD
Amount
Direct and Overlapping Indebtedness Type
Authorized
Unissued Applicable(5)
No. 06-1
Applicable
Tustin Unified School District SFID No. 2002-1 (0.01931%) GO
$80,000,000
$ 1,472 2.382318%
831
$ 35
Metropolitan Water District (0.00700%) GO
850,000,000
0 0.026963
1,295
0
Irvine Ranch Water District Water ID No. 113 (0.04000%)(6) GO
25,769,500
10,969,500 63.527597
1,295
6,968,660
Irvine Ranch Water District Water ID No. 213 (0.05900%)(6) GO
87,647,500
63,847,500 63.527597
1,295
40,560,782
Irvine Unified School District SFID No. 1 (0.02687%) GO
319,000,000
78,000,000 1.275431
456
994,836
TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS(3)
$ 48,524,313
TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS(3)
$ 72,760,406
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT(3)
$ 70,412,360
TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING INDEBTEDNESS(3)
$130,349,542
IV. Ratios to 2024-25 Assessed Valuation
Outstanding Land Secured Bonded Debt
23.73:1
Total Outstanding Bonded Debt
15.56:1
* Preliminary, subject to change.
0) Amount outstanding is equal to the initial principal amount of
the Bonds.
(2) Only overlaps in parcels in Zone 1.
(3) Additional bonded debt or available bond authorization may exist but is not shown because a tax was not levied for Fiscal Year 2024-25.
(4) Additional bonds may be issued for refunding purposes only.
0) Percentage applicable determined by Fiscal Year 2024-25 Equalized
Roll Assessed Value information.
(6) Irvine Ranch Water District is assessed based on land assessed value only.
Source: Webb Municipal Finance, LLC.
A-6
4932-3978-2181v13/202091-0001
Docusign Envelope ID: 3EFE5DEg-C71E-480B-80B0-BFC4B657B312
Historical Assessed Values. The following table summarizes the assessed values within CFD No. 06-
1 for the Fiscal Years shown.
TABLE A-4
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2017-18 THROUGH 2O24-25)
Parcels with
Total
Improvement
Land Assessed
Improvement
Total Assessed
Fiscal Year
Parcels()
Value
Value
Assessed Value
Valuation
Increase
2017-18
1295
1295
$403,372,829
$491,156,537
$ 894,529,366
N/A
2018-19
1295
1295
425,284,647
497,579,263
922,863,910
3.2
2019-20
1295
1295
441,672,254
506,091,370
947,763,624
2.7
2020-21
1295
1295
456,797,300
515,185,129
971,982,429
2.6
2021-22
1295
1295
470,612,691
522,028,358
992,641,049
2.1
2022-23
1295
1295
491,731,856
532,323,917
1,024,055,773
3.2
2023-24
1295
1295
515,174,283
551,188,787
1,066,363,070
4.1
2024-25
1295
1295
533,110,422
562,426,102
1,095,536,524
2.7
0) The number of parcels within CFD No. 06-1 subject to the Special Tax
Source: Webb Municipal Finance, LLC.
Delinquencies. Unpaid amounts of the Special Taxes become delinquent after December 10 and
April 10 of each Fiscal Year. Table A-5 below summarizes the Special Tax delinquencies within CFD No. 06-
1 for Fiscal Years 2020-21 through 2024-25 as of February 24, 2025.
TABLE A-5
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO. 06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
SPECIAL TAX LEVY, DELINQUENCY, AND DELINQUENCY RATE
FISCAL YEARS 2020-21 THROUGH FIRST INSTALLMENT 2024-25
Delinquencies Following Fiscal Year End
Delinquencies as of February 24, 2025
Fiscal
Parcels
Parcels
Amount
Percent
Parcels
Amount
Percent
Year
Amount Levied
Levied
Delinquent
Delinquent
Delinquent
Delinquent
Delinquent
Delinquent
2020-21
$3,548,658.27
1295
10
$16,650.18
0.47%
0
$ 0.00
0.00%
2021-22
3,626,123.09
1295
8
10,753.65
0.30
0
0.00
0.00
2022-23
3,709,353.96
1295
32
59,964.24
1.62
0
0.00
0.00
2023-24
3,783,564.80
1295
26
41,092.99
1.09
2
7,047.49
0.19
2024-250)
1,931,003.33
1295
N/A
N/A
N/A
7
11,640.57
0.60
0) Information reflects the first installment only.
Source: Webb Municipal Finance, LLC.
A-7
4932-3978-218lvl3/202091-0001
Docusign Envelope ID: 3EFE5DEg-C71E-480B-80B0-BFC4B657B312
Effective Tax Rates. The following table shows the average total effective tax rates for the single family residential parcels in Zone 1 and Zone 2
of CFD No. 06-1. Effective tax rates within CFD No. 06-1, based on Fiscal Year 2024-25 assessed values and overlapping taxes and assessments and
projected Fiscal Year 2025-26 Special Taxes, range from approximately 1.39% to approximately 1.79%.
TABLE A-6
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
PROJECTED TAX OBLIGATIONM
FOR SAMPLE DEVELOPED PROPERTY
Zone
1
1
1
2
2
2
Single Family
Single Family
Affordable Units
Single Family
Single Family
Affordable Units
Detached Property
Attached Property
(14-16)(2)
Detached Property
Attached Property
(11-12)(2)
Description/Land Use Classes
(1-6)(2)
(7-12)(2)
(1-7)(2)
(8-10)(2)
Average Home Value(')
$ 1,048,968
$ 655,675
$ 194,631
$ 1,327,090
$ 758,137
$ 336,611
Ad Valorem Property Taxes:
Basic Levy (1.00000%)
$ 10,489.68
$ 6,556.75
$ 1,946.31
$ 13,270.90
$ 7,581.37
$ 3,366.11
Tustin Unified School District SFID No. 2002-1 (0.01931%)
202.56
126.61
37.58
0.00
0.00
0.00
Metropolitan Water District (0.00700%)
73.43
45.90
13.62
92.90
53.07
23.56
Irvine Ranch Water District Water ID No. 113 (0.04000%)(4)
125.88
78.68
23.36
159.25
90.98
40.39
Irvine Ranch Water District Water ID No. 213 (0.05900%)(4)
185.67
116.05
34.45
234.89
134.19
59.58
Irvine Unified School District SFID No. 1 (0.02687%)
0.00
0.00
0.00
356.59
203.71
90.45
Total General Property Taxes
$ 11,077.21
$ 6,924.00
$ 2,055.32
$ 14,114.53
$ 8,063.32
$ 3,580.10
Assessment, Special Taxes & Parcel Charges:
Vector Control Charge $ 1.92 $ 0.67 $
0.67
$ 1.92
$ 1.92
$ 0.67
Mosquito, Fire Ant Assessment 8.81 5.29
5.29
8.81
8.81
5.29
MWD Water Standby Charge 10.08 10.08
10.08
10.08
10.08
10.08
Tustin Unified School District CFD No. 06-1 2,497.89 1,289.29
108.34
0.00
0.00
0.00
City of Tustin CFD No. 06-1 Special Tax A*(') 2,647.89 1,362.06
211.21
5,972.88
3,296.19
280.96
City of Tustin CFD No. 06-1 Special Tax B*(6) 2,489.04 1,345.09
433.71
2,952.09
1,672.55
762.89
Irvine USD Assessment 0.00 0.00
0.00
69.79
69.79
46.83
OC San Regional Sewer Fee 0.00 0.00
0.00
371.00
371.00
0.00
Total Assessment Charges $ 7,655.63 $ 4,012.48 $
769.31
$ 9,386.57
$ 5,430.34
$ 1,106.73
Average Total Property Tax $ 18,732.84 $ 10,936.47 $
2,824.63
$ 23,501.10
$ 13,493.66
$ 4,686.82
Average Effective Tax Rate 1.79%* 1.67%*
1.45%*
1.77%*
1.78%*
1.39%*
* Preliminary, subject to change.
0) Average Fiscal Year 2025-26 tax rates based upon Fiscal Year 2024-25 Overlapping Taxes and Assessment Rates.
0 Land use class. See - Table A-1.
0) Average Home Value is based upon average Fiscal Year 2024-25 Assessed Values for parcels of developed property.
0) Irvine Ranch Water District is assessed based on land assessed value only.
0) Reflects CFD 06-1 Average Projected Fiscal Year 2025-26 Special Tax A Levy for parcels of developed property.
(6) Reflects CFD 06-1 Average Projected Fiscal Year 2025-26 Special Tax B Levy for parcels of developed property.
Source: Webb Municipal Finance, LLC.
A-8
4932-3978-218lvl3/202091-0001
Docusign Envelope ID: 3EFE5DEg-C71E-480B-80B0-BFC4B657B312
Top Taxpayers. The following table shows the projected top taxpayers in CFD No. 06-1 based on the
Fiscal Year 2025-26 projected Special Tax levy.
TABLE A-7
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
ESTIMATED VALUE -TO -LIEN BY TOP PROPERTY OWNER
Percent of
Projected
Total
Projected
Fiscal Year
Fiscal Year
2025-26
Fiscal Year
Value -
No. of 2025-26
Special
2024-25
CFD No. 06-1
to -Lien
Property Owner Parcels Special Tax*
Tax*
Assessed Value
Bonds")
Other Bonds'
Total Bonds
Ratio*
Individual Owner 3 $ 14,377
0.41%
$ 3,033,438
$ 139,793
$ 0
$ 139,793
21.70:1
Individual Owner 2 10,903
0.31
2,188,274
106,013
0
106,013
20.64:1
Individual Owner 2 9,652
0.28
2,184,304
93,847
0
93,847
23.28:1
Individual Owner 1 7,918
0.23
2,311,790
76,987
0
76,987
30.03:1
Individual Owner 1 7,918
0.23
2,237,900
76,987
0
76,987
29.07:1
Individual Owner 1 7,918
0.23
2,073,134
76,987
0
76,987
26.93:1
Individual Owner 1 7,918
0.23
2,053,437
76,987
0
76,987
26.67:1
Individual Owner 1 7,918
0.23
2,026,814
76,987
0
76,987
26.33:1
Individual Owner 1 7,918
0.23
1,993,889
76,987
0
76,987
25.90:1
Individual Owner 1 7,918
0.23
1,993,305
76,987
0
76,987
25.89:1
Subtotal 14 90,358
2.58
22,096,285
878,564
0
878,564
25.15:1
All Others 1281 3,415,724
97.42
1,073,440,239
33,211,436
12,086,267
45,297,703
23.70:1
Totals 1295 $3,506,083
100.00%
$1,095,536,524
$ 34,090,000
$12,086,267
$ 46,176,267
23.73:1
* Preliminary, subject to change.
Includes initial principal of the Bonds.
(2) Includes outstanding bonds with respect to the Tustin
Unified School District
CFD No. 06-1.
Does not include general obligation bonded
indebtedness as shown in Table A-3.
Source: Webb Municipal Finance, LLC.
A-9
4932-3978-218lvl3/202091-0001
Docusign Envelope ID: 3EFE5DE9-C71E-480B-80B0-BFC4B657B312
Community Facilities District No. 2014-1
Location and Description. CFD No. 2014-1 was formed by the City on June 17, 2014 and is
generally located on Park Avenue on the west, Jamboree Road on the east, Moffett Drive on the north and the
Warner Avenue offramp of the 405 freeway on the south. CFD No. 2014-1 is fully built out and is developed
into 375 residential units on 78.2 gross acres. Construction in CFD No. 2014-1 began in October 2014, and
the model homes were opened to the public on May 29, 2015. The final building permit was issued in May
2017.
[INSERT CFD NO. 2014-1 MAP.]
Assigned Special Taxes. Table A-8 below sets forth the maximum and projected Special Taxes to be
levied per parcel of Taxable Property within CFD No. 2014-1 in Fiscal Year 2025-26, the total assessed values
of property within CFD No. 2014-1 in Fiscal Year 2024-25 and the aggregate value -to -lien ratio for the Bonds
in CFD No. 2014-1, allocated by land use class. The Special Taxes may not be levied after Fiscal Year 2053-
54. The final maturity of the CFD No. 2014-1 Bonds is September 1, 2045.
For the complete text of the CFD No. 2014-1 Rate and Method, see Appendix D-2 — "RATE AND
METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR COMMUNITY FACILITIES DISTRICTS
CFD NO. 2014-1."
A-10
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Docusign Envelope ID: 3EFE5DE9-C71E-480B-80B0-BFC4B657B312
TABLE A-8
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
MAXIMUM SPECIAL TAXES
Fiscal Year
Projected
Total Projected
2025-26
Fiscal Year
Fiscal Year
Land
Assigned
2025-26
2025-26
Use
No. of
Special Tax A
Special Tax A
Special Tax A
Percent of
CFD No. 2014-1
Aggregate
Description
Class
Residential Floor Area
Parcels
Per Parcel()
Per Parcel
Le9P)
Total
Assessed Value
Bonds* (1)
Value -to -Lien
Zone 1
Single Family Residential Property
1
Greater than 3,530 s.f.
139
$ 4,997
$4,898
$ 680,753
44.59%
$ 231,743,297
$ 9,722,052
23.84:1
Single Family Residential Property
2
3,210 - 3,529 s.f.
35
4,675
4,582
160,367
10.50
52,658,730
2,290,253
22.99:1
Single Family Residential Property
3
2,890 - 3,209 s.f.
53
4,308
4,222
223,778
14.66
71,044,675
3,195,842
22.23:1
Single Family Residential Property
4
2,570 - 2,889 s.f.
45
3,822
3,746
168,566
11.04
55,195,129
2,407,338
22.93:1
Single Family Residential Property
5
2,250 - 2,569 s.f.
17
3,346
3,279
55,749
3.65
19,127,487
796,175
24.02:1
Single Family Residential Property
6
Less than or equal to 2,250 s.f.
86
2,819
2,763
237,607
15.56
84,942,746
3,393,340
25.03:1
Multi -Family Residential Property
7
N/A
0
47,492
0
0
0.00
0
0
N/A
Non -Residential Property
8
N/A
0
47,492
0
0
0.00
0
0
N/A
Total
375
$ 1,526,820
100.00%
$ 514,712,064
$21,805,000
23.61:1
Preliminary, subject to change.
(1) The Assigned Special Tax A for each Land Use Class is per parcel except for Multi -Family Residential Property and Non -Residential Property, which is per Acre. On each July 1, the Maximum Special Tax A shall be increased
by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. The Mello -Roos Act limits the actual maximum rate that can be applied to individually owned residential parcels to 10% above what
would have been charged if there were no delinquencies in the Special Tax payment.
(2) Based upon the debt service requirement of the Bonds and includes estimated Fiscal Year 2025-26 Administrative Expense Requirement of $36,569.83. The CFD No. 2014-1 Indenture provides that CFD No. 2014-1 may, at its
option, establish the Administrative Expense Requirement for any Bond Year subsequent to the initial Bond Year at any amount larger than $36,569.83 that is not in excess of 102% of the Administrative Expense Requirement
applicable in the immediately preceding Bond Year.
(3) Includes initial principal of the Bonds.
Source: Webb Municipal Finance, LLC.
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Value -to -Lien. Table A-9 below sets forth the stratification of value -to -lien of the Taxable Property
within CFD No. 2014-1 based on Fiscal Year 2024-25 assessed value and each parcel's respective share of the
principal amount of the CFD No. 2014-1 Bonds (allocated to each parcel based upon its respective share of the
projected Special Tax levy for Fiscal Year 2025-26) and the ratio of the assessed value to its share of the CFD
No. 2014-1 Bonds. The ratio of the value of an individual lot within CFD No. 2014-1 to its respective share of
the principal amount of the CFD No. 2014-1 Bonds can be expected to vary.
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TABLE A-9
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
VALUE -TO -LIEN STRATIFICATION
Percent of
Assessed No. of Percent of
Total
Total Assessed
Value-to-Lien(l) Parcels Total Parcels
Assessed Value
Value
Less than 15.00:1(3) 2 0.53%
$ 1,683,935
0.33%
15.00:1 to 19.99:1 33 8.80
38,856,953
7.55
20.00:1 to 24.99:1 249 66.40
325,164,599
63.17
25.00:1 to 29.99:1 59 15.73
83,222,567
16.17
30.00:1 to 34.99:1 19 5.07
35,678,171
6.93
35.00:1 to 39.99:1 12 3.20
27,962,615
5.43
Greater than 39.99:11 0.27
2,143,224
0.42
Total 375 100.00%
$ 514,712,064
100.00%
* Preliminary, subject to change.
0) Assessed Value -to -Lien based upon the principal amount
of the outstanding
Bonds.
(2) Includes initial principal of the Bonds.
(3) The lowest value -to -lien in the less than 15.00:1 category is 12.49:1.
(4) The highest value -to -lien in the greater than 39.99:1
category is 40.06:1.
Source: Webb Municipal Finance, LLC.
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Projected
Fiscal Year
Percent of
2025-26
Projected
Allocation of
Aggregate
Special Tax
Fiscal Year
CFD No. 2014-
Value -to -
Levy*
2025-26 Levy*
I Bonds*(z)
Lien*
$ 9,120
0.60%
$ 130,242
12.93:1
143,485
9.40
2,049,155
18.96:1
1,020,931
66.87
14,580,244
22.30:1
220,378
14.43
3,147,287
26.44:1
75,658
4.96
1,080,496
33.02:1
53,502
3.50
764,080
36.60:1
3,746
0.25
53,496
40.06:1
$ 1,526,820
100.00%
$21,805,000
23.61:1
Docusign Envelope ID: 3EFE5DE9-C71E-480B-80B0-BFC4B657B312
Direct and Overlapping Debt The Authority has obtained the assessed values of all of the Taxable
Property in CFD No. 2014-1 subject to Special Tax A, as established by the County Assessor for Fiscal Year
2024-25, which totals $514,712,064.
CFD No. 2014-1 is included within the boundaries of overlapping local agencies providing
governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue
bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and
assessments that may be levied upon the property within CFD No. 2014-1 is shown in Table A-10 below. In
addition to current debt, new community facilities districts and/or special assessment districts could be formed
in the future encompassing all or a portion of the property within CFD No. 2014-1; and such districts or the
agencies that formed them could issue more bonds and levy additional special taxes or assessments. The
assessed value -to -lien ratio of the property within CFD No. 2014-1, based on the Fiscal Year 2024-25 assessed
values, assuming that the CFD No. 2014-1 Bonds have been issued to refund the Prior CFD No. 2014-1 Bonds,
equals approximately 23.61:1*. This ratio does not include overlapping general obligation debt within CFD
No. 2014-1. If general obligation debt is included, the value -to -lien ratio is 14.94:1*.
* Preliminary, subject to change.
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TABLE A-10
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
DIRECT AND OVERLAPPING DEBT
I. Assessed Value
2024-2025 Secured Roll Assessed Valuation
$ 514,712,064
Il. Land Secured Bond Indebtedness
Parcels
in CFD
Outstanding Direct and
%
No.
Amount
Overlapping Bonded Debt
Type
Issued
Outstanding
Applicable
2014-1
Applicable
City of Tustin CFD No. 2014-1
CFD
$27,665,000
$ 21,805,000*
100.000%
375
$ 21,805,000
TOTAL LAND SECURED BONDED DEBT ca)
$ 21,805,000
Parcels
in CFD
Authorized and Unissued
%
No.
Amount
Direct and Overlapping Indebtedness
Type
Authorized
Unissued
Applicable
2014-1
Applicable
City of Tustin CFD No. 2014-1
CFD
$29,000,000
$ W)
100.000%
375
$ 0
TOTAL UNISSUED LAND SECURED INDEBTEDNESS(z)
$ 0
TOTAL OUTSTANDING AND UNISSUED LAND SECURED
INDEBTEDNESSO
$ 21,805,000
III. General Obligation Bond Indebtedness
Parcels
in CFD
Outstanding Direct and
%
No.
Amount
Overlapping Bonded Debt
Type
Issued
Outstanding
Applicable(4)
2014-1
Applicable
Irvine Ranch Water District Water ID No. 113 (0.04000%)(5)
GO
$14,800,000
$ 12,706,000
29.846947%
375
$ 3,792,353
Irvine Ranch Water District Water ID No. 213 (0.05900%)(5)
GO
23,800,000
19,580,000
29.846947
375
5,844,032
Metropolitan Water District (0.00700%)
GO
850,000,000
17,155,000
0.012668
375
2,173
Tustin Unified School District SFID No. 2002-1 (0.01931%)
GO
79,998,528
45,060,000
2.028390
375
913,993
Tustin Unified School District SFID No. 2008-1 (0.02264%)
GO
95,000,000
69,670,000
2.081312
375
1,450,050
Tustin Unified School District SFID No. 2012-1 (0.01566%)
GO
75,000,000
42,090,000
1.505872
375
633,822
TOTAL GENERAL OBLIGATION BONDED DEBT(3)
$ 12,636,423
Parcels
in CFD
Authorized and Unissued
%
No.
Amount
Direct and Overlapping Indebtedness
Type
Authorized
Unissued
Applicable(4)
2014-1
Applicable
Irvine Ranch Water District Water ID No. 113 (0.04000%)(5)
GO
$25,769,500
$ 10,969,500
29.846947%
375
$ 3,274,061
Irvine Ranch Water District Water ID No. 213 (0.05900%)(5)
GO
87,647,500
63,847,500
29.846947
375
19,056,529
Metropolitan Water District (0.00700%)
GO
850,000,000
0
0.012668
375
0
Tustin Unified School District SFID No. 2002-1 (0.01931%)
GO
80,000,000
1,472
2.028390
375
30
Tustin Unified School District SFID No. 2008-1 (0.02264%)
GO
95,000,000
0
2.081312
375
0
Tustin Unified School District SFID No. 2012-1 (0.01566%)
GO
135,000,000
60,000,000
1.505872
375
903,523
TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS(3)
$ 23,234,143
TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS(3)
$ 35,870,566
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT(3)
$ 34,441,423
TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT
AND OVERLAPPING INDEBTEDNESS(3)
$ 57,675,566
IV. Ratios to 2024-25 Assessed Valuation
Outstanding Land Secured Bonded Debt
23.61:1
Total Outstanding Bonded Debt
14.94:1
* Preliminary, subject to change.
0) Amount outstanding is equal to the initial principal amount of the Bonds.
(z) Additional bonded debt or available bond authorization may exist but is not shown because a tax was not levied for Fiscal Year 2024-25.
0) Additional bonds may be issued for refunding purposes only.
0) Percentage applicable determined by Fiscal Year 2024-25 Equalized Roll Assessed Value information.
(5) Irvine Ranch Water District is assessed based on land assessed value only.
Source: Webb Municipal Finance, LLC.
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Historical Assessed Values. The following table summarizes the assessed values within CFD No.
2014-1 for the Fiscal Years shown.
TABLE A-11
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2017-18 THROUGH 2O24-25)
Parcels with
Total
Improvement
Land Assessed
Improvement
Total Assessed
Fiscal Year
Parcels()
Value
Value
Assessed Value
Valuation
Increase
2017-18
375
341
$171,513,972
$190,324,710
$361,838,682
N/A
2018-19
375
375
209,623,911
215,556,391
425,180,302
17.5%
2019-20
375
375
218,852,565
222,708,701
441,561,266
3.9
2020-21
375
375
223,721,996
228,439,224
452,161,220
2.4
2021-22
375
375
226,800,361
231,316,679
458,117,040
1.3
2022-23
375
375
239,085,079
236,746,023
475,831,102
3.9
2023-24
375
375
253,839,508
242,610,490
496,449,998
4.3
2024-25
375
375
265,832,610
248,879,454
514,712,064
3.7
0) The number of parcels within CFD No. 2014-1 subject to the Special Tax
Source: Webb Municipal Finance, LLC.
Delinquencies. Unpaid amounts of the Special Taxes become delinquent after December 10 and
April 10 of each Fiscal Year. Table A-12 below summarizes the Special Tax delinquencies within CFD No.
2014-1 for Fiscal Years 2020-21 through 2024-25 as of February 24, 2025.
TABLE A-12
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
SPECIAL TAX LEVY, DELINQUENCY, AND DELINQUENCY RATE
FISCAL YEARS 2020-21 THROUGH FIRST INSTALLMENT 2024-25
Delinquencies Following Fiscal Year End
Delinquencies as of February 24, 2025
Fiscal
Parcels
Parcels
Amount
Percent
Parcels
Amount
Percent
Year
Amount Levied
Levied
Delinquent
Delinquent
Delinquent
Delinquent
Delinquent
Delinquent
2020-21
$1,557,954.84
375
3
$7,093.81
0.46%
0
$ 0.00
0.00%
2021-22
1,587,882.82
375
3
7,453.68
0.47
0
0.00
0.00
2022-23
1,621,831.58
375
19
43,685.21
2.69
1
2,233.54
0.14
2023-24
1,647,822.85
375
5
12,372.96
0.75
0
0.00
0.00
2024-250)
837,794.51
375
N/A
N/A
N/A
2
3,298.88
0.39
0) Information reflects the first installment only.
Source: Webb Municipal Finance, LLC.
Effective Tax Rates. The following table shows the average total effective tax rates for the single
family residential parcels in CFD No. 2014-1. The effective tax rate within CFD No. 2014-1, based on Fiscal
Year 2024-25 assessed values and overlapping taxes and assessments and projected Fiscal Year 2025-26
Special Taxes, is approximately 1.52%.
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TABLE A-13
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
PROJECTED TAX OBLIGATION(')
FOR SAMPLE DEVELOPED PROPERTY
Average Home Value(2) $ 1,372,566
Ad Valorem Property Taxes:
Basic Levy (1.0000%) $ 13,725.66
Irvine Ranch Water District Water ID No. 113 (0.04000%)(3) 164.71
Irvine Ranch Water District Water ID No. 213 (0.05900%)(3) 242.94
Metropolitan Water District (0.00700%) 96.08
Tustin Unified School District SFID No. 2002-1 (0.01931%) 265.04
Tustin Unified School District SFID No. 2008-1 (0.02264%) 310.75
Tustin Unified School District SFID No. 2012-1 (0.01566%) 214.94
Total General Property Taxes $ 15,020.12
Assessment, Special Taxes & Parcel Charges:
Vector Control Charge
$ 1.92
Mosquito, Fire Ant Assessment
8.81
MWD Water Standby Charge
10.08
City of Tustin CFD No. 2014-1 Special Tax A*(4)
4,071.52
City of Tustin CFD No. 2014-1 Special Tax B*(5)
1,574.13
OC San Regional Sewer Fee
117.73
Total Assessment Charges
$ 5,782.27
Average Total Property Tax
$ 20,802.39
Average Effective Tax Rate
1.52%*
* Preliminary, subject to change.
0) Average Fiscal Year 2025-26 tax rates based upon Fiscal Year 2024-25 Overlapping Taxes and Assessment Rates.
(2) Average Home Value is based upon average Fiscal Year 2024-25 Assessed Values for parcels of developed property.
0) Irvine Ranch Water District is assessed based on land assessed value only.
(4) Reflects CFD 2014-1 Average Projected Fiscal Year 2025-26 Special Tax A Levy for parcels of developed property.
(5) Reflects CFD 2014-1 Average Projected Fiscal Year 2025-26 Special Tax B Levy for parcels of developed property.
Source: Webb Municipal Finance, LLC.
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Top Taxpayers. The following table shows the projected top taxpayers in CFD No. 2014-1 based on
the Fiscal Year 2025-26 projected Special Tax levy.
TABLE A-14
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
ESTIMATED VALUE -TO -LIEN BY TOP PROPERTY OWNER
Percent of
Projected
Projected
Total
Fiscal Year
Fiscal Year
Fiscal Year
Value -to -
No. of
2025-26
2025-26
2024-25 Assessed
CFD No. 2014-1
Lien
Property Owner
Parcels
Special Tax*
Special Tax*
Value
Bonds*()
Ratio*
Individual Owner
2
$ 9,795
0.64%
$ 3,111,729
$ 139,886
22.24:1
US Mansions LLC
2
9,120
0.60
3,279,250
130,242
25.18:1
Individual Owner
2
7,345
0.48
2,310,700
104,893
22.03:1
Individual Owner
2(2)
6,042
0.40
1,934,817
86,291
22.42:1
Individual Owner
1
4,898
0.32
2,754,000
69,943
39.38:1
Individual Owner
1
4,898
0.32
2,700,000
69,943
38.60:1
Individual Owner
1
4,898
0.32
2,601,000
69,943
37.19:1
Individual Owner
1
4,898
0.32
2,601,000
69,943
37.19:1
Individual Owner
1
4,898
0.32
2,468,400
69,943
35.29:1
Crape Myrtle Place LLC
1
4,898
0.32
2,448,000
69,943
35.00:1
Subtotal
14
61,687
4.04
26,208,896
880,969
29.75:1
All Others
361
1,465,133
95.96
488,503,168
20,924,031
23.35:1
Totals
375
$1,526,820
100.00%
$514,712,064
$ 21,805,000
23.61:1
* Preliminary, subject to change.
<1> Excludes General Obligation
Bonded indebtedness applicable within
CFD No. 2014-1.
(2) The two parcels have lower
assessed values because there have been
no transfers of ownership since the original
sales of the
homes in 2016.
Source: Webb Municipal Finance,
LLC.
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APPENDIX B
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
[TO COME]
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APPENDIX C
DEMOGRAPHIC INFORMATION REGARDING THE COUNTY OF ORANGE
AND THE CITY OF TUSTIN
The Bonds are not obligations of the City of Tustin (the "City') or the County of Orange (the
"County') and do not represent alien or charge against any funds or property of the City or the County. The
following information is provided only to give prospective investors an overview of the general economic
condition of the City, the County and the State of California (the "State').
General
The City is located in the central portion of the County of Orange (the "County"), California and
encompasses approximately 11 square miles. The City was incorporated on September 21, 1927 as a general
law city. As of January 1, 2024, the City had a population of approximately 78,844.
Population
2024.
The following table offers population figures for the City, the County and the State for 2020 through
Area 2020 2021 2022 2023 2024
City of Tustin 80,511 80,117 79,243 78,515 78,844
County of Orange 3,180,491 3,172,352 3,158,071 3,141,065 3,150,835
State of California 39,648,938 39,327,868 39,114,785 39,061,058 39,128,162
Source: California State Department of Finance, Demographic Research Unit. 2020, with 2010 Census Benchmark; 2021-2024,
with 2020 Census Benchmark.
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Building Activity
The following tables provide summaries of the building permit valuations and the number of new
dwelling units authorized in the City and County from 2019 through 2023.
BUILDING PERMIT VALUATIONS
City of Tustin
(Dollars in Thousands)
2019 2020 2021 2022 2023
Valuation ($000):
Residential
$66,431
$ 63,125
$ 16,789
$ 76,847
$ 51,287
Non-residential
28,253
46,212
50,892
51,181
79,529
Total*
$109,337
11310 816
Residential Units:
Single family
165
137
9
82
119
Multiple family
143
98
22
157
19
Total
308
235
31
239
138
* Totals may not add to sums because of rounding.
Source: Construction Industry Research Board.
BUILDING PERMIT VALUATIONS
County of Orange
(Dollars in Thousands)
2019
2020
2021
2022
2023
Valuation ($000):
Residential $2,275,405
$2,519,303
$2,393,960
$2,214,772
$2,573,625
Non-residential 1,285,856
1,153,778
1,825,076
1,928,312
1,994,878
Total*
$3,673,081
4 219 336
4 143 884
4 568 503
Residential Units:
Single family 6,563
8,443
3,292
2,929
2,688
Multiple family 1,798
723
4,382
3,405
9,725
Total 8,361
9,166
7,674
6,334
12,413
* Totals may not add to sums because of rounding.
Source: Construction Industry Research Board.
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Employment
The following tables show the largest employers located in the City and County as of June 30, 2024.
LARGEST EMPLOYERS
City of Tustin
(as of June 30, 2024)
Rank
Name of Business
Employees
Type of Business
1.
Tustin Unified School District
2,491
School District
2.
Schools First Federal Credit Union
1,089
Credit Union
3.
Costco Wholesale Corporation
749
Wholesale Store
4.
Rivian
500
Automotive Retail
5.
City of Tustin
440
Government
6.
Foothill Regional Medical Center
450
Medical Center
7.
Pacific Bell
416
Telephone Company
8.
New American Funding
412
Mortgage Lender
9.
Avid BioSciences
387
Bioservices
10.
Virgin Galactic
339
Space Tourism Company
Source: City of Tustin Comprehensive Annual Financial Report for the year ending June 30, 2024.
LARGEST EMPLOYERS
County of Orange
(As of June 30, 2024)
Rank Name of Business
1.
The Walt Disney Co.
2.
University of California, Irvine
3.
Providence Southern California
4.
County of Orange
5.
Kaiser Permanente
6.
Hoag Memorial Hospital Presbyterian
7.
Albertsons
8.
Allied Universal
9.
MemorialCare
10.
CHOC Hospital
Employees Type of Business
34,000
Media Company
26,072
University
23,632
Hospital
18,000
Government
10,293
Medical Center
10,293
Medical Center
7,222
Grocery Store
6,145
Security Company
5,800
Health Services
5,462
Medica Center
Source: County of Orange Comprehensive Annual Financial Report for the year ending June 30, 2024.
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Employment and Industry
Employment data by industry is not separately reported on an annual basis for the City but is compiled
for the Anaheim -Santa Ana -Irvine Metropolitan Divisions (the "MD"), which includes all of Orange County.
In addition to varied manufacturing employment, the MD has large and growing commercial and service sector
employment, as reflected in the table below.
The following table represents the Annual Average Labor Force and Industry Employment for the
County for the period from 2019 through 2023.
ANAHEIM-SANTA ANA-IRVINE METROPOLITAN DIVISION
INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
Total Farm
Total Nonfarm
Total, All Industries
Goods Producing
Mining, Logging and Construction
Manufacturing
Service Providing
Trade, Transportation and Utilities
Wholesale Trade
Retail Trade
Transportation, Warehousing and
Utilities
Information
Financial Activities
Professional and Business Services
Private Educational and Health
Services
Leisure and Hospitality
Other Services
Government
2019
2020
2021
2022
2023
1,900
1,900
2,000
1,700
1,700
1,675,300
1,532,700
1,587,800
1,666,100
1,681,900
1,677,200
1,534,600
1,589,800
1,667,700
1,683,600
266,600
251,700
252,300
261,100
261,400
106,600
101,700
102,500
105,600
104,900
160,100
150,100
149,800
155,400
156,500
1,408,700
1,281,000
1,335,500
1,405, 000
1,420,400
15,200
14,600
14,900
17,300
17,900
81,300
76,800
77,500
79,000
80,800
150,600
137,600
143,400
145,500
146,100
29,500
29,600
31,100
33,800
35,200
26,000
24,100
24,000
24,300
22,600
117,600
115,900
117,100
112,300
104,100
328,400
309,200
321,700
331,500
321,400
233,100
225,800
237,300
249,300
264,300
227,700
161,800
180,400
217,900
229,600
52,000
44,100
47,500
53,100
55,300
162,500
156,100
155,700
158,200
161,200
Note: The "Total, All Industries" data is not directly comparable to the employment data found herein.
Source: State of California Employment Development Department, Labor Market Information Division, Anaheim -Santa Ana -
Irvine MD (Orange County) Annual Average Labor Force and Industry Employment, March 2023 Benchmark.
The following table summarizes the labor force, employment and unemployment figures for the
period from 2019 through 2023 for the City, the County, the State and the nation as a whole.
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CITY OF TUSTIN,
COUNTY OF ORANGE,
STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment
Unemployment
Year and Area Labor Force Employment() UnemploymentO Rate (010)(3)
2019
City of Tustin
42,500
41,300
1,100 2.7%
County of Orange
1,623,400
1,568,400
45,500 2.8
State of California
19,385,300
18,589,600
795,700 4.1
United States
163,539,000
157,538,000
6,001,000 3.7
2020
City of Tustin
41,300
37,900
3,500 8.4%
County of Orange
1,563,800
1,424,300
139,500 8.9
State of California
18,958,600
17,037,000
1,921,600 10.1
United States
160,742,000
147,795,000
12,947,000 8.1
2021
City of Tustin
41,400
38,900
2,400 5.9%
County of Orange
1,557,200
1,464,100
93,100 6.0
State of California
18,956,600
17,568,700
1,387,800 7.3
United States
161,204,000
152,581,000
8,623,000 5.3
2022
City of Tustin
41,900
40,600
1,300 3.1%
County of Orange
1,579,300
1,528,500
50,700 3.2
State of California
19,169,300
18,348,900
820,400 4.3
United States
164,287,000
158,291,000
5,996,000 3.6
2023
City of Tustin 42,200 40,700
1,400 3.4%
County of Orange 1,588,900 1,532,400
56,500 3.6
State of California 19,308,300 18,388,300
920,000 4.8
United States 167,116,000 161,037,000
6,080,000 3.6
Note: Data is not seasonally adjusted.
0) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes.
(1) The unemployment rate is computed from unrounded data; therefore, it
may differ from rates computed from rounded
figures in this table.
Source: U.S. Department of Labor — Bureau of Labor Statistics, California
Employment Development Department. 2023
Benchmark.
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Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the
sum of wage and salary disbursements, supplements to wages and salaries, proprietors' income with inventory
valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment,
personal dividend income, personal interest income, and personal current transfer receipts, less contributions
for government social insurance.
The personal income of an area is the income that is received by, or on behalf of, all the individuals
who live in the area; therefore, the estimates of personal income are presented by the place of residence of the
income recipients.
Total personal income in Orange County increased by 60.4% between 2014 and 2023. The following
tables summarize personal income for Orange County for 2014 through 2023.
PERSONAL INCOME
Orange County
(Dollars in Thousands)
Annual
Year Orange County Percent Change
2014
$173,769,675
--%
2015
187,042,532
7.6
2016
194,223,700
3.7
2017
202,337,241
4.0
2018
210,648,610
3.9
2019
221,785,219
5.0
2020
239,165,288
7.3
2021
257,606,430
7.2
2022
264,973,116
2.8
2023
278,760,587
5.0
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
The following table summarizes per capita personal income for Orange County, California and the
United States for 2014 through 2023. This measure of income is calculated as the personal income of the
residents of the area divided by the resident population of the area.
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PER CAPITA PERSONAL INCOME
Orange County, State of California and the United States
2014-2023
Year
County of Orange
California
United States
2014
$55,457
$50,617
$46,289
2015
59,238
53,816
48,062
2016
61,184
55,862
48,974
2017
63,510
58,214
51,006
2018
66,056
60,984
53,311
2019
69,616
64,219
55,567
2020
75,074
70,098
59,123
2021
81,505
76,882
64,460
2022
84,109
76,941
66,244
2023
88,897
81,255
69,810
Source: U.S. Department of Commerce, Bureau of Economic Analysis
Taxable Sales
The table below presents taxable sales for the years 2019 through 2023 for the City.
TAXABLESALES
City of Tustin
(Dollars in Thousands)
Year
Permits Taxable Transactions
2019
3,096
$2,279,668
2020
3,366
2,114,455
2021
3,108
2,658,308
2022
3,154
2,968,921
2023
3,004
3,009,766
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2019-2023.
The table below presents taxable sales for the years 2019 through 2023 for the County.
TAXABLESALES
County of Orange
(Dollars in Thousands)
Year
Permits Taxable Transactions
2019
122,989
$69,688,975
2020
132,807
63,833,515
2021
118,779
78,253,936
2022
119,697
88,027,071
2023
116,309
87,298,417
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2019-2023
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Top Sales Tax Producers
The table below presents the top sales tax producers for the fourth quarter in 2024 for the City, in
alphabetical order.
Allen Packaging
Alternative Retail
AutoNation Ford
Best Buy
Costco
Home Depot
In N Out Burger
Jewelry Exchange
Lowes
Source: HdL Companies
Principal Property Tax Payers
ago.
Name of Producer
Marshalls
Micro Center
Musco Sports Lighting
Nissan Of Tustin
REI
Target
TJ Maxx
Toshiba America Medical Systems
Total Wine & More
Toyota Lease Trust
Tustin Acura
Tustin Buick GMC
Tustin Cadillac
Tustin Hyundai/Mazda
Tustin Lexus
Tustin Toyota
The table below presents the top ten property tax payers in the City for the current year and nine years
Taxpayer
Vestar Kimco Tustin LP
Raintree Tustin LLC
CSHV Myford Tustin LLC
Schools First Federal Credit Union
Legacy Villas LLC
AVID Bioservices Inc.
Flight Phase I Owner LLC
Tustin Market Place
Costco Wholesale Corporation
Borchard Redhill SKB-Tustin LLC
Irvine Company LLC
Avalon II California Value I
PK II Larwin Square SC LP
Irvine Apartment Communities
Ricoh Development
Cadigan Communities
CP II Park Place LLC
TOTAL
2024
2015
Percent of
Percent of
Total
Total
Taxable
Taxable
Current
Taxable
Assessed
Taxable
Assessed
Rank
Assessed Value
Value
Assessed Value
Value
1
$ 194,080,141
1.14%
$162,372,463
1.58%
2
158,921,136
0.94
3
142,137,552
0.84
4
139,649,608
0.82
5
139,268,642
0.82
6
134,801,018
0.80
7
134,355,435
0.79
8
92,255,693
0.54
9
72,051,827
0.42
47,286,886
0.46
10
71,236,070
0.42
47,709,881
0.46
228,477,924
2.22
98,143,300
0.95
48,263,673
0.47
50,873,840
0.49
48,516,780
0.47
47,482,617
0.46
42,498,878
0.41
$1,278,757,122
7.54%
$821,626,242
7.97%
Source: City of Tustin, California Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2024
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APPENDIX D-1
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.06-1
(TUSTIN LEGACY/COLUMBUS VILLAGES)
A Special Tax shall be levied on all Assessor's Parcels in the City of Tustin Community Facilities District
No. 06-1 (Tustin Legacy/Columbus Villages) ("CFD No. 06-1") and collected each Fiscal Year commencing in
Fiscal Year 2006-2007, in an amount determined through the application of the Rate and Method of
Apportionment as described below. All of the real property in CFD No. 06-1, unless exempted by law or by
the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A.
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel
Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the
applicable final map, parcel map, condominium plan, or other recorded County parcel map. The
square footage of an Assessor's Parcel is equal to the Acreage of such parcel multiplied by 43,560.
"Act" means the Mello -Roos Community Facilities Act of 1982, being Chapter 2.5, Division 2 of
Title 5 of the California Government Code.
"Administrative Expenses" means the following actual or reasonably estimated costs directly related
to the administration of CFD No. 06-1: the costs of computing the Special Taxes and preparing the
annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of
collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special
Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties
required of it under the Indenture; the costs to the City, CFD No. 06-1 or any designee thereof of
complying with arbitrage rebate requirements; the costs to the City, CFD No. 06-1 or any designee
thereof of complying with City, CFD No. 06-1 or obligated persons disclosure requirements of
applicable federal and state securities laws and the Act; the costs associated with preparing Special
Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of
the City, CFD No. 06-1 or any designee thereof related to an appeal of the Special Tax; the costs
associated with the release of funds from any escrow account; and the City's annual administration
fees and third party expenses. Administrative Expenses shall also include amounts estimated or
advanced by the City or CFD No. 06-1 for any other administrative purposes of CFD No. 06-1,
including attorney's fees and other costs related to commencing and pursuing to completion any
foreclosure as a result of delinquent Special Taxes.
"Affordable Units" means residential dwelling units located on one or more Assessor's Parcels of
Residential Property that are subject to deed restrictions, resale restrictions, and/or regulatory
agreements recorded in favor of the City providing for affordable housing. Affordable Units shall be
further classified as Moderate Income, Lower Income, or Very Low Income (as defined in Sections
50079.5, 50093, and 50105 of the California Health and Safety Code) and Affordable Housing Costs
for said households are defined in Section 50052.5 (9b) of the California Health and Safety Code.
Before the annexation of the Future Annexation Area, the total number of Affordable Units in Zone 1
shall not exceed 71 Moderate Income units, 117 Lower Income Units and 61 Very Low Income units
and the total number of Affordable Units in Zone 2 shall not exceed 30 Moderate Income units and 12
Very Low Income units. After the annexation of the Future Annexation Area, the total number of
Affordable Units in Zone 1 shall not exceed 80 Moderate Income units, 125 Lower Income Units and
61 Very Low Income units and the total number of Affordable Units in Zone 2 shall not exceed 30
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Moderate Income units and 12 Very Low Income units. Affordable Units constructed within each
Zone within the CFD shall be designated by the CFD Administrator in the chronological order in
which the building permits for such units are issued within that Zone. However, if for either Zone, the
total number of Affordable Units constructed in any one of the three affordable income categories
exceeds the amount stated above for such income category, then the units exceeding such total shall
not be considered Affordable Units and shall be assigned to a Land Use Class based on the type of use
and Residential Floor Area for each such unit.
"Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned
Assessor's Parcel number.
"Assessor's Parcel Map" means an official map of the County Assessor of the County designating
parcels by Assessor's Parcel number.
"Authorized Services" means those authorized services proposed to be financed by CFD No. 06-1
pursuant to the Act and listed in Exhibit A to this Rate and Method of Apportionment.
"Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or
more series, issued by CFD No. 06-1 under the Act.
"CFD Administrator" means an official of the City, or designee thereof, responsible for determining
the Special Tax Requirement for Facilities and the Special Tax Requirement for Services and
providing for the levy and collection of the Special Taxes.
"CFD No.06-1" means City of Tustin Community Facilities District No.06-1 (Tustin
Legacy/Columbus Villages).
"City" means the City of Tustin.
"Consumer Price Index" means, for each Fiscal Year, the Consumer Price Index published by the
U.S. Bureau of Labor Statistics for "All Urban Consumers" in the Los Angeles — Anaheim — Riverside
Area, measured as of the month of December in the calendar year which ends in the previous Fiscal
Year. In the event this index ceases to be published, the Consumer Price Index shall be another index
as determined by the CFD Administrator that is reasonably comparable to the Consumer Price Index
for the City of Los Angeles.
"Council" means the City Council of the City, acting as the legislative body of CFD No. 06-1.
"County" means the County of Orange.
"Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Public
Property and Taxable Property Owner Association Property, for which the Final Subdivision was
recorded on or prior to January 1 of the prior Fiscal Year and a building permit for new construction
was issued after January 1, 2005 and prior to May 1 of the prior Fiscal Year.
"Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot
line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et
seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates
individual lots for which building permits may be issued without further subdivision.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
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"Future Annexation Area" means the property designated as Future Annexation Area on the
boundary map for CFD No. 06-1, as identified in Exhibit B.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to
which Bonds are issued, as modified, amended and/or supplemented from time to time.
"Land Use Class" means any of the classes listed in Table 1 below.
"Maximum Special Tax" means the maximum Special Tax A and/or maximum Special Tax B, as
applicable.
"Maximum Special Tax A" means the Maximum Special Tax A determined in accordance with
Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel within CFD No. 06-1.
"Maximum Special Tax B" means the Maximum Special Tax B determined in accordance with
Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel within CFD No. 06-1.
"Non -Residential Property" means all Assessor's Parcels of Developed Property for which a
building permit permitting the construction of one or more non-residential units or facilities has been
issued by the City.
"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the Indenture.
"Property Owner Association Property" means, for each Fiscal Year, any property within the
boundaries of CFD No. 06-1 that was owned by a property owner association, including any master or
sub -association, as of January I of the prior Fiscal Year.
"Proportionately" means, for Developed Property, that the ratio of the actual Special Tax A levy to
the Maximum Special Tax A is equal for all Assessor's Parcels of Developed Property and that the
ratio of the actual Special Tax B levy to the Maximum Special Tax B is equal for all Assessor's
Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of
the actual Special Tax A levy per Acre to the Maximum Special Tax A per Acre is equal for all
Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similarly be applied to
other categories of Taxable Property as listed in Section E below.
"Public Property" means property within the boundaries of CFD No. 06-1 owned by, irrevocably
offered or dedicated to, or over, through or under which an easement for purposes of public right-of-
way has been granted, to the federal government, the State, the County, the City, or any local
government or other public agency, provided that any property leased by a public agency to a private
entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according
to its use.
"Residential Floor Area" means all of the square footage of living area within the perimeter of a
residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or
similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be made by
reference -to the building permit(s) issued for such Assessor's Parcel.
"Residential Property" means all Assessor's Parcels of Developed Property for which a building
permit permitting the construction thereon of one or more residential dwelling units has been issued
by the City.
"Single Family Attached Property" means all Assessor's Parcels of Residential Property for which
building permits have been issued for attached residential units.
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"Single Family Detached Property" means all Assessor's Parcels of Residential Property for which
building permits have been issued for detached residential units.
"Special Tax" means the Special Tax A and/or Special Tax B, as applicable.
"Special Tax A" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of
Taxable Property within CFD No. 06-1 to fund the Special Tax Requirement for Facilities.
"Special Tax A Buydown" means a mandatory bond principal buydown payment made by the
property owner to reduce the amount of Outstanding Bonds to compensate for a loss of Special Tax A
revenues resulting from the construction of fewer residential dwelling units, smaller residential
dwelling units, or a modified amount of non-residential Acreage, as determined in accordance with
Section D below.
"Special Tax B" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of
Taxable Property within CFD No. 06-1 to fund the Special Tax Requirement for Services.
"Special Tax Requirement for Facilities" means that amount required in any Fiscal Year for CFD
No. 06-1 to: (i) pay debt service on all Outstanding Bonds due in the calendar year commencing in
such Fiscal Year; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement
and rebate payments on the Bonds due in the calendar year commencing in such Fiscal Year; (iii) pay
Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for
all Outstanding Bonds; (v) pay for reasonably anticipated Special Tax A delinquencies based on the
delinquency rate for the Special Tax A levy in the previous Fiscal Year; (vi) pay directly for
acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount
does not increase the Special Tax for Facilities levy on Undeveloped Property; less (vii) a credit for
funds available to reduce the annual Special Tax A levy, as determined by the CFD Administrator
pursuant to the Indenture.
"Special Tax Requirement for Services" means that amount required in any Fiscal Year for CFD
No. 06-1 to (i) pay directly for Authorized Services due in the calendar year commencing in such
Fiscal Year; (ii) pay a proportionate share of Administrative Expenses; less (iii) a credit for funds
available to reduce the annual Special Tax B levy, as determined by the CFD Administrator.
"State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 06-1
which are not exempt from the Special Tax pursuant to law or Section F below.
"Taxable Property Owner Association Property" means, for each Fiscal Year, all Assessor's Parcels
of Property Owner Association Property that are not exempt from the Special Tax pursuant to
Section F below.
"Taxable Public Property" means, for each Fiscal Year, all Assessor's Parcels of Public Property that
are not exempt from the Special Tax pursuant to Section F below.
"Trustee" means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as
Developed Property, Taxable Public Property or Taxable Property Owner Association Property.
"Zone" means Zone 1 or Zone 2, as applicable.
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"Zone 1" means the land geographically identified as Tract 16851 on a map filed in Book 877, Pages
33 through 50 of Miscellaneous Maps, and as Instrument Number 200600148498, in Records of
Orange County, California, excepting therefrom lots 242, 243, 244, 245, 332, 333, 341, 342, 346, 348,
349, 350, 351, 352, 353, 354, 355, 361, F (portion), G (portion), Z, AA, AB, AC, AM (portion), AN,
AO, AP, AQ, AR, BA, BB (portion), ZA, ZB and DDL.
"Zone 2" means the land geographically identified as Tract 16582 on a map filed in Book 874, Pages
1 through 30 of Miscellaneous Maps, and as instrument number 200500867370 in Records of Orange
County, California.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within each Zone shall be classified as Developed Property,
Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property, and
shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment
determined pursuant to Sections C, D, and E below.
C. MAXIMUM SPECIAL TAX
1. Developed Property
(a). Maximum Special Tax
The Maximum Special Tax A and the Maximum Special Tax B for each Land Use
Class in each Zone is shown below in Tables 1 and 2. The Maximum Special Tax for
each Assessor's Parcel classified as Developed Property shall be the Maximum
Special Tax A plus Maximum Special Tax B applicable to such Assessor's Parcel for
the Zone in which the Assessor's Parcel is located.
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Land
Use
Class
1
2
3
4
5
6
7
8
9
10
12
13
14
15
16
17
TABLE 1
Maximum Special Tax for Developed Property in Zone 1
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Fiscal Year 2006-2007
Description
Single Family Detached Property
Single Family Detached Property
Single Family Detached Property
Single Family Detached Property
Single Family Detached Property
Single Family Detached Property
Single Family Attached Property
Single Family Attached Property
Single Family Attached Property
Single Family Attached Property
Single Family Attached Property
Single Family Attached Property
Senior Units
Affordable Units - Moderate
Affordable Units - Low
Affordable Units - Very Low
Non -Residential Property
Residential Floor
Area
> 3,600 s.f.
3,226 - 3,600 s.f.
2,851- 3,225 s.f.
2,476 - 2,850 s.f.
2,101 -2,475 s.f.
<= 2,100 s.f.
> 2,550 s.f.
2,301 - 2,550 s.f.
2,051- 2,300 s.f.
1,801 - 2,050 s.f.
1,551 -1,800 s.f.
<= 1,550 s.f.
NA
NA
NA
NA
NA
Maximum
Special
Tax A
$3,256 per unit
$2,843 per unit
$2,507 per unit
$2,498 per unit
$2,229 per unit
$2,217 per unit
$2,410 per unit
$2,338 per unit
$2,217 per unit
$1,905 per unit
$1,352 per unit
$895 per unit
$734 per unit
$350 per unit
$200 per unit
$50 per unit
$22,478 per Acre
Maximum
Special
Tax B
$1,950 per unit
$1,725 per unit
$1,538 per unit
$1,425 per unit
$1,245 per unit
$1,170 per unit
$1,335 per unit
$1,260 per unit
$1,170 per unit
$1,020 per unit
$795 per unit
$600 per unit
$488 per unit
$600 per unit
$200 per unit
$50 per unit
$6,000 per Acre
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TABLE 2
Maximum Special Tax for Developed Property in Zone 2
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Fiscal Year 2006-2007
Land Maximum
Use Residential Floor Special
Class Description Area Tax A
1
Single Family Detached Property
2
Single Family Detached Property
3
Single Family Detached Property
4
Single Family Detached Property
5
Single Family Detached Property
6
Single Family Detached Property
7
Single Family Detached Property
8
Single Family Attached Property
9
Single Family Attached Property
10
Single Family Attached Property
11
Affordable Units - Moderate
12
Affordable Units - Very Low
13
Non -Residential Property
> 4,300 s.f.
3,951
- 4,300 s.f.
3,601
- 3,950 s.f.
3,251-
3,600 s.f.
2,901-
3,250 s.£
2,551-
2,900 s.f.
<=
2,550 s.f.
> 1,800 s.f.
1,601-1,800
s.f.
<=
1,600 s.f.
NA
NA
(b). Increase in the Maximum Special Tax
$7,448 per unit
$6,988 per unit
$6,629 per unit
$6,118 per unit
$5,094 per unit
$4,838 per unit
$4,582 per unit
$3,268 per unit
$2,961 per unit
$2,449 per unit
$350 per unit
$50 per unit
$39,534 per Acre
Maximum
Special
Tax B
$2,250 per unit
$2,115 per unit
$2,010 per unit
$1,860 per unit
$1,560 per unit
$1,485 per unit
$1,410 per unit
$1,020 per unit
$930 per unit
$780 per unit
$600 per unit
$50 per unit
$6,000 per Acre
On each July 1, commencing on July 1, 2007 the Maximum Special Tax A, identified
in Tables 1 and 2 above, be increased by an amount equal to two percent (2%) of the
amount in effect for the previous fiscal year. On each July 1, commencing on July 1,
2007, the Maximum Special Tax B listed in Tables 1 and 2 above shall be increased
based on the percentage change in the Consumer Price Index, with a maximum
annual increase of six percent (6%) and a minimum annual increase of two percent
(2%) per Fiscal Year.
(c). Multiple Land Use Classes
In some instances an Assessor's Parcel of Developed Property may contain more
than one Land Use Class. The Maximum Special Tax levied on an Assessor's Parcel
shall be the sum of the Maximum Special Taxes for all Land Use Classes located on
that Assessor's Parcel.
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2. Undeveloped Property, Taxable Public Property, and Taxable Property Owner
Association Property
(a). Maximum Special Tax A
The Fiscal Year 2006-2007 Maximum Special Tax A for Undeveloped Property,
Taxable Public Property, and Taxable Property Owner Association Property shall be
$40,377 per Acre.
(b). Maximum Special Tax B
The Fiscal Year 2006-2007 Maximum Special Tax B for Undeveloped Property, Taxable
Public Property, and Taxable Pro e Owner Association Property shall be $6,000 per Acre.
(c). Increase in the Maximum Special Tax A and Special Tax B
On each July 1, commencing on July 1, 2007 the Maximum Special Tax A for Undeveloped
Property, Taxable Public Pro e , and Taxable Property Owner Association Property, shall be
increased by an amount equal to two percent (2%) of the amount in effect for the previous
fiscal year. On each July 1, commencing on July 1, 2007, the Maximum Special Tax B for
Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association
Property, shall be increased based on the percentage change in the Consumer Price Index,
with a maximum annual increase of six percent (6%) and a minimum annual increase of two
percent (2%) per Fiscal Year.
D. SPECIAL TAX A BUYDOWN
All of the requirements of this Section D, which describes the need for a Special Tax A Buydown that
may result from a change in development as determined pursuant to this Section D, shall only apply
after the sale of Bonds by CFD No. 06-1. The following definitions apply to this Section D:
"Certificate of Satisfaction of Special Tax A Buydown" means a certificate from the CFD
Administrator stating that the property described in such certificate has sufficiently met the Special
Tax A Buydown Requirement for such property as calculated under this Section D.
"Letter of Compliance" means a letter from the CFD Administrator allowing the issuance of building
permits based on the prior submittal of a request for Letter of Compliance by a property owner.
"Special Tax A Buydown Requirement" means the total amount of Special Tax A Buydown
necessary to be prepaid to permit the issuance of building permits listed in a request for Letter of
Compliance, as calculated under this Section D.
"Update Property" means an Assessor's Parcel of Undeveloped Property for which a building permit
has been issued. For purposes of all calculations in this Section D, Update Property shall be taxed as
if it were already Developed Property during the current Fiscal Year.
1. Request for Letter of Compliance
The CFD Administrator must submit a Letter of Compliance to the City for a specific Assessor's
Parcel or lot prior to the issuance by the City of a building permit for the construction of any
residential and/or non-residential development on that Assessor's Parcel or lot. If a Letter of
Compliance has not yet been issued, and a property owner wishes to request a building permit for an
Assessor's Parcel or lot, the property owner must first request a Letter of Compliance from the CFD
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Administrator. The request from the property owner shall contain a list of all building permits
currently being requested, the Assessor's Parcels or tract and lot numbers on which the construction is
to take place, and the Residential Floor Area (for each residential dwelling unit) or the Acreage (for
each non-residential parcel) associated with each building permit.
2. Issuance of Letter of Compliance
Upon the receipt of a request for Letter of Compliance, the CFD Administrator shall assign each
building permit identified in such request to Land Use Classes 1 through 17 for Zone 1 and Land Use
Classes 1 through 13 for Zone 2 as listed in Tables 3 and 4 below, based on the type of use and the
Residential Floor Area identified for each such building permit. When using Table 3, if Bonds are
secured solely by parcels in the portion of Zone 1 that does not include the Future Annexation Area,
the column entitled "Expected Units Without Future Annexation Area" shall be utilized for purposes
of this analysis. If Bonds are secured by all of Zone 1, including the Future Annexation Area, the
column entitled "Expected Units Including Future Annexation Area" shall be utilized for purposes of
this analysis. If the CFD Administrator determines (i) that the number of building permits requested
for each Land Use Class, plus those building permits previously issued for each Land Use Class, will
not cause the total number of residential units or non-residential Acreage within any such Land Use
Class to exceed the number of units or Acreage for such Land Use Class identified in Tables 3 and 4
below, and (ii) that the total number of residential dwelling units anticipated to be constructed
pursuant to the current development plan for CFD No. 06-1 will not be less than 989 for Zone 1 and
465 for Zone 2 prior to the annexation of the Future Annexation Area and not less than 1,075 for
Zone 1 and 465 for Zone 2 after the annexation of the Future Annexation Area, then a Letter of
Compliance shall be submitted to the City by the CFD Administrator approving the issuance of the
requested building permits. This Letter of Compliance shall be submitted by the CFD Administrator
within ten days of the submittal of the request for Letter of Compliance by the property owner.
However, should (i) the building permits requested, plus those previously issued, cause the total
number of residential units or non-residential Acreage within any such Land Use Class to exceed the
number of units or non-residential Acreage for such Land Use Class identified in Tables 3 and 4
below, or (ii) the CFD Administrator determine that changes in the development plan may cause a
decrease in the number of residential dwelling units within CFD No. 06-1 to below 989 dwelling units
in Zone 1 or 465 dwelling units in Zone 2 before the annexation of the Future Annexation Area or
below 1,075 dwelling units in Zone 1 or 465 dwelling units in Zone 2 after the annexation of the
Future Annexation Area, then a letter of Compliance will not be issued and the CFD Administrator
will be directed to determine if a Special Tax A Buydown shall be required.
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TABLE 3
Expected Dwelling Units per Land Use Class and Non -Residential Acreage
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Zone 1
Expected Units
Expected Units
Including
Land
Without Future
Future
Use
Residential
Floor
Annexation
Annexation
Class
Description
Area
Area
Area
1
Single Family Detached Property
> 3,600 s.£
10 units
10 units
2
Single Family Detached Property
3,226
— 3,600 s.f.
61 units
62 units
3
Single Family Detached Property
2,851—
3,225 s.f.
66 units
67 units
4
Single Family Detached Property
2,476
— 2,850 s.£
25 units
27 units
5
Single Family Detached Property
2,101—
2,475 s.f.
86 units
86 units
6
Single Family Detached Property
<=
2,100 s.f.
31 units
31 units
7
Single Family Attached Property
> 2,550 s.f.
27 units
27 units
8
Single Family Attached Property
2,301
— 2,550 s.f.
9 units
9 units
9
Single Family Attached Property
2,051—
2,300 s.f.
24 units
24 units
10
Single Family Attached Property
1,801
— 2,050 s.f.
32 units
38 units
11
Single Family Attached Property
1,551
—1,800 s.f.
164 units
217 units
12
Single Family Attached Property
<=
1,550 s.f.
118 units
124 units
13
Senior Units
NA
87 units
87 units
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TABLE 4
Expected Dwelling Units per Land Use Class and Non -Residential Acreage
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Zone 2
Land
Use Residential Floor Number of
Class Description Area Units/Acres
1 Single Family Detached Property
> 4,300 s.f.
20 units
2 Single Family Detached Property
3,951 — 4,300 s.f.
37 units
3 Single Family Detached Property
3,601 — 3,950 s.f.
26 units
4 Single Family Detached Property
3,251— 3,600 s.f.
23 units
5 Single Family Detached Property
2,901— 3,250 s.f.
51 units
6 Single Family Detached Property
2,551— 2,900 s.f.
107 units
7 Single Family Detached Property
<= 2,550 s.f.
15 units
8 Single Family Attached Property
> 1,800 s.f.
51 units
9 Single Family Attached Property
1,601-1,800 s.f.
85 units
10 Single Family Attached Property
<= 1,600 s.f.
8 units
11 Affordable Units — Moderate
NA
30 units
12 Affordable Units — Very Low
NA
12 units
13 Non -Residential Property
NA
0 Acres
3. Calculation of Special Tax A Buydown
If a Special Tax A Buydown calculation is required as a result of item 2, above, the CFD
Administrator shall review the current development plan for CFD No. 06-1 in consultation with the
current property owners for all remaining Undeveloped Property in CFD No. 06-1, and shall prepare
an updated version of Tables 3 and 4 identifying the revised number of units or non-residential
Acreage anticipated within each Land Use Class. The CFD Administrator shall not be responsible for
any delays in preparing the updated Tables 3 and 4 that result from a refusal on the part of one or more
current property owners of Undeveloped Property to provide information on their future development.
The CFD Administrator shall then review the updated Tables 3 and 4 and determine the Special Tax A
Buydown Requirement, if any, to be applied to the property identified in the request for Letter of
Compliance to assure the CFD's ability to collect Special Taxes equal to 110% debt service coverage
on the Outstanding Bonds, plus the cost of annual CFD administration. The calculations shall be
undertaken by the CFD Administrator as follows:
Step 1. Compute the sum of the Maximum Special Tax A to be levied on all Developed Property and
Update Property within CFD No. 06-1, plus the sum of the Maximum Special Tax A to be
levied on all future development as identified in the current development plan as determined
by the CFD Administrator in consultation with the property owner.
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Step 2. Determine the amount of Special Tax A required to provide 110% debt service coverage on
the Outstanding Bonds, plus any other costs associated with the Special Tax Requirement for
Facilities.
Step 3. If the total sum computed pursuant to step 1 is greater than or equal to the amount computed
pursuant to step 2, then no Special Tax A Buydown will be required and a Letter of
Compliance shall immediately be issued by the CFD Administrator for all of the building
permits currently being requested. If the total sum computed pursuant to step 1 is less than
the amount computed pursuant to step 2, then continue to step 4.
Step 4. Determine the Maximum Special Tax A shortfall by subtracting the total sum computed
pursuant to step 1 from the amount computed pursuant to step 2. Divide this Maximum
Special Tax A shortfall by the amount computed pursuant to step 2.
Step 5. The Special Tax A Buydown Requirement shall be calculated using the prepayment formula
described in Section 1. 1, with the following exceptions: (i) skip Paragraphs 1, 2 and 3, and
begin with Paragraph 4; (ii) the Bond Redemption Amount in Paragraph 4 of the prepayment
formula described in Section I.1 shall equal the product of the quotient computed pursuant to
step 4 above times the Previously Issued Bonds, as defined in Section 1. 1; (iii) the Capitalized
Interest Credit described in Paragraph 12 of Section I.1 shall be $0; and (iv) any payments of
the Special Tax A Buydown (less Administrative Fees and Expenses) shall be disbursed
pursuant to the Indenture.
The Special Tax A Buydown computed under step 5 shall be billed directly to the property
owner of each Assessor's Parcel identified in the request for Letter of Compliance and shall
be due within 30 days of the billing date. If the Special Tax A Buydown is not paid within 45
days of the billing date, a delinquent penalty of 10 percent shall be added to the Special Tax A
Buydown. Upon receipt of the Special Tax A Buydown payment, the CFD Administrator
shall issue a Letter of Compliance and a Certificate of Satisfaction of Special Tax A Buydown
for the subject property.
4. Costs and Expenses Related to Implementation of Special Tax A Buydown
The property owner of each Assessor's Parcel identified in the request for Letter of
Compliance shall pay all costs of the CFD Administrator or other consultants required to
review the application for building permits, calculate the Special Tax A Buydown, issue
Letters of Compliance or any other actions required under Section D. Such payments shall be
due 30 days after receipt of invoice by such property owner. A deposit may be required by
the CFD Administrator prior to undertaking work related to the Special Tax A Buydown.
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax A
Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the Council shall determine the
Special Tax Requirement for Facilities and shall levy the Special Tax A until the total Special Tax A levy
equals the Special Tax Requirement for Facilities. The Special Tax A shall be levied each Fiscal Year as
follows:
First: The Special Tax A shall be levied Proportionately on each Assessor's Parcel of Developed
Property at up to 100% of the applicable Maximum Special Tax A;
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F.
Second: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the
first step has been completed, the Special Tax A shall be levied Proportionately on each Assessor's
Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax A for Undeveloped
Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the
first two steps have been completed, then the Special Tax A shall be levied Proportionately on each
Assessor's Parcel of Taxable Property Owner Association Property at up to the Maximum Special
Tax A for Taxable Property Owner Association Property;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the
first three steps have been completed, then the Special Tax A shall be levied Proportionately on each
Assessor's Parcel of Taxable Public Property at up to the Maximum Special Tax A for Taxable Public
Property.
2. Special Tax B
Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the Council shall levy
the Special Tax B until the total Special Tax B levy equals the Special Tax Requirement for Services.
The Special Tax B shall be levied each Fiscal Year as follows:
First: The Special Tax B shall be levied Proportionately on each Assessor's Parcel of Developed
Property at up to 100% of the applicable Maximum Special Tax B;
Second: If additional monies are needed to satisfy the Special Tax Requirement for Services after the
first step has been completed, the Special Tax B shall be levied Proportionately on each Assessor's
Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax B for Undeveloped
Property.
1. Special Tax A Prior to Annexation of Future Annexation Area
No Special Tax A shall be levied on up to 0.13 Acres of Public Property and up to 31.01 Acres of
Property Owner Association Property in Zone 1, and on up to 0.16 Acres of Public Property and up to
30.31 Acres of Property Owner Association Property in Zone 2. Tax-exempt status will be assigned
by the CFD Administrator in the chronological order in which property becomes Public Property and
Property Owner Association Property within each Zone. However, should an Assessor's Parcel no
longer be classified as Public Property or Property Owner Association Property, its tax-exempt status
will be revoked.
Public Property or Property Owner Association Property that is not exempt from the Special Tax A
under this section shall be subject to the levy of the Special Tax A and shall be taxed Proportionately
as part of the third and fourth steps in Section E.1.
2. Special Tax AAfter Annexation of Future Annexation Area
No Special Tax A shall be levied on up to 0.20 Acres of Public Property and up to 32.80 Acres of
Property Owner Association Property in Zone 1, and on up to 0.16 Acres of Public Property and up to
30.31 Acres of Property Owner Association Property in Zone 2. Tax-exempt status will be assigned
by the CFD Administrator in the chronological order in which property becomes Public Property and
Property Owner Association Property within each Zone. However, should an Assessor's Parcel no
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longer be classified as Public Property or Property Owner Association Property, its tax-exempt status
will be revoked.
Public Property or Property Owner Association Property that is not exempt from the Special Tax A
under this section shall be subject to the levy of the Special Tax A and shall be taxed Proportionately
as part of the third and fourth steps in Section E.1.
3. Special Tax B
No Special Tax B shall be levied on Public Property or Property Owner Association Property.
G. APPEALS AND INTERPRETATIONS
Any landowner or resident who feels that the amount of the Special Tax levied on such landowner's or
resident's Assessor's Parcel is in error may submit a written appeal to CFD No. 06-1. The CFD
Administrator shall review the appeal and if the CFD Administrator concurs, the amount of the
Special Tax levied shall be appropriately modified.
The Council may interpret this Rate and Method of Apportionment of Special Tax for purposes of
clarifying any ambiguity and make determinations relative to the amount of Administrative Expenses
and any landowner or resident appeals. Any decision of the Council shall be final and binding as to all
persons.
H. MANNER OF COLLECTION
Special Tax A and Special Tax B will be collected in the same manner as ordinary ad valorem property
taxes or in such other manner as the Council shall determine, including direct billing of the affected
property owners. The Special Tax A Buydown shall be directly billed to the property owner at the
time such Special Tax is being levied.
I. PREPAYMENT OF SPECIAL TAX A
The following additional definitions apply to this Section I:
"Buildout" means, for CFD No. 06-1, that all expected building permits have been issued.
"CFD Public Facilities" means either $42,949,043 in 2006 dollars, which shall increase by the
Construction Inflation Index on July 1, 2007, and on each July 1 thereafter, or such lower number as
(i) shall be determined by the CFD Administrator as sufficient to provide the public facilities to be
provided by CFD No. 06-1 under the authorized bonding program for CFD No. 06-1, or (ii) shall be
determined by the City Council concurrently with a covenant that it will not issue any more CFD
No. 06-1 Bonds (except refunding bonds) to be supported by the Special Tax for Facilities levy under
this Rate and Method of Apportionment as described in Section D above.
"Construction Inflation Index" means the annual percentage change in the Engineering News
Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends
in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation
Index shall be another index as determined by the CFD Administrator that is reasonably comparable to
the Engineering News Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs previously
paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund, and
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(iii) moneys currently on deposit in an escrow fund that are expected to be available to finance the
cost of CFD Public Facilities.
"Improvement Fund" means an account specifically identified in the Indenture to hold funds which
are currently available for expenditure to acquire or construct CFD Public Facilities eligible under the
Act.
"Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are deemed to be
outstanding under the Indenture after the first interest and/or principal payment date following the
current Fiscal Year.
1. Prepayment in Full
Only an Assessor's Parcel of Developed Property, or Taxable Property Owner Association
Property, Taxable Public Property or Undeveloped Property for which a building permit has
been issued, may be prepaid. The obligation of the Assessor's Parcel to pay the Special Tax
for Facilities may be permanently satisfied as described herein, provided that a prepayment
may be made with respect to a particular Assessor's Parcel only if there are no delinquent
Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of
an Assessor's Parcel intending to prepay the Special Tax for Facilities obligation shall provide
the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of
such written notice, the CFD Administrator shall notify such owner of the prepayment
amount for such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for
providing this service. Prepayment must be made not less than 45 days prior to the next
occurring date that notice of redemption of CFD No. 06-1 Bonds from the proceeds of such
prepayment may be given by the Trustee pursuant to the Indenture.
The Special Tax B may not be prepaid.
The Special Tax A Prepayment Amount (defined below) shall be calculated as summarized below
(capitalized terms as defined below):
Bond Redemption Amount
plus
Redemption Premium
plus
Future Facilities Amount
plus
Defeasance Amount
plus
Administrative Fees and Expenses
less
Reserve Fund Credit
less
Capitalized Interest Credit
Total: equals
Special Tax A Prepayment Amount
As of the proposed date of prepayment, the Special Tax A Prepayment Amount shall be calculated as
follows:
Paragraph No.:
1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel.
2. For Assessor's Parcels of Developed Property, Taxable Property Owner Association Property,
or Taxable Public Property for which a building permit has been issued, compute the
Maximum Special Tax A for the current Fiscal Year applicable for the Assessor's Parcel to be
prepaid. For Assessor's Parcels of Undeveloped Property for which a building permit has
been issued, compute the Maximum Special Tax A for the current Fiscal Year applicable for
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that Assessor's Parcel as though it was already designated as Developed Property, based upon
the building permit which has already been issued for that Assessor's Parcel.
3. Divide the Maximum Special Tax A computed pursuant to paragraph 2 by the total estimated
Maximum Special Tax A for the entire CFD No. 06-1 based on the Developed Property
Special Tax A which could be levied in the current Fiscal Year on all expected development
through Buildout of CFD No. 06-1, excluding any Assessor's Parcels which have been
prepaid.
4. Multiply the quotient computed pursuant to paragraph 3 by the Previously Issued Bonds to
compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond
Redemption Amount").
Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable
redemption premium (e.g., the redemption price-100%), if any, on the Previously Issued
Bonds to be redeemed (the "Redemption Premium").
6. Compute the current Future Facilities Costs.
Multiply the quotient computed pursuant to paragraph 3 by the amount determined pursuant
to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future
Facilities Amount").
Compute the amount needed to pay interest on the Bond Redemption Amount from the first
bond interest and/or principal payment date following the current Fiscal Year until the earliest
redemption date for the Previously Issued Bonds.
Determine the Special Tax A levied on the Assessor's Parcel in the current Fiscal Year which
has not yet been paid.
10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the
reinvestment of the Special Tax A Prepayment Amount less the Future Facilities Amount and
the Administrative Fees and Expenses (defined below) from the date of prepayment until the
redemption date for the Previously Issued Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed
pursuant to paragraph 10 (the "Defeasance Amount").
12. The administrative fees and expenses of CFD No.06-1 are as calculated by the CFD
Administrator and include the costs of computation of the prepayment, the costs to invest the
prepayment proceeds, the costs of redeeming CFD No. 06-1 Bonds, and the costs of recording
any notices to evidence the prepayment and the redemption (the "Administrative Fees and
Expenses").
13. If reserve funds for the Previously Issued Bonds, if any, are at or above 100% of the reserve
requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall
be calculated as a reduction in the applicable reserve fund for the Previously Issued Bonds to
be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). No Reserve Fund
Credit shall be granted if reserve funds are below 100% of the reserve requirement.
14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of
the date immediately following the first interest and/or principal payment following the
current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient
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computed pursuant to paragraph 3 by the expected balance in the capitalized interest fund or
account under the Indenture after such first interest and/or principal payment (the
"Capitalized Interest Credit").
15. The Special Tax A prepayment is equal to the sum of the amounts computed pursuant to
paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14
(the "Special Tax A Prepayment Amount").
From the Special Tax for Facilities Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the
Indenture and be used to retire CFD No. 06-1 Bonds or make debt service payments. The amount
computed pursuant to paragraph 7 shall be deposited into the Improvement Fund. The amount
computed pursuant to paragraph 12 shall be retained by CFD No. 06-1.
The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full $5,000
increment of CFD No. 06-1 Bonds. In such cases, the increment above $5,000 or integral multiple
thereof will be retained in the appropriate fund established under the Indenture to be used with the
next prepayment of CFD No. 06-1 Bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year's Special Tax A levy as determined under
paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax A levy
for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is
prepaid, the City Council shall cause a suitable notice to be recorded in compliance with the Act, to
indicate the prepayment of the Special Tax A and the release of the Special Tax A lien on such
Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax A shall cease.
Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless, at the time of
such proposed prepayment, the amount of Maximum Special Tax A that may be levied on Taxable
Property within CFD No. 06-1 (after excluding Public Property and Property Owner Association
Property in Zone 1 and Zone 2 as set forth in Section F) both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all Previously Issued Bonds,
plus the cost of annual CFD administration.
2. Prepayment in Part
The Special Tax A on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Taxable
Property Owner Association Property, Taxable Public Property, or Undeveloped Property for which a
building permit has been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section I.1; except that a partial prepayment shall be calculated according to the
following formula:
PP=PExF.
These terms have the following meaning:
PP = the partial prepayment
PE = the Special Tax A Prepayment Amount calculated according to Section I.1
F = the percentage, expressed as a decimal, by which the owner of the Assessor's Parcel is
partially prepaying the Special Tax A.
The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator
of such owner's intent to partially prepay the Special Tax A and the percentage by which the Special
Tax A shall be prepaid. The CFD Administrator shall provide the owner with a statement of the
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amount required for the partial prepayment of the Special Tax A for an Assessor's Parcel within 30
days of the request and may charge a reasonable fee for providing this service. With respect to any
Assessor's Parcel that is partially prepaid, the Council shall (i) distribute the funds remitted to it
according to Section 1.1, and (ii) indicate in the records of CFD No. 06-1 that there has been a partial
prepayment of the Special Tax A and that a portion of the Special Tax A with respect to such
Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special
Tax A, shall continue to be levied on such Assessor's Parcel pursuant to Section E.1.
Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless, at the time of
such proposed prepayment, the amount of Maximum Special Tax A that may be levied on Taxable
Property within CFD No. 06-1 (after excluding Public Property and Property Owner Association
Property in Zone 1 and Zone 2 as set forth in Section F) both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all Previously Issued Bonds,
plus the cost of annual CFD administration.
J. TERM OF SPECIAL TAX
The Special Tax A shall be levied for a period not to exceed forty years commencing with Fiscal Year
2006-2007. The Special Tax B shall be levied as long as necessary to meet the Special Tax
Requirement for Services.
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EXHIBIT A
AUTHORIZED SERVICES
The types of services proposed to be financed by CFD No. 06-1 are police protection services, fire protection
services, ambulance and paramedic services, recreation program services, maintenance of parks, parkways and
open space and flood and storm protection services.
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EXHIBIT B
BOUNDARY MAP
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APPENDIX D-2
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR
THE CITY OF TUSTIN COMMUNITY FACILITIES DISTRICT NO.2014-1
(TUSTIN LEGACY/STANDARD PACIFIC)
A Special Tax (all capitalized terms used herein are defined in Section A., "Definitions", below) shall be
levied on all Assessor's Parcels of Taxable Property in the City of Tustin Community Facilities District
No. 2014-1 (Tustin Legacy/Standard Pacific) ("CFD No. 2014-1") and collected each Fiscal Year commencing
in Fiscal Year 2014-2015, in an amount determined through the application of this Rate and Method of
Apportionment as described below. All of the real property in CFD No. 2014-1, unless exempted by law or by
the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The capitalized terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel
Map, or if the land area is not shown on the Assessor's Parcel Map, the land area as shown on the
applicable Final Subdivision, parcel map, condominium plan, or other recorded County parcel map.
The square footage of an Assessor's Parcel is equal to the Acreage of such parcel multiplied by
43,560.
"Act" means the Mello -Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5,
Division 2 of Title 5 of the California Government Code.
"Administrative Expenses" means the following actual or reasonably estimated costs directly related
to the administration of CFD No. 2014-1: the costs of computing the Special Taxes and preparing the
annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of
collecting the Special Taxes (whether by the City, the County or otherwise); the costs of remitting the
Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of
the duties required of it under the Indenture; the costs of the City, CFD No. 2014-1 or any designee
thereof of complying with any arbitrage rebate requirements applicable to the Bonds; the costs of the
City, CFD No. 2014-1 or any designee thereof of complying with City, CFD No. 2014-1 or obligated
persons disclosure requirements of applicable federal and state securities laws and the Act; the costs
associated with preparing Special Tax disclosure statements and responding to public inquiries
regarding the Special Taxes; the costs of the City, CFD No. 2014-1 or any designee thereof related to
an appeal of the Special Tax; the costs associated with the release of funds from any escrow account
established for CFD No. 2014-1; and the City's annual administration fees and third party expenses in
anyway related to CFD No. 2014-1. Administrative Expenses shall also include amounts estimated or
advanced by the City or CFD No. 2014-1 for any other administrative purposes of CFD No. 2014-1,
including attorney's fees and other costs related to commencing and pursuing to completion any
foreclosure as a result of delinquent Special Taxes.
"Annual Special Tax A" means the Special Tax A actually levied in any Fiscal Year on any
Assessor's Parcel.
"Annual Special Tax B" means the Special Tax B actually levied in any Fiscal Year on any
Assessor's Parcel.
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"Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a
Final Subdivision that was recorded prior to the January 1st preceding the Fiscal Year in which the
Special Tax A is being levied, and (ii) that have not been issued a building permit on or before
May 1 st preceding the Fiscal Year in which the Special Tax A is being levied.
"Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned
Assessor Parcel Number.
"Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by
Assessor's Parcel Number.
"Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the County for
purposes of identification.
"Assigned Annual Special Tax A" means the Special Tax A for each Land Use Category of
Developed Property, as determined in accordance with Section C. La., below.
"Authorized Facilities" means those facilities authorized to be financed by CFD No. 2014-1 pursuant
to the Act and the proceedings to form CFD No. 2014-1.
"Authorized Services" means those services authorized to be financed by CFD No. 2014-1 pursuant
to the Act and the proceedings to form CFD No. 2014-1.
"Backup Special Tax A" means the Special Tax amount set forth in Section C. Lb., below.
"Bonds" means any bonds or other debt (as defined in Section 53317 (d) of the Act), whether in one
or more series, issued by the City for CFD No. 2014-1 under the Act.
"Building Permit" means the first legal document issued by the City giving official permission for
new construction. For purposes of this definition, `Building Permit" may or may not include any
subsequent building permits issued or changed after the first issuance, as determined by the CFD
Administrator.
"Calendar Year" means the period commencing January 1 of any year and ending the following
December 31.
"CFD Administrator" means an official of the City, or designee thereof, responsible for determining
the Special Tax A Requirement for Facilities and the Special Tax B Requirement for Services, and
otherwise providing for the levy and collection of the Special Taxes.
"CFD No.2014-1" means City of Tustin Community Facilities District No.2014-1 (Tustin
Legacy/Standard Pacific).
"City" means the City of Tustin, California.
"Consumer Price Index" means, for each Fiscal Year, the Consumer Price Index published by the
U.S. Bureau of Labor Statistics for "All Urban Consumers: in the Los Angeles — Anaheim — Riverside
Area, measured as of the month of December in the calendar year which ends in the previous Fiscal
Year." In the event this index ceases to be published, the Consumer Price Index shall be another
index as determined by the CFD Administrator that is reasonably comparable to the Consumer Price
Index for the City of Los Angeles.
"Council" means the City Council of the City, acting as the legislative body of CFD No. 2014-1.
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"County" means the County of Orange, California.
"Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Public
Property and Taxable Property Owner Association Property, that are included in a Final Subdivision
that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax is being
levied and for which a Building Permit for new construction has been issued on or prior to May lst
preceding the Fiscal Year in which the Special Tax is being levied.
"Dwelling Unit" or "DU" means a residential unit that is used or intended to be used as a domicile by
one or more persons, as determined by the CFD Administrator.
"Exempt Property" means all Assessor's Parcels designated as being exempt from Special Tax A
and Special Tax B as provided for in Section E.
"Final Subdivision" means a subdivision of property by recordation of a final subdivision map,
parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code
Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352
that creates individual lots for which Building Permits may be issued without further subdivision.
"Fiscal Year" means the period commencing July 1 of any year and ending the following June 30.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument, pursuant to
which Bonds are issued, as modified, amended and/or supplemented from time to time.
"Land Use Class" means any of the classes listed in Table 1 below.
"Maximum Special Tax" means the Maximum Special Tax A and/or Maximum Special Tax B, as
applicable.
"Maximum Special Tax A" means the Maximum Special Tax A determined in accordance with
Section C that can be levied in any Fiscal Year on any Assessor's Parcel within CFD No. 2014-1.
"Maximum Special Tax B" means the Maximum Special Tax B determined in accordance with
Section C that can be levied in any Fiscal Year on any Assessor's Parcel within CFD No. 2014-1.
"Multi -family Residential Property" means all Parcels of Developed Property that consist of a
building or buildings comprised of attached Dwelling Units available for rental by the general public,
not for sale to an end user, and under common management, as determined by the CFD Administrator.
"Non -Residential Property" means all Assessor's Parcels of Developed Property for which a
Building Permit permitting the construction of one or more non-residential units or facilities has been
issued.
"Outstanding Bonds" means all Bonds which are outstanding under the provisions of an Indenture.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax A
obligation for an Assessor's Parcel, as described in Section H.
"Prepayment Amount" means the amount required to prepay the Special Tax A obligation in full for
an Assessor's Parcel, as described in Section H.
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"Property Owner Association Property" means, for each Fiscal Year, any property within the
boundaries of CFD No. 2014-1 that was owned by a property owner association, including any master
or sub -association, as of January 1 of the prior Fiscal Year.
"Proportionately" means for Developed Property, that the ratio of the actual Special Tax A levy to
the Assigned Special Tax A is equal for all Assessor's Parcels of Developed Property and that the
ratio of the actual Special Tax B levy to the Maximum Special Tax B is equal for all Assessor's
Parcels of Developed Property. For Approved Property, that the ratio of the actual Special Tax A levy
to the Maximum Special Tax A is equal for all Assessor's Parcels of Approved Property and that the
ratio of the actual Special Tax B levy to the Maximum Special Tax B is equal for all Assessor's
Parcels of Approved Property. For Undeveloped Property, "Proportionately" means that the ratio of
the actual Special Tax A levy per Acre to the Maximum Special Tax A per Acre is equal for all
Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similarly be applied to
other categories of Taxable Property as listed in Section C below.
"Public Property" means property within the boundaries of CFD No. 2014-1 owned by, irrevocably
offered or dedicated to, or over, through or under which an easement for purposes of public right-of-
way has been granted, to the federal government, the State, the County, the City, or any local
government or other public agency, provided that any property leased by a public agency to a private
entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according
to its use.
"Residential Floor Area" means all of the square footage of living area within the perimeter of a
residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or
similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be made by
reference to the Building Permit(s) issued for such Assessor's Parcel.
"Residential Property" means all Assessor's Parcels of Developed Property for which a Building
Permit permitting the construction thereon of one or more residential dwelling units has been.
"Single Family Residential Property" means all Assessor's Parcels of Residential Property for
which building permits have been issued for residential units, other than Multi -family Property.
"Special Tax" means the Special Tax A and/or Special Tax B, as applicable.
"Special Tax A" means the special taxes to be levied in each Fiscal Year on each Assessor's Parcel of
Taxable Property within CFD No. 2014-1 to fund the Special Tax A Requirement for Facilities.
"Special Tax B" means the special tax authorized to be levied in each Fiscal Year on each Assessor's
Parcel of Taxable Property within CFD No. 2014-1 to fund the Special Tax B Requirement for
Services.
"Special Tax A Requirement for Facilities" means the amount required in any Fiscal Year for CFD
No. 2014-1 to: (i) pay the debt service on all Outstanding Bonds due in the Calendar Year
commencing in such Fiscal Year, (ii) pay periodic costs on the Bonds, including but not limited to,
credit enhancement and rebate payments with respect to the Bonds due in the calendar year
commencing in such Fiscal Year; (iii) pay actual and estimated Administrative Expenses related to the
levy and collection of Special Tax A, the administration of the Bonds and the obligations of the City
and CFD No. 2014-1 under the Indenture; (iv) pay any amounts required to establish or replenish any
reserve funds for all Outstanding Bonds, to the extent not included in a computation of the Special
Tax A Requirement for Facilities in a previous Fiscal Year; (v) pay for reasonable anticipated Special
Tax A delinquencies for the current Fiscal Year based on the delinquency rate for the Special Tax A
levy in the previous Fiscal Year; (vi) pay directly for acquisition or construction of Authorized
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Facilities; less (vii) a credit for funds available to reduce the annual Special Tax A levy, as determined
by the CFD Administrator in accordance with any Indenture.
"Special Tax B Requirement for Services" means that amount required in any Fiscal Year for CFD
No. 2014-1 to (i) pay directly for costs of the Authorized Services due in the calendar year
commencing in such Fiscal Year; (ii) pay actual and estimated Administrative Expenses related to the
levy and collection of the Special Tax B and the provision of the Authorized Services; less (iii) a
credit for funds available to reduce the annual Special Tax B levy, as determined by the CFD
Administrator.
"State" means the State of California.
"Taxable Property" means all Assessor's Parcels within the boundaries of CFD No. 2014-1, which
are not exempt from the Special Tax pursuant to law or Section E below.
"Taxable Property Owner Association Property" means, for each Fiscal Year, all Assessor's
Parcels of Property Owner Association Property that are not exempt from the Special Tax pursuant to
Section E below.
"Taxable Public Property" means, for each Fiscal Year, all Assessor's Parcels of Public Property
that are not exempt from the Special Tax pursuant to Section E below.
"Trustee" means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as
Developed Property, Taxable Public Property or Taxable Property Owner Association Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property shall be classified as Developed Property, Approved Property,
Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property,
and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment
determined pursuant to Sections C, D, and E below.
Parcels of Developed Property shall further be classified as Residential Property or Non -Residential
Property. Parcels of Residential Property shall further be classified as Single Family Property or
Multi -family Residential Property. Parcels of Single Family Property shall be further categorized into
Land Use Classes based on the Residential Floor Area for each such Parcel.
C. MAXIMUM SPECIAL TAX
1. Developed Property
The Maximum Special Tax A for each Parcel of Single Family Residential Property shall be
the greater of. (i) the applicable Assigned Special Tax described in Table 1 or (ii) the amount
derived by application of the Backup Special Tax A.
The Maximum Special Tax B for each Parcel of Single Family Residential Property shall be
the applicable Maximum Special Tax B described in Table 1.
The Maximum Special Tax A for each Parcel of Non -Residential Property, or Multi -family
Residential Property shall be the Assigned Special Tax A described in Table 1.
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The Maximum Special Tax B for each Parcel of Non -Residential Property or Multi -family
Residential Property shall be the Maximum Special Tax B described in Table 1.
a. Assigned Special Tax
The Assigned Special Tax for each Parcel of Developed Property is shown in Table 1
below:
TABLE 1
Maximum Special Tax for Developed Property in
Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific)
Fiscal Year 2014-2015
Land
Use
Class
Description
DU/Acre
Residential
Floor Area
Assigned
Special
Tax A
Maximum
Special
Tax B
1
Single Family Residential Property
DU
> 3,530 s.f.
$4,997
$1,522
2
Single Family Residential Property
DU
3,210 — 3,529 s.f.
$4,675
$1,425
3
Sin le Family Residential Property
DU
2,890 — 3,209 s.f.
$4,308
$1,314
4
Single FamilResidential Property
DU
2,570 — 2,889 s.f.
$3,822
$1,164
5
Single Family Residential Property
DU
2,250 — 2,569 s.f.
$3,346
$1,020
6
Sin le Family Residential Property
DU
<=2,250 s.f.
$2,819
$860
7
Multi -family Residential Property
Acre
N/A
$47,492
$14,475
8
Non -Residential Property
Acre
N/A
$47,492
$14,475
b. Backup Special Tax A
When a Final Subdivision is recorded, the Backup Special Tax A for a Parcel
classified or to be classified as Single Family Residential Property within such Final
Subdivision shall be determined by multiplying the Undeveloped Property Maximum
Special Tax A rate per acre, as defined in Section C3 below, by the total Acreage of
Taxable Property within such Final Subdivision, excluding the Acreage associated
with Multi -Family Residential Property, Non -Residential Property, Public Property
and/or Property Owner's Association Property that is not Exempt Property pursuant
to Section E. and dividing such amount by the number of Parcels within such Final
Subdivision classified as either (i) Single Family Residential Property or
(ii) Approved Property for which a Building Permit is expected to be issued for
Single Family Residential Property (i.e., the number of residential lots).
Notwithstanding the forgoing, if Parcels classified or to be classified as Single
Family Residential Property are subsequently changed or modified by recordation of
a lot line adjustment or similar instrument, then the Backup Special Tax shall be
recalculated for the area that has been changed or modified using the methodology
described in the preceding paragraph.
The Backup Special Tax A shall not apply to Multi -Family Residential Property,
Non -Residential Property, Public Property, Property Owner's Association Property,
or Undeveloped Property.
C. Increase in the Maximum Special Tax
On each July 1, commencing on July 1, 2015, the Maximum Special Tax A,
calculated pursuant to Section C.1 above shall be increased by an amount equal to
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two percent (2%) of the amount in effect for the previous Fiscal Year. On each
July 1, commencing on July 1, 2015, the Maximum Special Tax B shall be increased
by an amount equal to two percent (2%) of the amount in effect for the previous
Fiscal Year.
d. Multiple Land Use Classes
In some instances an Assessor's Parcel of Developed Property may contain more
than one Land Use Class. The Maximum Special Tax levied on an Assessor's Parcel
shall be the sum of the Maximum Special Taxes for all Land Use Classes located on
that Assessor's Parcel.
2. Approved Property
a. Single Family Residential Property
The Fiscal Year 2014-2015 Maximum Special Tax A for each Parcel of Approved
Property expected to be classified as Single Family Residential Property shall be the
Backup Special Tax computed pursuant to Section C. Lb above.
The Fiscal Year 2014-2015 Maximum Special Tax B for each Parcel of Approved
Property expected to be classified as Single Family Residential Property shall be
$14,475 per acre.
b. Multi -family Residential Property and Non -Residential Property
The Fiscal Year 2014-2015 Maximum Special Tax A for each Parcel of Approved
Property expected to be classified as Multi -Family Residential Property and Non -
Residential Property shall be $47,492 per acre.
The Fiscal Year 2014-2015 Maximum Special Tax B for each Parcel of Approved
Property expected to be classified as Multi -Family Residential Property and Non -
Residential Property shall be $14,475 per acre.
C. Increase in the Maximum Special Tax A and Maximum Special Tax B
On each July 1, commencing on July 1, 2015, the Maximum Special Tax A for
Approved Property shall be increased by an amount equal to two percent (2%) of the
amount in effect for the previous Fiscal Year. On each July 1, commencing on
July 1, 2015, the Maximum Special Tax B for Approved Property shall be increased
by an amount equal to two percent (2%) of the amount in effect for the previous
Fiscal Year.
3. Undeveloped Property, Taxable Public Property, and Taxable Property Owner
Association Property
a. Maximum Special Tax A
The Fiscal Year 2014-2015 Maximum Special Tax A for Undeveloped Property,
Taxable Public Property, and Taxable Property Owner Association Property shall be
$47,492 per Acre.
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b. Maximum Special Tax B
The Fiscal Year 2014-2015 Maximum Special Tax B for Undeveloped Property,
Taxable Public Property, and Taxable Property Owner Association Property shall be
$14,475 per Acre.
C. Increase in the Maximum Special Tax A and Maximum Special Tax B
On each July 1, commencing on July 1, 2015, the Maximum Special Tax A for
Undeveloped Property, Taxable Public Property, and Taxable Property Owner
Association Property, shall be increased by an amount equal to two percent (2%) of
the amount in effect for the previous Fiscal Year. On each July 1, commencing on
July 1, 2015, the Maximum Special Tax B for Undeveloped Property, Taxable Public
Property, and Taxable Property Owner Association Property, shall be increased by an
amount equal to two percent (2%) of the amount in effect for the previous Fiscal
Year.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax A
Commencing Fiscal Year 2014-2015 and for each subsequent Fiscal Year, the Council or its
designee shall determine the Special Tax A Requirement for Facilities and shall levy the
Special Tax A until the total Special Tax A levy equals the Special Tax A Requirement for
Facilities. The Special Tax A shall be levied each Fiscal Year as follows:
First: The Annual Special Tax A shall be levied Proportionately on each Assessor's Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax A;
Second: If additional moneys are needed to satisfy the Special Tax A Requirement for
Facilities after the first step has been completed, the Annual Special Tax A shall be levied
Proportionately on each Assessor's Parcel of Approved Property at up to 100% of the
Maximum Special Tax A for Approved Property;
Third: If additional moneys are needed to satisfy the Special Tax A Requirement for
Facilities after the first step has been completed, the Annual Special Tax A shall be levied
Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the
Maximum Special Tax A for Undeveloped Property;
Fourth: If additional moneys are needed to satisfy the Special Tax A Requirement for
Facilities after the first three steps have been completed, the Special Tax A to be levied on
each Parcel of Developed Property for which the Maximum Special Tax A is derived by the
application of the Backup Special Tax A shall be increased in equal percentages from the
Assigned Special Tax A up to the Maximum Special Tax A for such Parcel;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities
after the first four steps have been completed, then the Annual Special Tax A shall be levied
Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property at
up to the Maximum Special Tax A for Taxable Property Owner Association Property;
Sixth : If additional moneys are needed to satisfy the Special Tax Requirement for Facilities
after the first five steps have been completed, then Special Tax A shall be levied
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Proportionately on each Assessor's Parcel of Taxable Public Property at up to the Maximum
Special Tax A for Taxable Public Property.
2. Special Tax B
Commencing with Fiscal Year 2014-2015 and for each following Fiscal Year, the Council or
its designee shall levy the Special Tax B until the total Special Tax B levy equals the Special
Tax B Requirement for Services. The Special Tax B shall be levied each Fiscal Year as
follows:
First: The Special Tax B shall be levied Proportionately on each Assessor's Parcel of
Developed Property at up to 100% of the applicable Maximum Special Tax B;
Second: If additional monies are needed to satisfy the Special Tax B Requirement for
Services after the first step has been completed, the Special Tax B shall be levied
Proportionately on each Assessor's Parcel of Approved Property at up to 100% of the
Maximum Special Tax B for Approved Property.
Third: If additional monies are needed to satisfy the Special Tax B Requirement for Services
after the first two steps have been completed, the Special Tax B shall be levied
Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the
Maximum Special Tax B for Undeveloped Property.
E. EXEMPTIONS
1. Special Tax A
No Special Tax A shall be levied on up to 46.57 Acres of Public Property and/or, Property Owner
Association Property in the chronological order in which property becomes Public Property and
Property Owner Association Property. However, should an Assessor's Parcel no longer be classified
as Public Property or Property Owner Association Property, its tax-exempt status will be revoked as
determined by the CFD Administrator.
Property Owner Association Property or Public Property that is not exempt from the Special Tax A
under this section shall be subject to the levy of the Special Tax A and shall be taxed Proportionately
as part of the fifth and sixth steps in Section D.1 as determined by the CFD Administrator.
2. Special Tax B
No Special Tax B shall be levied on Public Property or Property Owner Association Property.
F. APPEALS AND INTERPRETATIONS
Any landowner or resident who feels that the amount of the Special Tax levied on such landowner's or
resident's Assessor's Parcel is in error may submit a written appeal to CFD No. 2014-1. The CFD
Administrator shall review the appeal and if the CFD Administrator concurs and the Special Tax is to
be modified in favor of the Property owner or resident of the Assessor's Parcel, no cash refund shall
be made for prior years' Special Tax levies, but an adjustment shall be made to the next Special Tax
levy(ies).
The Council may interpret this Rate and Method of Apportionment of Special Tax for purposes of
clarifying any ambiguity and make determinations relative to the amount of Administrative Expenses.
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G. MANNER OF COLLECTION
Special Tax A and Special Tax B will be collected in the same manner as ordinary ad valorem
property taxes or in such other manner as the Council shall determine, including direct billing of the
affected property owners.
H. PREPAYMENT OF SPECIAL TAX A
The following additional definitions apply to this Section H:
"Build -out" means, for CFD No. 2014-1, that all expected Building Permits for the Assessors Parcels
in CFD No. 2014-1 have been issued.
"CFD Public Facilities" means either $26,000,000 in 2014 dollars, which shall increase by the
Construction Inflation Index on July 1, 2015, and on each July 1 thereafter, or such lower number as
(i) shall be determined by the CFD Administrator as sufficient to provide the Authorized Facilities, or
(ii) shall be determined by the City Council concurrently with a covenant that it will not issue any
more Bonds (except refunding bonds) to be supported by the Special Tax A levy under this Rate and
Method of Apportionment as described in Section D.1 above.
"Construction Inflation Index" means the annual percentage change in the Engineering News
Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends
in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation
Index shall be another index as determined by the CFD Administrator that is reasonably comparable to
the Engineering News Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs previously
paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund, and
(iii) moneys currently on deposit in an escrow fund that are expected to be available to finance the
cost of CFD Public Facilities.
"Improvement Fund" means an account specifically identified in the Indenture to hold funds which
are currently available for expenditure to acquire or construct Authorized Facilities.
"Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are deemed to be
outstanding under the Indenture after the first interest and/or principal payment date following the
current Fiscal Year.
1. Prepayment in Full
Only an Assessor's Parcel of Developed Property, or Taxable Property Owner Association
Property, Taxable Public Property or Approved Property for which a building permit has been
issued, may prepay Special Tax A. The obligation of the Assessor's Parcel to pay the Special
Tax A may be permanently satisfied as described herein, provided that a prepayment may be
made with respect to a particular Assessor's Parcel only if there are no delinquent Special
Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an
Assessor's Parcel intending to prepay the Special Tax A obligation shall provide the CFD
Administrator with written notice of intent to prepay. Within 30 days of receipt of such
written notice, the CFD Administrator shall notify such owner of the prepayment amount for
such Assessor's Parcel. The CFD Administrator may charge the owner prepaying Special
Tax A a reasonable fee for providing this service. Prepayment must be made not less than 45
days prior to the next occurring date that notice of redemption of CFD No. 2014-1 Bonds
from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture.
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The Special Tax B may not be prepaid.
The Special Tax A Prepayment Amount (defined below) shall be calculated as summarized below
(capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Special Tax A Prepayment Amount
As of the proposed date of prepayment, the Special Tax A Prepayment Amount shall be
calculated as follows:
Paragraph No.:
Confirm that no Special Tax delinquencies apply to such Assessor's Parcel.
2. For Assessor's Parcels of Developed Property, Taxable Property Owner Association Property,
or Taxable Public Property for which a Building Permit has been issued, compute the
Maximum Special Tax A for the current Fiscal Year applicable for the Assessor's Parcel to be
prepaid. For Assessor's Parcels of Approved Property for which a building permit has been
issued, compute the Maximum Special Tax A for the current Fiscal Year applicable for that
Assessor's Parcel as though it was already designated as Developed Property, based upon the
building permit which has already been issued for that Assessor's Parcel.
3. Divide the Maximum Special Tax A computed pursuant to paragraph 2 by the total estimated
Maximum Special Tax A for the entire CFD No. 2014-1 based on the Developed Property
Special Tax A which could be levied in the current Fiscal Year on all expected development
through Build -out of CFD No. 2014-1, excluding any Assessor's Parcels which have been
prepaid.
4. Multiply the quotient computed pursuant to paragraph 3 by the Previously Issued Bonds to
compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond
Redemption Amount").
Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable
redemption premium (e.g., the redemption price-100%), if any, on the Previously Issued
Bonds to be redeemed (the "Redemption Premium").
Compute the current Future Facilities Costs.
Multiply the quotient computed pursuant to paragraph 3 by the amount determined pursuant
to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future
Facilities Amount").
Compute the amount needed to pay interest on the Bond Redemption Amount from the first
bond interest and/or principal payment date following the current Fiscal Year until the earliest
redemption date for the Previously Issued Bonds.
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9. Determine any Special Tax A levied on the Assessor's Parcel in the current Fiscal Year which
has not yet been paid.
10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the
reinvestment of the Special Tax A Prepayment Amount less the Future Facilities Amount and
the Administrative Fees and Expenses (defined below) from the date of prepayment until the
redemption date for the Previously Issued Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed
pursuant to paragraph 10 (the "Defeasance Amount").
12. The administrative fees and expenses of CFD No. 2014-1 are as calculated by the CFD
Administrator and include the costs of computation of the prepayment, the costs to invest the
prepayment proceeds, the costs of redeeming CFD No.2014-1 Bonds, and the costs of
recording any notices to evidence the prepayment and the redemption (the "Administrative
Fees and Expenses").
13. If reserve funds for the Previously Issued Bonds, if any, are at or above 100% of the reserve
requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall
be calculated as a reduction in the applicable reserve fund for the Previously Issued Bonds to
be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). No Reserve Fund
Credit shall be granted if reserve funds are below 100% of the reserve requirement.
14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of
the date immediately following the first interest and/or principal payment following the
current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient
computed pursuant to paragraph 3 by the expected balance in the capitalized interest fund or
account under the Indenture after such first interest and/or principal payment (the
"Capitalized Interest Credit").
15. The Special Tax A prepayment is equal to the sum of the amounts computed pursuant to
paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14
(the "Special Tax A Prepayment Amount").
From the Special Tax for Facilities Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the
Indenture and be used to retire Previously Issued Bonds or make debt service payments. The amount
computed pursuant to paragraph 7 shall be deposited into the Improvement Fund. The amount
computed pursuant to paragraph 12 shall be retained by the CFD Administrator.
The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full $5,000
increment of Previously Issued Bonds. In such cases, the increment above $5,000 or integral multiple
thereof will be retained in the appropriate fund established under the Indenture to be used with the
next prepayment of Previously Issued Bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year's Special Tax A levy as determined under
paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax A
levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that
is prepaid, the City Council shall cause a suitable notice to be recorded in compliance with the Act, to
indicate the prepayment of the Special Tax A and the release of the Special Tax A lien on such
Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax A shall cease.
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Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless, at the time of
such proposed prepayment, the amount of Maximum Special Tax A that may be levied on Taxable
Property within CFD No. 2014-1 (after excluding Public Property and Property Owner Association
Property as set forth in Section E) both prior to and after the proposed prepayment is at least 1.1 times
the maximum annual debt service on all Previously Issued Bonds, plus the estimated annual
Administration Expenses.
Prepayment in Part
The Special Tax A on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Taxable
Property Owner Association Property, Taxable Public Property, or Undeveloped Property for which a
building permit has been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section 1.1; except that a partial prepayment shall be calculated according to the
following formula:
PP = ((PE -A) X F) + A
These terms have the following meaning:
PP = the partial prepayment
PE = the Special Tax A Prepayment Amount calculated according to Section 1.1
F = the percentage, expressed as a decimal, by which the owner of the Assessor's Parcel is
partially prepaying the Special Tax A.
A = Administrative Fees and Expenses
The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator
of such owner's intent to partially prepay the Special Tax A and the percentage by which the Special
Tax A shall be prepaid. The CFD Administrator shall provide the owner with a statement of the
amount required for the partial prepayment of the Special Tax A for an Assessor's Parcel within
30 days of the request and may charge a reasonable fee for providing this service. With respect to any
Assessor's Parcel that is partially prepaid, the Council shall (i) distribute the funds remitted to it
according to Section 1.1, and (ii) indicate in the records of CFD No. 2014-1 that there has been a
partial prepayment of the Special Tax A and that a portion of the Special Tax A with respect to such
Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special
Tax A, shall continue to be levied on such Assessor's Parcel pursuant to Section D.
Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless, at the time of
such proposed prepayment, the amount of Maximum Special Tax A that may be levied on Taxable
Property within CFD No. 2014-1 (after excluding Public Property and Property Owner Association
Property as set forth in Section E)both prior to and after the proposed prepayment is at least 1.1 times
the maximum annual debt service on all Previously Issued Bonds, plus the cost of annual CFD
administration.
I. TERM OF SPECIAL TAX
The Special Tax A shall be levied for a period not to exceed forty years commencing with Fiscal Year 2014-
2015. The Special Tax B shall be levied as long as necessary to meet the Special Tax B Requirement for
Services.
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APPENDIX E
FORM OF BOND COUNSEL OPINION
, 2025
Tustin Financing Authority
Tustin, California
Re: $ Tustin Financing Authority Special Tax Revenue Refunding Bonds, Series 2025
Ladies and Gentlemen:
We have examined the Constitution and the laws of the State of California, a certified record of the
proceedings of the Tustin Financing Authority (the "Authority") taken in connection with the issuance by the
Authority of its Tustin Financing Authority Special Tax Revenue Refunding Bonds, Series 2025 (the "Bonds")
and such other information and documents as we consider necessary to render this opinion.
In rendering this opinion, we have relied upon certain representations and certifications of fact made
by the Authority, the Community Facilities Districts, the initial purchaser of the Bonds and others and opinions
of counsel to the Authority and the Community Facilities Districts. We have not undertaken to verify through
independent investigation the accuracy of the representations and certifications relied upon by us.
The Bonds have been issued pursuant to the Marks Roos Local Bond Pooling Act of 1985, as
amended (Article 4 of Chapter 5 of Division 7 of Title I of the California Government Code) (the "Act"), that
certain Indenture of Trust dated as of [June] 1, 2025 (the "Indenture"), by and between the Authority and The
Bank of New York Mellon Trust Company, N.A., as Trustee, and an authorizing resolution adopted by the
Board of Directors of the Authority (the "Board") on [May 20], 2025 (the "Resolution"). Capitalized terms not
defined herein shall have the meaning set forth in the Indenture.
We have assumed the genuineness of all documents and signatures presented to us, the authenticity of
documents submitted as originals and the conformity to originals of documents submitted as copies. We have
not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented,
warranted or certified in the documents, and of the legal conclusions contained in the opinions referred to in
the preceding paragraphs of this opinion. Furthermore, we have assumed compliance with all covenants and
agreements contained in the Bonds and the Indenture.
We call attention to the fact that the rights and obligations under the Bonds and the Indenture may be
limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other
laws relating to or affecting creditors' rights, by the application of equitable principles and the exercise of
judicial discretion in appropriate cases and by the limitations on legal remedies against public agencies in the
State of California.
Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we
deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:
(1) The Bonds have been duly and validly authorized by the Authority and are legal,
valid and binding limited obligations of the Authority, enforceable in accordance with their terms and
the terms of the Indenture.
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(2) The Indenture has been duly executed and delivered by the Authority. The Indenture
creates a valid pledge of the Revenues to secure the Bonds and the amounts on deposit in certain funds
and accounts established under the Indenture to secure the Bonds, as and to the extent provided in the
Indenture. The Indenture constitutes the valid and binding agreement of the Authority and is
enforceable in accordance with its terms.
(3) Under existing statutes, regulations, rulings and judicial decisions, and assuming the
accuracy of certain representations and compliance with certain covenants and requirements described
herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal
income tax purposes and is not an item of tax preference for purposes of calculating the federal
alternative minimum tax imposed on individuals; however, it should be noted that with respect to
applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended
(the "Code"), interest (and original issue discount) with respect to the Bonds might be taken into
account in determining adjusted financial statement income for the purposes of computing the
alternative minimum tax imposed on such corporations.
(4) Interest (and original issue discount) on the Bonds is exempt from State of
California personal income tax.
(5) The difference between the issue price of a Bond (the first price at which a
substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption
price at maturity with respect to such Bonds (to the extent the redemption price at maturity is greater
than the issue price) constitutes original issue discount. Original issue discount accrues under a
constant yield method, and original issue discount will accrue to a Bond owner before receipt of cash
attributable to such excludable income. The amount of original issue discount deemed received by a
Bond owner will increase the Bond owner's basis in the applicable Bond.
(6) The amount by which a Bond owner's original basis for determining loss on sale or
exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on
maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized
under Section 171 of the Code; such amortizable Bond premium reduces the Bond owner's basis in
the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal
income tax purposes. The basis reduction as a result of the amortization of Bond premium may result
in a Bond owner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or
less (under certain circumstances) than the original cost of the Bond to the owner. Purchasers of the
Bonds should consult their own tax advisors as to the treatment, computation and collateral
consequences of amortizable Bond premium.
The opinions expressed herein as to the exclusion from gross income for federal income tax purposes
of interest (and original issue discount) on the Bonds are based upon certain representations of fact and
certifications made by the Authority, the City and the Community Facilities Districts and are subject to the
condition that the Authority, the City and the Community Facilities Districts comply with all requirements of
the Code that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and
original issue discount) will not become includable in gross income for federal income tax purposes. Failure to
comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to
be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds.
The Authority, the City and the Community Facilities Districts each has covenanted to comply with all such
requirements. Except as set forth in paragraphs (3) through (6) above, we express no opinion as to any tax
consequences related to the Bonds.
Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate and
the Local Obligation Bond Indentures 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
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approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no
opinion herein as to the effect on the exclusion from gross income for federal income tax purposes of interest
(and original issue discount) on any Bond if any such change occurs or action is taken or omitted upon the
advice or approval of counsel other than Stradling Yocca Carlson & Rauth LLP.
It is possible that subsequent to the issuance of the Bonds there might be federal, state, or local
statutory changes (or judicial or regulatory interpretations of federal, state, or local law) that affect the federal,
state, or local tax treatment of the Bonds or the market value of the Bonds. No assurance can be given that
subsequent to the issuance of the Bonds such changes or interpretations will not occur.
Our opinion is limited to matters governed by the laws of the State of California and federal income
tax law. We assume no responsibility with respect to the applicability or the effect of the laws of any other
jurisdiction. The opinions expressed herein are based upon our analysis and interpretation of existing laws,
regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities.
By delivering this opinion, we are not expressing any opinion with respect to any indemnification,
contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-
off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of
remedies, waiver or severability provisions contained in the Bonds or the Indenture, nor are we expressing any
opinion with respect to the state or quality of title to or interest in any assets described in or as subject to the
lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies
available to enforce liens on any assets thereunder.
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or
not occurring) after the date hereof. Our engagement as Bond Counsel terminates upon the issuance of the
Bonds and we have not undertaken to determine, or to inform any person, whether any such actions or events
are taken (or not taken) or do occur (or do not occur).
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official
Statement relating to the Bonds or other offering material relating to the Bonds and expressly disclaim any
duty to advise the owners of the Bonds with respect to matters contained in the Official Statement and any
other offering material relating to the Bonds.
Respectfully submitted,
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT ("Disclosure Agreement"), dated as of [June] 1,
2025, is executed and delivered by the TUSTIN FINANCING AUTHORITY (the "Issuer"), and Webb
Municipal Finance, LLC, as Dissemination Agent (the "Dissemination Agent") in connection with the issuance
of $ aggregate principal amount the Tustin Financing Authority Special Tax Revenue Refunding
Bonds, Series 2025 (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of
[June] 1, 2025 (the "Indenture"), by and between The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee"), and the Issuer. The proceeds of the Bonds will be used to acquire the Local
Obligations (as defined below). The Issuer and the Dissemination Agent covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Issuer for the benefit of the Owners and Beneficial Owners of the Bonds and in order to
assist the Participating Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange
Commission.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to
any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described
in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income
purposes.
"Community Facilities District No. 06-1" means City of Tustin Community Facilities District No. 06-
1 (Tustin Legacy/Columbus Villages), a community facilities district formed pursuant to the CFD Act.
"Community Facilities District No. 2014-1" means City of Tustin Community Facilities District No.
2014-1 (Tustin Legacy/Standard Pacific), a community facilities district formed pursuant to the CFD Act.
"Disclosure Representative" shall mean the Executive Director of the Issuer, or his or her designee, or
such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to
time.
"Dissemination Agent" shall mean Webb Municipal Finance, LLC, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Issuer and
which has filed with the Trustee and the Issuer a written acceptance of such designation.
"EMMA" shall mean the Electronic Municipal Market Access system of the MSRB.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to
Section 1513(b)(1) of the Securities Exchange Act of 1934 and any successor entity designated under the Rule
as the repository for filings made pursuant to Section 15B(b)(2) of the Securities Exchange Act of 1934.
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"Official Statement" shall mean that certain Official Statement for the Bonds dated , 2025.
"Owners" shall mean the registered owners of the Bonds as set forth in the registration books
maintained by the Trustee.
"Participating Underwriter" shall mean the original underwriter of the Bonds required to comply with
the Rule in connection with offering of the Bonds.
"Repository" shall mean the Electronic Municipal Market Access System of the Municipal Securities
Rulemaking Board, which can be found at www.emma.msrb.org, any other repository of disclosure
information that may be designated by the Securities and Exchange Commission in the future.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean the State of California.
"Community Facilities District" means any one of Community Facilities District No.06-1 or
Community Facilities District No. 2014-1.
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or upon written direction shall cause the Dissemination Agent to, not later
than the April 1 following the end of the Issuer's Fiscal Year (June 30) commencing with the report due by
April 1, 2026, provide to the Repository, in an electronic format and accompanied by identifying information
as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this
Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4 of this
Disclosure Agreement; provided that the audited financial statements of the City, if any exist, may be
submitted separately from the balance of the Annual Report and later than the date required above for the filing
of the Annual Report if they are not available by that date. If the Issuer's fiscal year changes, the Issuer shall
give notice of such change in the same manner as for a Listed Event under Section 5(a). The Issuer shall
provide a written certification with each Annual Report furnished to the Dissemination Agent and the Trustee
to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder.
The Dissemination Agent and Trustee may conclusively rely upon such certification of the Issuer and shall
have no duty or obligation to review such Annual Report.
(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for
providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the
Dissemination Agent. If by fifteen (15) Business Days prior to such date, the Dissemination Agent has not
received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to inquire if the Issuer
is in compliance with subsection (a).
(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the
Repository by the date required in subsection (a), the Dissemination Agent in a timely manner shall send a
notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to date for providing the Annual Report the name and
address of the Repository; and
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(ii) file a report with the Issuer certifying that the Annual Report has been provided
pursuant to this Disclosure Agreement, stating the date it was provided and listing the Repository(ies)
to which it was provided.
Section 4. Content of Annual Reports. The Annual Report shall contain or include by reference
the following:
(a) The audited financial statements of the City for the prior fiscal year, if any have been
prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles
as promulgated to apply to governmental entities from time to time by the Governmental Accounting
Standards Board. If the City is preparing audited financial statements and such audited financial statements are
not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the audited
financial statements may be submitted separately from the balance of the Annual Report and later than the date
required above for the filing of the Annual Report if such audited financial statements are not available by the
date required for filing the Annual Report.
(b) The Annual Report shall contain or incorporate by reference the following:
(i) the principal amount of the Bonds and each series of Local Obligations outstanding
as of the September 2 preceding the filing of the Annual Report;
(ii) the balance in each fund and account under the Indenture and each Local Obligation
Indenture, the Reserve Requirement and the Proportionate Share for each Reserve Account as of the
September 30 preceding the filing of the Annual Report;
(iii) any changes to the Rates and Methods of Apportionment of the Special Taxes
approved or submitted to the qualified electors for approval prior to the filing of the Annual Report
and a description of any parcels for which the Special Taxes have been prepaid in the Fiscal Year for
which the Annual Report is being prepared for each Community Facilities District;
(iv) an update to the aggregate assessed value -to -lien ratios of all the Taxable Property in
the Community Facilities Districts based upon the most recent Special Tax levy preceding the date of
the Annual Report and the assessed values of property for current fiscal year, in substantially the form
of Table 4 in the Official Statement;
(v) an update to the total Special Tax levy and the Special Tax levy of the top 10
taxpayers in each of the Community Facilities Districts for the current fiscal year, in substantially the
form of Table 6 in the Official Statement;
(vi) an update to the value -to -lien stratification in each of the Community Facilities
Districts, in substantially the forms of Table A-2 and A-9 in the Official Statement;
(vii) the assessed values within each of the Community Facilities Districts in the current
fiscal year, in substantially the forms of Tables A-4 and A -I I in the Official Statement;
(viii) information regarding the Special Tax delinquencies within each of the Community
Facilities Districts for the most recently completed fiscal year and, if available, for the first installment
of the Special Tax due in the current fiscal year, in substantially the forms of Tables A-5 and A-12 in
the Official Statement;
(ix) the status of any foreclosure actions being pursued by the Community Facilities
Districts within the Community Facilities Districts with respect to delinquent Special Taxes;
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(x) any changes with respect to the inclusion or exclusion of the Community Facilities
Districts in the County's Teeter Plan; and
(xi) any information not already included under (i) through (vii) above that the Issuer is
required to file in its annual report to the California Debt and Investment Advisory Commission
pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982, as amended.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the Issuer or related public entities, which have been submitted
to the Repository. If the document included by reference is a final official statement, it must be available from
the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so
included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the Dissemination
Agent to give, notice of the occurrence of any of the following events with respect to the Bonds in a timely
manner not more than ten (10) business days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or
final determinations of taxability or of a Notice of Proposed Issue (IRS Form
5701-TEB);
6. tender offers;
7. defeasances;
8. ratings changes;
9. bankruptcy, insolvency, receivership or similar proceedings; and
Note: for the purposes of the event identified in subparagraph (9), the event is considered to
occur when any of the following occur: the appointment of a receiver, fiscal agent or similar
officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the obligated person, or
if such jurisdiction has been assumed by leaving the existing governmental body and officials
or officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement or
liquidation by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the obligated person.
10. default, event of acceleration, termination event, modification of terms, or other
similar events under the terms of a financial obligation of the obligated person, any of which
reflect financial difficulties.
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(b) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice
of the occurrence of any of the following events with respect to the Bonds, if material:
1. unless described in paragraph 5(a)(5) above, notices or determinations by the Internal
Revenue Service with respect to the tax status of the Bonds or other material events
affecting the tax status of the Bonds;
2. the consummation of a merger, consolidation or acquisition involving an obligated
person or the sale of all or substantially all of the assets of the obligated person, other
than in the ordinary course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive agreement relating to any
such actions, other than pursuant to its terms;
3. appointment of a successor or additional trustee or the change of the name of a
trustee;
4. nonpayment related defaults;
5. modifications to the rights of Owners of the Bonds;
6. bond calls;
7. release, substitution or sale of property securing repayment of the Bonds; and
8. incurrence of a financial obligation of the obligated person, or agreement to
covenants, events of default, remedies, priority rights, or other similar terms of a
financial obligation of the obligated person, any of which affect Owners of the
Bonds.
(c) In the event of the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as
soon as possible determine if such event would be material under applicable federal securities laws.
(d) If the Issuer determines that knowledge of the occurrence of a Listed Event under
Section 5(b) would be material under applicable federal securities laws, the Issuer shall file, or cause the
Dissemination Agent to file, a notice of such occurrence with the Repository in a timely manner not more than
10 business days after the event.
(e) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the
responsibility of the Issuer and that the Dissemination Agent, if other than the Issuer, shall not be responsible
for determining whether the Issuer's instructions to the Dissemination Agent under this Section 5 comply with
the requirements of the Rule.
(f) For purposes of the events identified in subparagraphs (a)(10) and (b)(8) under this Section 5,
the term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection
with, or pledged as security or a source of payment for, an existing or planned debt obligation; or
(iii) guarantee of (i) or (ii). The term financial obligation shall not include obligations as to which a final
official statement has been provided to the MSRB consistent with the Rule.
Section 6. Format for Filings with the MSRB. Any report or filing with the MSRB pursuant to
this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying
information as is prescribed by the MSRB.
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Section 7. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure
Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.
If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such
termination in the same manner as for a Listed Event under Section 5(a).
Section 8. Dissemination Agent. The Issuer may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out is obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The
Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by
the Issuer pursuant to this Disclosure Agreement. If at any time there is not any other designated
Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be
Webb Municipal Finance, LLC. The Dissemination Agent may resign by providing thirty (30) days written
notice to the Issuer and the Trustee.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Issuer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement
may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver related to the provisions of Sections 3(a), 4, or 5, it may only be
made in connection with a change in circumstances that arises from a change in legal requirements, change in
law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of
business conducted;
(b) The undertaking hereunder, as amended or taking into account such waiver, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of
the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as
well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same
manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does
not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or
Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall
describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation
of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting
principles, on the presentation) of financial information or operating data being presented by the Issuer. In
addition, if the amendment related to the accounting principles to be followed in preparing financial
statements, (i) notice of such change shall be given in the same manner as for a Listed Event under
Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison
(in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on
the basis of the new accounting principles and those prepared on the basis of the formed accounting principles.
Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this
Disclosure Agreement or any other means of communication, or including any other information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement,
the Issuer shall have no obligation under this Agreement to update such information or include it in any future
Annual Report or notice of occurrence of a Listed Event.
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Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this
Disclosure Agreement, the Trustee at the written direction of any Participating Underwriter or the Owners of at
least 25% aggregate principal amount of Outstanding Bonds, shall, or any Owner or Beneficial Owner of the
Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Issuer to comply with its obligations under this Disclosure
Agreement, but only to the extent funds have been provided to it or it has been otherwise indemnified to its
satisfaction from any cost, liability, expense or additional charges of the Trustee whatsoever, including,
without limitation, fees and expenses of its attorney. A default under this Disclosure Agreement shall not be
deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement shall
be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer
agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents,
harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of
defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence
or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of
the Dissemination Agent and payment of the Bonds.
Section 13. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
Issuer: Tustin Financing Authority
c/o City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Dissemination Agent: Webb Municipal Finance, LLC
3788 McCray St.
Riverside CA, 92506
Any person may, by written notice to the other persons listed above, designate a different address or
telephone number(s) to which subsequent notice or communications should be sent.
Section 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Issuer, the Trustee, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners
from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 15. Counterparts. This Disclosure Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument.
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Section 16. Governing Law. This Disclosure Agreement shall be construed and governed in
accordance with the laws of the State of California.
TUSTIN FINANCING AUTHORITY
Executive Director
WEBB MUNICIPAL FINANCE, LLC, as Dissemination
Agent
Authorized Representative
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EXHIBIT A
NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: TUSTIN FINANCING AUTHORITY
Name of Bond Issue: $ TUSTIN FINANCING AUTHORITY SPECIAL TAX REVENUE
REFUNDING BONDS, SERIES 2025
Date of Issuance: _'2025
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the
above -named Bonds as required by the Continuing Disclosure Agreement dated as of [June] 1, 2025, by and
between the Issuer and Webb Municipal Finance, LLC, as dissemination agent. The Issuer anticipated that the
Annual Report will be filed by
Dated:
[DISSEMINATION AGENT],
as Dissemination Agent on behalf of
Tustin Financing Authority
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APPENDIX G
DTC AND THE BOOK -ENTRY -ONLY SYSTEM
The information in this section concerning DTC and DTC's book -entry only system has been obtained
from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the
completeness or accuracy thereof. The following description of the procedures and record keeping with
respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value
and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial
ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and
the Beneficial Owners is based solely on information provided by DTC to the Authority which the Authority
believes to be reliable, but the Authority and the Underwriters do not and cannot make any independent
representations concerning these matters and do not take responsibility for the accuracy or completeness
thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on
the foregoing information with respect to such matters, but should instead confirm the same with DTC or the
DTC Participants, as the case may be.
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for
the Bonds. The Bonds will be issued as fully -registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC.
One fully -registered Bond will be issued for each annual maturity of the Bonds, each in the aggregate principal
amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world's largest securities depository, is a limited -purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "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. DTC holds and provides asset servicing for over 3.5 million issues of U.S.
and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over
100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post
trade settlement among Direct Participants of sales and other securities transactions in deposited securities,
through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This
eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its
regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain
a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC
has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Such
website is not incorporated herein by such reference.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each
Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are,
however, expected to receive written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries
made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial
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Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of
the book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered
in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an
authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of
Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be
in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the
transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders,
defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may
wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices
to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to
the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the Community Facilities Districts as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede &
Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to
credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from
the Community Facilities Districts or the Trustee, on payable date in accordance with their respective holdings
shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the
Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the responsibility of the Community
Facilities Districts or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility
of Direct and Indirect Participants.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer
the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for physical
delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied
when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed
by a book -entry credit of tendered Bonds to the Trustee's DTC account.
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DTC may discontinue providing its services as depository with respect to the Bonds at any time by
giving reasonable notice to the Community Facilities Districts or the Trustee. Under such circumstances, in
the event that a successor depository is not obtained, physical certificates are required to be printed and
delivered.
The Community Facilities Districts may decide to discontinue use of the system of book -entry only
transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and
delivered to DTC.
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APPENDIX H
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
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Stradling Draft of 04-25-25
INDENTURE OF TRUST
by and between
TUSTIN FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Dated as of June 1, 2025
TUSTIN FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS, SERIES 2025
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section1.1 Definitions..................................................................................................................2
Section 1.2 Rules of Construction............................................................................................... 13
Section 1.3 Authorization and Purpose of Bonds....................................................................... 13
Section1.4 Equal Security.......................................................................................................... 13
ARTICLE 11
ISSUANCE OF BONDS
Section2.1
Terms of Bonds........................................................................................................
13
Section 2.2
Redemption of Bonds...............................................................................................
15
Section2.3
Form of Bonds.........................................................................................................
17
Section 2.4
Execution of Bonds..................................................................................................
17
Section 2.5
Transfer of Bonds.....................................................................................................
18
Section 2.6
Exchange of Bonds..................................................................................................
18
Section 2.7
Temporary Bonds.....................................................................................................
18
Section2.8
Bond Register...........................................................................................................
19
Section 2.9
Bonds Mutilated, Lost, Destroyed or Stolen............................................................
19
Section2.10
Book -Entry System..................................................................................................
19
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
Section3.1 Issuance of Bonds........................................................................................
Section 3.2 Application of Proceeds of Sale of 2025 Bonds and Funds Received from
the Community Facilities Districts..............................................................
Section3.3
Revenue Fund..............................................................................................
Section 3.4
Costs of Issuance Fund................................................................................
Section3.5
Purchase Fund..............................................................................................
Section3.6
Reserve Fund...............................................................................................
Section3.7
Rebate Fund.................................................................................................
Section3.8
Surplus Fund................................................................................................
Section 3.9
Administrative Expense Fund......................................................................
Section 3.10
Validity of Bonds.........................................................................................
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.1
Pledge of Revenues; Assignment of Rights ...............................
Section 4.2
Receipt, Deposit and Application of Revenues; Revenue Fund
Section 4.3
Reserve Fund.............................................................................
Section4.4
Surplus Fund..............................................................................
Section4.5
Investments................................................................................
Section 4.6
Valuation and Disposition of Investments .................................
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21
22
22
22
22
22
22
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23
24
25
27
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TABLE OF CONTENTS
(continued)
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ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.1
Punctual Payment.....................................................................................................
29
Section 5.2
Extension of Payment of Bonds...............................................................................
29
Section 5.3
Against Encumbrances.............................................................................................
29
Section 5.4
Power to Issue Bonds and Make Pledge and Assignment .......................................
30
Section 5.5
Accounting Records and Financial Statements........................................................
30
Section 5.6
Conditions to Issuance of Additional Obligations...................................................
30
Section5.7
Tax Covenants.........................................................................................................
31
Section5.8
Rebate Fund.............................................................................................................
32
Section 5.9
Local Obligations.....................................................................................................
34
Section 5.10
Sale of Local Obligations.........................................................................................
35
Section 5.11
Continuing Disclosure Agreement...........................................................................
36
Section 5.12
Further Assurances...................................................................................................
36
Section 5.13
Pledged Revenues....................................................................................................
36
ARTICLE VI
THE TRUSTEE
Section 6.1
Appointment of Trustee...........................................................................................
36
Section 6.2
Acceptance of Trusts................................................................................................
36
Section 6.3
Fees, Charges and Expenses of Trustee...................................................................
40
Section 6.4
Notice to Bond Owners of Default..........................................................................
40
Section 6.5
Intervention by Trustee............................................................................................
40
Section 6.6
Removal of Trustee..................................................................................................
41
Section 6.7
Resignation by Trustee.............................................................................................
41
Section 6.8
Appointment of Successor Trustee..........................................................................
41
Section 6.9
Merger or Consolidation..........................................................................................
41
Section 6.10
Concerning any Successor Trustee..........................................................................
42
Section 6.11
Appointment of Co-Trustee.....................................................................................
42
Section 6.12
Indemnification; Limited Liability of Trustee.........................................................
42
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.1 Amendment Hereof..................................................................................................43
Section 7.2 Effect of Supplemental Indenture............................................................................ 44
Section 7.3 Endorsement or Replacement of Bonds After Amendment ..................................... 44
Section 7.4 Amendment by Mutual Consent.............................................................................. 44
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 8.1 Events of Default..................................................................................................... 45
Section 8.2 Remedies; Rights of Bond Owners..........................................................................45
Section 8.3 Application of Revenues and Other Funds After Event of Default ......................... 46
Section 8.4 Control by Bond Insurer Upon Default.................................................................... 46
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Section 8.5 Appointment of Receivers....................................................................................... 47
Section8.6 Non Waiver..............................................................................................................47
Section 8.7 Rights and Remedies of Bond Owners.................................................................... 47
Section 8.8 Termination of Proceedings..................................................................................... 47
ARTICLE IX
MISCELLANEOUS
Section 9.1
Limited Liability of Authority.................................................................................
48
Section 9.2
Benefits of Indenture Limited to Parties..................................................................
48
Section 9.3
Discharge of Indenture.............................................................................................48
Section 9.4
Successor is Deemed Included in All References to Predecessor ............................49
Section 9.5
Content of Certificates.............................................................................................
50
Section 9.6
Execution of Documents by Bond Owners..............................................................
50
Section 9.7
Disqualified Bonds...................................................................................................
50
Section 9.8
Waiver of Personal Liability....................................................................................
51
Section 9.9
Entire Agreement; Partial Invalidity........................................................................
51
Section 9.10
Destruction of Cancelled Bonds..............................................................................
51
Section 9.11
Funds and Accounts.................................................................................................
51
Section9.12
Notices.....................................................................................................................
52
Section9.13
Unclaimed Moneys..................................................................................................
52
Section 9.14
Payment Due on Other than a Business Day...........................................................
53
Section9.15
Governing Law........................................................................................................
53
ARTICLE X
[MUNICIPAL BOND INSURANCE POLICY AND RESERVE SURETY BOND]
SignaturePage................................................................................................................................ S-1
Exhibit A Form of Series 2025 Bonds....................................................................................A-1
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this "Indenture"), dated as of June 1, 2025, by and between
the TUSTIN FINANCING AUTHORITY, a joint powers authority organized and existing under the
laws of the State of California (the "Authority") and THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., a national banking association organized and existing under the laws of
the United States of America (the "Trustee");
WITNESSETH:
WHEREAS, the Authority is a joint exercise of powers authority duly organized and existing
under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of
Division 7 of Title 1 of the Government Code of the State of California (the "Act"), and is authorized
pursuant to Article 4 of the Act to borrow money for the purpose of financing the acquisition of
bonds, notes and other obligations to provide financing and refinancing for capital improvements of
member entities of the Authority and other local agencies; and
WHEREAS, each of the Community Facilities Districts (as defined herein) has previously
issued a series of Prior Bonds (as defined herein) to finance certain improvements and facilities
and/or refund certain special tax bonds of the Community Facilities Districts; and
WHEREAS, the Authority has determined to issue its Special Tax Revenue Refunding
Bonds, Series 2025 (the "2025 Bonds") in the aggregate principal amount of $ for the primary
purpose of acquiring special tax refunding bonds of each of the aforesaid Community Facilities
Districts, the proceeds of which will be utilized to defease and refund the Prior Bonds; and
WHEREAS, the 2025 Bonds will be issued pursuant to and secured by this Indenture in the
manner provided herein; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish
and declare the terms and conditions upon which the Bonds are to be issued and to secure the
payment of the principal thereof and interest thereon, the Authority has authorized the execution and
delivery of this Indenture; and
WHEREAS, the Authority hereby certifies that all acts and proceedings required by law
necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the
Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to
constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in
accordance with its terms, have been done and taken, and the execution and delivery of the Indenture
have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and
Outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the terms
and conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase and
acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt and
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sufficiency of which is hereby acknowledged, the Authority does hereby covenant and agree with the
Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section 1.1 Definitions. Unless the context otherwise requires, the terms defined in this
Section shall for all purposes of this Indenture and of any Supplemental Indenture and of the Bonds
and of any certificate, opinion, request or other documents herein mentioned have the meanings
herein specified.
"Act" means Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7,
Title 1 of the Government Code of the State, as it may hereafter be amended from time to time.
"Additional Bonds" means additional bonds issued pursuant to Section 5.6 and secured on a
parity with the 2025 Bonds.
"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the
Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds
scheduled to be paid in such Bond Year, whether at maturity or from sinking fund payments.
"Authority Administrative Expenses" means the fees and expenses of the Trustee, including
legal fees and expenses (including fees and expenses of outside counsel and the allocated costs of
internal attorneys) and the out of pocket expenses incurred by the Trustee, the City and the Authority
in carrying out their duties hereunder including payment of amounts payable to the United States
pursuant to Section 5.8 hereof.
"Authority" means the Tustin Financing Authority, a joint exercise of powers agency
established pursuant to the laws of the State, whose members as of the date hereof are the City and
the Tustin Housing Authority, a public body corporate and politic organized and existing under the
laws of the State.
"Authorized Officer" means the Chair of the Authority, or such other member of the Board of
Directors as the Chair may designate, the Executive Director of the Authority, the Treasurer of the
Authority and the Secretary of the Authority, and any designee thereof or any other Person
authorized by the Authority to perform an act or sign a document on behalf of the Authority for
purposes of this Indenture.
"Beneficial Owners" means the actual purchasers of the Bonds whose ownership interests are
recorded on the books of the DTC Participants.
"Bond Counsel" means any attorney at law or firm of attorneys selected by the Authority, of
nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds
issued by states and political subdivisions, and duly admitted to practice law before the highest court
of any state of the United States of America.
"Bond Insurer" means , or any successor thereto.
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"Bond Law" means the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4
of the Act (commencing with Section 6584), as it may hereafter be amended from time to time.
"Bond Re.ig Stier" means the registration books for the Bonds maintained by the Trustee in
accordance with Section 2.8 hereof.
"Bond Year" means each twelve month period extending from September 2 in one calendar
year to September 1 of the succeeding calendar year, except in the case of the initial Bond Year
which shall be the period from the Closing Date of the Bonds to September 1, 2025, both dates
inclusive.
"Bonds" means collectively, the 2025 Bonds and any Additional Bonds authorized by and at
any time Outstanding pursuant to the Bond Law and this Indenture.
"Business Day" means a day which is not a Saturday or Sunday or a day of the year on which
the New York Stock Exchange, the Federal Reserve System, or banks or trust companies in New
York, New York, Wilmington, Delaware or Los Angeles, California, or where the Trust Office is
located, are not required or authorized by law, regulation or executive order to remain closed.
"Certificate of the Authority" means a certificate in writing signed by the Executive Director
or Treasurer of the Authority, or by any other officer of the Authority duly authorized in writing by
the Board for that purpose.
"CFD Act" means the Mello -Roos Community Facilities Act of 1982, constituting
Chapter 2.5 (commencing with Section 53311), Article 1 of Division 2 of Title 5 of the Government
Code of that State of California, as amended from time to time.
"CFD No. 06-1 Local Obligations" means the City of Tustin Community Facilities District
No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series 2025;
"CFD No. 2014-1 Local Obligations" means the City of Tustin Community Facilities District
No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Refunding Bonds, Series 2025.
"CC" means the City of Tustin, County of Orange, California.
"Closing Date" means for each Series the date on which the Bonds of such Series were
executed and delivered to the Original Purchaser thereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the United States
Treasury Regulations proposed or in effect with respect thereto.
"Community Facilities District" or "CFD" means any one of the Community Facilities
Districts.
"Community Facilities Districts" means, collectively, CFD No. 06-1 and CFD No. 2014-1.
"Community Facilities District No. 06-1" or "CFD No. 06-1" means City of Tustin
Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages), a community facilities
district formed pursuant to the CFD Act.
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"Community Facilities District No. 2014-1" or "CFD No. 2014-1" means City of Tustin
Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific), a community facilities
district formed pursuant to the CFD Act.
"Community Facilities District No. 06-1 Local Obligation Indenture" means the Bond
Indenture, dated as of June 1, 2025, by and between Community Facilities District No. 06-1 and The
Bank of New York Mellon Trust Company, N.A., as trustee, relating to the City of Tustin
Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding
Bonds, Series 2025.
"Community Facilities District No. 2014-1 Local Obligation Indenture" means the Bond
Indenture, dated as of June 1, 2025, by and between Community Facilities District No. 2014-1 and
The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the City of Tustin
Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Refunding
Bonds, Series 2025.
"Costs of Issuance" means the costs and expenses incurred in connection with the issuance
and sale of the Bonds, the Local Obligations, and the acquisition of the Local Obligations by the
Authority, including the acceptance and initial annual fees and expenses (including legal fees and
expenses) of the Trustee, legal fees and expenses, costs of printing the Bonds and the preliminary and
final Official Statements, fees of financial consultants, the underwriter's discount, the premiums with
respect to the Insurance Policy and the Reserve Surety Bond, and other fees and expenses set forth in
a Request of the Authority.
"Costs of Issuance Fund" means the fund by that name established in Section 3.4.
"Dated Date" means the date on which the Bonds are issued and authenticated by the Trustee.
"Defeasance Securities" means any direct, noncallable general obligations of the United
States of America (including obligations issued or held in book -entry form on the books of the
Department of the Treasury of the United States of America), or noncallable obligations the timely
payment of principal of and interest on which are fully and unconditionally guaranteed by the United
States of America.
"DTC" means The Depository Trust Company, New York, New York, and its successors and
assigns.
"DTC Participants" means securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations maintaining accounts with DTC.
"Event of Default" means any of the events described in Section 8.1 hereof.
"Fiscal Year" means any twelve month period extending from July 1 in one calendar year to
June 30 of the succeeding calendar year, both dates inclusive, or any other twelve month period
selected and designated by the Authority as its official fiscal year period.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time to
time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
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"Independent Accountant" means any accountant or firm of such accountants appointed and
paid by the Authority, and who, or each of whom —
(a) is in fact independent and not under domination of the Authority or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or
the City; and
(c) is not an officer or employee of the Authority, or the City, but who may be
regularly retained to make annual or other audits of the books of or reports to the Authority or the
City.
"Independent Financial Consultant" means any financial consultant or firm of such
consultants appointed and paid by the Authority, and who, or each of whom —
(a) is in fact independent and not under domination of the Authority or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or
the City; and
(c) is not an officer or employee of the Authority or the City, but who may be
regularly retained to make annual or other audits of the books of or reports to the Authority or the
City.
"Information Services" means such services providing information with respect to called
bonds in accordance with then current guidelines of the Securities and Exchange Commission, such
as the Trustee may select in its sole discretion.
"Insurance Policy" or "Policy" means the insurance policy issued by the Bond Insurer
guaranteeing the scheduled payment of principal of and interest on the Insured Bonds when due.
"Insured Bonds" means the 2025 Bonds maturing on September 1 of the years 20_ through
20 , inclusive, with the CUSIP numbers
"Interest Account" means the account by that name established and held by the Trustee
pursuant to Sections 3.3 and 4.2(a) hereof.
"Interest Payment Date" means March 1 and September 1 in each year, beginning
September 1, 2025, and continuing thereafter so long as any Bonds remain Outstanding.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest,
publicly announced from time to time by JPMorgan Chase Bank, N.A., at its principal office in The
City of New York, New York, as its prime or base lending rate ("Prime Rate") (any change in such
Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank, N.A.)
plus 5%, and (ii) the then applicable highest rate of interest on the 2025 Bonds and (b) the maximum
rate permissible under applicable usury or similar laws limiting interest rates. In the event JPMorgan
Chase Bank, N.A., ceases to announce its Prime Rate, the Prime Rate shall be the prime or base
lending rate of such other bank, banking association or trust company as the Bond Insurer, in its sole
and absolute discretion, shall designate. Interest at the Late Payment Rate on any amount owing to
5
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the Bond Insurer shall be computed on the basis of the actual number of days elapsed in a year of 360
days.
"Local Obligation Bond Indentures" means, collectively, the Community Facilities District
No. 06-1 Local Obligation Indenture and the Community Facilities District No. 2014-1 Local
Obligation Indenture.
Local Obligation Bond Indentures shall also include any additional Local Obligation Bond
Indentures executed and delivered in connection with the issuance hereafter of additional Local
Obligations.
"Local Obligations" means, collectively, the CFD No. 06-1 Local Obligations and the CFD
No. 2014-1 Local Obligations. Local Obligations shall also include any additional Local Obligations
issued hereafter pursuant to and in accordance with the provisions of the Local Obligation Bond
Indentures.
"Local Obligations Delinquency Revenues" means Revenues received by the Trustee from
the Local Obligations Trustee for a Series of the Local Obligations representing the payment of
delinquent debt service on such Local Obligations.
"Local Obligations Trustee" means The Bank of New York Mellon Trust Company, N.A., a
national banking association duly organized and existing under the laws of the United States of
America, with a principal corporate trust office in Los Angeles, California, and its successors and
assigns, and any other corporation or association which may at any time be substituted in its place as
provided in the Local Obligation Bond Indentures.
"Maximum Annual Debt Service" means, as of the date of any calculation, the largest Annual
Debt Service on a Series during the current or any future Bond Year.
"Mood" means Moody's Investors Service, Inc., its successors and assigns.
"Original Purchaser" means, with respect to the 2025 Bonds, Stifel, Nicolaus & Company,
Incorporated and with respect to a Series of Additional Bonds, the original purchaser thereof.
"Outstanding" when used as of any particular time with reference to Bonds, means (subject
to the provisions of Section 9.7 hereof) all Bonds theretofore executed and issued by the Authority
and authenticated and delivered by the Trustee under this Indenture except —
(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for
cancellation pursuant to Section 2.9 hereof,
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.3
hereof or Bonds called for redemption for which funds have been provided as described in
Section 2.2(g) hereof, and
(c) Bonds in lieu of or in substitution for which other Bonds shall have been
executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
"Owner" or "Bond Owner," when used with respect to any Bond, means the person in whose
name the ownership of such Bond shall be registered on the Bond Register.
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"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
1. (a) Direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America ("United States Treasury Obligations"), (b) obligations
fully and unconditionally guaranteed as to timely payment of principal and interest by the United
States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United States of America when such
obligations are backed by the full faith and credit of the United States of America, or (d) evidences of
ownership of proportionate interests in future interest and principal payments on obligations
described above held by a bank or trust company as custodian, under which the owner of the
investment is the real party in interest and has the right to proceed directly and individually against
the obligor and the underlying government obligations are not available to any person claiming
through the custodian or to whom the custodian may be obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government -sponsored agencies which are not backed by the
full faith and credit of the United States of America:
(a) Federal Home Loan Mortgage Corporation (FHLMC)
(i) Participation certificates (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
(ii) Senior Debt obligations
(b) Farm Credit Banks (formerly: Federal Land Banks, Federal
(i) Intermediate Credit Banks and Banks for Cooperatives)
(ii) Consolidated system -wide bonds and notes
(c) Federal Home Loan Banks (FHL Banks)
(i) Consolidated debt obligations
(d) Federal National Mortgage Association (FNMA)
(i) Senior debt obligations
(ii) Mortgage -backed securities (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal amounts)
(e) Financing Corporation (FICO)
(i) Debt obligations
(f) Resolution Funding Corporation (REFCORP)
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(i) Debt obligations
4. Demand deposits, including interest bearing money market accounts, trust funds, trust
accounts, overnight bank deposits, interest -bearing deposits, other deposit products, certificates of
deposit, including those placed by a third party, or bankers acceptances of depository institutions,
including the Trustee or any of its affiliates, unsecured certificates of deposit, time deposits, and
bankers' acceptances (having maturities of not more than 30 days) of any bank (including the Trustee
and any affiliate) the short-term obligations of which are rated "A-1" or better by Standard & Poor's.
5. Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation (FDIC), in banks (including the Trustee and any affiliate) which have capital
and surplus of at least $5 million.
6. Commercial paper (having original maturities of not more than 270 days rated "A-
1+" by Standard & Poor's and "Prime-l" by Moody's.
7. Money market mutual funds having a rating in the highest investment category
granted thereby from S&P or Moody's, including those for which the Trustee or its affiliate receives
and retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment
advisor or otherwise.
"State Obligations," which means:
(a) Direct general obligations of any state of the United States of America or any
subdivision or agency thereof to which is pledged the full faith and credit of a state the
unsecured general obligation debt of which is rated "A3" by Moody's and "A" by Standard
& Poor's, or better, or any obligation fully and unconditionally guaranteed by any state,
subdivision or agency whose unsecured general obligation debt is so rated.
(b) Direct general short-term obligations of any state agency or subdivision or
agency thereof described in (A) above and rated "A-1+" by Standard & Poor's and "Prime -I"
by Moody's.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of
any state, state agency or subdivision described in (A) above and rated "AA" or better by
Standard & Poor's and "Aa" or better by Moody's.
9. Pre -refunded municipal obligations rated "AAA" by Standard & Poor's and "Aaa" by
Moody's meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to maturity
or (2) the paying agent for the municipal obligations has been given irrevocable instructions
concerning their call and redemption and the issuer of the municipal obligations has
covenanted not to redeem such municipal obligations other than as set forth in such
instructions;
(b) the municipal obligations are secured by cash or United States Treasury
Obligations which may be applied only to payment of the principal of, interest and premium
on such municipal obligations;
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(c) the principal of and interest on the United States Treasury Obligations (plus
any cash in the escrow) has been verified by the report of independent certified public
accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due
and to become due on the municipal obligations ("Verification");
(d) the cash or United States Treasury Obligations serving as security for the
municipal obligations are held by an escrow agent or paying agent in trust for owners of the
municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be permitted
except with another United States Treasury Obligation and upon delivery of a new
Verification; and
(f) the cash or United States Treasury Obligations are not available to satisfy any
other claims, including those by or against the paying agent or escrow agent.
10. Repurchase agreements:
With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt of
which is rated at least "A" by Standard & Poor's and Moody's; or (2) any broker -dealer with "retail
customers" or a related affiliate thereof which broker -dealer has, or the parent company (which
guarantees the provider) of which has, long-term debt rated at least "A" by Standard & Poor's and
Moody's, which broker -dealer falls under the jurisdiction of the Securities Investors Protection
Corporation; or (3) any other entity rated "A" or better by Standard & Poor's and Moody's:
(a) The market value of the collateral is maintained at levels equal to 104% of the
amount of cash transferred by the Trustee to the provider of the repurchase agreement plus
accrued interest with the collateral being valued weekly and marked -to -market at one current
market price plus accrued interest;
(b) The Trustee or a third parry acting solely as agent therefor or for the
Authority (the "Holder of the Collateral") has possession of the collateral or the collateral has
been transferred to the Holder of the Collateral in accordance with applicable state and
federal laws (other than by means of entries on the transferor's books);
(c) The repurchase agreement shall state and an opinion of counsel shall be
rendered at the time such collateral is delivered that the Holder of the Collateral has a
perfected first priority security interest in the collateral, any substituted collateral and all
proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in
possession);
(d) The repurchase agreement shall provide that if during its term the provider's
rating by either Moody's or Standard & Poor's is withdrawn or suspended or falls below "A "
by Standard & Poor's or "AY by Moody's, as appropriate, the provider must, at the direction
of Trustee, within 10 days of receipt of such direction, repurchase all collateral and terminate
the agreement, with no penalty or premium to the Trustee.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with no
evergreen provision), collateral levels need not be as specified in (a) above, so long as such collateral
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levels are 103% or better and the provider is rated at least "A" by Standard & Poor's and Moody's,
respectively.
11. Investment agreements, including guaranteed investment contracts, repurchase
agreements and forward delivery agreements, that are obligations of an entity rated, or whose
obligations are rated, or guaranteed by an entity which is rated or whose obligations are rated, (at the
time the investment is entered into) not lower than "A-" by S&P or Fitch, or "AY by Moody's.
12. The State of California Local Agency Investment Fund.
"Principal Account" means the account by that name established and held by the Trustee
pursuant to Sections 3.3 and 4.2(a) hereof.
"Prior Bonds" means the following series of bonds previously issued by the Community
Facilities Districts:
(a) City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus
Villages) Special Tax Refunding Bonds, Series 2015A;
(b) City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus
Villages) Special Tax Bonds, Series 2015B;
(c) City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard
Pacific) Special Tax Bonds, Series 2015A.
"Proportionate Share" means, (i) as of any date of calculation, for the CFD No. 2014-1 Local
Obligations, the ratio derived by dividing the maximum annual debt service of such Local Obligation
by the Reserve Requirement, and (ii) as of the same date of calculation, for the CFD No. 06-1 Local
Obligations, one (1) minus the ratio derived in clause (i).
"Purchase Fund" means the fund by that name established and held by the Trustee pursuant
to Section 3.5 hereof.
"Rebate Fund" means the fund by that name established pursuant to Section 5.8 hereof.
"Rebate Regulations" means the Treasury Regulations issued under Section 148(f) of the
Code.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day
of the month preceding the month in which such Interest Payment Date occurs, whether or not such
day is a Business Day.
"Request of the Authority" means a written certificate or request executed by an Authorized
Officer.
"Request of the City" means a written certificate or request executed by the Mayor of the
City, its City Manager, its Assistant City Manager, the Finance Director or any other officer of the
City duly authorized by the City Council of the City to sign documents on its behalf with respect to
the matters referred to therein.
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"Representation Letter" means the representation letter dated as of the Closing Date for a
Series among the Authority, the Trustee and DTC.
"Reserve Account" means an account of the Reserve Fund established hereunder.
"Reserve Credit Facility" means (i) the Reserve Surety Bond, or (ii) a policy of insurance, a
surety bond, a letter of credit or other comparable credit facility, permitting draws thereunder in
accordance with Section 4.3 hereof to the final date of maturity of the Bonds or Parity Bonds, so long
as (a) the provider of any such policy of insurance, surety bond, letter of credit or other comparable
credit facility is rated in at the time of delivery to the Trustee not less than the rating on the Bonds
from Standard & Poor's or another rating agency requested by the Authority to rate the Bonds, and
(b) the Reserve Surety Bond remains in effect, the Bond Insurer has consented to the delivery of
such Reserve Credit Facility.
"Reserve Fund" means the fund by that name established and held by the Trustee pursuant to
Section 3.6 hereof.
"Reserve Surety Bond" means the Reserve Surety Bond issued by the Bond Insurer
guaranteeing certain payments into the Reserve Fund with respect to the 2025 Bonds as provided
therein and subject to the limitations set forth therein.
"Reserve Requirement" means an amount equal to the lowest of (i) 10% of the initial
principal amount of the Bonds, (ii) Maximum Annual Debt Service, or (iii) 125% of Average Annual
Debt Service. Notwithstanding the foregoing, in no event shall the Reserve Requirement exceed the
initial deposit thereto except in connection with any increase associated with the issuance of
Additional Bonds. As applied to individual accounts of the Reserve Fund, the Reserve Requirement
shall initially be allocated as set forth in Section 4.3(a) hereof.
"Responsible Officer" means any officer of the Trustee assigned to administer the Trustee's
duties under this Indenture and when used with respect to the Trustee, any managing director,
president, vice president, senior associate, associate or other officer of the Trustee within the Trust
Office (or any successor Trust Office) customarily performing functions similar to those performed
by the persons who at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred at the Trust Office because of such person's knowledge of and familiarity with the
particular subject and having direct responsibility for the administration of this Indenture.
"Revenue Fund" means the fund by that name established and held by the Trustee pursuant to
Sections 3.3 and 4.2 hereof.
"Revenues" means: (a) all amounts received by the Trustee from the Local Obligations;
(b) any proceeds of the Bonds originally deposited with the Trustee and all moneys deposited and
held from time to time by the Trustee in the funds and accounts established hereunder with respect to
the Bonds (other than the Costs of Issuance Fund, Administrative Expense Fund, the Rebate Fund
and the Surplus Fund); and (c) investment income with respect to any moneys held by the Trustee in
the funds and accounts established hereunder with respect to the Bonds (other than investment
income on moneys held in the Costs of Issuance Fund, Administrative Expense Fund, the Rebate
Fund and the Surplus Fund).
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"Securities Depositories" means The Depository Trust Company, 55 Water Street,
50th Floor, New York, NY 10041-0099 Attn. Call Notification Department, Fax (212) 855-7232;
and, in accordance with then current guidelines of the securities and Exchange Commission, such
other addresses and/or such other securities depositories as the Authority may designate in a
Certificate of the Authority delivered to the Trustee.
"Series" means each series of Bonds issued hereunder.
"Series of Local Obligations" means each of the Local Obligations issued pursuant to the
Local Obligation Bond Indentures.
"Six Month Period" shall mean the period of time beginning on the Closing Date and ending
six months thereafter, and each six month period thereafter until the latest maturity date of the Bonds
(and any obligations that refund the Bonds).
"Special Taxes" means the taxes authorized to be levied by the CFDs on parcels within the
CFDs, as applicable, which have been pledged to repay the Local Obligations pursuant to the CFD
Act.
"Standard & Poor's" and "S&P" means S&P Global Ratings, a Standard & Poor's Financial
Services LLC business, its successors and assign.
"State" means the State of California.
"Supplemental Indenture" means any indenture, agreement or other instrument hereafter duly
executed by the Authority in accordance with the provisions of Article VII of this Indenture.
"Surplus Fund" means the fund by that name established pursuant to Section 3.8 hereof.
"Tax Certificate" means the certificate by that name to be executed by the Authority on the
Closing Date with respect to a Series of Bonds to establish certain facts and expectations and which
contains certain covenants relevant to compliance with the Code.
"Trust Office" means the office of the Trustee at which at any particular time its corporate
trust business with respect to this Indenture shall be administered, which office at the date hereof is
located in Los Angeles, California, or such other place as designated by the Trustee except that with
respect to presentation of Bonds for payment or for registration of transfer and exchange, such term
shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust
agency business shall be conducted.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., a national banking
association duly organized and existing under the laws of the United States of America, with a
corporate trust office in Los Angeles, California, and its successors and assigns, and any other
corporation or association which may at any time be substituted in its place as provided in Article VI
hereof.
"2025 Bonds" means the Tustin Financing Authority Special Tax Revenue Refunding Bonds,
Series 2025.
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Section 1.2 Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of this
Indenture; and the words "herein," "hereof," "hereunder," and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
Section 1.3 Authorization and Purpose of Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of
such review, and hereby finds and determines, that all things, conditions and acts required by law to
exist, happen and/or be performed precedent to and in the issuance of the Bonds do exist, have
happened and have been performed in due time, form and manner as required by law, and the
Authority is now authorized under the Bond Law and each and every other requirement of law, to
issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority
hereby authorizes the issuance of the 2025 Bonds pursuant to the Bond Law and this Indenture for
the primary purpose of providing funds to acquire the Local Obligations and in connection therewith,
defease and refund the Prior Bonds.
Section 1.4 Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Bonds; and the covenants and agreements herein
set forth to be performed on behalf of the Authority shall be for the equal and proportionate benefit,
security and protection of all Owners of the Bonds and for the equal and proportionate benefit,
security and protection of all Owners of the Bonds as their respective interests appear without
preference, priority or distinction as to security or otherwise of any of the Bonds over other Bonds or
any of the Bonds over any other Bonds by reason of the number or date thereof or the time of sale,
execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided
therein or herein.
ARTICLE II
ISSUANCE OF BONDS
Section 2.1 Terms of Bonds. The 2025 Bonds authorized to be issued by the Authority
under and subject to the Bond Law and the terms of this Indenture shall be dated as of their Closing
Date and be designated the "Tustin Financing Authority Special Tax Revenue Refunding Bonds,
Series 2025," which shall be issued in the original aggregate principal amount of
Dollars ($).
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The 2025 Bonds shall be issued in fully registered form without coupons in denominations of
$5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity date.
The 2025 Bonds shall mature on September 1 in each of the years and in the amounts, and shall bear
interest (calculated on the basis of a 360-day year of twelve 30-day months) at the rates, as follows:
Maturity Date
(September 1) Principal Amount
2025 $
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
Interest Rate Per Annum
Interest on the Bonds shall be payable on each Interest Payment Date to the person whose
name appears on the Bond Register as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed
on such Interest Payment Date by first class mail, postage prepaid, to the Owner at the address of
such Owner as it appears on the Bond Register or by wire transfer to an account in the United States
of America made on such Interest Payment Date upon written instructions of any Owner of
$1,000,000 or more in aggregate principal amount of Bonds of a Series provided to the Trustee in
writing at least five (5) Business Days before the Record Date for such Interest Payment Date.
Principal of and premium (if any) on any Bond shall be paid upon presentation and surrender thereof,
at maturity or the prior redemption thereof, at the Trust Office of the Trustee. The principal of and
interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of
America.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (a) it is authenticated after a Record Date and on or before the
following Interest Payment Date, in which event it shall bear interest from such Interest Payment
Date; or (b) it is authenticated on or before the first Record Date, in which event it shall bear interest
from the Dated Date; provided, however, that if, as of the date of authentication of any Bond, interest
thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest
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has previously been paid or made available for payment thereon, or from the Dated Date if no
interest has been paid or made available for payment.
Section 2.2 Redemption of Bonds.
(a) Optional Redemption. The 2025 Bonds maturing on or before
September 1, 20 are not subject to optional redemption prior to maturity. The 2025 Bonds
maturing on or after September 1, 20 may be redeemed at the option of the Authority, from any
source of available funds, prior to maturity on any date on or after September 1, 20 as a whole, or
in part from maturities of the Local Obligations simultaneously redeemed, if any redemption of
Local Obligations is being made in conjunction with such optional redemption, and otherwise from
such maturities as are selected by the Authority, and by lot within a maturity, at a redemption price
equal to the par amount of the 2025 Bonds to be redeemed, together with accrued interest thereon to
the date of redemption, without premium.
If the source of funds to optionally redeem the Bonds is to be from a redemption of a
Local Obligation, then, prior to consenting to the optional redemption of any Local Obligation which
it has purchased and is held under this Indenture, the Authority shall deliver to the Trustee a
certificate of an Independent Accountant or an Independent Financial Consultant verifying that,
following such optional redemption of the Local Obligations and redemption of Bonds, the principal
and interest generated from the remaining Local Obligations is adequate to make the timely payment
of principal and interest due on the Bonds remaining Outstanding following such optional
redemption. The Authority shall be required to give the Trustee written notice of its intention to
redeem Bonds under this Section (a) at least forty-five (45) days prior to the date fixed for
redemption (or such later date as shall be acceptable to the Trustee, in the sole determination of the
Trustee, such notice intended for the convenience of the Trustee). The optional redemption
provisions (if any) of any Series of Additional Bonds shall be set forth and provided for in a
Supplemental Indenture.
(b) Special Redemption. The 2025 Bonds are subject to special redemption on
any Interest Payment Date from proceeds of early redemption of Local Obligations from
prepayments of Special Taxes within a Community Facilities District, as applicable, in whole or in
part, from maturities corresponding proportionately to the maturities of the Local Obligations
simultaneously redeemed, at the principal amount thereof, plus a premium expressed below as a
percentage of the principal amount so redeemed, plus accrued interest to the date of redemption
thereof:
Redemption Dates Redemption Prices
Any Interest Payment Date from September 1, 20 through March 1, 103%
20
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
(c) Mandatory Sinking Fund Redemption. The 2025 Bonds maturing on
September 1, 20_ are subject to mandatory sinking fund redemption prior to maturity, in part, on
September 1, 20_, and on each September 1 thereafter by lot, from sinking fund payments at a
redemption price equal to the principal amount of 2025 Bonds to be redeemed, together with accrued
interest to the date of redemption, without premium, as follows:
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Redemption Date Redemption
(September 1) Amount
(maturity)
The 2025 Bonds maturing on September 1, 20 are subject to mandatory sinking fund
redemption prior to maturity, in part, on September 1, 20, and on each September 1 thereafter by
lot, from sinking fund payments at a redemption price equal to the principal amount of 2025 Bonds
to be redeemed, together with accrued interest to the date of redemption, without premium, as
follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the Bonds maturing September 1, 20_ or September 1, 20 are redeemed
pursuant to Section 2.2(a) or (b) hereof, the sinking fund payments for such Bonds will be reduced as
nearly as practicable on a proportionate basis in integral multiples of $5,000.
(d) Notice of Redemption. The Trustee on behalf, and at the expense of, the
Authority shall send notice of any redemption to the respective Owners of any Bonds designated for
redemption at their respective addresses appearing on the Bond Register, and to the Securities
Depositories and to the Information Services, at least twenty (20) but not more than sixty (60) days
prior to the date fixed for redemption; provided, however, so long as the Bonds are registered in the
name of the nominee of DTC, notice shall be given in such manner as complies with the
requirements of DTC. Neither failure to receive any such notice so sent nor any defect therein shall
affect the validity of the proceedings for the redemption of such Bonds or the cessation of the
accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the
redemption place and the redemption price and shall designate the CUSIP numbers, Bond numbers
and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or
maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then
surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice
also that further interest on such Bonds will not accrue after the redemption date.
In addition to the foregoing notice, further notice shall be sent by the Trustee in said
form to any Bondowner whose Bond has been called for redemption but who has failed to submit his
Bond for payment by the date which is sixty days after the redemption date, but no defect in said
further notice nor any failure to give or receive all or any portion of such further notice shall in any
manner defeat the effectiveness of a call for redemption.
Unless funds for the optional redemption of any Bonds are irrevocably deposited with
the Trustee prior to rendering notice of redemption to the Bondowners, such notice shall state that
such redemption is subject to the deposit of funds by the Authority. Any notice of optional
redemption shall be cancelled and annulled if for any reason funds will not be or are not available on
the date fixed for redemption for the payment in full of the Bonds then called for redemption, and
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such cancellation shall not constitute an Event of Default under this Indenture. The Authority and
the Trustee shall have no liability to the Owners or any other party related to or arising from such
rescission of redemption. The Trustee shall send notice of such rescission of redemption in the same
manner as the original notice of redemption was sent.
Upon the payment by the Trustee from the applicable account in the Revenue Fund of
the redemption price of the Bond being redeemed, each check or other transfer of funds issued for
such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and
maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
(e) Selection of Bonds of a Maturity for Redemption. Unless otherwise provided
hereunder, whenever provision is made in this Indenture or in the applicable Supplemental Indenture
for the redemption of less than all of the Bonds of a maturity, the Trustee shall select the Bonds to be
redeemed from all Bonds of maturity not previously called for redemption, by lot in any manner
which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such
selection, all Bonds shall be deemed to be comprised of separate $5,000 authorized denominations,
and such separate authorized denominations shall be treated as separate Bonds which may be
separately redeemed.
(f) Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee
shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or
Bonds of the same maturity date, of authorized denominations in aggregate principal amount equal
to the unredeemed portion of the Bond to be redeemed.
(g) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the principal of and interest (and premium, if any) on the Bonds so
called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled
to any benefit under this Indenture other than the right to receive payment of the redemption price,
and no interest shall accrue thereon from and after the redemption date specified in such notice. All
Bonds redeemed pursuant to this Section 2.2 shall be cancelled and destroyed.
Section 2.3 Form of Bonds. The Bonds, the form of Trustee's certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the form set
forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or
appropriate variations, omissions and insertions, as permitted or required by this Indenture.
Section 2.4 Execution of Bonds. All the Bonds shall, from time to time, be executed on
behalf of the Authority by, or bear the manual or facsimile signature of, one of the members of the
Board of Directors of the Authority and be attested by the manual or facsimile signature of the
Secretary or by any deputy thereof. If any of the directors or officers who shall have signed or sealed
any of the Bonds or whose facsimile signature shall be upon the Bonds shall cease to be such officer
of the Authority before the Bond so signed and sealed shall have been actually authenticated by the
Trustee or delivered, such Bonds nevertheless may be authenticated, issued and delivered with the
same force and effect as though the person or persons who signed or sealed such Bonds or whose
facsimile signature shall be upon the Bonds had not ceased to be such officer of the Authority; and
any such Bond may be signed and sealed on behalf of the Authority by those persons who, at the
actual date of the execution of such Bonds, shall be the proper officers of the Authority, although at
the date of such Bond any such person shall not have been such officer of the Authority.
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Only such of the Bonds as shall bear thereon a certificate of authentication in substantially
the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be
conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
Section 2.5 Transfer of Bonds. Subject to Section 2.10, any Bond may in accordance
with its terms, be transferred, upon the Bond Register, by the person in whose name it is registered,
in person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly
executed. Whenever any Bond shall be surrendered for transfer, the Authority shall execute and the
Trustee shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like Series,
tenor, maturity and aggregate principal amount. No Bonds selected for redemption shall be subject
to transfer pursuant to this Section nor shall any Bond be subject to transfer during the fifteen days
prior to the selection of Bonds for redemption.
The cost of printing any Bonds and any services rendered or any expenses incurred by the
Trustee in connection with any transfer or exchange shall be paid by the Authority. However, the
Owners of the Bonds shall be required to pay any tax or other governmental charge required to be
paid for any exchange or registration of transfer and the Owners of the Bonds shall be required to pay
the reasonable fees and expenses of the Trustee and Authority in connection with the replacement of
any mutilated, lost or stolen Bonds.
The transferor shall also provide or cause to be provided to the Trustee all information
necessary to allow the Trustee to comply with any applicable tax reporting obligations, including
without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045.
The Trustee may rely on the information provided to it and shall have no responsibility to verify or
ensure the accuracy of such information.
Section 2.6 Exchange of Bonds. Subject to Section 2.10, Bonds may be exchanged at
the Trust Office of the Trustee for Bonds of the same Series, tenor and maturity and of other
authorized denominations. No Bonds selected for redemption shall be subject to exchange pursuant
to this Section, nor shall any Bond be subject to exchange during the fifteen days prior to the
selection of Bonds for redemption. The cost of printing Bonds and any services rendered or expenses
incurred by the Trustee in connection with any transfer or exchange shall be paid by the Authority.
Section 2.7 Temporary Bonds. The Bonds may be issued initially in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed,
lithographed or typewritten, shall be of such denominations as may be determined by the Authority
and may contain such reference to any of the provisions of this Indenture as may be appropriate.
Every temporary Bond shall be executed by the Authority and be registered and authenticated by the
Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If
the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and
thereupon the temporary Bonds may be surrendered for cancellation, in exchange therefor at the
Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such
temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized
denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under
this Indenture as definitive Bonds authenticated and delivered hereunder.
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Section 2.8 Bond Register. The Trustee will keep or cause to be kept at its Trust Office
sufficient records for the registration and transfer of the Bonds, which shall be the Bond Register and
shall at all times during regular business hours be open to inspection by the Authority upon
reasonable prior written notice; and, upon presentation for such purpose, the Trustee shall, under
such reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on said records, Bonds as hereinbefore provided.
Section 2.9 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee
shall thereupon authenticate and deliver, a new Bond of like tenor and authorized denomination in
exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and
destroyed in accordance with the retention policy of the Trustee then in effect. If any Bond issued
hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be
submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it
shall be given, at the expense of the Bond Owner, the Authority shall execute, and the Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the
Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called
for redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender
thereof upon receipt of indemnity satisfactory to the Trustee). The Trustee may require payment of a
reasonable fee for each new Bond issued under this Section and of the expenses which may be
incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in
lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual
obligation on the part of the Authority whether or not the Bond 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 Indenture with all other Bonds secured by this Indenture.
Section 2.10 Book -Entry System.
(a) All Bonds shall be initially issued in the form of a separate single certificated
fully registered Bond for each maturity date of the Bonds. Upon initial issuance, the ownership of
each Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.
Except as provided in Section 2.10(d) hereof, all Outstanding Bonds shall be registered in the Bond
Register in the name of Cede & Co., as nominee of DTC.
(b) With respect to Bonds registered in the Bond Register in the name of Cede &
Co., as nominee of DTC, the Authority and the Trustee shall have no responsibility or obligation
with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with
respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other
person, other than an Owner, as shown in the Bond Register, of any notice with respect to the Bonds,
including any notice of redemption, (iii) the payment to any DTC Participant or any other person,
other than an Owner, as shown in the Bond Register, of any amount with respect to principal of,
premium, if any, or interest on the Bonds, or (iv) or any consent given or other action taken by DTC
as Owner. The Authority and the Trustee may treat and consider the person in whose name each
Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the
purpose of payment of principal, premium, if any, and interest on such Bond, for the purpose of
giving notices of redemption and other matters with respect to such Bond, for the purpose of
registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee
shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the
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respective Owners, as shown in the Bond Register, as provided in Section 2.8 hereof, or their
respective attorneys duly authorized in writing, and all such payments shall be valid and effective to
fully satisfy and discharge the Authority's obligations with respect to payment of principal of,
premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other
than an Owner, as shown in the Bond Register, shall receive a certificated Bond evidencing the
obligation of the Authority to make payments of principal, premium, if any, and interest pursuant to
this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein
with respect to record dates, the word "Cede & Co." in this Indenture shall refer to such new
nominee of DTC. In connection with any proposed transfer outside the book -entry system, the
Authority or DTC shall provide or cause to be provided to the Trustee all information necessary to
allow the Trustee to comply with any applicable tax reporting obligations, including without
limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. The
Trustee may rely on the information provided to it and shall have no responsibility to verify or
ensure the accuracy of such information.
(c) The delivery of the Representation Letter shall not in any way limit the
provisions of Section 2.10(b) hereof or in any other way impose upon the Authority or the Trustee
any obligation whatsoever with respect to persons having interests in the Bonds other than the
Owners, as shown on the Bond Register. The Trustee shall take all action necessary for all
representations in the Representation Letter with respect to the Trustee to be complied with at all
times.
(d) (i) DTC may determine to discontinue providing its services with respect
to the Bonds at any time by giving written notice to the Authority and the Trustee and discharging its
responsibilities with respect thereto under applicable law.
(ii) The Authority, in its sole discretion and without the consent of any
other person, may terminate the services of DTC with respect to the Bonds if the Authority
determines that:
(A) DTC is unable to discharge its responsibilities with respect to
the Bonds, or
(B) a continuation of the requirement that all Outstanding Bonds
be registered in the Bond Register in the name of Cede & Co., or any other nominee of DTC, is not
in the best interest of the beneficial owners of such Bonds.
(iii) Upon the termination of the services of DTC with respect to the
Bonds pursuant to subsection 2. 1 0(d)(ii)(B) hereof, or upon the discontinuance or termination of the
services of DTC with respect to the Bonds pursuant to subsection 2.10(d)(i) or
subsection 2. 1 0(d)(ii)(A) hereof after which no substitute securities depository willing to undertake
the functions of DTC hereunder can be found which, in the opinion of the Authority, is willing and
able to undertake such functions upon reasonable and customary terms, the Authority is obligated to
deliver Bond certificates, as described in this Indenture and the Bonds shall no longer be restricted to
being registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be
registered in whatever name or names DTC shall designate to the Trustee in writing, in accordance
with the provisions of this Indenture.
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(e) Notwithstanding any other provisions of this Indenture to the contrary, as
long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to principal or, premium, if any, and interest on such Bond and all notices with respect to
such Bond shall be made and given, respectively, in the manner provided in the Representation
Letter.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
Section 3.1 Issuance of Bonds. Upon the execution and delivery of this Indenture, the
Authority shall execute and deliver the 2025 Bonds in the original aggregate principal amount set
forth in Section 2.1 hereof to the Trustee for authentication and delivery to the Original Purchaser
thereof upon the Request of the Authority.
Section 3.2 Application of Proceeds of Sale of 2025 Bonds and Funds Received from
the Community Facilities Districts. Upon the receipt by the Trustee of payment for the 2025
Bonds in the amount of $ (representing the purchase price for the 2025 Bonds, less $
transferred directly by the Original Purchaser of the 2025 Bonds to the Bond Insurer to pay the
premium on the Policy and the Reserve Surety Bond), the Trustee shall deposit such funds as
follows:
(a) $ of the proceeds of the 2025 Bonds shall be deposited in the Purchase
Fund for the acquisition of the Local Obligations in accordance with Section 3.5 hereof.
(b) $ of the proceeds of the 2025 Bonds, representing the aggregate of
each Community Facilities District's share of the Costs of Issuance, shall be retained by the Trustee
and deposited in the Costs of Issuance Fund for the payment of Costs of Issuance in accordance with
Section 3.4 hereof.
(c) $ of the proceeds of the 2025 Bonds, representing the aggregate of each
Community Facilities District's share of 50% of the Reserve Requirement will be deposited in in the
Reserve Fund and will be credited to the various accounts in the Reserve Fund as provided in
Section 4.3 hereof.
The Trustee shall deposit in the Reserve Fund the Reserve Surety Bond, which amount
represents 50% of the Reserve Requirement as of the Closing Date of the 2025 Bonds and will be
credited to the various accounts in the Reserve Fund as provided in Section 4.3 hereof.
The application of proceeds from the sale of a Series of Additional Bonds shall be set forth in
the Supplemental Indenture providing for the issuance of such Series of Additional Bonds.
The Trustee may, in its discretion, establish a temporary fund or account in its books or
records to facilitate such deposits and transfers.
Section 3.3 Revenue Fund. The Trustee shall establish and maintain a separate fund to
be known as the "Revenue Fund" and the following separate accounts therein: Interest Account and
Principal Account. Except as otherwise provided herein, the Trustee shall deposit all Revenues
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received after the Closing Date to the Revenue Fund and shall apply amounts in the Revenue Fund as
described in Section 4.2 below.
Section 3.4 Costs of Issuance Fund. The Trustee shall establish and maintain a fund
known as the "Costs of Issuance Fund" into which shall be deposited the amounts set forth in
Section 3.2(b) above. The moneys in the Costs of Issuance Fund shall be used to pay Costs of
Issuance from time to time upon receipt by the Trustee of a Request of the Authority. Each such
Request of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts. On the date which is one hundred
twenty (120) days following the Closing Date, or upon the earlier receipt by the Trustee of a Request
of the Authority stating that all Costs of Issuance have been paid, the Trustee shall transfer all
remaining amounts in the Costs of Issuance Fund to the Revenue Fund. Upon such transfer, the
Costs of Issuance Fund shall be closed and the Trustee shall no longer be obligated to make
payments for Costs of Issuance. The Authority may at any time file a Request of the Authority
requesting that the Trustee retain a specified amount in the Costs of Issuance Fund and transfer to the
Revenue Fund all remaining amounts, and upon receipt of such request by the Trustee, the Trustee
shall comply with such request.
Section 3.5 Purchase Fund. The Trustee shall establish and maintain a separate fund to
be known as the "Purchase Fund" into which shall be deposited a portion of the proceeds of sale of
the Bonds pursuant to Section 3.2(a) hereof (or pursuant to the provisions of a Supplemental
Indenture). The Trustee shall use the proceeds of the Bonds to purchase Local Obligations on the
Closing Date; provided, however, that such Local Obligations may be purchased only if the Trustee
has received a certificate of the Original Purchaser of the Bonds or an Independent Financial
Consultant stating that the Revenues to be available to the Trustee, assuming timely payment of the
Local Obligations, will be sufficient to permit the timely payment of the principal of and interest on
all Outstanding Bonds.
Section 3.6 Reserve Fund. The Trustee shall establish and maintain a separate fund to
be known as the "Reserve Fund" and within such fund, accounts to be known as the "CFD No. 06-1
Reserve Account" and the "CFD No. 2014-1 Reserve Account," which accounts shall be
administered as provided in Section 4.3 hereof.
Section 3.7 Rebate Fund. The Trustee shall establish and maintain a separate fund,
when needed, to be known as the "Rebate Fund" and a separate Rebate Account and Alternative
Penalty Account therein for the Bonds. The Rebate Fund shall be administered as described in
Section 5.8 hereof.
Section 3.8 Surplus Fund. The Trustee shall establish and maintain a separate fund,
when needed, to be known as the "Surplus Fund" which shall be administered as described in
Section 4.4 hereof.
Section 3.9 Administrative Expense Fund. The Trustee shall establish and maintain a
separate fund to be held by the Trustee and known as the "Administrative Expense Fund" into which
shall be deposited the amounts specified in Section 4.2(c) and any amounts transferred to the Trustee
by the Community Facilities Districts for the purpose of paying Authority Administrative Expenses
which an Authorized Officer directs to be deposited in the Administrative Expense Fund. The
moneys in the Administrative Expense Fund shall be used to pay Authority Administrative Expenses
or shall be transferred to the Surplus Fund, in either case, upon receipt of a Requisition of the
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Authority. The Trustee shall rely fully on any such Requisition and shall not be required to make any
investigation in connection therewith.
Section 3.10 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any proceedings taken by the Authority or the Community
Facilities Districts with respect to the application of the proceeds of the Bonds, and the recital
contained in the Bonds that the same are issued pursuant to the Bond Law shall be conclusive
evidence of their validity and of the regularity of their issuance.
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.1 Pledge of Revenues; Assignment of Rights. Subject to the provisions of
Sections 6.3 and 9.3 hereof, the Bonds shall be secured by a first lien on and pledge (which shall be
effected in the manner and to the extent hereinafter provided) of all of the Revenues. The Bonds
shall be equally secured by a pledge, charge and lien upon the Revenues without priority for any
Bond over any other Bond; and the payment of the interest on and principal of the Bonds and any
premiums upon the redemption of any Bonds shall be and are secured by an exclusive pledge, charge
and lien upon the Revenues. So long as any of the Bonds are Outstanding, the Revenues shall not be
used for any purpose except as is expressly permitted by this Indenture.
The Authority hereby transfers in trust, grants a security interest in and assigns to the Trustee,
for the benefit of the Owners from time to time of the Bonds, respectively, all of the Revenues and all
of the right, title and interest of the Authority in the Local Obligations, subject to the terms of this
Indenture. The Trustee shall be entitled to and shall collect and receive all of the Revenues and any
Revenues collected or received by the Authority shall be deemed to be held, and to have been
collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the
Authority to the Trustee. The Trustee also shall be entitled to and, subject to the provisions of this
Indenture, the Trustee shall take all steps, actions and proceedings reasonably necessary in its
judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority
and all of the obligations of the City and the Community Facilities Districts under the Local
Obligations.
Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if
any, and interest on the Bonds, and upon satisfaction of all claims against the Authority hereunder
with respect to the Bonds, including all fees, charges and expenses of the Trustee and the Authority
which are properly payable hereunder, or upon the making of adequate provisions for the payment of
such amounts as permitted hereby, all moneys remaining in all funds and accounts pertaining to such
Bonds, (except any amounts on deposit in the Rebate Fund and except moneys necessary to pay
principal of, premium, if any, and interest on the Bonds, which moneys shall be held by the Trustee
pursuant to Section 9.3), shall no longer be considered Revenues and are not pledged to repay the
Bonds. Such amounts shall be transferred to the Local Obligations Trustee for each Series of Local
Obligations then outstanding proportionately based on their respective Proportionate Share. In the
event that the Local Obligations have been paid or defeased, then any such amounts shall be paid by
the Trustee to the Authority to be used by the Authority for any lawful purpose.
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Section 4.2 Receipt, Deposit and Application of Revenues; Revenue Fund. Subject to
Section 4.2(a)(iv) below, all Revenues described in clause (a) of the definition thereof in Section 1.1
shall be promptly deposited by the Trustee upon receipt thereof in the Revenue Fund.
(a) On each Interest Payment Date, the Trustee shall transfer from the Revenue
Fund, and deposit into the following respective accounts for the Bonds, the following amounts in the
following order of priority, the requirements of each such account (including the making up of any
deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier
required deposit) at the time of deposit to be satisfied before any transfer is made to any account
subsequent in priority:
(i) Interest Account. On each Interest Payment Date, the Trustee shall
deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the
Interest Account to equal the amount of interest becoming due and payable on such Interest Payment
Date on all Outstanding Bonds on such date. All moneys in the Interest Account shall be used and
withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become
due and payable (including accrued interest on any Bonds redeemed prior to maturity). In the event
that the amounts on deposit in the Interest Account on any Interest Payment Date, after any transfers
from the Reserve Fund pursuant to Section 4.3 hereof, are insufficient for any reason to pay the
aggregate amount of interest then coming due and payable on the Outstanding Bonds, the Trustee
shall apply such amounts to the payment of interest on each of the Outstanding Bonds on a pro rata
basis.
(ii) Principal Account. On each September 1 on which principal of the
Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount required to
cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and
premium (if any) on, the Bonds coming due and payable on such date, or required to be redeemed on
such date pursuant to Section 2.2 hereof, provided, however, that no amount shall be deposited to
effect a redemption pursuant to Section 2.2(a) hereof unless the Trustee has first received a certificate
of an Independent Accountant or an Independent Financial Consultant certifying that such deposit to
effect an optional redemption of the Bonds will not impair the ability of the Authority to make timely
payment of the principal of and interest on the Bonds, assuming for such purposes that the
Community Facilities Districts continue to make timely payments on all Local Obligations not then
in default. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely
for the purpose of (i) paying the principal of the Bonds at the maturity thereof or (ii) paying the
principal of and premium (if any) on any Bonds upon the redemption thereof pursuant to Section 2.2
hereof.
(iii) Reserve Fund. On each Interest Payment Date on which the balance
in the Reserve Fund is less than the Reserve Requirement, or amounts are due to an insurer under a
Reserve Credit Facility, after making deposits required under (i) and (ii) above, the Trustee shall
transfer from the Revenue Fund, an amount sufficient to increase the balance in the Reserve Fund to
the Reserve Requirement, by depositing the amount necessary to make the various accounts therein
equal to, together, the Reserve Requirement, provided the value of the moneys deposited therein, as
invested, shall be valued at market value on such transfer date for purposes of making such
determination; and provided, further, that the replenishment of the Reserve Accounts shall be made
in accordance with Section 4.3 hereof.
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(iv) Local Obligations Delinquency Revenues. The Trustee shall disburse
or transfer all Revenues representing Local Obligations Delinquency Revenues in the following order
of priority:
First, to make payments required pursuant to Section 8.3 upon the occurrence of an
Event of Default as described in Section 8.1(a),
Second, to the Reserve Fund to replenish the amount on deposit therein to the
Reserve Requirement as set forth in Section 4.3, and
Third, to make the deposits specified in Section 4.2(a)(i) through (iii) above.
(b) If on any Interest Payment Date or date for redemption the amount on deposit
in the Revenue Fund is inadequate to make the transfers described in subsection (a) above as a result
of a payment default on an issue of Local Obligations, the Trustee shall immediately notify the
issuer of such Local Obligations of the amount needed to make the required deposits under
subsection (a) above. In the event that following such notice the Trustee receives Local Obligations
Delinquency Revenues from the issuer of such Local Obligation to cure such shortfall, the Trustee
shall deposit such amounts to the Revenue Fund for application in accordance with subsection
(a)(iv).
(c) On each Interest Payment Date after making the transfers required under
subsections (a) and (b) above, upon receipt of a Request of the Authority to do so, the Trustee shall
transfer from the Revenue Fund to the Rebate Fund for deposit in the accounts therein the amounts
specified in such Request of the Authority.
(d) On September 1 of each year, after making the deposits required under
subsections (a), (b) and (c) above, and upon reimbursement to the Bond Insurer for any amounts
owed under the Insurance Policy pursuant to Section 10.3 hereof, the Trustee shall transfer all
amounts remaining on deposit in the Revenue Fund to the Administrative Expense Fund unless the
Trustee has received a Request of the Authority directing it to transfer all or a portion of the said
amounts to the Surplus Fund, in which case the Trustee shall make the transfer to the Surplus Fund
so specified.
Section 4.3 Reserve Fund.
(a) There shall be maintained in the Reserve Fund an amount equal to the
Reserve Requirement of which $ shall initially be allocated to the CFD No. 06-1 Reserve
Account and $ shall initially be allocated to the CFD No. 2014-1 Reserve Account, such
amounts being the initial Proportionate Share of the Reserve Requirement for each Reserve Account
less amounts attributable to the Reserve Surety Bond, which shall be deposited in the Reserve Fund.
In the event that the amount of the Reserve Requirement is changed, the Trustee shall, upon receipt
of a Request of the Authority, adjust the Proportionate Share of each Reserve Account to reflect the
new Reserve Requirement. The Reserve Requirement may be satisfied in whole or in part by the
Reserve Surety Bond and one or more additional Reserve Credit Facilities. Fifty percent (50%) of
the Reserve Requirement will initially be satisfied by the Reserve Surety Bond and fifty percent
(50%) of the Reserve Requirement will initially be satisfied with the deposit from proceeds of the
2025 Bonds pursuant to Section 3.2(c) hereof. As of any date of calculation, the amount of the
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Reserve Surety Bond, any other Reserve Credit Facility and cash on deposit in the Reserve Fund
shall be allocated to the Reserve Accounts based on the Proportionate Share.
(b) Moneys in the Reserve Fund shall be used solely for the purposes set forth in
this Section 4.3. Subject to the limitations set forth in the following paragraph, amounts in the
Reserve Fund may be applied to pay the principal of and interest on the Bonds when the moneys in
the Interest Account and the Principal Account of the Revenue Fund are insufficient therefor. In
addition, moneys in the Reserve Fund not constituting funds drawn on the Reserve Fund Surety
Bond or any other Reserve Credit Facility may be applied: (i) in connection with an optional
redemption of Bonds pursuant to Section 2.2 or a defeasance pursuant to Section 9.3, (ii) when the
balance therein equals the principal and interest due on the Bonds to and including maturity,
(iii) when the amount in a Reserve Account is transferred to the Interest Account and the Principal
Account as a credit against the payments due on the Local Obligations secured by such account on
the transfer dates specified in subsection (e) below, or (iv) when a recalculation of the Reserve
Requirement results in a reduction thereof and amounts on deposit in the Reserve Fund in excess of
the Reserve Requirement (exclusive of interest earnings, which are governed by Section 4.5) are
transferred to the Interest Account and the Principal Account as a credit against the payments due on
the Local Obligations as provided in subsection (f) below.
(c) Except as otherwise provided herein, all money in the Reserve Fund and the
Reserve Accounts therein shall be used and withdrawn by the Trustee solely for the purpose of
making transfers as described in this Section 4.3(c). If the amounts in the Interest Account or the
Principal Account of the Revenue Fund are insufficient to pay the principal of or interest on the
Bonds when due or mandatory sinking fund payments on the Bonds when due, the Trustee shall
withdraw from the applicable Reserve Account or Reserve Accounts an amount equal to the
deficiency resulting from the delinquency in the payment of scheduled debt service on the applicable
Series of Local Obligations and transfer such amount to the Interest Account, the Principal Account
or both, as applicable. If there are insufficient funds on deposit in a Reserve Account to cover a
deficiency resulting from the delinquency in the payment of scheduled debt service on the applicable
Series of Local Obligations, the Trustee shall withdraw from the other Reserve Account the amount
of such remaining deficiency and transfer such amount to the Interest Account, the Principal
Account or both, as applicable.
Upon the transfer by the Trustee to the Reserve Fund of Local Obligations Delinquency
Revenues of a Community Facilities District, such Revenues shall be allocated as follows:
(A) First, to the Bond Insurer to reimburse it for all Policy Costs
(as defined in Section 4.3(f)(iii) below) due as a result of a draw on the Reserve Surety Bond and
reimbursement of amounts with respect to any other Reserve Credit Facility due as a result of
delinquencies on the Local Obligations of such Community Facilities District with such
reimbursements credited first to the Reserve Account for the Series of Local Obligations to which
such delinquent Revenues do not relate, if such reimbursements are owing as a result from draws due
to delinquencies in the payment of scheduled debt service on the other series of Local Obligations.
Such reimbursements shall next be credited to the Reserve Account for the series of Local
Obligations from which the delinquent Revenues were received; and
(B) Second, to the Reserve Account for the Series of Local
Obligations to which such Local Obligations Delinquency Revenues do not relate, that amount
necessary to increase the amount on deposit in such account to the Reserve Requirement, if the
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deficiency in the amount on deposit in such account resulted from draws on such Reserve Account
due to delinquencies in the payment of scheduled debt service on the other Series of Local
Obligations.
(C) Third, after increasing the amount on deposit in the applicable
Reserve Account to the Reserve Requirement pursuant to the second step above, to the Reserve
Account for the Series of Local Obligations from which the Local Obligations Delinquency
Revenues were received that amount necessary to replenish the amount on deposit in such Reserve
Account to the applicable Reserve Requirement; and
(D) Fourth, to the Revenue Fund.
(d) On September 1 of each year, any interest earned on the investment of
moneys on deposit in the Reserve Fund which would cause the amount therein to exceed the Reserve
Requirement shall be applied as set forth in Section 4.5 hereof.
(e) In the Bond Year in which any Local Obligation matures, cash on deposit in
the Reserve Account related to such Local Obligations, will be transferred to the Interest Account
and the Principal Account as a credit against the payments due on such Local Obligations, with the
amount transferred from a Reserve Account being deposited first to the Interest Account as a credit
on the interest due on such Local Obligations on such date and the balance being deposited to the
Principal Account as a credit on the principal due on such Local Obligations on such date.
Notwithstanding the foregoing, the Trustee shall retain an amount sufficient to ensure that the
Reserve Requirement is met in the subsequent Bond Year. Amounts on deposit in a Reserve
Account for which the related Local Obligations are no longer outstanding may be transferred to any
other Reserve Account as set forth in a Certificate of the Authority.
(f) On September 1 of each year, in connection with the annual recalculation of
the Reserve Requirement, amounts on deposit in the Reserve Accounts (exclusive of interest
earnings, which are governed by Section 4.5) in excess of each Reserve Account's Proportionate
Share of the Reserve Requirement shall be transferred first to the Interest Account and then to the
Principal Account as a credit against the payments due on the CFD No. 06-1 Local Obligations on
such date, until the CFD No. 06-1 Local Obligations have been paid in full, and then as a credit
against the payment due on the CFD No. 2014-1 Local Obligations.
(g) [As long as the Reserve Surety Bond shall be in full force and effect, the
Authority and the Trustee agree to comply with the following provisions:] [TO COME]
Section 4.4 Surplus Fund. Any amounts transferred to the Surplus Fund pursuant to
subsection 4.2 hereof shall no longer be considered Revenues and are not pledged to repay the
Bonds. So long as Local Obligations are outstanding, on September 1 of each year after setting aside
any amount specified in a Request of the Authority as necessary to pay Administrative Expenses, the
remaining balance, if any, in the Surplus Fund shall (i) be transferred by the Trustee to the City for
credit to the special tax fund for the Local Obligations, and each Community Facilities District shall
be credited a percentage of the total amount available on each September 1 that is equal to the
percentage which each series of its outstanding Local Obligation represents of all outstanding Local
Obligations held by the Trustee as of the date of disbursement or (ii) as set forth in a Request of the
City be applied to the redemption of Local Obligations pursuant to the terms of the Local Obligation
Bond Indenture with each series of Local Obligations to be credited a percentage of the total amount
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available on each September 1 that is equal to the percentage which a series of outstanding Local
Obligations represents of all outstanding Local Obligations held by the Trustee as of the date of
disbursement. In the event that the Local Obligations have been redeemed or defeased in whole or in
part, then such credit shall be applied to the Local Obligation that remains outstanding. In the event
all Community Facilities Districts are no longer obligated to levy Special Taxes to repay Local
Obligations, then any amounts in the Surplus Fund may be used by the Authority for any lawful
purpose, including, but not limited to, the payment of expenses of the Authority, the City or the
Community Facilities Districts relating to the Bonds, the Local Obligations, the Community
Facilities Districts, or any other purpose as specified in a Request of the Authority delivered to the
Trustee.
On September 1 of the year preceding the year of the final maturity of the Bonds, the
remaining balance in the Surplus Fund shall be credited by the Trustee on a proportionate basis, to
the special tax fund established with respect to Local Obligations of the Community Facilities
Districts. Such amounts shall be applied to reduce debt service payments on Local Obligations.
Section 4.5 Investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments, as directed pursuant to the Request of the Authority filed with the Trustee at least two
(2) Business Days in advance of the making of such investments. The Trustee shall be entitled to
conclusively rely on any such Request of the Authority as to both suitability and legality of the
directed investments and shall be fully protected in relying thereon. In the absence of any such
Request of the Authority the Trustee shall hold such moneys uninvested. Permitted Investments
purchased as an investment of moneys in any fund or account established pursuant to this Indenture
shall be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or accounts
established hereunder shall be deposited in the fund or account from which such investment was
made; provided, however, that all interest or gain derived from the investment of amounts in the
accounts of the Reserve Fund shall, to the extent the balance in any account thereof exceeds, on
September 1 of each year, its Proportionate Share of the Reserve Requirement as set forth in Section
4.3(a) hereof, be withdrawn by the Trustee on such September 1, commencing September 1, 2026,
and deposited to the special tax fund of the Community Facilities Districts to be applied to the
payment of debt service on the applicable Local Obligations on the next Interest Payment Date.
For purposes of acquiring any investments hereunder, the Trustee may commingle moneys
held by it in any of the funds and accounts held by it hereunder. The Trustee is hereby authorized, in
making or disposing of any investment permitted by this Section, to deal with itself (in its individual
capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of
the Trustee or for any third person or dealing as principal for its own account. The Trustee and its
affiliates may act as advisor, sponsor, principal or agent in the acquisition or disposition of any
investment and may impose its customary charges for such trades, including account maintenance
fees. The Trustee and its affiliates may make any and all investments permitted herein through its
own investment department. The Trustee shall incur no liability for losses arising from any
investments made pursuant to this Section 4.5 or losses incurred as a result of the liquidation of any
investment prior to its stated maturity or the failure of the Authority to provide timely written
investment direction. The parties hereto acknowledge that the Trustee is not providing investment
supervision, recommendations, or advice.
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The Authority acknowledges that to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations
of security transactions effected by the Trustee as they occur, the Authority specifically waives
receipt of such confirmations to the extent permitted by law. The Authority further understands that
trade confirmations for securities transactions effected by the Trustee will be available upon request
and at no additional cost and other trade confirmations may be obtained from the applicable broker.
The Trustee will furnish the Authority periodic cash transaction statements which include detail for
all investment transactions made by the Trustee hereunder or brokers selected by the Authority.
Upon the Authority's election, such statements will be delivered via the Trustee's online service and
upon electing such service, paper statements will be provided only upon request.
Ratings of Permitted Investments referred to herein shall be determined at the time of
purchase of such Permitted Investments and without regard to rating subcategories. The Trustee
shall have no responsibility to monitor ratings of Permitted Investments after the initial purchase of
such Permitted Investments or the responsibility to validate the ratings of Permitted Investments prior
to the initial purchase.
Section 4.6 Valuation and Disposition of Investments. For the purpose of determining
the amount in any fund or account, the value of Permitted Investments credited to such fund or
account shall be valued at the original cost thereof (excluding any brokerage commissions and
excluding any accrued interest) provided that the investment of any funds held in the Reserve Fund,
shall be valued at fair market value and marked to market at least quarterly by the Authority.
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.1 Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal and interest and premium (if any) to become due in respect of all the Bonds, in strict
conformity with the terms of the Bonds and of this Indenture, according to the true intent and
meaning thereof, but only out of Revenues, and other assets pledged for such payment as provided in
this Indenture.
Section 5.2 Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and
in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall
be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder,
to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of
the Bonds then Outstanding and of all claims for interest thereon which shall have been so extended.
Nothing in this Section shall be deemed to limit the right of the Authority to issue Bonds for the
purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an
extension of maturity of the Bonds.
Section 5.3 Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrance upon the Revenues, and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge
and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves
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the right to enter into one or more other indentures for any of its corporate purposes, including other
programs under the Bond Law, and reserves the right to issue other obligations for such purposes.
Section 5.4 Power to Issue Bonds and Make Pledge and Assignment. The Authority is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and
assign the Revenues, the Local Obligations and other assets purported to be pledged and assigned,
respectively, under this Indenture. The Bonds and the provisions of this Indenture are and will be the
legal, valid and binding limited, special obligations of the Authority in accordance with their terms,
and the Authority and the Trustee shall at all times, subject to the provisions of Article VI hereof and
to the extent permitted by law, defend, preserve and protect said pledge and assignment of the
Revenues, the Local Obligations and other assets and all the rights of the Bond Owners under this
Indenture against all claims and demands of all persons whomsoever.
Section 5.5 Accounting Records and Financial Statements. The Trustee shall at all
times keep, or cause to be kept, proper books of record and account, prepared in accordance with
corporate trust industry standards in which complete and accurate entries shall be made of
transactions made by it relating to the proceeds of Bonds, the Revenues, the Local Obligations and
all funds and accounts established pursuant to this Indenture. Such books of record and account shall
be available for inspection by the Authority and the Community Facilities Districts upon reasonable
prior written notice during regular business hours and under reasonable circumstances, in each case
as agreed to by the Trustee.
Not later than 45 days following each Interest Payment Date, the Trustee shall prepare and
file with the Authority a report in the Trustee's standard statement format setting forth: (i) amounts
withdrawn from and deposited into each fund and account maintained by the Trustee under this
Indenture; (ii) the balance on deposit in each fund and account as of the date for which such report is
prepared; and (iii) a brief description of all obligations held as investments in each fund and account.
Copies of such reports may be mailed to any Owner upon the Owner's written request to the Trustee
at the expense of such Owner at a cost not to exceed the Trustee's actual costs of duplication and
mailing.
Section 5.6 Conditions to Issuance of Additional Obligations. Except as set forth in
this Section 5.6, the Authority covenants that no additional bonds, notes or other indebtedness shall
be issued or incurred which are payable out of Revenues in whole or in part.
The Authority may issue Additional Bonds in such principal amount as shall be determined
by the Authority, pursuant to a Supplemental Indenture adopted or entered into by the Authority but
only for the purpose of refunding the 2025 Bonds or any Additional Bonds. Such Additional Bonds
may be issued subject to the following conditions precedent:
(a) The Authority shall be in compliance with all covenants set forth in this
Indenture and all Supplemental Indentures;
(b) The proceeds of such Additional Bonds shall be applied to accomplish a
refunding of all or a portion of the Bonds or any Additional Bonds Outstanding.
(c) The Supplemental Indenture providing for the issuance of such Additional
Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and
principal thereof shall be payable on September 1 in any year in which principal is payable.
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(d) Prior to the delivery of any Additional Bonds, a written certificate must be
provided to the Authority and the Trustee by an Independent Financial Consultant which certifies
that following the issuance of the Series of Additional Bonds, the principal and interest generated
from the Local Obligations is adequate to make the timely payment of principal and interest due on
all Outstanding Bonds and the Series of Additional Bonds to be issued hereunder.
(e) The Supplemental Indenture providing for the issuance of such Additional
Bonds may provide for the establishment of separate funds and accounts.
(f) No Event of Default (or any event which, once all notice or grace periods
have passed, would constitute an Event of Default) shall have occurred and be continuing with
respect to the Bonds or any of the Local Obligations unless such Event of Default shall be cured
upon the issuance of the Additional Bonds.
(g) The Authority shall deliver to the Trustee a written Certificate of the
Authority certifying that the conditions precedent to the issuance of such Additional Bonds set forth
in subsections (a), (b), (c), (d) and (f) of this Section 5.6 above have been satisfied and that, upon the
issuance of such Additional Bonds an amount equal to the Reserve Requirement, as adjusted (if
necessary) to reflect the issuance of such Additional Bonds will be on deposit in the Reserve Fund.
Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set
forth in this Section 5.6, no such issuance may occur if the Reserve Fund is not fully funded at the
Reserve Requirement.
So long as any Bonds remain outstanding or any amounts are owed to the Bond Insurer by
the Authority, without the prior written consent of the Bond Insurer, the Authority shall not issue any
Additional Bonds that bears interest at other than fixed rates or permits or requires the Owner to
tender such indebtedness for purchase prior to the stated maturity thereof.
Section 5.7 Tax Covenants. Notwithstanding any other provision of this Indenture,
absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds
will not be adversely affected for federal income tax purposes, the Authority covenants to comply
with all applicable requirements of the Code necessary to preserve such exclusion from gross income
and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The Authority will not take or omit to take any action or make any
use of the proceeds of the Bonds or of any other moneys or property which would cause the Bonds to
be "private activity bonds" within the meaning of Section 141 of the Code.
(b) Arbitrage. The Authority will make no use of the proceeds of the Bonds or of any
other amounts or property, regardless of the source, or take or omit to take any action which would
cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The Authority will make no use of the proceeds of the Bonds or
take or omit to take any action that would cause the Bonds to be "federally guaranteed" within the
meaning of Section 149(b) of the Code.
(d) Information Reporting. The Authority will take or cause to be taken all necessary
action to comply with the informational reporting requirement of Section 149(e) of the Code.
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(e) Hedge Bonds. The Authority will make no use of the proceeds of the Bonds or any
other amounts or property, regardless of the source, and will not take any action or refrain from
taking any action that would cause the Bonds to be considered "hedge bonds" within the meaning of
Section 149(g) of the Code unless the Authority takes all necessary action to assure compliance with
the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of
interest on the Bonds for federal income tax purposes.
(f) Miscellaneous. The Authority will take no action and will refrain from taking any
action inconsistent with its expectations stated in any Tax Certificate executed with respect to the
Bonds and will comply with the covenants and requirements stated therein and incorporated by
reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the Authority from issuing Bonds the interest on which
has been determined by the Board to be subject to federal income taxation.
Section 5.8 Rebate Fund
(a) Establishment. The Trustee shall establish a Rebate Fund, when needed, and shall
maintain therein separate accounts (solely from amounts deposited by the Authority) designated the
"Rebate Account" and the "Alternative Penalty Account." Absent an opinion of Bond Counsel that
the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be
adversely affected, the Authority shall cause to be deposited in each such account of the Rebate Fund
such amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate.
All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment
to the United States Treasury. All amounts on deposit in the Rebate Fund shall be governed by this
Section 5.8 and the Tax Certificate unless and to the extent that the Authority delivers to the Trustee
an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of
interest on the Bonds will not be adversely affected if such requirements are not satisfied.
Notwithstanding any other provision of this Indenture, the Trustee shall be deemed conclusively to
have complied with this Section 5.8 and the Tax Certificate if it follows the directions set forth in any
Request of the Authority or Certificate of the Authority and shall be fully protected in so doing. The
Trustee shall have no independent responsibility to, or liability resulting from its failure to, enforce
compliance by the Authority with the terms of this Section 5.8 or the Tax Certificate.
(b) Rebate Account. The following requirements shall be satisfied with respect to the
Rebate Account:
(i) Annual Computation. Within 55 days of the end of each Bond Year, the
Authority shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance
with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into
account any applicable exceptions with respect to the computation of the rebatable arbitrage,
described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section
148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section
148(f)(4)(C)(vii) of the Code (the "11/2% Penalty") has been made), for this purpose treating the last
day of the applicable Bond Year as a computation date, within the meaning of Section 1.148 1(b) of
the Rebate Regulations (the "Rebatable Arbitrage"). The Authority shall obtain expert advice as to
the amount of the Rebatable Arbitrage to comply with this Section 5.8.
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(ii) Annual Transfer. Within 55 days of the end of each applicable Bond Year,
upon receipt of the Request of the Authority, an amount shall be deposited to the applicable Rebate
Account by the Trustee from any Revenues specified by the Authority in the aforesaid Request of the
Authority, if and to the extent required so that the balance in the Rebate Account shall equal the
amount of Rebatable Arbitrage so calculated in accordance with (i) of this Subsection (b). In the
event that immediately following the transfer required by the previous sentence, the amount then on
deposit to the credit of a Rebate Account exceeds the amount required to be on deposit therein, upon
receipt of a Request of the Authority, the Trustee shall withdraw the excess from the applicable
Rebate Account and then credit the excess to the Revenue Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed by Request of
the Authority, to the United States Treasury, out of amounts in the Rebate Account,
(A) Not later than 60 days after the end of (A) the fifth Bond Year, and
(B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable
Arbitrage as set forth in a Certificate of the Authority delivered to the Trustee calculated as of the
end of such Bond Year; and
(B) Not later than 60 days after the payment of all the Bonds, an amount
equal to 100% of the Rebatable Arbitrage as set forth in a Certificate of the Authority delivered to the
Trustee calculated as of the end of such applicable Bonds Year, and any income attributable to the
Rebatable Arbitrage, as set forth in a Certificate of the Authority delivered to the Trustee computed
in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from a Rebate
Account, the amount in such Rebate Account is not sufficient to make such payment when such
payment is due, the Authority shall calculate or cause to be calculated the amount of such deficiency
and deposit with the Trustee an amount received from any legally available source equal to such
deficiency prior to the time such payment is due. Each payment required to be made pursuant to this
Subsection (b) shall be made to the Internal Revenue Service Center, Ogden, Utah 84207 on or
before the date on which such payment is due, and shall be accompanied by Internal Revenue Service
Form 8038 T (which form shall be completed and provided by the Authority to the Trustee), or shall
be made in such other manner as provided under the Code, in each case as specified in a Request of
the Authority delivered to the Trustee.
(c) Alternative Penalty Account.
(i) Six Month Computation. If the 11/2% Penalty has been elected, within 85 days
of each particular Six Month Period, the Authority shall determine or cause to be determined whether
the 11/2% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six
Month Period. The Authority shall obtain expert advice in making such determinations.
(ii) Six Month Transfer. Within 85 days of the close of each Six Month Period,
upon receipt of the Request of the Authority, the Trustee shall deposit in the Alternative Penalty
Account from any source of funds (specified by the Authority in the aforesaid Request), if and to the
extent required, so that the balance in the Alternative Penalty Account for a Series equals the amount
of 1 %2% Penalty (as specified in such Request) due and payable to the United States Treasury
determined by the Authority as provided in subsection (c)(i) above. In the event that immediately
following the transfer provided in the previous sentence, the amount then on deposit to the credit of
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the Alternative Penalty Account exceeds the amount required to be on deposit therein to make the
payments required by subsection (c)(iii) below, the Trustee, pursuant to a Certificate of the
Authority, may withdraw the excess from the Alternative Penalty Account and credit the excess to
the Revenue Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed by Request of
the Authority, to the United States Treasury, out of amounts in the Alternative Penalty Account, not
later than 90 days after the close of each Six Month Period the 1 %2% Penalty (as specified by the
Authority in the aforesaid Request), if applicable and payable, computed by the Authority in
accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment
required to be made from the Alternative Penalty Account, the amount in such account is not
sufficient to make such payment when such payment is due, the Authority shall calculate the amount
of such deficiency and deposit with the Trustee an amount received from any legally available source
of funds equal to such deficiency for transfer into the Alternative Penalty Account prior to the time
such payment is due. Each payment required to be made pursuant to this Subsection (c)(iii) shall be
made to the Internal Revenue Service, Ogden, Utah 84207 on or before the date on which such
payment is due, and shall be accompanied by Internal Revenue Service Form 8038 T (which form
shall be completed and provided by the Authority to the Trustee) or shall be made in such other
manner as provided under the Code.
(d) Disposition of Unexpended Funds. Any funds remaining in the accounts of the
Rebate Fund after redemption and payment of the Bonds and the payments of all amounts described
in Subsection (b)(iii) or (c)(iii) (whichever is applicable) or provision made therefor satisfactory to
the Trustee, including accrued interest and payment of all applicable fees to the Trustee, may, upon
written request, be withdrawn by the Trustee and remitted to the Authority and utilized in any
manner by the Authority.
(e) Survival of Defeasance. Notwithstanding anything in this Section to the contrary, the
obligation to comply with the requirements of this Section shall survive the defeasance of the Bonds.
(f) Trustee. The Trustee shall have no responsibility to monitor or calculate any
amounts payable to the U.S. Treasury pursuant to this Section and shall be deemed conclusively to
have complied with its obligations hereunder if it follows the written instructions of the Authority
given pursuant to this Section.
Section 5.9 Local Obligations. Subject to the provisions of this Indenture (including
Article VI), the Authority and the Trustee shall use reasonable efforts to collect all amounts due from
the Community Facilities Districts pursuant to the Local Obligations and shall enforce, and take all
steps, actions and proceedings which the Authority and Trustee determine to be reasonably necessary
for the enforcement of all of the rights of the Authority thereunder and for the enforcement of all of
the obligations and covenants of the City and the Community Facilities Districts thereunder. The
Authority shall instruct the Community Facilities Districts to authenticate and deliver to the Trustee
the Local Obligations registered in the name of the Trustee.
The Authority, the Trustee and a Community Facilities District may at any time consent to,
amend or modify any of the Local Obligations of such Community Facilities District pursuant to the
terms thereof, (a) with the prior consent of the Bond Insurer and the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding, or (b) without the consent of any of the
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Owners or the Bond Insurer if such amendment or modification is for any one or more of the
following purposes:
(a) to cure any ambiguity or formal defects or omissions or to correct any
inconsistent provisions in the Local Obligation Bond Indentures;
(b) to grant or confer upon the holders of the Local Obligations any additional
rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the
holders of the Local Obligations; or
(c) to add to the conditions, limitations and restrictions on the issuance of bonds
or other obligations under the provisions of the Indenture other conditions, limitations and
restrictions thereafter to be observed; or
(d) to add to the covenants and agreements of the Community Facilities Districts
contained in such Local Obligations other covenants and agreements thereafter to be observed by the
Community Facilities Districts or to surrender any right or power therein reserved to or conferred
upon the Community Facilities Districts.
Section 5.10 Sale of Local Obligations. Notwithstanding anything in this Indenture to the
contrary, though subject to the prior written consent of the Bond Insurer, the Authority may cause the
Trustee to sell, from time to time, all or a portion of a Series of Local Obligations, provided that the
Authority shall deliver to the Trustee:
(a) a certificate of an Independent Accountant certifying that, following the sale
of such Local Obligations and the Revenues to be paid to the Authority (assuming the timely
payment of amounts due thereon with respect to any Local Obligations not then in default), together
with interest and principal due on any Defeasance Securities pledged to the repayment of the Bonds
and the Revenues then on deposit in the funds and accounts established hereunder (valuing any
Permitted Investments held hereunder at the then fair market value thereof), will be sufficient to pay
the principal of and interest on the Bonds when due;
(b) if any Bonds are then rated by Standard & Poor's a notification from
Standard & Poor's to the effect that such rating will not be withdrawn or reduced as a result of such
sale of Local Obligations;
(c) an opinion of Bond Counsel that such sale of Local Obligations is authorized
under the provisions of this Indenture and will not adversely affect the exclusion of interest on any
Bonds theretofore issued on a tax-exempt basis from gross income for purposes of federal income
taxation; and
(d) to provide for the issuance of an additional Series of Local Obligations
subject to and in accordance with the provisions of the applicable Local Obligation Bond Indenture.
Upon compliance with the foregoing conditions by the Authority, the Trustee shall sell such
Local Obligations in accordance with the Request of the Authority and disburse the proceeds of the
sale of such Local Obligations to the Authority or upon the receipt of a Request of the Authority shall
deposit such proceeds in the Revenue Fund.
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Section 5.11 Continuing Disclosure Agreement. The Authority hereby covenants and
agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure
Agreement to be executed and delivered by the Authority in connection with the issuance of the
Bonds. Notwithstanding any other provision of this Indenture, failure of the Authority to comply
with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any
Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the Authority to comply with its
obligations under this Section 5.11. For purposes of this Section, `Beneficial Owner" means any
person which has or shares the power, directly or indirectly, to make investment decisions
concerning ownership of any Bonds (including persons holding Bonds through nominees,
depositories and other intermediaries).
Section 5.12 Further Assurances. The Authority 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 Indenture, and for the better
assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this
Indenture.
Section 5.13 Pledged Revenues. The Authority represents it has not heretofore made a
pledge of, granted a lien on or security interest in, or made an assignment or sale of the Revenues that
ranks on a parity with or prior to the pledge granted under this Indenture. The Authority shall not
hereafter make any pledge or assignment of, lien on, or security interest in the Revenues payable
senior to or on a parity with the pledge of Revenues established under this Indenture.
ARTICLE VI
THE TRUSTEE
Section 6.1 Appointment of Trustee. The Bank of New York Mellon Trust Company,
N.A., with a corporate trust office presently located in Los Angeles, California, a national banking
association organized and existing under and by virtue of the laws of the United States of America, is
hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be
deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this
Indenture. The Authority agrees that it will maintain a Trustee which is a (a) national banking
association that is supervised by the Office of the Comptroller of the Currency and has at least Two
Hundred Fifty Million Dollars ($250,000,000) of assets; (b) a state -chartered commercial bank that is
a member of the Federal Reserve System and has at least $1 billion of assets; or (c) otherwise
approved by the Bond Insurer in writing.
The Trustee is hereby authorized to pay the principal of and interest and redemption premium
(if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to
maturity, to make regularly scheduled interest payments, and to cancel any Bond upon payment
thereof.
The Bond Insurer shall receive prior written notice of any name change of the Trustee.
Section 6.2 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it
by this Indenture, and agrees to perform said trusts, but only upon and subject to the following
express terms and conditions:
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(a) The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. These duties shall be deemed purely ministerial in nature,
and the Trustee shall not be liable except for the performance of such duties, and no implied
covenants or obligations shall be read into this Indenture against the Trustee. In case an Event of
Default hereunder has occurred (which has not been cured or waived), the Trustee may exercise such
of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill
and diligence in their exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform the
duties required of it hereunder either directly or by or through attorneys, agents, custodians,
nominees or receivers appointed with due care, and shall not be responsible for any willful
misconduct or negligence on the part of any agent, attorney, custodian, nominee or receiver so
appointed. The Trustee may consult with and act upon the advice of counsel (which may be counsel
to the Authority) concerning all matters of trust and its duty hereunder and may conclusively rely
upon and shall be wholly protected in reliance upon the advice or opinion of such counsel in respect
of any action taken or omitted by it in accordance herewith.
(c) The Trustee shall not be responsible for any recital herein, or in the Tax
Certificate or the Bonds, or for any of the supplements thereto or instruments of further assurance, or
for the validity, effectiveness or the sufficiency of the security for the Bonds issued hereunder or
intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions or agreements on the part of the Authority
hereunder or under Tax Certificate. The Trustee shall have no responsibility, opinion, or liability
with respect to any information, statement, or recital in any offering memorandum, official
statement, or other disclosure material prepared or distributed with respect to the issuance of the
Bonds.
(d) Except as provided in Section 3.2 hereof, the Trustee shall not be accountable
for the use of any proceeds of sale of the Bonds delivered hereunder. The Trustee may become the
Owner of Bonds secured hereby with the same rights which it would have if not the Trustee; may
acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same
rights it would have if it were not the Trustee; and may act as a depository for and permit any of its
officers or directors to act as a member of, or in any other capacity with respect to, any committee
formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the
Owners of the majority in aggregate principal amount of the Bonds then Outstanding.
(e) The Trustee shall be entitled to request and receive written instructions from
the Authority and shall have no responsibility or liability for any losses or damages of any nature
that may arise from any action taken or not taken by the Trustee in accordance with the written
direction thereof. The Trustee may conclusively reply and shall be protected and shall incur no
liability in acting, or refraining from acting, in good faith and without negligence, in reliance upon
any notice, request, direction, consent, certificate, requisition, opinion, order, affidavit, letter,
telegram, bond, debenture, note, other evidence of indebtedness (including any Bond) or other paper
or document believed by it to be genuine and correct and to have been signed, sent or presented by
the proper person or persons, not only as to due execution, validity and effectiveness, but also as to
the truth and accuracy of any information contained therein. The Trustee shall fully rely on such
request or certificate and shall not be required to make any investigation in connection therewith.
Any action taken or omitted to be taken by the Trustee without negligence pursuant to this Indenture
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upon the written request or direction, authority or consent of any person who at the time of making
such request or direction or giving such authority or consent is the Owner of any Bond, shall be
conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in
exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an
Owner of any Bond or to take any action at such person's request unless the ownership of such Bond
by such person shall be reflected on the Bond Register.
(f) As to the existence or non-existence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a
Certificate of the Authority and/or opinion of counsel as sufficient evidence of the facts therein
contained and prior to the occurrence of an Event of Default hereunder of which the Trustee has
been given notice or is deemed to have notice, as provided in Section 6.2(h) hereof, shall also be at
liberty to accept a Certificate of the Authority and/or opinion of counsel to the effect that any
particular dealing, transaction or action is necessary or expedient, and shall be fully protected in
relying thereon, but may at its discretion secure such further evidence deemed by it to be necessary
or advisable, but shall in no case be bound to secure the same.
(g) The permissive right of the Trustee to do things enumerated in this Indenture
shall not be construed as a duty and notwithstanding any other provision of this Indenture, the
Trustee shall not be answerable for other than its negligence or willful misconduct. The immunities
and exceptions from liability of the Trustee shall extend to its officers, directors, employees and
agents.
(h) The Trustee shall not be required to take notice or be deemed to have notice
of any Event of Default hereunder except where a Responsible Officer has actual knowledge of such
Event of Default and except for the failure by the Authority to make any of the payments to the
Trustee required to be made by the Authority pursuant hereto, including payments on the Local
Obligations, or failure by the Authority to file with the Trustee any document required by this
Indenture to be so filed subsequent to the issuance of the Bonds, unless a Responsible Officer shall
be specifically notified in writing of such default by the Authority or by the Owners of at least
twenty five percent (25%) in aggregate principal amount of the Outstanding Bonds and all notices or
other instruments required by this Indenture to be delivered to the Trustee must, in order to be
effective, be delivered to a Responsible Officer at the Trust Office of the Trustee, and in the absence
of such notice so delivered the Trustee may conclusively assume there is no Event of Default
hereunder except as aforesaid. Delivery of a notice to the officer and address for the Trustee set
forth in Section 9.12 hereof, as updated by the Trustee from time to time, shall be deemed notice to a
Responsible Officer.
(i) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right fully to inspect all books,
papers and records of the Authority pertaining to the Bonds, and to make copies of any of such
books, papers and records such as may be desired but which is not privileged by statute or by law.
0) The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the performance of its duties
hereunder.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
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whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable by the Trustee in its sole discretion
for the purpose of establishing the right of the Authority to the execution of any Bonds, the
withdrawal of any cash, or the taking of any other action by the Trustee.
(1) Before taking any action referred to in Sections 6.5, 8.2, or this Article, the
Trustee may require that security or indemnity satisfactory to it in its sole and exclusive discretion
be furnished for the reimbursement of all expenses to which it may be put and to protect it against all
liability, except liability which is adjudicated to have resulted from its negligence or willful
misconduct in connection with any such action.
(m) All moneys received by the Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds.
(n) Whether or not expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be
subject to the provisions of this Article VI.
(o) The Trustee shall not be considered in breach of or in default in its
obligations hereunder or progress in respect thereto in the event of delay in the performance of such
obligations due to unforeseeable causes beyond its control and without its fault or negligence,
including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government,
acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion, mob violence, riot, war, inability to procure or general sabotage or rationing
of labor, equipment, facilities, sources of energy, material or supplies in the open market, loss or
malfunctions of utilities, computer (hardware or software) or communications service, accidents,
labor disputes, the unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility, litigation or arbitration involving a party or others relating to zoning or
other governmental action or inaction pertaining to the project, malicious mischief, condemnation,
and unusually severe weather or delays of supplies or subcontractors due to such causes or any
similar event and/or occurrences beyond the control of the Trustee.
(p) The Trustee agrees to accept and act upon written instructions and/or
directions provided via Electronic Means pursuant to this Indenture provided, however, that: (a)
such originally executed instructions and/or directions shall be signed by a person as may be
designated and authorized to sign for the party signing such instructions and/or directions, and (b)
the Trustee shall have received a current incumbency certificate containing the specimen signature
of such designated person. Any such instructions, directions and other communications furnished by
electronic transmission shall be in the form of attachments in PDF format.
(q) The Trustee shall not be liable in connection with the performance of its
duties hereunder except for its own negligence or willful misconduct.
(r) The Trustee shall have the right to accept and act upon instructions, including
funds transfer instructions ("Instructions") given pursuant to this Indenture and related financing
documents and delivered using Electronic Means ("Electronic Means" shall mean the following
communications methods: e-mail, secure electronic transmission containing applicable
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authorization codes, passwords and/or authentication keys issued by the Trustee, or another method
or system specified by the Trustee as available for use in connection with its services hereunder);
provided, however, that the Authority shall provide to the Trustee an incumbency certificate listing
officers with the authority to provide such Instructions ("Authorized Officers") and containing
specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by
the Authority whenever a person is to be added or deleted from the listing. If the Authority elects to
give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act
upon such Instructions, the Trustee's understanding of such Instructions shall be deemed controlling.
The Authority understands and agrees that the Trustee cannot determine the identity of the actual
sender of such Instructions and that the Trustee shall conclusively presume that directions that
purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to
the Trustee have been sent by such Authorized Officer. The Authority shall be responsible for
ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the
Authority and all Authorized Officers are solely responsible to safeguard the use and confidentiality
of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the
Authority. The Trustee shall not be liable for any losses, costs or expenses arising directly or
indirectly from the Trustee's reliance upon and compliance with such Instructions notwithstanding
such directions conflict or are inconsistent with a subsequent written instruction. The Authority
agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the
Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and
the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and
risks associated with the various methods of transmitting Instructions to the Trustee and that there
may be more secure methods of transmitting Instructions than the method(s) selected by the
Authority; (iii) that the security procedures (if any) to be followed in connection with its
transmission of Instructions provide to it a commercially reasonable degree of protection in light of
its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of
any compromise or unauthorized use of the security procedures.
Section 6.3 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
payment and reimbursement by the Authority for reasonable fees for its services rendered hereunder
and all advances (including any interest on advances), counsel fees and expenses (including fees and
expenses of outside counsel and the allocated costs of internal attorneys) and other expenses
reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon
the occurrence of an Event of Default hereunder, but only upon an Event of Default with respect to a
Series, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon
the amounts held in Funds and accounts for such Series hereunder for the foregoing fees, charges and
expenses incurred by it respectively. The Trustee's right to payment of such fees and expenses shall
survive the discharge and payment or defeasance of the Bonds and termination of this Indenture, and
the resignation or removal of the Trustee.
Section 6.4 Notice to Bond Owners of Default. If an Event of Default hereunder occurs
with respect to any Bonds of which the Trustee has been given, or is deemed to have notice, as
provided in Section 6.2(h) hereof, then the Trustee shall promptly give written notice thereof to the
Owner of each such Bond unless such Event of Default shall have been cured before the giving of
such notice.
Section 6.5 Intervention by Trustee. In any judicial proceeding to which the Authority
is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the
interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners,
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and subject to Section 6.2(1) hereof, shall do so if requested in writing by the Owners of at least
twenty five percent (25%) in aggregate principal amount of such Bonds then Outstanding.
Section 6.6 Removal of Trustee. No removal or termination of the Trustee shall become
effective until a successor meeting the requirements below or otherwise acceptable to the Bond
Insurer, so long as the Insurance Policy is in full force and effect and the Bond Insurer has not
defaulted on its obligations thereunder, shall be qualified and appointed and shall have accepted its
appointment. The Owners of a majority in aggregate principal amount of the Outstanding Bonds may
and the Authority may, so long as no Event of Default then exists, upon 30 calendar days' prior
written notice to the Trustee and the Bond Insurer, remove the Trustee initially appointed, and any
successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and
the Bond Insurer. Upon any such removal, the Authority shall appoint a successor or successors
thereto; provided that any such successor shall be a bank, association or trust company meeting the
requirements set forth in Section 6.1 hereof.
Section 6.7 Resignation by Trustee. The Trustee and any successor Trustee may at any
time resign and be discharged from its duties and obligations hereunder by giving prior written notice
of its intention to resign to the Authority, the Community Facilities Districts, the Bond Insurer and
the City by registered or certified mail. Upon receiving such notice of resignation, the Authority
shall promptly appoint a successor Trustee to which the Bond Insurer consents. No resignation of the
Trustee shall become effective until a successor meeting the requirements below or otherwise
acceptable to the Bond Insurer, so long as the Insurance Policy is in full force and effect and the
Bond Insurer has not defaulted on its obligations thereunder, shall be qualified and appointed and
shall have accepted its appointment. Upon such acceptance, the Authority shall cause notice thereof
to be sent to the Bond Insurer and the Bond Owners at their respective addresses set forth on the
Bond Register.
Section 6.8 Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.6 or 6.7, respectively, the Authority shall promptly
appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to
appoint a successor Trustee within thirty (30) calendar days following the delivery to the Trustee of
the instrument described in Section 6.6 or within thirty (30) calendar days following the receipt of
notice by the Authority, the Community Facilities Districts, the Bond Insurer and the City pursuant to
Section 6.7, the Trustee may, at the expense of the Authority, petition any court of competent
jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 6.1
hereof. Any such successor Trustee appointed by such court shall become the successor Trustee
hereunder notwithstanding any action by the Authority purporting to appoint a successor Trustee
following the expiration of such thirty (30) calendar day period.
Section 6.9 Merger or Consolidation. Any organization or entity into which the Trustee
may be merged or converted or with which it may be consolidated, or any organization or entity
resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any
organization or entity succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such organization or entity shall be
otherwise qualified and eligible under this Article 6, without the execution or filing of any paper or
any further act on the part of any of the parties hereto except where an instrument of transfer or
assignment is required by law to effect such succession, anything herein to the contrary
notwithstanding.
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Section 6.10 Concerning any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an
instrument in writing accepting such appointment hereunder and to the predecessor Trustee an
instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the
successor Trustee serves as Trustee hereunder and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts,
duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Request of
the Authority, or of the Trustee's successor, execute and deliver an instrument transferring to such
successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and
every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder
to its successor, provided, however, the Trustee shall be paid in full for any fees and expenses owing
to it prior to or contemporaneously with the signing of any instrument or agreement to effect the
transfer to a successor Trustee. Should any instrument in writing from the Authority be required by
any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers
and duties hereby vested or intended to be vested in the predecessor Trustee, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.
Section 6.11 Appointment of Co -Trustee. It is the purpose of this Indenture that there
shall be no violation of any law of any jurisdiction (including particularly the law of the State)
denying or restricting the right of banking corporations or associations to transact business as a
trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in
particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee
deems that by reason of any present or future law of any jurisdiction it may not exercise any of the
powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as
herein granted, or take any other action which may be desirable or necessary in connection therewith,
it may be necessary that the Trustee appoint an additional individual or institution as a separate
co -trustee. The following provisions of this Section 6.11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution
as a separate or co -trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such
separate or co -trustee but only to the extent necessary to enable such separate or co -trustee to
exercise such powers, rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate or co -trustee shall run to and be enforceable by either of the Trustee
or separate or co -Trustee.
Should any instrument in writing from the Authority be required by the separate trustee or
co -trustee so appointed by the Trustee or the Authority for more fully and certainly vesting in and
confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.
In case any separate trustee or co -trustee, or a successor to either, shall become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co -trustee, so far as permitted by law, shall vest in and be exercised by the Trustee
until the appointment of a new trustee or successor to such separate trustee or co -trustee.
Section 6.12 Indemnification; Limited Liability of Trustee. The Authority further
covenants and agrees to indemnify and save the Trustee and its officers, officials, directors, agents
and employees, harmless from and against any damages, loss, cost, claims, expense (including legal
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fees and expenses of its attorneys), and liabilities which it may incur arising out of or in the exercise
and performance of its powers and duties hereunder, including the costs and expenses of defending
against any claim (other than claims asserted by the Authority) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, or in connection with enforcing any
remedies hereunder and under any related documents, but excluding any and all losses, damage,
claim, expenses and liabilities which are due to the negligence or intentional misconduct of the
Trustee, its officers, directors, agents or employees. In no event shall the Trustee be responsible or
liable for any consequential, punitive, indirect, incidental, or special damages or loss of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of action. No provision
in this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any
financial liability hereunder unless security or indemnity satisfactory to it in its sole and absolute
discretion against such liability or risk is provided to it. The Trustee may refuse to perform any duty
or exercise any right or power which would require it to expend its own funds or risk any liability if
it shall reasonably believe that repayment of such funds or adequate indemnity against such risk is
not reasonably assured to it. The Trustee shall not be liable for any action taken or omitted to be
taken by it in accordance with the direction of a majority (or any lesser amount that may direct the
Trustee in accordance with the provisions of the Indenture) of the Owners of the principal amount of
Bonds Outstanding or the Bond Insurer relating to the time, method and place of conducting any
proceeding or remedy available to the Trustee under this Indenture. The Trustee shall not be liable
for any errors of judgment made in good faith by a Responsible Officer, unless it shall be proved that
the Trustee was negligent or engaged in willful misconduct in ascertaining the pertinent facts. The
rights of the Trustee and the obligations of the Authority under this Section 6.12 shall survive
termination of this Indenture, discharge of the Bonds and resignation or removal of the Trustee.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.1 Amendment Hereof. This Indenture and the rights and obligations of the
Authority and of the Owners of the Bonds may be modified or amended at any time by a
Supplemental Indenture which shall become binding when the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding and the prior written consent of the Bond Insurer are
filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce
the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the
principal, interest or redemption premiums, if any, at the time and place and at the rate and in the
currency provided therein of any Bond without the express written consent of the Owner of such
Bond and the Bond Insurer with respect to any Insured Bond, (b) reduce the percentage of Bonds
required for the written consent to any such amendment or modification, or (c) without written
consent of the Trustee, modify any of the rights or obligations of the Trustee.
This Indenture and the rights and obligations of the Authority and of the Owners of the
Bonds may also be modified or amended at any time by a Supplemental Indenture which shall
become binding upon adoption, without consent of any Bond Owners and the Bond Insurer, to the
extent permitted by law but only for any one or more of the following purposes:
(a) to cure any ambiguity or formal defects or omissions or to correct any
inconsistent provisions in this Indenture or any Supplemental Indenture;
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(b) to grant or confer upon the holders of the Bonds any additional rights,
remedies, powers, authority or security that may lawfully be granted to or conferred upon the
holders of the Bonds; or
(c) to add to the conditions, limitations and restrictions on the issuance of bonds
or other obligations under the provisions of the Indenture other conditions, limitations and
restrictions thereafter to be observed; or
(d) to add to the covenants and agreements of the Authority in this Indenture
other covenants and agreements thereafter to be observed by the Authority or to surrender any right
or power therein reserved to or conferred upon the Authority; or
(e) to issue Additional Bonds in accordance with Section 5.6 hereof.
In executing or accepting any Supplemental Indenture or amendment as permitted by this
Article or the modification thereby of the trusts created by this Indenture, the Trustee shall be
furnished, at the expense of the Authority, an opinion of Bond Counsel that any such Supplemental
Indenture entered into by the Authority and the Trustee is authorized and complies with the
provisions of this Indenture and the Trustee may conclusively rely upon such opinion and shall be
fully protected in relying thereon.
Section 7.2 Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may be,
shall thereafter be determined, exercised and enforced hereunder subject in all respects to such
modification and amendment, and all the terms and conditions of any Supplemental Indenture shall
be deemed to be part of this Indenture for any and all purposes.
Section 7.3 Endorsement or Replacement of Bonds After Amendment. After the
effective date of any action taken as hereinabove provided, the Authority may determine that any
affected Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date
and presentation of its Bond for that purpose at the Trust Office of the Trustee, a suitable notation as
to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so
modified as, in the opinion of the Authority, shall be necessary to conform to such Bond Owners'
action shall be prepared and executed, and in that case upon demand of the Owner of any Bond
Outstanding at such effective date such new Bonds shall be exchanged at the Trust Office of the
Trustee, without cost to each Bond Owner, for Bonds then Outstanding, upon surrender of such
Outstanding Bonds.
Section 7.4 Amendment by Mutual Consent. The provisions of this Article VII shall
not prevent any Bond Owner, with the Bond Insurer's consent, from accepting any amendment as to
the particular Bond held by such Owner, provided that due notation thereof is made on such Bond.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 8.1 Events of Default. The following events shall be Events of Default
hereunder.
(a) Default in the due and punctual payment of the principal of any Bond when
and as the same shall become due and payable, whether at maturity as therein expressed, by
proceedings for redemption, by declaration or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any
Bond when and as such interest installment shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants,
agreements or conditions on its part in this Indenture or in the Bonds contained, if such default shall
have continued for a period of thirty (30) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to
the Authority and the Trustee by the Owners of not less than twenty five percent (25%) in aggregate
principal amount of the Bonds at the time Outstanding, provided that such default (other than a
default arising from nonpayment of the Trustee's fees and expenses, which must be cured within
such 30 day period) shall not constitute an Event of Default hereunder if the Authority shall
commence to cure such default within said thirty (30) day period and thereafter diligently and in
good faith shall cure such default within a reasonable period of time.
Section 8.2 Remedies; Rights of Bond Owners. Upon the occurrence of an Event of
Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of
the principal of, premium, if any, and interest on the Outstanding Bonds, and to enforce any rights of
the Trustee under or with respect to this Indenture. Subject to Section 8.3, in the event of an Event of
Default arising out of a nonpayment of Trustee's fees and expenses, the Trustee may sue the
Authority to seek recovery of its fees and expenses, provided, however, that such recovery may be
made only from the funds of the Authority and not from Revenues.
If an Event of Default shall have occurred and be continuing and if requested to do so by the
Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds,
and, in each case, if indemnified as provided in Section 6.2(l), the Trustee shall be obligated to
exercise such one or more of the rights and powers conferred by this Article VIII and, as applicable,
under the Local Obligations, as the Trustee, being advised by counsel, shall deem most expedient in
the interests of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the
Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall
be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bond
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver of any such Event of Default or
acquiescence therein; such right or power may be exercised from time to time as often as may be
deemed expedient.
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In no event shall the principal of the Bonds be accelerated.
When the Trustee incurs expenses or renders services after the occurrence of an Event of
Default, such expenses and the compensation for such services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency, arrangement, moratorium,
reorganization or other debtor relief law.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Bond Owners any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Bond Owners in any such proceeding without the approval of the
Bond Owners so affected.
Section 8.3 Application of Revenues and Other Funds After Event of Default. All
amounts received by the Trustee with respect to the Bonds pursuant to any right given or action taken
by the Trustee under the provisions of this Indenture relating to the Bonds shall be applied by the
Trustee in the following order upon presentation of the several Bonds, and the stamping thereon of
the amount 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 Trustee in declaring such Event of
Default and in carrying out the provisions of this Article VIII, including reasonable compensation to
its agents, attorneys and counsel (including outside counsel and the allocated costs of internal
attorneys), and to the payment of all other outstanding fees and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds then
due and unpaid, with interest on overdue installments of principal and interest to the extent permitted
by law at the net effective rate of interest then borne by the Outstanding Bonds; provided, however,
that in the event such amounts shall be insufficient to pay in full the full amount of such interest and
principal, then such amounts shall be applied in the following order of priority;
(a) first to the payment of all installments of interest on the Bonds then due and
unpaid,
(b) second, to the payment of all installments of principal of the Bonds then due
and unpaid, and
(c) third, to the payment of interest on overdue installments of principal and
interest on Bonds.
Section 8.4 Control by Bond Insurer Upon Default. Anything herein notwithstanding,
so long as the Insurance Policy is in full force and effect and the Bond Insurer has not defaulted on
its obligations thereunder, upon the occurrence and continuance of a default or an Event of Default;
(a) the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies
granted to the holders of the Insured Bonds or the Trustee for the benefit of the holders of the Insured
Bonds hereunder; (b) no default or Event of Default may be waived without the Bond Insurer's
written consent; and (c) the Bond Insurer shall be deemed to be the sole owner of the Insured Bonds
for all purposes hereunder, including, without limitations, for purposes of exercising remedies and
approving amendments.
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Section 8.5 Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the
rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall be entitled, as a
matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts
pledged hereunder, pending such proceedings, with such powers as the court making such
appointment shall confer.
Section 8.6 Non Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds, shall affect or impair the obligation of the Authority, which is absolute
and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the
Bonds at the respective dates of maturity, as herein provided, out of the Revenues and other moneys
herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Bond Owners
shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies
on any such subsequent default or breach. No delay or omission of the Trustee or 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 Trustee or Bond Owners by the Bond Law or by this
Article VIII may be enforced and exercised from time to time and as often as shall be deemed
expedient by the Trustee or the Bond Owners, as the case may be.
Section 8.7 Rights and Remedies of Bond Owners. No Owner of any Bond issued
hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any
remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the
Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in
aggregate principal amount of all the Bonds then Outstanding shall have made written request upon
the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding
in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable
to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such
request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of
sixty (60) days after such written request shall have been received by, and said tender of indemnity
shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy
hereunder; it being understood and intended that no one or more Owners of Bonds shall have any
right in any manner whatever by his or their action to enforce any right under this Indenture, except
in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of
this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal
benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest and
premium (if any) on such Bond as herein provided or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
Section 8.8 Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
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proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the Authority, the Trustee and the Bond Owners
shall be restored to their former positions and rights hereunder, respectively, with regard to the
property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as
if no such proceedings had been taken.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Limited Liability of Authority. Notwithstanding anything in this Indenture
contained, the Authority shall not be required to advance any moneys derived from any source of
income other than the Revenues or for the payment of the principal of or interest on the Bonds, or
any premiums upon the redemption thereof, or for the performance of any covenants herein
contained (except to the extent any such covenants are expressly payable hereunder from the
Revenues). The Authority may, however, advance funds for any such purpose, provided that such
funds are derived from a source legally available for such purpose and may be used by the Authority
for such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as
in this Indenture provided. The general fund of the Authority is not liable, and the credit of the
Authority is not pledged, for the payment of the interest and premium (if any) on or principal of the
Bonds. The Owners of the Bonds shall never have the right to compel the forfeiture of any property
of the Authority. The principal of and interest on the Bonds and any premiums upon the redemption
of any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any
property of the Authority or upon any of its income, receipts or revenues except the Revenues and
other funds pledged to the payment thereof as in this Indenture provided.
Section 9.2 Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee, the
Bond Insurer and the Owners of the Bonds, any right, remedy or claim under or by reason of this
Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and
on behalf of the Authority shall be for the sole and exclusive benefit of the Trustee, the Bond Insurer
and the Owners of Bonds.
Section 9.3 Discharge of Indenture. The Authority may pay and discharge any or all of
the Outstanding Bonds 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 and
premium (if any) on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
money which, together with the available amounts then on deposit in the funds and accounts
established with the Trustee pursuant to this Indenture and available for such purpose, is fully
sufficient to pay such Bonds, including all principal, interest and redemption premiums; or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust,
Defeasance Securities in such amount as an Independent Accountant shall determine will, together
with the interest to accrue thereon and available moneys then on deposit in the funds and accounts
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established with the Trustee pursuant to this Indenture and available for such purpose, be fully
sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and
redemption premiums) at or before their respective maturity dates.
[Any Outstanding Bond or Bonds shall be deemed to have been paid and discharged under
(b) or (c) above if (i) in the case of Bonds to be redeemed prior to the maturity thereof, notice of such
redemption shall have been provided pursuant to Section 2.2(e) hereof or provision satisfactory to the
Trustee shall have been made for the provision of such notice, (ii) the Authority shall deliver to the
Trustee and the Bond Insurer draft copies of (A) an escrow agreement with respect to the deposits
under (b) or (c) above, (B) an opinion of Bond Counsel, to the effect that the requirements of this
Indenture have been satisfied with respect to such discharge of Bonds, and (C) with respect to a
deposit under (c) above, a verification report of an Independent Accountant (a "Verification
Report"), regarding the sufficiency of the escrow fund.) The Bond Insurer shall be provided with
final drafts of the above -referenced documentation not less than three Business Days prior to any
defeasance with respect to the Bonds. The opinion and Verification Report shall be addressed to the
Bond Insurer and shall be in form and substance satisfactory to the Bond Insurer. In addition, the
escrow agreement shall provide (a) that any substitution of securities following the execution and
delivery of the escrow agreement shall require the delivery of (i) a Verification Report; (ii) an
opinion of Bond Counsel that such substitution will not adversely affect the exclusion (if interest on
the Bonds is excludable) from gross income of the holders of the Bonds of the interest on the Bonds
for federal income tax purposes; and (iii) the prior written consent of the Bond Insurer, which
consent will not be unreasonably withheld; (b) the Authority will not exercise any prior optional
redemption of the Bonds secured by the escrow agreement or any other redemption other than
mandatory sinking fund redemptions unless (i) the right to make any such redemption has been
expressly reserved in the escrow agreement and such reservation has been disclosed in detail in the
official statement for the refunding bonds, and (ii) as a condition to any such redemption there shall
be provided to the Bond Insurer a Verification Report as to the sufficiency of the escrow receipts
without reinvestment to meet the escrow requirements remaining following any such redemption;
and (iii) the Authority shall not amend the escrow agreement or enter into a forward purchase
agreement or other agreement with respect to rights in the escrow without the prior written consent of
the Bond Insurer.
Defeasance shall be accomplished only with an irrevocable deposit in escrow of cash and/or
Defeasance Securities. Further substitutions of securities in the escrow are not permitted. The
deposit in the escrow must be sufficient, without reinvestment, to pay all principal and interest as
scheduled on the Bonds to and including the date of redemption.
This Indenture shall not be discharged until all amounts due or to become due to the Bond
Insurer shall have been paid in full in accordance with Section 10.3. The Authority's obligation to
pay such amounts shall expressly survive payment in full of the payments of principal of and interest
on the Bonds.]
Section 9.4 Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Authority is named or referred
to, such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in this
Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
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Section 9.5 Content of Certificates. Every certificate by or on behalf of the Authority
with respect to compliance with a condition or covenant provided for in this Indenture shall include
(a) a statement that the person or persons making or giving such certificate have read such covenant
or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions contained in such
certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to
be made such examination or investigation as is necessary to enable them to express an informed
opinion as to whether or not such covenant or condition has been complied with; and (d) a statement
as to whether, in the opinion of the signers, such condition or covenant has been complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar as it
relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such
officer knows that the certificate or opinion or representations with respect to the matters upon which
his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should
have known that the same were erroneous. Any such certificate or opinion or representation made or
given by counsel may be based, insofar as it relates to factual matters, on information with respect to
which is in the possession of the Authority, or upon the certificate or opinion of or representations by
an officer or officers of the Authority, unless such counsel knows that the certificate or opinion or
representations with respect to the matters upon which his certificate, opinion or representation may
be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that
the same were erroneous.
Section 9.6 Execution of Documents by Bond Owners. Any request, consent or other
instrument required by this Indenture to be signed and executed by Bond Owners may be in any
number of concurrent writings of substantially similar tenor and may be signed or executed by such
Bond Owners in person or by agent or agents duly appointed in writing. Proof of the execution of
any such request, consent or other instrument or of a writing appointing any such agent, shall be
sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the
Authority if made in the manner provided in this Section 9.6.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to
take acknowledgements of deeds, certifying that the person signing such request, consent or other
instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be conclusively proved by the Bond Register. Any request,
consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and the
Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or
suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In
lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call
and hold a meeting of the Bond Owners upon such notice and in accordance with such rules and
obligation as the Trustee considers fair and reasonable for the purpose of obtaining any such action.
Section 9.7 Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or
waiver under this Indenture, Bonds which are owned or held by or for the account of the Authority,
the City or the Community Facilities Districts (but excluding Bonds held in any employees' or
retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such
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determination, provided, however, that for the purpose of determining whether the Trustee shall be
protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the
Trustee knows to be so owned or held shall be disregarded. Upon request, the Authority shall specify
to the Trustee those Bonds disqualified pursuant to this Section 9.7 and the Trustee may conclusively
rely upon such certificate.
Section 9.8 Waiver of Personal Liability. No officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the interest on or principal of
the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the
performance of any official duty provided by law.
Section 9.9 Entire Agreement; Partial Invalidity. This Agreement and the exhibits
hereto set forth the entire agreement and understanding of the parties related to this transaction and
supersedes all prior agreements and understandings, oral or written. If any one or more of the
covenants or agreements, or portions thereof, provided in this Indenture on the part of the Authority
(or of the Trustee) to be performed should be contrary to law, then such covenant or covenants, such
agreement or agreements, or such portions thereof, shall be null and void and shall be deemed
separable from the remaining covenants and agreements or portions thereof and shall in no way
affect the validity of this Indenture or of the Bonds; but the Bond Owners shall retain all rights and
benefits accorded to them under the Bond Law or any other applicable provisions of law. The
Authority hereby declares that it would have entered into this Indenture and each and every other
section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the
issuance of the Bonds pursuant hereto irrespective of the fact that any or more sections, paragraphs,
subdivisions, sentences, clauses or phrases of this Indenture or the application thereof to any person
or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 9.10 Destruction of Cancelled Bonds. Whenever in this Indenture provision is
made for the surrender to the Authority or the Trustee of any Bonds which have been paid or
cancelled pursuant to the provisions of this Indenture, the Trustee shall destroy such Bonds in
accordance with the retention policy of the Trustee then in effect.
Section 9.11 Funds and Accounts. Any fund or account required by this Indenture to be
established and maintained by the Authority or the Trustee may be established and maintained in the
accounting records of the Authority or the Trustee, as the case may be, either as a fund or an account,
and may, for the purpose of such records, any audits thereof and any reports or statements with
respect thereto, be treated either as a fund or as an account. All such records with respect to all such
funds and accounts held by the Authority shall at all times be maintained in accordance with
generally accepted accounting principles and all such records with respect to all such funds and
accounts held by the Trustee shall be at all times maintained in accordance with corporate trust
industry practices; in each case with due regard for the protection of the security of the Bonds and the
rights of every Owner thereof.
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Section 9.12 Notices. Any notice, request, complaint, demand, communication or other
paper shall be sufficiently given and shall be deemed given when delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, Electronic Means or other electronic
transmission, addressed as follows:
If to the Authority: Tustin Financing Authority
c/o City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: Executive Director
If to the Community
Facilities Districts
(as applicable): [Name of Community Facilities District]
c/o City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
If to the Trustee: The Bank of New York Mellon Trust Company, N.A.
333 S. South Hope Street, Suite 2525
Los Angeles, CA 90071
Attention: Corporate Trust Services
If to the Bond Insurer:
Re: Policy No.
Telephone:
Telecopier:
Email:
The Authority, the City, the Trustee and the Bond Insurer may designate any further or
different addresses to which subsequent notices, certificates or other communications shall be sent.
Any such notice, certificates or other communications furnished by electronic transmission shall be
in the form of attachments in PDF format.
Section 9.13 Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the
Bonds which remain unclaimed for two (2) years after the date when such Bonds have become due
and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys
were held by the Trustee at such date, or for two (2) years after the date of deposit of such moneys if
deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid
by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee shall
thereupon be released and discharged with respect thereto and the Bond Owners shall look only to
the Authority for the payment of such Bonds; provided, however, that before being required to make
such payment to the Authority, the Trustee shall, at the expense of Authority, cause to be mailed to
the Owners of all such Bonds, at their respective addresses appearing on the Bond Register, a notice
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that said moneys remain unclaimed and that, after a date in said notice, which date shall not be less
than thirty (30) days after the date of mailing such notice, the balance of such moneys then
unclaimed will be returned to the Authority. Any money held by the Trustee pursuant to this
paragraph shall be held uninvested and without liability for interest.
Section 9.14 Payment Due on Other than a Business Day. If the date for making any
payment or the last date for performance of any act or the exercising of any right, as provided in the
Indenture, is not a Business Day, such payment, with no interest accruing for the period after such
nominal date, may be made or act performed or right exercised on the next succeeding Business Day
with the same force and effect as if done on the nominal date provided in this Indenture.
Section 9.15 Governing Law. This Indenture shall be construed and governed in
accordance with the laws of the State of California.
ARTICLE X
[MUNICIPAL BOND INSURANCE POLICY AND RESERVE SURETY BOND]
[TO COME]
[REMAINDER OF PAGE INTENTIONALLYLEFT BLANK.J
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IN WITNESS WHEREOF, the Authority has caused this Indenture to be executed by the
Executive Director of the Authority, attested by its Secretary, and the Trustee has caused this
Indenture to be executed by one of its authorized officers, all as of the day and year first above
written.
ATTEST:
Secretary
TUSTIN FINANCING AUTHORITY
Executive Director
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
Authorized Officer
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EXHIBIT A
FORM OF SERIES 2025 BOND
R- $
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
AUTHORITY OR THE TRUSTEE FOR REGISTRATION OR TRANSFER,
EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
HEREIN.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
TUSTIN FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BOND, SERIES 2025
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NUMBER:
% September 1, 20 52025
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
AND NO/100 DOLLARS
The TUSTIN FINANCING AUTHORITY, a joint powers authority organized and existing
under the laws of the State of California (the "Authority"), for value received, hereby promises to
pay (but only out of the Revenues and other funds hereinafter referred to) to the Registered Owner
identified above or registered assigns (the "Registered Owner"), on the Maturity Date identified
above (subject to any right of prior redemption hereinafter mentioned), the Principal Amount
identified above in lawful money of the United States of America; and to pay interest thereon at the
Interest Rate identified above in like money from the Interest Payment Date (as hereinafter defined)
next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before
an Interest Payment Date and after the fifteenth calendar day of the month preceding the month in
which such Interest Payment Date occurs, in which event it shall bear interest from such Interest
Payment Date, or unless this Bond is authenticated on or prior to August 15, 2025, in which event it
shall bear interest from the Dated Date identified above; provided, however, that if, at the time of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the
Interest Payment Date to which interest hereon has previously been paid or made available for
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payment), payable semiannually on September 1 and March 1 in each year, commencing
September 1, 2025 (each, an "Interest Payment Date") until the Maturity Date stated above or date of
redemption of this Bond. The Principal Amount hereof is payable upon presentation and surrender
hereof at the Trust Office (as defined in the Indenture) of The Bank of New York Mellon Trust
Company, N.A. (the "Trustee"). Interest hereon is payable by check of the Trustee mailed by first
class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the
address of the Registered Owner as it appears on the registration books of the Trustee as of the
fifteenth calendar day of the month preceding the month in which such Interest Payment Date occurs;
provided, however, that payment of interest may be made by wire transfer to an account in the United
States of America to any registered owner of Bonds in the aggregate principal amount of $1,000,000
or more upon written instructions of any such registered owner filed with the Trustee in writing at
least five (5) Business Days before the Record Date for such Interest Payment Date.
This Bond is one of a duly authorized issue of bonds of the Authority designated the "Tustin
Financing Authority Special Tax Revenue Refunding Bonds, Series 2025" (the "Bonds"), limited in
principal amount to Dollars ($, secured by an Indenture of Trust dated as of
June 1, 2025 (the "Indenture"), by and between the Authority and the Trustee. Reference is hereby
made to the Indenture and all indentures supplemental thereto for a description of the rights
thereunder of the owners of the Bonds, of the nature and extent of the Revenues, of the rights, duties
and immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of
the terms of the Indenture are hereby incorporated herein and constitute a contract between the
Authority and the Registered Owner hereof, and to all of the provisions of which Indenture the
Registered Owner hereof, by acceptance hereof, assents and agrees. Capitalized terms not defined
herein shall have the meanings set forth in the Indenture.
This Bond is a limited obligation of the Authority, payable solely from the Revenues and
funds pledged under the Indenture. This Bond is not a debt of the City of Tustin (the "City") or the
State of California (the "State") or any of its political subdivisions (except the Authority and only to
the extent set forth in the Indenture), and none of said City, the State or any of its political
subdivisions is liable hereon. The Authority has no taxing power.
The Bonds are authorized to be issued pursuant to the provisions of the Marks -Roos Local
Bond Pooling Act of 1985, as amended, constituting Article 4 (commencing with Section 6584) of
Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act").
The Bonds are limited obligations of the Authority and, as and to the extent set forth in the Indenture,
are payable solely from and secured by a first lien on and pledge of the Revenues and certain other
funds held by the Trustee as provided in the Indenture. The Revenues and such other funds
constitute a trust fund for the security and payment of the principal of and interest on the Bonds,
except to the extent otherwise provided in the Indenture. The full faith and credit of the Authority is
not pledged to the payment of the principal of or interest or redemption premiums (if any) on the
Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance
upon, any of the property of the Authority or any of its income or receipts, except the Revenues and
such other funds as provided in the Indenture.
The Bonds have been issued to provide funds to purchase certain obligations of two
community facilities districts of the City (each a "Community Facilities District" and, collectively,
the "Community Facilities Districts") as identified in the Indenture (collectively, the "Local
Obligations"). A Community Facilities District, in turn, will take the proceeds that it receives from
the sale of the Local Obligations to the Authority to refund certain outstanding indebtedness of the
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Community Facilities Districts, all as more particularly described in the Indenture. The obligations
of the Community Facilities Districts to make payments of principal and interest on the Local
Obligations are limited obligations secured only as set forth therein.
The Bonds maturing on or before September 1, 20 are not subject to optional redemption
prior to maturity. The Bonds maturing on or after September 1, 20 may be redeemed at the option
of the Authority, from any source of available funds, prior to maturity on any Interest Payment Date
on or after September 1, 20 as a whole, or in part from maturities of the Local Obligations
simultaneously redeemed, if any redemption of Local Obligations is being made in conjunction with
such optional redemption, and otherwise from such maturities as are selected by the Authority, and
by lot within a maturity, at a redemption price equal to the par amount of the Bonds to be redeemed,
together with accrued interest thereon to the date of redemption, without premium.
The Bonds are subject to special redemption on any Interest Payment Date from proceeds of
early redemption of the Local Obligations from prepayments of Special Taxes (as such terms are
defined in the Indenture), in whole or in part, from maturities corresponding proportionately to the
maturities of the Local Obligations simultaneously redeemed, at the principal amount thereof, plus a
premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest
to the date of redemption thereof:
Redemption Dates Redemption Prices
Any Interest Payment Date from September 1, 20 through March 1, 20 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
The Bonds maturing on September 1, 20 and September 1, 20 are subject to mandatory
sinking fund redemption prior to maturity, in part on September 1, 20 and September 1, 20 and
on each September 1 thereafter by lot, in accordance with the schedules of sinking fund payments set
forth in the Indenture at a redemption price equal to the principal amount of the Bonds to be
redeemed, together with accrued interest to the redemption date, without premium.
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than 20 nor more than 60 days prior to the redemption date by first
class mail, postage prepaid, to the addresses set forth in the registration books in accordance with the
provisions of the Indenture provided, however, so long as the Bonds are registered in the name of the
Nominee, notice of redemption shall be given in such manner as complies with the requirements of
DTC. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein
will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for
redemption will cease to accrue interest on the specified redemption date, provided that funds for the
redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners
of such Bonds shall have no rights except to receive payment of the redemption price upon the
surrender of the Bonds.
Unless funds for the optional redemption of any Bonds are irrevocably deposited with the
Trustee prior to rendering notice of redemption to the Bondowners, such notice shall state that such
redemption is subject to the deposit of funds by the Authority. Any notice of optional redemption
shall be cancelled and annulled if for any reason funds will not be or are not available on the date
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fixed for redemption for the payment in full of the Bonds then called for redemption, and such
cancellation shall not constitute an Event of Default under the Indenture. The Authority and the
Trustee shall have no liability to the Owners or any other party related to or arising from such
rescission of redemption. The Trustee shall send notice of such rescission of redemption in the same
manner as the original notice of redemption was sent.
If this Bond is called for redemption and payment is duly provided therefor as specified in the
Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
The Bonds are issuable as fully registered Bonds without coupons in denominations of
$5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges,
if any, provided in the Indenture, fully registered Bonds may be exchanged at the Trust Office of the
Trustee for a like aggregate principal amount and maturity of fully registered Bonds of other
authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by its attorney duly
authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized
denomination or denominations, for the same aggregate principal amount will be issued to the
transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange
of any Bond (i) during the 15 days prior to selection of Bonds for redemption, or (ii) selected for
redemption.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner
hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the
contrary. The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or
otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption
premiums at the time and place and at the rate and in the currency provided therein of any Bond
without the express written consent of the owner of such Bond, (b) reduce the percentage of Bonds
required for the written consent to any such amendment or modification, or (c) without its written
consent thereto, modify any of the rights or obligations of the Trustee, all as more fully set forth in
the Indenture.
It is hereby certified by the Authority that all things, conditions and acts required to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do 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 and by the Act, and that the amount of this Bond,
together with all other indebtedness of the Authority, does not exceed any limit prescribed by the
Constitution or statutes of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon shall have been signed by the
Trustee.
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IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and
on its behalf by the facsimile signatures of its Chairperson and Secretary, all as of the Dated Date
identified above.
Attest:
Secretary
TUSTIN FINANCING AUTHORITY
Chair
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within -mentioned Indenture.
Date: 92025 THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
Authorized Signatory
[FORM OF LEGAL OPINION]
The attached is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth
LLP, Newport Beach, California, in connection with the issuance of, and dated as of the date of the
original delivery of, the Bonds. A signed copy is on file in my office.
Secretary of the Tustin Financing Authority
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[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is ,
the within mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same on the books of the Trustee with full power of substitution in the
premises.
Dated:
Signature guaranteed:
NOTE: Signature guarantee shall be made by
a guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever
ME
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[FORM OF STATEMENT OF INSURANCE]
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Anzel Galvan Draft 4-14-2025
TUSTIN FINANCING AUTHORITY
Special Tax Revenue Refunding Bonds, Series 2025
BOND PURCHASE AGREEMENT
[Pricing Date]
Tustin Financing Authority
c/o City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: Executive Director
City of Tustin Community Facilities Districts
No. 06-1 (Tustin Legacy/Columbus Villages)
c/o City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: City Manager
Ladies and Gentlemen:
City of Tustin Community Facilities Districts
No. 2014-1 (Tustin Legacy/Standard Pacific)
c/o City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: City Manager
The undersigned, Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), acting not
as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement
(which, together with the exhibits hereto, is referred to as the "Purchase Agreement") with the Tustin
Financing Authority (the "Authori "), City of Tustin Community Facilities District No. 06-1 (Tustin
Legacy/Columbus Villages) ("CFD No. 06-1") and City of Tustin Community Facilities District No.
2014-1 (Tustin Legacy/Standard Pacific) ("CFD No. 2014-1" and together with CFD No. 06-1, the
"Community Facilities Districts"), which, upon the acceptance of the Authority and the Community
Facilities Districts, will be binding upon the Authority, the Community Facilities Districts and the
Underwriter. This offer is made subject to acceptance by the Authority and by the Community
Facilities Districts by the execution of this Purchase Agreement and delivery of the same to the
Underwriter prior to 6:00 P.M., California time, on the date hereof, and, if not so accepted, will be
subject to withdrawal by the Underwriter upon notice delivered to the Authority and the Community
Facilities Districts at any time prior to the acceptance hereof by the Authority and the Community
Facilities Districts. Capitalized terms that are used herein and not otherwise defined have the meanings
that are set forth in the Indenture of Trust, dated as of [June 1], 2025 (the "Indenture"), by and between
the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"),
and, if not defined therein, the Local Obligation Bond Indentures (as such term is defined herein).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase
from the Authority, and the Authority hereby agrees to issue, sell and deliver to the Underwriter all
(but not less than all) of the Tustin Financing Authority Special Tax Revenue Refunding Bonds, Series
2025 in the aggregate principal amount of $[PAR] (the "Bonds"). The Bonds will be dated as of their
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date of delivery. Interest on the Bonds shall be payable semiannually on [September 1, 2025] and each
March 1 and September 1 as provided in the Indenture, and will mature, bear interest and be subject to
redemption prior to maturity as set forth in Exhibit A. The purchase price of the Bonds shall be equal
to $ (being the aggregate principal amount thereof plus original issue premium of $ ,
less an underwriter's discount of $). The Authority and the Community Facilities Districts
acknowledge that the Underwriter will on the Closing Date (as such term is defined herein), on behalf
of the Authority, wire a portion of the purchase price in the amount of $ representing the
premiums for the Policy and the Reserve Policy (as such terms are defined herein), directly to
(the "Insurer").
Concurrently with the sale of the Bonds to the Underwriter pursuant to this Purchas Agreement,
upon the terms and conditions and in reliance upon the respective representations, warranties and
covenants herein, the Authority hereby agrees to purchase (i) from CFD No. 06-1, and CFD No. 06-1
agrees to sell to the Authority for such purpose all (but not less than all) of its City of Tustin Community
Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) Special Tax Refunding Bonds, Series
2025 (the "CFD No. 06-1 Local Obligations"), and (ii) from CFD No. 2014-1, and CFD No. 2014-1
agrees to sell to the Authority for such purposes all (but not less than all) of its City of Tustin
Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) Special Tax Refunding
Bonds, Series 2025 (the "CFD No. 2014-1 Local Obligations" and together with the CFD No. 06-1
Local Obligations, the "Local Obligations"). The Local Obligations shall be dated as of their date of
delivery. Interest on the Local Bonds shall be payable semiannually on [September 1, 2025] and each
March 1 and September 1 thereafter, and will mature, bear interest and be subject to redemption prior
to maturity as set forth in Exhibit B.
Section 2. The Bonds. The Bonds shall be issued by the Authority under the provisions
of the Marks -Roos Local Bond Pooling Act of 1985, as amended, constituting Article 4 of Chapter 5
of Division 7 of Title 1 of the California Government Code, the Indenture, and a resolution adopted by
the Board of Directors of the Authority (the "Board of Directors") at a regular meeting held on May
20, 2025 (the "Authority Bond Resolution").
The Bonds shall be payable solely from and secured by a first lien on and pledge of the
Revenues and certain other funds held by the Trustee as provided in the Indenture. Revenues, as
defined in the Indenture, generally consist of revenues received by the Trustee as the result of the
payment of debt service on the Local Obligations. Subject to the foregoing, The Bonds shall be as
described in, and shall be secured under and pursuant to the Indenture substantially in the form
previously submitted to the Underwriter with only such changes therein as shall be mutually agreed
upon by the Authority and the Underwriter.
The proceeds of the Bonds shall be used by the Authority to: (i) purchase the Local Obligations;
(ii) purchase a municipal bond insurance policy from the Insurer to guarantee payment of principal of
and interest on the Bonds [maturing on September 1 of the years 20 through 20, inclusive] (the
"Policy"); (iii) purchase a debt service reserve insurance policy for deposit in the Reserve Fund to fund
to 50% of the initial Reserve Requirement (the "Reserve Policy") and fund a cash deposit in the
Reserve Fund for the remaining 50% of the initial Reserve Requirement; and (iv) pay costs of issuance
of the Bonds. The proceeds of the Bonds will be applied in accordance with the Indenture.
The Local Obligations shall be issued by the Community Facilities Districts under the
provisions of the Mello -Roos Community Facilities Act of 1982 (constituting Section 53311 et seq. of
the California Government Code) (the "Community Facilities District Act").
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The CFD No. 06-1 Local Obligations shall also be issued pursuant to a Bond Indenture, dated
as of [June 1], 2025, and by and between CFD No. 06-1 and The Bank of New York Trust Company,
N.A., as trustee (the "CFD No. 06-1 Local Obligation Indenture"), and a resolution adopted the City
Council (the "City Council") of the City of Tustin (the "C"), acting as legislative body of CFD No.
06-1, at a meeting held on May 20, 2025 (the "CFD No. 06-1 Resolution").
The CFD No. 2014-1 Local Obligations shall also be issued pursuant to a Bond Indenture,
dated as of [June 1], 2025, and by and between CFD No. 2014-1 and The Bank of New York Trust
Company, N.A., as trustee (the "CFD No. 2014-1 Local Obligation Indenture" and together with the
CFD No. 06-1 Local Obligation Indenture, the "Local Obligation Bond Indentures" and each a "Local
Obligation Bond Indenture"), and a resolution adopted the City Council, acting as legislative body of
CFD No. 2014-1, at a meeting held on May 20, 2025 (the "CFD No. 2014-1 Resolution" and together
with the CFD No. 06-1 Resolution, the "Local Obligation Bond Resolutions").
The CFD No. 06-1 Local Obligations shall be secured by a first lien on and a security interest
in, all of the Net Special Taxes and any other amounts held in the Special Tax Fund (as such terms are
defined in the CFD No. 06-1 Local Obligation Bond Indenture). Net Special Taxes as defined in the
CFD No. 06-1 Local Obligation Bond Indenture generally consist of special taxes levied on taxable
property within the CFD No. 06-1 less administrative expenses.
The CFD No. 2014-1 Local Obligations shall be secured by a first lien on and a security interest
in, all of the Net Special Taxes and any other amounts held in the Special Tax Fund (as such terms are
defined in the CFD No. 2014-1 Local Obligation Bond Indenture). Net Special Taxes as defined in
the CFD No. 2014-1 Local Obligation Bond Indenture generally consist of special taxes levied on
taxable property within the CFD No. 2014-1 less administrative expenses.
The proceeds of the CFD No. 06-1 Local Obligations shall be used to refund CFD No. 06-1's
outstanding Special Tax Refunding Bonds, Series 2015A and outstanding Special Tax Bonds, Series
2015B (collectively, the "Prior CFD No. 06-1 Bonds"). The Prior CFD No. 06-1 Bonds will be
refunded and redeemed pursuant to an Escrow Agreement, dated [Closing Date], by and among the
Authority, CFD No. 06-1, and The Bank of New York Mellon Trust Company, N.A., as escrow agent
(the "Prior CFD No. 06-1 Bonds Escrow Agreement").
The proceeds of the CFD No. 2014-1 Local Obligations shall be used to refund CFD No. 2014-
1's outstanding Special Tax Bonds, Series 2015A (the "Prior CFD No. 2014-1 Bonds" and together
with the Prior CFD No. 06-1 Bonds, the "Prior Bonds"). The Prior CFD No. 2014-1 Bonds will be
refunded and redeemed pursuant to an Escrow Agreement, dated [Closing Date], by and among the
Authority, CFD No. 2014-1, and The Bank of New York Mellon Trust Company, N.A., as escrow
agent (the "Prior CFD No. 2014-1 Bonds Escrow Agreement" and together with the Prior CFD No.
06-1 Bonds Escrow Agreement, the "Escrow Agreements").
The Bonds, this Purchase Agreement, the Indenture, the Continuing Disclosure Agreement,
dated as of [June] 1, 2025 (the "Continuing Disclosure Certificate"), between the Authority and Webb
Municipal Finance, LLC, as dissemination agent, the Escrow Agreements and the Authority Bond
Resolution are collectively referred to herein as the "Authority Bond Documents."
The Local Obligations, this Purchase Agreement, the Local Obligation Bond Indentures, the
Escrow Agreements, and the Local Obligation Bond Resolutions are collectively referred to herein as
the "Local Obligation Bond Documents."
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Section 3. Public Offering and Establishment of Issue Price.
(a) The Underwriter agrees to make an initial public offering of all of the Bonds at
the public offering prices (or yields) set forth in Exhibit A and incorporated herein by reference.
Subsequent to the initial public offering, the Underwriter reserves the right to change the public
offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the
Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The
Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices.
The City and the Authority acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant
to this Purchase Agreement is an arm's-length commercial transaction between the Community
Facilities Districts and the Authority, on one hand, and the Underwriter, on the other; (ii) in connection
therewith and with the discussions, undertakings and procedures leading up to the consummation of
such transaction, the Underwriter is and has been acting solely as principal and is not acting as a
Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended);
(iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Community
Facilities Districts or Authority with respect to the offering contemplated hereby or the discussions,
undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided
other services or is currently providing other services to the Community Facilities Districts or
Authority on other matters); (iv) the Underwriter has financial and other interests that differ from those
of the Community Facilities Districts and the Authority; and (v) the Community Facilities Districts
and Authority have consulted their own legal, financial and other advisors to the extent that they have
deemed appropriate.
(b) The Underwriter agrees to assist the Authority in establishing the issue price of
the Bonds and shall execute and deliver to the Authority at Closing (as defined below) an "issue price"
or similar certificate, together with the supporting pricing wires or equivalent communications,
substantially in the form set forth in Exhibit C, with such modifications as may be appropriate or
necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel (as such
term is defined below), to accurately reflect, as applicable, the sales price or prices or the initial offering
price or prices to the public of the Bonds and the 2025 Lease Revenues Bonds, if applicable. All
actions to be taken by the Authority under this section to establish the issue price of the Bonds may be
taken on behalf of the Authority by the Authority's municipal advisor, Fieldman Rolapp & Associates,
Inc. (the "Municipal Advisor") and any notice or report to be provided to the Authority may be
provided to the Authority's Municipal Advisor.
(c) Except as otherwise set forth in Exhibit A, the Authority will treat the first price
at which 10% of each maturity of the Bonds (the "10% test"), identified under the column "10% Test
Used" in Exhibit A, is sold to the public as the issue price of that maturity. At or promptly after the
execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices
at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been
satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority
the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation
shall continue, whether or not the Closing Date (as defined below) has occurred, until either: (i) the
Underwriter has sold all of the Bonds of that maturity; or (ii), the 10% test has been satisfied as to the
Bonds of that maturity, provided that, the Underwriter's reporting obligation after the Closing Date
may be at reasonable periodic intervals or otherwise upon the request of the Authority or Bond Counsel.
For purposes of this Section, if Bonds mature on the same date but have different interest rates, each
separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. For
clarity, and notwithstanding any other condition to Closing set forth in this Purchase Agreement, the
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sale of 10% of each maturity of the Bonds to the public prior to the Closing Date shall not be a condition
to Closing.
(d) The Underwriter confirms that it has offered the Bonds to the public on or
before the date of this Purchase Agreement at the offering price or prices (the "initial offering price"),
or at the corresponding yield or yields, set forth in Exhibit A, except as otherwise set forth therein.
Exhibit A also sets forth, identified under the column "Hold the Offering Price Rule Used," as of the
date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not
been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in
the next sentence shall apply, which will allow the Authority to treat the initial offering price to the
public of each such maturity as of the sale date as the issue price of that maturity (the "hold -the -
offering -price rule"). So long as the hold -the -offering -price rule remains applicable to any maturity of
the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a
price that is higher than the initial offering price to the public during the period starting on the sale date
and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or
(ii) the date on which the Underwriter has sold at least 10% of that maturity
of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the Authority promptly after the close of the fifth (5th)
business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at
a price that is no higher than the initial offering price to the public.
(e) The Underwriter confirms that:
(1) any selling group agreement and any third -parry distribution agreement
relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains
or will contain language obligating each dealer who is a member of the selling group, and each broker -
dealer that is a party to such third -party distribution agreement, as applicable, (A) (i) to report the prices
at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the
Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is
notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity,
provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals
or otherwise upon request of the Underwriter, and (ii) to comply with the hold -the -offering -price rule,
if applicable, if and for so long as directed by the Underwriter; (B) to promptly notify the Underwriter
of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related parry to an
underwriter participating in the initial sale of the Bonds to the public (each such term being used as
defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker -dealer,
the Underwriter shall assume that each order submitted by the dealer or broker -dealer is a sale to the
public; and
(2) any selling group agreement relating to the initial sale of the Bonds to
the public, together with the related pricing wires, contains or will contain language obligating each
dealer that is a party to a third -parry distribution agreement to be employed in connection with the
initial sale of the Bonds to the public to require each broker -dealer that is a parry to such third -party
distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each
maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that
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maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10%
test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the
Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or
the dealer and (B) comply with the hold -the -offering -price rule, if applicable, if and for so long as
directed by the Underwriter or the dealer and as set forth in the related pricing wires.
(f) The Authority acknowledges that, in making the representations set forth in
this Section, the Underwriter will rely on (i) in the event a selling group has been created in connection
with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the
selling group to comply with the requirements for establishing issue price of the Bonds, including, but
not limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Bonds,
as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third -
party distribution agreement was employed in connection with the initial sale of the Bonds to the
public, the agreement of each broker -dealer that is a party to such agreement to comply with the
requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to
comply with the hold -the -offering -price rule, if applicable to the Bonds, as set forth in the third -party
distribution agreement and the related pricing wires. The Authority further acknowledges that the
Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of
any broker -dealer that is a party to a third -party distribution agreement, to comply with its
corresponding agreement to comply with the requirements for establishing issue price of the Bonds,
including, but not limited to, its agreement to comply with the hold -the -offering -price rule, if
applicable to the Bonds.
(g) The Underwriter acknowledges that sales of any Bonds to any person that is a
related party to an underwriter participating in the initial sale of the Bonds to the public (each such
term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
(i) "public" means any person other than an underwriter or a related party;
(ii) "underwriter" means (A) any person that agrees pursuant to a written
contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to
participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a
written contract directly or indirectly with a person described in clause (A) to participate in the initial
sale of the Bonds to the public (including a member of a selling group or a party to a third party
distribution agreement participating in the initial sale of the Bonds to the public);
(iii) a purchaser of any of the Bonds is a "related party" to an underwriter
if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common
ownership of the voting power or the total value of their stock, if both entities are corporations
(including direct ownership by one corporation of another), (B) more than 50% common ownership of
their capital interests or profits interests, if both entities are partnerships (including direct ownership
by one partnership of another), or (C) more than 50% common ownership of the value of the
outstanding stock of the corporation or the capital interests or profit interests of the partnership, as
applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership
of the applicable stock or interests by one entity of the other); and
all parties.
(iv) "sale date" means the date of execution of this Purchase Agreement by
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Section 4. The Official Statement. By their acceptance of this proposal, the Authority
and the Community Facilities Districts ratify, confirm and approve of the use and distribution by the
Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds dated
[POS Date] (including the cover page, all appendices and all information incorporated therein and any
other supplements or amendments thereto and as disseminated in its printed physical form or in
electronic form in all respects materially consistent with such physical form, the "Preliminary Official
Statement") that authorized officers or representatives of the Community Facilities Districts and the
Authority deemed "final" as of its date for purposes of Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 15c2-12"), except for certain information that is permitted
to be omitted therefrom by Rule 15c2-12. The Authority and the Community Facilities Districts agree
to deliver or cause to be delivered to the Underwriter, within seven business days of the date hereof,
copies of the final official statement, dated the date hereof, relating to the Bonds (including all
information that was previously permitted to have been omitted by Rule 15c2-12), including the cover
page, all appendices, all information incorporated therein and any amendments or supplements as have
been approved by the Authority, the Community Facilities Districts and the Underwriter (the "Official
Statement") in such quantity as the Underwriter shall reasonably request to comply with Section (b)(4)
of Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board (the "MSRB").
The Underwriter hereby agrees that it will not request that payment be made by any purchaser
of the Bonds prior to delivery by the Underwriter to the purchaser of a copy of the Official Statement.
The Underwriter agrees: (i) to provide the Authority and the Community Facilities Districts with final
pricing information on the Bonds on a timely basis; and (ii) to file a copy of the Official Statement,
including any supplements prepared by the Authority or the Community Facilities Districts in
accordance with MSRB rules with the MSRB at http://emma.msrb.org. The Authority and the
Community Facilities Districts hereby approve of the use and distribution by the Underwriter of the
Preliminary Official Statement in connection with the offer and sale of the Bonds. The Authority and
the Community Facilities Districts will cooperate with the Underwriter in the filing by the Underwriter
of the Official Statement with the MSRB.
Section 5. Closing.
(a) At 8:30 a.m., California time, on [Closing Date], or at such other time or date
as the Authority and the Underwriter agree upon (the "Closing Date"), the Authority shall deliver or
cause to be delivered to the Trustee, the Bonds, in definitive form, registered in the name of Cede &
Co., as the nominee of The Depository Trust Company ("DTC"), so that the Bonds may be
authenticated by the Trustee and credited to the account specified by the Underwriter under DTC's
FAST procedures. Concurrently with the delivery of the Bonds, the Authority and the Community
Facilities Districts will deliver the documents hereinafter mentioned at the offices of Stradling Yocca
Carlson & Rauth LLP, Newport Beach, California ("Bond Counsel"), or another place to be mutually
agreed upon by the Authority, the Community Facilities Districts and the Underwriter. The
Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1
hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds,
together with the delivery of the aforementioned documents, is herein called the "Closing."
The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations
of five thousand dollars ($5,000) or any integral multiple thereof. The Authority and the Community
Facilities Districts acknowledge that the services of DTC will be used initially by the Underwriter in
order to permit the issuance of the Bonds in book -entry form, and agree to cooperate fully with the
Underwriter in employing such services.
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(b) At 8:30 a.m. California time, on the Closing Date, concurrently with the
delivery of the Bonds to the Trustee pursuant to Section 5(a), (i) the Community Facilities Districts
shall deliver the Local Obligations to The Bank of New York Mellon Trust Company, N.A., as trustee
under the respective Local Obligation Bond Indentures (in such capacity, the "Local Obligation Bond
Trustee") in definitive form, duly executed, together with the other documents hereinafter mentioned,
(ii) subject to the terms and conditions hereof, the Trustee solely from moneys held under the Indenture
will accept such delivery and pay the purchase price of the Local Obligations as referenced in the Local
Obligation Bond Indentures by wire transfer or other funds which are good funds on the Closing Date,
and (iii) The Bank of New York Mellon Trust Company N.A., as escrow agent under the Escrow
Agreements (in such capacity, the "Escrow Agent") shall deposit into the Escrow Funds established
under the Escrow Agreements the amounts described in the Escrow Agreements. Delivery and
payment, as aforesaid, shall be made at such place as shall have been mutually agreed upon by the
Community Facilities Districts, the Escrow Agent and the Authority.
Section 6. Representations, Warranties and Covenants of the Authority. The
Authority represents, warrants and covenants to the Underwriter and the Community Facilities
Districts that:
(a) The Authority is a public body that is duly organized and existing under the
Constitution and laws of the State of California (the "State"), including Articles 1, 2 and 4 of Chapter 5
of Division 7 of Title 1 of the Government Code of the State of California and the Joint Exercise of
Powers Agreement, dated as of March 1, 2025 (the "JPA Agreement"), by and between the City of
Tustin, California (the "City") and the Tustin Housing Authority.
(b) The Authority has full legal right, power and authority to adopt or enter into,
as the case may be, and to carry out and consummate the transactions on its part contemplated by the
Authority Bond Documents.
(c) By all necessary official action at a regular meeting of the Authority's Board
of Directors that was duly noticed and held, the Authority has adopted the Authority Bond Resolution,
has duly authorized and approved the issuance of the Bonds and the execution of the Authority Bond
Documents, has duly authorized and approved the Preliminary Official Statement, will, by execution
thereof, duly authorize and approve the Official Statement, and has duly authorized and approved the
execution and delivery of, and the performance by the Authority of the obligations on its part contained
in, the Authority Bond Documents and the consummation by it of all other transactions contemplated
by the Authority Bond Documents in connection with the issuance of the Bonds. As of the date hereof,
such authorizations and approvals are in full force and effect and have not been amended, modified or
rescinded. When executed and delivered, and assuming due execution and delivery by the other parties
thereto, if applicable, the Authority Bond Documents will constitute the legally valid and binding
obligations of the Authority enforceable in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or affecting creditors' rights generally, or by the exercise of judicial
discretion and the limitations on legal remedies against joint powers authorities in the State. The
Authority has complied, and will at the Closing be in compliance in all material respects, with the
terms of the Authority Bond Documents.
(d) The Authority is not in any material respect in breach of or default under any
applicable constitutional provision, law or administrative regulation of any state or of the United States,
or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement,
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indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party which
breach or default has or may have a materially adverse effect on the ability of the Authority to perform
its obligations under the Authority Bond Documents, and no event has occurred and is continuing
which with the passage of time or the giving of notice, or both, would constitute such a default or event
of default under any such instrument; and the adoption, execution and delivery of the Authority Bond
Documents, if applicable, and compliance with the provisions on the Authority's part contained
therein, will not conflict in any material way with or constitute a material breach of or a material default
under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party, nor
will any such execution, delivery, adoption or compliance result in the creation or imposition of any
lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the
property or assets of the Authority or under the terms of any such law, regulation or instrument, except
as may be provided by the Authority Bond Documents.
(e) Except as described in or contemplated by the Preliminary Official Statement
and the Official Statement, all material authorizations, approvals, licenses, permits, consents and orders
of any governmental authority, legislative body, board, agency or commission having jurisdiction of
the matter which are required for the due authorization by, or which would constitute a condition
precedent to or the absence of which would materially adversely affect the due performance by the
Authority of its obligations in connection with the Authority Bond Documents have been duly obtained
or, when required for future performance, are expected to be obtained, other than such approvals,
consents and orders as may be required under the Blue Sky or securities laws of any state in connection
with the offering and sale of the Bonds.
(f) Until the date which is twenty-five (25) days after the end of the underwriting
period, if any event shall occur of which the Authority is aware that would cause the Official Statement
to contain any untrue statement of a material fact or omit to state a material fact that is necessary in
order to make the statements in the Official Statement, in light of the circumstances under which they
were made, not misleading (other than statements in the Official Statement under the caption
"MISCELLANEOUS — Underwriting," information regarding DTC and its book entry only system,
and information regarding the Insurer, the Policy, and the Reserve Policy), the Authority shall
forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully
in furnishing any information available to it for any supplement to the Official Statement necessary, in
the Underwriter's reasonable opinion, so that the statements therein as so supplemented will not be
misleading in light of the circumstances existing at such time and the Authority shall promptly furnish
to the Underwriter a reasonable number of copies of such supplement. As used herein, the term "end
of the underwriting period" means the later of such time as: (i) the Authority delivers the Bonds to the
Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting
syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice
to the contrary, the end of the underwriting period shall be deemed to be the Closing Date. Any notice
delivered pursuant to this provision shall be written notice delivered by the Underwriter to the
Authority at or prior to the Closing Date of the Bonds and shall specify a date (other than the Closing
Date) to be deemed the end of the underwriting period.
(g) As of the time of acceptance hereof and the Closing, except as disclosed in the
Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, governmental authority, public board or body, pending, with service of process
upon the Authority having been accomplished, or threatened in writing to the Authority: (i) in any way
questioning the corporate existence of the Authority or the titles of the officers of the Authority to their
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respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or
delivery of any of the Bonds, the payment or collection of Special Taxes with respect to the Local
Obligations or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds,
or in any way contesting or affecting the validity of the Bonds or the other Authority Bond Documents
or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion
of the interest on the Bonds from taxation or contesting the powers of the Authority or its authority to
issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the
business, operations or financial condition of the Authority; or (iv) contesting the completeness or
accuracy of the Preliminary Official Statement or the Official Statement or any supplement or
amendment thereto or asserting that the Preliminary Official Statement or the Official Statement
contained any untrue statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
(h) To the Authority's knowledge, there is no basis for any action, suit, proceeding,
inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 6(g).
(i) The information in the Preliminary Official Statement as of its date does not
and in the Official Statement as of the date hereof and as of the Closing Date (other than information
therein under the captions "MISCELLANEOUS — Underwriting," information regarding DTC and its
book -entry only system, and information regarding the Insurer, the Policy, and the Reserve Policy)
does not and will not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading.
0) The Authority will refrain from taking any action, or permitting any action to
be taken, with regard to which the Authority may exercise control, that results in the loss of the
tax-exempt status of the interest on the Bonds.
(k) The Authority will refrain from taking any action, or permitting any action to
be taken, to reduce the amount of the Revenues or Special Taxes while the Bonds are Outstanding, and
the Authority will collect the Revenues in accordance with the Indenture and the Local Obligation
Bond Indentures.
(1) Between the date of this Purchase Agreement and twenty-five (25) days after
the end of the underwriting period, the Authority will not, without the prior written consent of the
Underwriter, offer or issue any certificates, bonds, notes, or other obligations for borrowed money or
incur any material liabilities, direct or contingent, payable from or secured by a pledge of Net Special
Taxes.
(m) Any certificate signed by any officer of the Authority authorized to execute
such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the
Underwriter shall be deemed a representation and warranty of the Authority to the Underwriter and the
Community Facilities Districts as to the statements made therein but not of the person signing such
certificate.
(n) The Indenture creates a valid pledge of, and first lien upon the Revenues
deposited thereunder, and the amounts held in certain funds and accounts established and pledged
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under the Indenture, subject in all cases to the provisions of the Indenture permitting the application
thereof for the purposes and on the terms and conditions set forth therein.
(o) Except as described in the Preliminary Official Statement and the Official
Statement, neither the City nor any of its related entities that are staffed by the City, including the
Authority, have failed to comply with any of their undertakings pursuant to Rule 15c2-12 within the
last five years.
Section 7. Representations, Warranties and Covenants of the Community Facilities
Districts. The Community Facilities Districts represent, warrant and covenant to the Underwriter and
the Authority that:
(a) The City is a municipal corporation and general law city duly organized and
existing under and by virtue of the Constitution and laws of the State and has duly authorized the
formation of the Community Facilities Districts, the incurring of bonded indebtedness thereby and
other matters relating to the Community Facilities Districts pursuant to resolutions duly adopted by the
City Council (collectively, the "Community Facilities Districts Formation Resolutions" and, together
with the Local Obligation Bond Resolutions, the "Community Facilities Districts Resolutions") and
the Community Facilities District Act. The City Council, as the legislative body of the City and the
Community Facilities Districts, has duly adopted the Community Facilities Districts Formation
Resolutions, ordinances of the City Council levying within the Community Facilities Districts the
Special Taxes applicable thereto (the "Ordinances"), and has caused to be recorded in the real property
records of the County of Orange, California (the "Co un ") notices of special tax lien with respect to
the Community Facilities District, and any required amendments thereof (collectively, the "Notices of
Special Tax Lien" and, together with the Community Facilities Districts Formation Resolutions and
the Ordinances, the "Formation Documents"), and has duly adopted the Local Obligation Resolutions.
The Formation Documents remain in full force and effect as of the date hereof and have not been
amended or rescinded. The Community Facilities Districts are duly organized and validly existing as
community facilities districts under the laws of the State. The Community Facilities District have, and
at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute,
deliver and perform their respective obligations under the Community Facilities District Documents to
which they are a party, and to carry out all transactions contemplated by each of such agreements; (ii)
to issue, sell and deliver their respective Local Obligations as provided herein; and (iii) to carry out,
give effect to and consummate the transactions contemplated by their Formation Documents, the
Community Facilities District Documents to which they are a party, and the Official Statement.
(b) The Community Facilities District and the City, as applicable, have each
complied, and will at the Closing Date be in compliance in all material respects, with the Formation
Documents and the Local Obligation Bond Documents, and any immaterial noncompliance by the
Community Facilities Districts and the City, if any, will not impair the ability of the Community
Facilities Districts and the City, as applicable, to carry out, give effect to or consummate the
transactions contemplated by the foregoing. From and after the date of issuance of the Local
Obligations, the Community Facilities Districts and the City Council of the City, as the legislative body
of the Community Facilities Districts, will continue to comply with their respective covenants
contained in the Community Facilities District Documents.
(c) By all necessary official action, the City Council, as the legislative body of the
Community Facilities Districts, has duly authorized and approved the Local Obligation Bond
Documents, has duly authorized and approved the Preliminary Official Statement and the Official
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Statement and has duly authorized and approved the execution and delivery of, and the performance
by the Community Facilities Districts of their obligations on their part contained in, the Local
Obligation Bond Documents to which they are a party and the consummation by the Community
Facilities Districts of all other transactions contemplated by the Local Obligation Bond Documents in
connection with the issuance of the Local Obligations. As of the date hereof, such authorizations and
approvals are in full force and effect and have not been amended, modified or rescinded. When
executed and delivered, and assuming due execution and delivery by the other parties thereto, if
applicable, the Local Obligation Bond Documents to which they are a parry will constitute the legally
valid and binding obligations of the Community Facilities Districts enforceable in accordance with
their respective terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors'
rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against
municipal corporations in the State. The Community Facilities Districts have complied, and will at
the Closing be in compliance in all material respects, with the terms of the Local Obligation Bond
Documents to which they are party.
(d) The Community Facilities Districts are not in any material respect in breach of
or default under any applicable constitutional provision, law, ordinance or administrative rule or
regulation of the State, the County, or administrative regulation of any state or of the United States, or
any agency or instrumentality thereof either, or any applicable judgment or decree, or any loan
agreement, indenture, bond, note, resolution, agreement or other instrument to which the Community
Facilities District are a party which breach or default has or may have a materially adverse effect on
the ability of the Community Facilities Districts to perform their respective obligations under the Local
Obligation Bond Documents to which they are a party, and no event has occurred and is continuing
which with the passage of time or the giving of notice, or both, would constitute such a default or event
of default under any such instrument; and the adoption, execution and delivery of the Local Obligation
Bond Documents, and compliance with the provisions on its part contained therein, will not conflict in
any material way with or constitute a material breach of or a material default under any constitutional
provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note,
resolution, agreement or other instrument, nor will any such execution, delivery, adoption or
compliance result in the creation or imposition of any lien, charge or other security interest or
encumbrance of any nature whatsoever upon any of the property or assets of either Community
Facilities District or under the terms of any such law, regulation or instrument, except as may be
provided by the Local Obligation Bond Documents.
(e) Except as described in or contemplated by the Preliminary Official Statement
and the Official Statement, all material authorizations, approvals, licenses, permits, consents and orders
of any governmental authority, legislative body, board, agency or commission having jurisdiction of
the matter which are required for the due authorization by, or which would constitute a condition
precedent to or the absence of which would materially adversely affect the due performance by the
Community Facilities Districts of their respective obligations in connection with the Local Obligation
Bond Documents to which they are a party have been duly obtained or, when required for future
performance, are expected to be obtained, other than such approvals, consents and orders as may be
required under the Blue Sky or securities laws of any state in connection with the offering and sale of
the Bonds.
(f) The Preliminary Official Statement was as of its date and at the date hereof,
and the Official Statement is, and at all times subsequent to the date of the Official Statement up to and
including the Closing will be, true and correct in all material respects, and the Preliminary Official
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Statement did not as of its date and at date the hereof, and the Official Statement does not and will not,
at all times subsequent to the date of the Official Statement up to and including the Closing, contain
any untrue statement of a material fact or omit to state a material fact that is necessary to make the
statements contained therein, in the light of the circumstances under which they were made, not
misleading (except that this representation does not include statements in the Official Statement under
the caption "MISCELLANEOUS — Underwriting," information regarding DTC and its book entry only
system, and information regarding the Insurer, the Policy, and the Reserve Policy, as to which no view
is expressed).
(g) Each Community Facilities District will advise the Underwriter promptly of
any proposal to amend or supplement the Official Statement. The Community Facilities Districts will
advise the Underwriter promptly of the institution of any proceedings known to it by any governmental
authority prohibiting or otherwise affecting the use of the Official Statement in connection with the
offering, sale or distribution of the Bonds.
(h) As of the time of acceptance hereof, except as disclosed in the Official
Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, governmental authority, public board or body, pending, with service of process upon the
City or either Community Facilities District having been accomplished, or threatened in writing to the
City or either Community Facilities District: (i) in any way questioning the corporate existence of the
City or either Community Facilities District or the titles of the officers of the City to their respective
offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of
the Bonds or the Local Obligations, the payment or collection of Revenues or Special Taxes or any
other amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or any
amounts pledged or to be pledged to pay Local Obligations, or in any way contesting or affecting the
validity of the Bonds, the Local Obligations or the Community Facilities District Documents or the
consummation of the transactions contemplated thereby or hereby; (iii) contesting the exclusion of the
interest on the Bonds from taxation, contesting the powers of the Authority to issue the Bonds, or
contesting the powers of the Community Facilities Districts which may result in any material adverse
change relating to the financial condition of the Community Facilities Districts; (iv) which would be
likely to result in any material adverse change relating the Community Facilities Districts of their
ability to pay debt service on their respective Local Obligations when due; (v) which would be likely
to result in any material adverse change relating to the business, operations or financial condition of
the City or the Community Facilities Districts; or (vi) contesting the completeness or accuracy of the
Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or
asserting that the Preliminary Official Statement or the Official Statement contained any untrue
statement of a material fact or omitted to state any material fact that is necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(i) To the knowledge of the Community Facilities Districts, there is no basis for
any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (vi)
of paragraph 7(h).
0) Until the date which is twenty-five (25) days after the end of the underwriting
period, if any event shall occur of which the Community Facilities Districts are aware that would cause
the Official Statement to contain any untrue statement of a material fact or omit to state a material fact
that is necessary in order to make the statements in the Official Statement, in light of the circumstances
under which they were made, not misleading (other than statements in the Official Statement under the
caption "MISCELLANEOUS — Underwriting," information regarding DTC and its book entry only
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system, and information regarding the Insurer, the Policy, and the Reserve Policy), the Community
Facilities Districts shall forthwith notify the Underwriter of any such event of which it has knowledge
and shall cooperate fully in furnishing any information available to it for any supplement to the Official
Statement necessary, in the Underwriter's reasonable opinion, so that the statements therein as so
supplemented will not be misleading in light of the circumstances existing at such time and the
Community Facilities Districts shall promptly furnish to the Underwriter a reasonable number of
copies of such supplement.
(k) Except as disclosed in the Preliminary Official Statement and the Official
Statement, the Community Facilities Districts have not within the last five years failed to comply in
any material respect with any of their respective continuing disclosure undertakings with regard to
Rule 15c2-12 to provide annual reports or notices of material events specified in such rule.
(1) The Community Facilities Districts will refrain from taking any action, or
permitting any action to be taken, with regard to which the Community Facilities Districts may exercise
control, that results in the loss of the tax-exempt status of the interest on the Bonds.
(m) Between the date of this Purchase Agreement and twenty-five (25) days after
the end of the underwriting period, the Community Facilities Districts will not, without the prior written
consent of the Underwriter, offer or issue any certificates, bonds, notes, or other obligations for
borrowed money or incur any material liabilities, direct or contingent, payable from or secured by a
pledge of the Net Special Taxes securing their respective Local Obligations.
(n) Any certificate signed by any officer of the City on behalf of the Community
Facilities Districts authorized to execute such certificate in connection with the execution, sale and
delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty
of the applicable Community Facilities District to the Underwriter and the Authority as to the
statements made therein but not of the person signing such certificate.
Section 8. Conditions to the Obligations of the Underwriter. The Underwriter has
entered into this Purchase Agreement in reliance upon the representations and warranties of the
Authority and the Community Facilities Districts contained herein. The obligations of the Underwriter
to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the
Underwriter, to the accuracy in all material respects of the statements of the officers and other officials
of the Authority and of the Community Facilities Districts, as well as authorized representatives of
Bond Counsel, the Trustee, the Local Obligation Bond Trustee and the Escrow Agent made in any
certificates or other documents furnished pursuant to the provisions hereof, to the performance by the
Authority and the Community Facilities Districts of their obligations to be performed under the
Authority Bond Documents and the Local Obligation Bond Documents to which they are a party,
respectively, at or prior to the Closing Date; and to the following additional conditions:
(a) The representations, warranties and covenants of the Authority and the
Community Facilities Districts contained herein shall be true and correct at the date hereof and at the
time of the Closing, as if made on the Closing Date.
(b) At the time of Closing, the Authority Bond Documents and the Local
Obligation Bond Documents shall be in full force and effect as valid and binding agreements between
or among the various parties thereto, and the Authority Bond Documents, the Local Obligation Bond
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Documents and the Official Statement shall not have been amended, modified or supplemented except
as may have been agreed to in writing by the Underwriter.
(c) At the time of the Closing, no material default shall have occurred or be
existing under the Authority Bond Documents, the Local Obligation Bond Documents or any other
agreement or document pursuant to which any of their financial obligations were executed and
delivered, and the Authority and the Community Facilities Districts shall not be in default in the
payment of principal or interest with respect to any of their respective financial obligations, which
default would materially adversely impact the ability of the Authority to pay the Bonds or the
Community Facilities Districts to pay their respective Local Obligations.
(d) In recognition of the desire of the Authority, the Community Facilities Districts
and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential
adverse impact of any of the following events on such a public offering, this Purchase Agreement shall
be subject to termination in the discretion of the Underwriter by notification, in writing, to the
Authority and the Community Facilities Districts prior to delivery of and payment for the Bonds, if
between the date hereof and the time of Closing, in the Underwriter's sole and reasonable judgment
any of the following events shall occur (each a "Termination Event"):
(i) the market price or marketability of the Bonds, or the ability of the
Underwriter to enforce contracts for the sale of the Bonds, shall be materially adversely affected by
any of the following events:
(A) legislation shall have been enacted by the Congress of the
United States or the legislature of the State or shall have been favorably reported out of committee of
either body or be pending in committee of either body, or shall have been recommended to the
Congress for passage by the President of the United States or a member of the President's Cabinet, or
a decision shall have been rendered by a court of the United States or the State or the Tax Court of the
United States, or a ruling, resolution, regulation or temporary regulation, release or announcement shall
have been made or shall have been proposed to be made by the Treasury Department of the United
States or the Internal Revenue Service, or other federal or state authority with appropriate jurisdiction,
with respect to federal or state taxation upon interest received on obligations of the general character
of the Bonds;
(B) there shall have occurred (1) an outbreak or escalation of
hostilities or the declaration by the United States of a national emergency or war or (2) any other
calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such
calamity or crisis; or
(C) a general suspension of trading on the New York Stock
Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall
have been fixed and be in force, or maximum ranges for prices for securities shall have been required
and be in force on any such exchange, whether by virtue of determination by that exchange or by order
of U.S. Securities and Exchange Commission ("SEC") or any other governmental authority having
jurisdiction; or
(D) legislation shall have been enacted by the Congress of the
United States or shall have been favorably reported out of committee or be pending in committee, or
shall have been recommended to the Congress for passage by the President of the United States or a
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member of the President's Cabinet, or a decision by a court of the United States shall be rendered, or
a ruling, regulation, proposed regulation or statement by or on behalf of the SEC or other governmental
agency having jurisdiction of the subject matter shall be made, to the effect that any obligations of the
general character of the Bonds and the Local Obligations are not exempt from registration under or
other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities
Exchange Act of 1934, as amended and as then in effect, or that the Indenture or the Local Obligation
Bond Indentures are not exempt from qualification under or other requirements of the Trust Indenture
Act of 1939, as amended and as then in effect; or
(E) except as disclosed in or contemplated by the Official
Statement, any material adverse change in the affairs of the Authority or the Community Facilities
Districts shall have occurred; or
(F) any rating of the Bonds or the rating of any obligations of the
Authority, the Community Facilities Districts or the Insurer shall have been downgraded, withdrawn
or placed on credit watch with negative outlook by any major credit rating agency; or
(ii) any event or circumstance shall exist that either makes untrue or
incorrect in any material respect any statement or information in the Official Statement (other than any
statement provided by the Underwriter) or is not reflected in the Official Statement but should be
reflected therein in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading and, in either such event, the Authority or the Community Facilities
Districts refuse to permit the Official Statement to be supplemented to supply such statement or
information, or the effect of the Official Statement as so supplemented is to materially adversely affect
the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for
the sale of the Bonds; or
(iii) a general banking moratorium shall have been declared by federal or
State authorities having jurisdiction and be in force; or
(iv) a material disruption in securities settlement, payment or clearance
services affecting the Bonds shall have occurred; or
(v) any new restriction on transactions in securities materially affecting the
market for securities (including the imposition of any limitation on interest rates) or the extension of
credit by, or a charge to the net capital requirements of, underwriters shall have been established by
the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the
United States, or by Executive Order; or
(vi) a decision by a court of the United States shall be rendered, or a stop
order, release, regulation or no -action letter by or on behalf of the SEC or any other governmental
agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the
issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this
Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering
or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the
Closing Date, including the Securities Act of 1933, as amended and as then in effect, the Securities
Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939; or
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(vii) the commencement of any action, suit or proceeding described in
Section 6(g) or Section 7(h).
Subject to Sections 10 and 17, upon the occurrence of a Termination Event and the termination
of this Purchase Agreement by the Underwriter, all obligations of the Authority, the Community
Facilities Districts and the Underwriter under this Purchase Agreement shall terminate, without further
liability.
(e) at or prior to the Closing, the Underwriter shall receive the following
documents, in each case to the reasonable satisfaction in form and substance of the Underwriter:
(i) The executed Authority Bond Resolution together with a certificate
dated as of the Closing Date of the Secretary of the Board of Directors to the effect that such resolution
is a true, correct and complete copy thereof, has not been amended, modified or rescinded since the
date of its adoption and remains in full force and effect as of the Closing Date;
(ii) The executed Local Obligation Bond Resolutions, together with a
certificate dated as of the Closing Date of the City Clerk to the effect that such resolutions are true,
correct and complete copies thereof, have not been amended, modified or rescinded since the date of
their adoption and remain in full force and effect as of the Closing Date;
(iii) A certificate dated as of the Closing Date of the City Clerk to the effect
that the Formation Documents have not been amended, modified or rescinded since the date of their
adoption and remain in full force and effect as of the Closing Date;
(iv) Evidence of recordation in the real property records of the County of
the Notices of Special Tax Lien, in the forms required by the Community Facilities District Act;
(v) The Authority Bond Documents and the Local Obligation Bond
Documents, each duly executed and delivered by the respective parties thereto, with only such
amendments, modifications or supplements as may have been agreed to in writing by the Underwriter;
(vi) Specimen Bonds and Specimen Local Obligations;
(vii) The approving opinion of Bond Counsel dated the Closing Date and
addressed to the Authority in substantially the form attached as Appendix E to the Official Statement,
and a reliance letter thereon addressed to the Underwriter;
(viii) A supplemental opinion of Bond Counsel dated the Closing Date and
addressed to the Underwriter in substantially the form attached hereto as Exhibit D:
(ix) One or more opinions of Bond Counsel dated the Closing Date,
addressed to the Underwriter and the Authority, approving, without qualification, the validity of the
Local Obligations and the Local Obligation Bond Indentures and such matters as may be reasonably
requested by the Underwriter and the Authority;
(x) The Official Statement, executed on behalf of the Authority and the
Community Facilities Districts, and the Preliminary Official Statement;
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(xi) Evidence that the rating on the Bonds is as described in the Official
Statement;
(xii) A certificate, dated the Closing Date, signed by a duly authorized
officer of the Authority, satisfactory in form and substance to the Underwriter, to the effect that: (A)
the Authority Bond Resolution was duly adopted at a regular meeting of the Authority's Board of
Directors held on May 20, 2025, at which a quorum was present and acting throughout, is in full force
and effect as of the date hereof and has not been amended, modified or supplemented, except as agreed
to by the Underwriter; (B) the representations, warranties and covenants of the Authority contained in
this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date by the Authority; (C) no event affecting the Authority
has occurred since the date of the Official Statement which should be disclosed in the Official
Statement for the purposes for which it is to be used or which is necessary to disclose therein in order
to make the statements and information therein not misleading in any material respect; (D) the
information and statements contained in the Official Statement (other than the statements in the Official
Statement under the caption "MISCELLANEOUS — Underwriting," information regarding DTC and
its book entry only system, and information regarding the Insurer, the Policy, and the Reserve Policy,
as to which no view need be expressed) did not as of its date and do not as of the Closing contain an
untrue statement of a material fact or omit to state any material fact that is necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading in
any material respect; and (E) the Authority is not, in any material respect, in breach of or default under
any applicable law or administrative regulation of the State or the United States or any applicable
judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including but
not limited to the Authority Bond Documents) or other instrument to which the Authority is a party or
is otherwise subject, which would have a material adverse impact on the Authority's ability to perform
its obligations under the Authority Bond Documents, and no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both, would constitute such a default or
event of default under any such instrument.
(xiii) A certificate of the Community Facilities Districts, dated the Closing
Date, signed by authorized representatives of the Community Facilities Districts, satisfactory in form
and substance to the Underwriter, to the effect that: (A) the Local Obligation Resolutions were duly
adopted at regular meeting of the City Council of the City, acting as the legislative body of the
Community Facilities District, held on May 20, 2025, at which a quorum was present and acting
throughout, is in full force and effect as of the Closing Date and have not been amended, modified or
supplemented, except as agreed to by the Underwriter; (B) the representations, warranties and
covenants of the Community Facilities District contained in this Purchase Agreement are true and
correct in all material respects on and as of the Closing Date with the same effect as if made on the
Closing Date by the City; (C) no event affecting the Community Facilities Districts has occurred since
the date of the Official Statement which should be disclosed in the Official Statement for the purposes
for which it is to be used or which is necessary to disclose therein in order to make the statements and
information therein not misleading in any material respect; (D) the information and statements
contained in the Official Statement (other than information in the Official Statement under the captions
"MISCELLANEOUS — Underwriting," information regarding DTC and its book -entry only system,
and information regarding the Insurer, the Policy and the Reserve Policy) did not as of its date and
does not as of the Closing contain an untrue statement of a material fact or omit to state any material
fact that is necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading in any material respect; and (E) the Community Facilities Districts are not,
in any material respect, in breach of or default under any applicable law or administrative regulation
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of the State or the United States or any applicable judgment or decree or any loan agreement, indenture,
bond, note, resolution, agreement (including but not limited to the Local Obligation Bond Documents)
or other instrument to which the Community Facilities Districts are a party or are otherwise subject,
which would have a material adverse impact on the Community Facilities Districts' ability to perform
their respective obligations under the Local Obligation Bond Documents to which they are a party, and
no event has occurred and is continuing which, with the passage of time or the giving of notice, or
both, would constitute such a default or event of default under any such instrument.
(xiv) An opinion dated the Closing Date and addressed to the Underwriter of
Woodruff, Spradlin & Smart, A Professional Corporation, as counsel to the Authority, to the effect
that:
(A) the Authority is duly organized and validly existing as a joint
exercise of powers authority under the laws of the State of California;
(B) the Authority Bond Resolution was duly adopted at regular
meeting of the Authority's Board of Directors, which was called and held pursuant to law, with all
public notice required by law and at which a quorum was present and acting throughout, is in full force
and effect and has not been modified, amended, rescinded or repealed since its date of adoption;
(C) the Authority has full right and lawful authority to execute and
deliver the Authority Bond Documents and such documents have been duly authorized, executed and
delivered by and on behalf of the Authority, and assuming the due authorization, execution and delivery
by the other parties thereto, the Authority Bond Documents are valid and binding obligations of the
Authority enforceable in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium, or similar laws, or by legal or equitable principles relating to
or limiting creditors' rights generally;
(D) except as otherwise disclosed in the Preliminary Official
Statement and the Official Statement, to the best knowledge of such counsel, there is no action, suit,
proceeding, inquiry, or investigation before or by any court or public board or body pending, with
service of process upon the Authority having been accomplished, or, to the best knowledge of such
counsel, threatened in writing against the Authority, wherein an unfavorable decision, ruling, or finding
would adversely affect the transactions contemplated by the Bonds, the Authority Bond Documents or
any other agreement, document, or certificate related to such transaction;
(E) insofar as it will have a material adverse effect on the ability of
the Authority to enter into, carry out or perform its obligations under the Authority Bond Documents
or to consummate the transactions contemplated thereby, to the best of our knowledge, the Authority
is not in material breach of or default under any applicable judgment or decree or any loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or to
which the Authority or any of its property or assets is otherwise subject, and no event has occurred and
is continuing which with the passage of time or the giving of notice, or both, would constitute a default
or an event of default under any such judgment, decree or instrument; and
(F) no authorization, approval, consent, or order of any
governmental agency or, to the best of our knowledge, any other person or corporation is required for
the valid authorization, execution and delivery of the Authority Bond Documents on behalf of the
Authority that has not been obtained.
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(xv) An opinion dated the Closing Date and addressed to the Underwriter
Woodruff, Spradlin & Smart, A Professional Corporation, as counsel to the Community Facilities
Districts, to the effect that:
(A) the City is a municipal corporation and general law city duly
organized and existing under and by virtue of the Constitution and laws of the State;
(B) the Community Facilities Districts are duly organized and
validly existing as community facilities districts under and by virtue of the Constitution and laws of
the State (including the Community Facilities District Act), and has all requisite power and authority
thereunder: (a) to enter into, execute, deliver and perform their respective covenants and agreements
under the Community Facilities District Documents to which they are a party; (b) to approve and
authorize the use, execution and distribution of the Preliminary Official Statement and the Official
Statement; (c) to issue, sell, execute and deliver their respective Local Obligations; (d) to pledge the
Net Taxes as contemplated by the Local Obligation Bond Indenture relating to their respective Local
Obligations; and (e) to carry on their activities as currently conducted;
(C) the Local Obligation Bond Resolutions and the Formation
Documents have been duly adopted at meetings of the City Council of the City that were called and
held pursuant to law and with all public notice required by law and at which a quorum was present and
acting throughout, and the Local Obligation Bond Resolutions and the Formation Documents are in
full force and effect and have not been modified, amended, rescinded or repealed since the respective
dates of their adoption;
(D) the Local Obligation Bond Documents and the Official
Statement have duly authorized, executed and delivered by the Community Facilities Districts and,
assuming due authorization, execution and delivery by the other parties thereto, as applicable, the Local
Obligation Bond Documents constitute the valid and binding obligations of the Community Facilities
Districts, except as enforcement may be limited by bankruptcy, insolvency, moratorium, or similar
laws, or by legal or equitable principles relating to or limiting creditors' rights generally;
(E) no consent, authorization or approval of, or filing or
registration with, any governmental or regulatory officer or body which has not already been obtained
is required to be obtained by the Community Facilities Districts for their execution and performance
of their respective Local Obligation Bond Documents or the actions on their part contemplated thereby,
including causing the issuance of their respective Local Obligations;
(F) except as otherwise disclosed in the Preliminary Official
Statement and the Official Statement, to the best knowledge of such counsel, there is no litigation,
proceeding, action, suit or investigation at law or in equity before or by any court, governmental
authority or body, pending, with service of process upon the City or either Community Facilities
District having been accomplished, or, to the best knowledge of such counsel, threatened in writing
against the City or the Community Facilities District, challenging the creation, organization or
existence of the City, the Community Facilities Districts or the validity of the Local Obligation Bond
Documents or seeking to restrain or enjoin the payment or collection of Special Taxes, any amounts
pledged or to be pledged to pay the principal of and interest on the Local Obligations, any amounts
pledged or to be pledged to pay the principal of and interest on the Bonds, the repayment of the Bonds
or in any way contesting or affecting the validity of the Local Obligation Bond Documents or
contesting the authority of the Community Facilities Districts to enter into or perform their respective
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obligations under the Local Obligation Bond Documents to which they are a party, which, in any
manner, questions the right of the Community Facilities Districts to pay the Local Obligations or the
use of special taxes to pay the Local Obligations, or which may materially adversely affect the ability
of the Community Facilities Districts to pay debt service on the Local Obligations when due.
(G) the execution and delivery of the Local Obligation Bond
Documents and compliance with the provisions thereof do not and will not in any material respect
conflict with or constitute on the part of the Community Facilities Districts a breach of or default under
any agreement or other instrument to which either Community Facilities District is a party or by which
either is bound or any existing law, regulation, court order or consent decree to which either is subject,
which breach or default has or may have a material adverse effect on the ability of either Community
Facilities District to perform its respective obligations under the Local Obligation Bond Documents to
which it is a party;
(xvi) A letter of Stradling Yocca Carlson & Rauth LLP, Newport Beach,
California, as disclosure counsel to the City and the Authority, dated the Closing Date and addressed
to the Underwriter, in substantially the form attached as Exhibit E hereto.
(xvii) An opinion of Anzel Galvan LLP, San Francisco, California, counsel
to the Underwriter, in form and substance satisfactory to the Underwriter;
(xviii) An opinion of counsel to The Bank of New York Mellion Trust
Company, N.A. (the `Bank"), as Trustee, Local Obligation Bond Trustee, and Escrow Agent addressed
to the Underwriter, dated the Closing Date, to the effect that:
(A) The Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States having full power and
authority and being qualified to enter into, accept and administer the trust created under the Indenture,
the Local Obligation Bond Indentures and the Escrow Agreements (collectively, the "Bank
Documents") and to enter into the Bank Documents;
(B) The Bank Documents have been duly authorized, executed and
delivered by the Bank and, assuming due authorization, execution and delivery by the other parties
thereto, constitute the legal, valid and binding obligations of the Bank, enforceable against the Bank in
accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws affecting enforcement of creditors' rights generally and by the application of
equitable principles if equitable remedies are sought;
(C) To such counsel's knowledge, no authorization, approval,
consent, or order of any governmental agency or regulatory authority having jurisdiction over the Bank,
except for such authorizations, approvals or consents previously obtained, is required for the
authorization, execution and delivery by the Bank of the Bank Documents; and
(D) An authorized representative of the Bank has duly
authenticated the Bonds in accordance with the Indenture and the Local Obligations in accordance with
the Local Obligation Bond Indentures.
(xix) Certified copies of the general resolution of the Bank authorizing the
execution and delivery of certain documents by certain officers of the Bank, which resolution
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authorizes the execution of the Bank Documents, the authentication of the Bonds and the Local
Obligations.
(xx) A certificate, dated the Closing Date, signed by a duly authorized
official or representative of the Bank, substantially to the effect that: (a) the Bank is a national banking
association organized and existing under and by virtue of the laws of the United States, having the full
power and being qualified to enter into and perform its duties under the Bank Documents, to
authenticate and deliver the Bonds to the Underwriter, and to authenticate and delivery the Local
Obligations; (b) the Bank is duly authorized to enter into the Bank Documents, to authenticate and
deliver the Bonds to the Underwriter pursuant to the Indenture, and to authenticate and deliver the
Local Obligations pursuant to the Local Obligation Bond Indentures; (c) when the Bonds are delivered
to and paid for by the Underwriter at the Closing, the Bonds and the Local Obligations will have been
duly authenticated and delivered by the Bank; (d) the execution and delivery of the Bank Documents
and compliance with the provisions on the Bank's part contained therein, will not conflict with or
constitute a breach of or default under any law, administrative regulation, judgment, decree, loan
agreement, indenture, note, resolution, agreement or other instrument to which the Bank is a party or
is otherwise subject (except that no representation, warranty or agreement is made with respect to any
federal or state securities or blue sky laws or regulations), which conflict, breach or default would
materially impair the ability of the Bank to perform its obligations under the Bank Documents, nor will
any such execution, delivery, adoption or compliance result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature whatsoever upon any of the properties
or assets held by the Bank pursuant to the liens created by the Bank Documents under the terms of any
such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note,
resolution, agreement or other instrument, except as provided by the Bank Documents; and (e) to the
best of the knowledge of the Bank, it has not been served with any action, suit, proceeding, inquiry or
investigation in law or in equity, before or by any court, governmental agency, public board or body,
nor is any such action or other proceeding threatened against the Bank, affecting the existence of the
Bank, or the titles of its officers to their respective offices or seeking to prohibit, restrain, or enjoining
the execution and delivery of the Bonds, the Local Obligations or the collection of revenues to be
applied to pay the principal, premium, if any, and interest with respect to the Bonds or the Local
Obligations or the pledge thereof, or in any way contesting or affecting the validity or enforceability
of any Bank Document, or contesting the powers of the Bank or its authority to enter into, adopt or
perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable
decision, ruling or funding would materially adversely affect the validity or enforceability of the Bank
Documents or the power and authority of the Bank to enter into and perform its duties under the Bank
Documents, to authenticate and deliver the Bonds to or upon the order of the Underwriter and to
authenticate and deliver the Local Obligations;
(xxi) A certificate dated the Closing Date from Webb Municipal Finance,
LLC, as Special Tax Consultant and dissemination agent, addressed to the Authority, the Community
Facilities Districts and the Underwriter to the effect that, with respect to each Community Facilities
District: (i) the Special Taxes applicable thereto, if levied and collected in the maximum amounts
permitted pursuant to the rate and method of apportionment established for such Community Facilities
District, as of the Closing Date, would generate at least 110% of the annual debt service payable with
respect to their respective Local Obligations plus the Administrative Expenses Cap (as defined in the
applicable Local Obligation Bond Indenture), based on such assumptions and qualifications as shall be
acceptable to the Underwriter; (ii) the statements in the Preliminary Official Statement and the Official
Statement provided by the Special Tax Consultant concerning the Special Taxes and all information
supplied by it for use in the Official Statement were as of the date of the Preliminary Official Statement,
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the date of the Official Statement and are as of the Closing Date true and correct, and do not contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading; and (iii)
the Special Tax Consultant is duly authorized to execute and deliver the Continuing Disclosure
Agreement in its capacity as dissemination agent thereunder, and the Special Tax Consultant has duly
executed and delivered the Continuing Disclosure Agreement.
(xxii) For each of the Bonds and the Local Obligations, the preliminary and
final Statement of Sale required to be delivered to the California Debt and Investment Advisory
Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the
Government Code;
(xxiii) A copy of the executed Blanket Issuer Letter of Representations by and
between the Authority and DTC relating to the book -entry system;
(xxiv) A tax certificate dated the Closing Date of the City and the Authority
relating to the Bonds in form and substance to the reasonable satisfaction of Bond Counsel and the
Underwriter, together with an IRS Form 8038-G relating to the Bonds;
(xxv) Certificates, dated the date of the Preliminary Official Statement, of the
Authority and the Community Facilities Districts, as required under Rule 15c2-12;
(xxvi) Evidence that a debt management policy which complies with Section
8855 of the Government Code has been adopted by the Authority and the Community Facilities
Districts;
(xxvii) Certified copies of the JPA Agreement and all amendments thereto and
related certificates issued by the Secretary of State of the State (or, alternatively, a certificate of the
Authority confirming that notice of the JPA Agreement and all amendments thereto have been fled
with the Secretary of State prior to the Closing Date);
(xxviii) Evidence satisfactory to the Underwriter that the Trustee has received
the Policy and the Reserve Policy from the Insurer;
(xxix) An opinion of counsel to the Insurer, dated the Closing Date, in form
and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters,
the Policy, and disclosures relating thereto in the Official Statement;
(xxx) A certificate of the Insurer, dated the Closing Date, in form and
substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters, the
Policy and the Reserve Policy, and disclosures relating thereto in the Official Statement;
(xxxi) A copy of the Blue Sky Survey dated the date of Closing with respect
to the Bonds;
(xxxii) One or more defeasance opinions of Bond Counsel dated the Closing
Date and addressed to the Underwriter, substantially to the effect that the pledge of special taxes and
other funds provided for in the indentures pursuant to which the Prior Bonds were issued, all
obligations of the Community Facilities Districts with respect to their respective Prior Bonds have
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ceased and terminated, except as expressly provided such indentures and the Prior Bonds are no longer
outstanding within the meaning of such indentures;
(xxxiii) A verification report of Causey Public Finance LLC with respect to the
sufficiency of amounts deposited with the Escrow Agent under the Escrow Agreements to defease and
redeem the outstanding Prior Bonds in accordance with the terms of the Escrow Agreements; and
(xxxiv) Such additional legal opinions, certificates, proceedings, instruments
or other documents as Bond Counsel or the Underwriter may reasonably request.
All of the opinions, letters, certificates, instruments and other documents mentioned in this
Purchase Agreement will be deemed to be in compliance with the provisions of this Purchase
Agreement if, but only if, they are in form and substance satisfactory to the Underwriter. If the
Authority and Community Facilities District shall be unable to satisfy the conditions to the obligations
of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase
Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the
Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase
Agreement shall terminate and neither the Authority, the Community Facilities District nor the
Underwriter shall be under any further obligation hereunder, except that their respective obligations of
set forth in Section 10 hereof shall continue in full force and effect
Section 9. Changes in Official Statement. Within 90 days after the Closing or within 25
days following the end of the underwriting period, whichever occurs first, if any event relating to or
affecting the Bonds, the Local Obligations, the Trustee, the Local Obligation Bond Trustee, the
Authority or the Community Facilities Districts shall occur as a result of which it is necessary, in the
reasonable opinion of the Underwriter, to amend or supplement the Official Statement in order to make
the Official Statement not misleading in any material respect in the light of the circumstances existing
at the time it is delivered to a purchaser, the Authority and the Community Facilities Districts will
forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or
supplement the Official Statement so that it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The
Authority and the Community Facilities Districts shall cooperate with the Underwriter in the filing by
the Underwriter of such amendment or supplement to the Official Statement with the MSRB.
Section 10. Expenses. Whether or not the Bonds are sold to the Underwriter, or the Local
Obligations are sold to the Authority, the Underwriter shall be under no obligation to pay any expenses
incident to the performance of the obligations of the Authority or the Community Facilities Districts
hereunder. If the Bonds are delivered by the Authority to the Underwriter, the Authority shall pay,
from the proceeds of the Bonds or from other funds of the Authority or the Community Facilities
Districts, the following expenses: (a) the cost of preparing, duplicating or printing, mailing and
delivering the Community Facilities District Documents, the Authority Bond Documents, the Local
Obligation Bond Documents, the Preliminary Official Statement, the Official Statement and all other
agreements and documents that are contemplated therein and hereby (and drafts of any thereof); (b)
the cost of preparation and printing of the definitive Bonds and the Local Obligations; (c) the fees and
expenses of the Authority, the Community Facilities Districts, the Trustee, the Local Obligation Bond
Trustee, Bond Counsel, Disclosure Counsel, the Municipal Advisor, any entity retained by the
Authority, the City or the Community Facilities Districts to perform continuing disclosure compliance
research or provide continuing disclosure compliance reports and any other experts or consultants
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retained by the Authority, the City or the Community Facilities Districts; (d) the charges of any rating
agency with respect to the Bonds; (e) premiums and other expenses relating to the Policy and the
Reserve Policy; (f) reimbursement to the Underwriter for payment of any fees and expenses reasonably
incurred in connection with the initial offering, sale and delivery of the Bonds, including but not limited
to industry fees (e.g., DTC, DAC, IPREO, CUSIP and Day Loan fees) only if the Authority and
Underwriter have previously discussed and approved the allocation of proceeds towards these fees,
and meal and travel expenses of the personnel of the City or the Authority, but not including
entertainment expenses or those to be paid by the Underwriter pursuant to the last paragraph of this
Section 10; and (g) all other fees and expenses, not including entertainment expenses, reasonably
incurred in connection with the preparation of the Authority Bond Documents, the Local Obligation
Bond Documents, the Preliminary Official Statement, the Official Statement and all other agreements
and documents that are contemplated hereby (and drafts of any thereof) and/or the initial offering, sale
and delivery of the Bonds. The Authority and the Community Facilities Districts have authorized, and
do hereby authorize, the Underwriter to pay such expenses on behalf of the Authority and the
Community Facilities Districts from proceeds of the Bonds at Closing as further described in the
closing memorandum relating to the Bonds.
If the Bonds are sold to the Underwriter by the Authority, the Authority shall pay out of the
proceeds of the Bonds the discount of the Underwriter, or the purchase price paid for the Bonds shall
reflect such discount.
Except as otherwise provided in this Section 10, the Underwriter shall pay the cost, if any, of
qualifying the Bonds for sale in the various states chosen by the Underwriter, all advertising expenses
in connection with the public offering of the Bonds and all other expenses incurred by it in connection
with its public offering and distribution of the Bonds, not described above.
Section 11. Qualification of Bonds. The Authority and the Community Facilities Districts
will furnish such information, execute such instruments and take such other action in cooperation with
the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale
under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the
United States as the Underwriter may designate and to provide for the continuance of such
qualification; provided, however, that neither the Authority nor the Community Facilities Districts will
be required to qualify as a foreign corporation or to file any general or special consents to service of
process under the laws of any state.
Section 12. Notices. Any notice or other communication to be given to the Underwriter
under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus &
Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067,
Attention: Sara Brown. All notices or communications hereunder by any party shall be given and
served upon each other party. Any notice or communication to be given to the Authority or the
Community Facilities Districts under this Purchase Agreement may be given by delivering the same
in writing to the applicable address set forth on the first page of this Purchase Agreement.
Section 13. Parties in Interest. This Purchase Agreement is made solely for the benefit of
the Authority, the Community Facilities Districts and the Underwriter (including the successors or
assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof.
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Section 14. Severability. In case any one or more of the provisions contained herein shall
for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
Section 15. Entire Agreement. This Purchase Agreement contains the entire agreement
between the parties relating to the subject matter hereof and supersedes all oral statements, prior
writings and representations with respect thereto.
Section 16. Counterparts. This Purchase Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the same instrument.
Section 17. Survival of Representations and Warranties. The representations and
warranties of the City and the Authority in or made pursuant to this Purchase Agreement shall not be
deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or
termination of this Purchase Agreement and regardless of any investigations made by or on behalf of
the Underwriter (or statements as to the results of such investigations) concerning such representations
and statements of the Authority or the Community Facilities Districts and regardless of delivery of and
payment for the Bonds.
Section 18. Waiver of Jury Trial. THE AUTHORITY AND THE COMMUNITY
FACILITIES DISTRICTS HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS PURCHASE AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 19. Effectiveness. This Purchase Agreement shall become effective and binding
upon the respective parties hereto upon the execution of the acceptance hereof by the Authority and
the Community Facilities Districts and shall be valid and enforceable as of the time of such acceptance.
[Signature Page Follows]
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Section 20. Governing Law. This Purchase Agreement shall be governed by and
construed in accordance with the laws of the State.
Accepted as of the date first stated above:
TUSTIN FINANCING AUTHORITY
Executive Director
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Title: Authorized Officer
Time of Execution: a.m./p.m. Pacific Time
CITY OF TUSTIN COMMUNITY FACILITIES
DISTRICT NO. 06-1 (TUSTIN
LEGACY/COLUMBUS VILLAGES)
City Manager of the City of Tustin, acting as
the legislative body of City of Tustin
Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Time of Execution: a.m./p.m. Pacific Time
CITY OF TUSTIN COMMUNITY FACILITIES
DISTRICT NO. 2014-1 (TUSTIN
LEGACY/STANDARD PACIFIC)
City Manager of the City of Tustin, acting as
the legislative body of City of Tustin
Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific)
Time of Execution: a.m./p.m. Pacific Time
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EXHIBIT A
TUSTIN FINANCING AUTHORITY
Special Tax Revenue Refunding Bonds, Series 2025
MATURITY SCHEDULE
Maturity Initial
Date Principal Interest Offering 10% Test 10% Test
(September 1) Amount Rate Yield Price Used Satisfied
C Priced to first optional redemption date of September 1, 20, at par.
I Insured Bonds.
REDEMPTION PROVISIONS
Hold -the-
Offering -
Price Rule
Used
Optional Redemption. The Bonds maturing on or before September 1, 20 are not subject to
optional redemption prior to maturity. The Bonds maturing on or after September 1, 20 may be
redeemed at the option of the Authority, from any source of available funds, prior to maturity on any
date on or after September 1, 20_ as a whole, or in part from maturities of the Local Obligations
simultaneously redeemed, if any redemption of Local Obligations is being made in conjunction with
such optional redemption, and otherwise from such maturities as are selected by the Authority, at a
redemption price equal to the par amount of the Bonds to be redeemed, together with accrued interest
thereon to the date of redemption, without premium.
If the source of funds to optionally redeem the Bonds is to be from a redemption of a Local
Obligation, then prior to consenting to the optional redemption of any Local Obligation which it has
purchased and is held under the Indenture, the Authority will deliver to the Trustee a certificate of an
Independent Accountant or an Independent Financial Consultant verifying that, following such
optional redemption of the Local Obligations and redemption of Bonds, the principal and interest
generated from the remaining Local Obligations is adequate to make the timely payment of principal
and interest due on the Bonds remaining Outstanding following such optional redemption.
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Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20_ are subject
to mandatory sinking fund redemption prior to maturity, in part, on September 1, 20_, and on each
September 1 thereafter by lot, from sinking fund payments at a redemption price equal to the principal
amount of Bonds to be redeemed, together with accrued interest to the date of redemption, without
premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
The Bonds maturing on September 1, 20_ are subject to mandatory sinking fund redemption
prior to maturity, in part, on September 1, 20_, and on each September 1 thereafter by lot, from
sinking fund payments at a redemption price equal to the principal amount of Bonds to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the Bonds maturing September 1, 20_ or September 1, 20 are redeemed
pursuant to the Indenture, the sinking fund payments for such Bonds will be reduced as nearly as
practicable on a proportionate basis in integral multiples of $5,000.
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EXHIBIT B
LOCAL OBLIGATIONS
City of Tustin Community Facilities District No. 06-1
(Tustin Legacy/Columbus Villages)
Special Tax Refunding Bonds, Series 2025
MATURITY SCHEDULE
Maturity Date Principal
(September 1) Maturity Interest Rate Yield Price
REDEMPTION PROVISIONS
Optional Redemption. The CFD No. 06-1 Local Obligations maturing on or after September
1, 20 may be redeemed, at the option of the District from any source of funds on any date on or after
September 1, 20, in whole, or in part from such maturities as are selected by the District and by lot
within a maturity, at a redemption price equal to the principal amount to be redeemed, together with
accrued interest to the date of redemption, without premium. For so long as the Authority is the Owner
of the CFD No. 06-1 Local Obligations, in connection with the calculation of such redemption price,
the District shall receive a credit from the Authority from the reduction in the District's Proportionate
Share resulting from the redemption of the CFD No. 06-1 Local Obligations and the Authority CFD
No. 06-1 Local Obligations so redeemed in connection therewith.
Extraordinary Redemption. The CFD No. 06-1 Local Obligations are subject to extraordinary
redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date,
and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account
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pursuant to Section 3.2 at the following redemption prices, expressed as a percentage of the principal
amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates
Redemption
Prices
Any Interest Payment Date from September 1, 20 through March 1, 20 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
For so long as the Authority is the Owner of the CFD No. 06-1 Local Obligations, in connection
with the calculation of such redemption price, the District shall receive a credit from the Authority
from the reduction in the Proportionate Share of the Reserve Requirement resulting from the
redemption of the CFD No. 06-1 Local Obligations and the Authority CFD No. 06-1 Local Obligations
so redeemed in connection therewith.
Mandatory Sinking Fund Redemption. The CFD No. 06-1 Local Obligations maturing on
September 1, 20 are subject to mandatory sinking fund redemption prior to maturity, in part, on
September 1, 20, and on each September 1 thereafter by lot, from sinking fund payments at a
redemption price equal to the principal amount of CFD No. 06-1 Local Obligations to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
The CFD No. 06-1 Local Obligations maturing on September 1, 20 are subject to mandatory
sinking fund redemption prior to maturity, in part, on September 1, 20 , and on each September 1
thereafter by lot, from sinking fund payments at a redemption price equal to the principal amount of
CFD No. 06-1 Local Obligations to be redeemed, together with accrued interest to the date of
redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the CFD No. 06-1 Local Obligations maturing September 1, 20 or
September 1, 20_ are redeemed pursuant to Section 4.1(a) or (b) hereof, the sinking fund payments
for such CFD No. 06-1 Local Obligations will be reduced as nearly as practicable on a proportionate
basis in integral multiples of $5,000.
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City of Tustin Community Facilities District No. 2014-1
(Tustin Legacy/Standard Pacific)
Special Tax Refunding Bonds, Series 2025
MATURITY SCHEDULE
Maturity Date Principal
(September 1) Maturity Interest Rate Yield
REDEMPTION PROVISIONS
Price
Optional Redemption. The CFD No. 2014-1 Local Obligations maturing on or after September
1, 20_ may be redeemed, at the option of the District from any source of funds on any date on or after
September 1, 20, in whole, or in part from such maturities as are selected by the District and by lot
within a maturity, at a redemption price equal to the principal amount to be redeemed, together with
accrued interest to the date of redemption, without premium. For so long as the Authority is the Owner
of the CFD No. 2014-1 Local Obligations, in connection with the calculation of such redemption price,
the District shall receive a credit from the Authority from the reduction in the District's Proportionate
Share resulting from the redemption of the CFD No. 2014-1 Local Obligations and the Authority CFD
No. 2014-1 Local Obligations so redeemed in connection therewith.
Extraordinary Redemption. The CFD No. 2014-1 Local Obligations are subject to
extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest
Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption
Account pursuant to Section 3.2 at the following redemption prices, expressed as a percentage of the
principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates Redemption
Prices
Any Interest Payment Date from September 1, 20 through March 1, 20 103%
September 1, 20 and March 1, 20 102
September 1, 20 and March 1, 20 101
September 1, 20 and any Interest Payment Date thereafter 100
For so long as the Authority is the Owner of the CFD No. 2014-1 Local Obligations, in
connection with the calculation of such redemption price, the District shall receive a credit from the
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Authority from the reduction in the Proportionate Share of the Reserve Requirement resulting from the
redemption of the CFD No. 2014-1 Local Obligations and the Authority CFD No. 2014-1 Local
Obligations so redeemed in connection therewith.
Mandatory Sinking Fund Redemption. The CFD No. 2014-1 Local Obligations maturing on
September 1, 20 are subject to mandatory sinking fund redemption prior to maturity, in part, on
September 1, 20, and on each September 1 thereafter by lot, from sinking fund payments at a
redemption price equal to the principal amount of CFD No. 2014-1 Local Obligations to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
The CFD No. 2014-1 Local Obligations maturing on September 1, 20 are subject to
mandatory sinking fund redemption prior to maturity, in part, on September 1, 20 , and on each
September 1 thereafter by lot, from sinking fund payments at a redemption price equal to the principal
amount of CFD No. 2014-1 Local Obligations to be redeemed, together with accrued interest to the
date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that the CFD No. 2014-1 Local Obligations maturing September 1, 20 or
September 1, 20 are redeemed pursuant to Section 4.1(a) or (b) hereof, the sinking fund payments
for such CFD No. 2014-1 Local Obligations will be reduced as nearly as practicable on a proportionate
basis in integral multiples of $5,000.
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EXHIBIT C
TUSTIN FINANCING AUTHORITY
Special Tax Revenue Refunding Bonds, Series 2025
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated ("Stifel") hereby
certifies as set forth below with respect to the sale and delivery of the above -captioned obligations (the
"Bonds").
Sale of the General Rule Maturities.
(a) Stifel offered the Hold -the -Offering -Price Maturities to the Public for purchase at the
respective initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the
Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this
certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated [Pricing Date], by and between
Stifel, as the Underwriter (as defined below), and the Issuer (as defined below), Stifel has agreed in
writing that: (i) for each Maturity of the Hold -the -Offering -Price Maturities, it would neither offer nor
sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering
Price for such Maturity during the Holding Period for such Maturity (the "hold -the -offering -price
rule"); and (ii) any selling group agreement shall contain the agreement of each dealer who is a member
of the selling group, and any third -party distribution agreement shall contain the agreement of each
broker -dealer who is a party to the third -party distribution agreement, to comply with the hold -the -
offering -price rule. Pursuant to such agreement, no Underwriter has offered or sold any Maturity of
the Hold -the -Offering -Price Maturities at a price that is higher than the respective Initial Offering Price
for that Maturity of the Bonds during the Holding Period.
2. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A
hereto as the "General Rule Maturities."
(b) Hold -the -Offering -Price Maturities means those Maturities of the Bonds listed in
Schedule A hereto as the "Hold -the -Offering -Price Maturities."
(c) Holding Period means, with respect to a Hold -the -Offering -Price Maturity, the period
starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the
Sale Date (which Sale Date is [Pricing Date]), or (ii) the date on which Raymond James has sold at
least 10% of such Hold -the -Offering -Price Maturity to the Public at prices that are no higher than the
Initial Offering Price for such Hold -the -Offering -Price Maturity.
(d) Issuer means the Tustin Financing Authority.
(e) Maturity means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as
separate maturities.
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(f) Public means any person (including an individual, trust, estate, partnership,
association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term "related party" for purposes of this certificate generally means any two or more persons who
have greater than 50 percent common ownership, directly or indirectly.
(g) Underwriter means: (i) any person that agrees pursuant to a written contract with the
Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale
of the Bonds to the Public; and (ii) any person that agrees pursuant to a written contract directly or
indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the
Bonds to the Public (including a member of a selling group or a party to a third -party distribution
agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in
this certificate represents Stifel's interpretation of any laws, including specifically Sections 103 and
148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The
undersigned understands that the foregoing information will be relied upon by the Issuer, City of Tustin
Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) ("CFD No. 06-1") and
City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) ("CFD No.
2014-1" and together with CFD No. 06-1, the "Community Facilities Districts"), with respect to certain
of the representations set forth in the Tax Certificate and with respect to compliance with the federal
income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth LLP, in connection
with rendering its opinion that the interest on the Bonds is excluded from gross income for federal
income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal
income tax advice that it may give to the Issuer or the Community Facilities Districts from time to time
relating to the Bonds. The certifications contained herein are not necessarily based on personal
knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or
institutional knowledge (or both) regarding the matters set forth herein.
Dated: [Closing Date]
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:_
Name:
By:
Name:
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING
PRICES OF THE HOLD -THE -OFFERING -PRICE MATURITIES
(Attached)
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SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)
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EXHIBIT D
FORM OF SUPPLEMENTAL OPINION
2025
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Re: $ Tustin Financing Authority Special Tax Revenue Refunding Bonds, Series
2025
Ladies and Gentlemen:
We have examined certified copies of proceedings taken for the issuance and sale to Stifel,
Nicolaus & Company, Incorporated (the "Underwriter") of the above -referenced bonds (the "Bonds"),
and we have rendered our opinion (the "Approving Opinion") to the Tustin Financing Authority (the
"Authority") this day regarding the validity and enforceability of the Bonds. The Bonds have been
issued pursuant to the authority contained in Article 4 of Chapter 5 of Division 7 of Title 1 of the
California Government Code (the "Act") and that certain Indenture of Trust dated as of [June] 1, 2025
(the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company,
N.A., as Trustee. We have also rendered our opinions (the "Local Obligations Approving Opinions")
to the City of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages) and
the City of Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific)
(collectively, the "CFDs") with respect to the issuance of the Local Obligations. You may rely upon
our Approving Opinion and our Local Obligations Approving Opinions as if they were addressed to
you.
Capitalized terms not otherwise defined herein shall have the meanings set forth in the Bond
Purchase Agreement dated , 2025 (the "Purchase Agreement"), among the Authority, the CFDs
and the Underwriter.
In connection with the preparation of this opinion, we have examined originals or copies
certified or otherwise identified to our satisfaction of (i) the Purchase Agreement, (ii) the Indenture
and the [Local Obligations Indentures], (iii) the Official Statement dated , 2025 and posted on
2025 relating to the Bonds (the "Official Statement"), (iv) the Continuing Disclosure
Agreement of the Authority dated as of [June] 1, 2025, by and between the Authority and Webb
Municipal Finance, LLC, as Dissemination Agent, (v) the letters, certificates and opinions delivered
to you pursuant to the provisions of Section of the Purchase Agreement, and (vi) such other
documents, certificates, instructions and records as we have considered necessary or appropriate as a
basis for this opinion.
We have assumed, but not independently verified, that the signatures on all documents, letters,
opinions and certificates which we have examined are genuine, that all documents submitted to us are
authentic and were duly and properly executed by the parties thereto and that all representations made
in the documents that we have reviewed are true and accurate. As to questions of fact material to our
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opinion, we have relied upon the representations of each party made in the aforesaid documents, and
we have made no independent investigation of such matters.
Based upon the foregoing and such other information and documents as we consider necessary
to render this opinion, we are of the opinion that:
(i) The Purchase Agreement, Continuing Disclosure Agreement and the Local Obligation
Indentures have been duly authorized, executed and delivered by the Authority and, assuming due
authorization, execution and delivery by and validity against the other parties thereto, constitute the
legal, valid and binding obligations of the Authority, enforceable in accordance with their terms,
except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance
or transfer, moratorium or other laws relating to or affecting the enforcement of creditors' rights
generally, by the exercise of judicial discretion in accordance with general principles of equity or
otherwise in appropriate cases and by the limitation on legal remedies against public agencies in the
State of California; provided, however, that we express no opinion as to any provisions therein relating
to indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions
contained therein.
(ii) The statements contained in the Official Statement under the captions
"INTRODUCTION — Financing Purpose," "— The Bonds; The Local Obligations," "— Sources of
Payment for the Bonds and the Local Obligations," and "— Description of the Bonds," "FINANCING
PLAN," "THE BONDS" (other than information relating to DTC and its book -entry only system as to
which no opinion is expressed)," "SECURITY FOR THE BONDS," "SECURITY FOR THE LOCAL
OBLIGATIONS," "LEGAL MATTERS — Tax Matters," and in Appendix E thereto, excluding any
material that may be treated as included under such captions by reference to other documents, insofar
as such statements expressly summarize certain provisions of the Indenture, the [Local Obligation
Indentures], and Bond Counsel's final opinion are accurate in all material respects.
(iii) The Bonds [and the Local Obligations] are not subject to the registration requirements
of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to
the Trust Indenture Act of 1939, as amended.
The foregoing opinions are based upon our analysis and interpretation of existing laws,
regulations, rulings and judicial decisions and cover certain matters not directly addressed by such
authorities. The opinions are limited to matters governed by the laws of the State of California and
federal securities laws, and we assume no responsibility with respect to the applicability or the effect
of the laws of any other jurisdiction.
Except as expressly set forth in the Approving Opinion, we express no opinion regarding any
tax consequences with respect to the Bonds. No opinion is expressed herein with respect to the
compliance with, or applicability of, any "blue sky" laws of any state as they relate to the offer or sale
of the Bonds.
We call attention to the fact that the foregoing opinions may be affected by actions taken (or
not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to
determine, or to inform any person, whether such actions or events are taken (or not taken) or occur
(or do not occur), and we expressly disclaim any responsibility to advise you as to events occurring
after the date hereof with respect to the Bonds or other matters discussed in the Official Statement.
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No attorney -client relationship has existed or exists between our firm and the Underwriter in
connection with the Bonds or by virtue of this letter. This letter is solely for your benefit and is not to
be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other
person. This letter is not intended to be relied upon by holders of Bonds or owners of any beneficial
interest therein.
Our engagement with respect to the Bonds terminates as of the date hereof, and we have not
undertaken any duty, and expressly disclaim any responsibility, to advise you as to events occurring
after the date hereof with respect to the Bonds or other matters discussed herein or in the Official
Statement.
Respectfully submitted,
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EXHIBIT E
FORM OF DISCLOSURE COUNSEL LETTER
2025
Tustin Financing Authority
Tustin, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
[Insurer]
Re: $ Tustin Financing Authority Special Tax Revenue Refunding Bonds, Series
2025
Ladies and Gentlemen:
We have acted as Disclosure Counsel to the Tustin Financing Authority (the "Authority") in
connection with the sale and issuance of the above -referenced bonds (the "Bonds"). The Bonds are
being issued pursuant to Resolution No. adopted on [May 20], 2025, by the Board of Directors
of the Authority and an Indenture of Trust, dated as of [June] 1, 2025 (the "Indenture"), by and between
the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee.
Capitalized terms not otherwise defined herein shall have the meanings set forth in the Bond
Purchase Agreement dated , 2025 (the "Purchase Agreement"), among the Authority, the City
of Tustin Community Facilities District No. 06-1 (Tustin Legacy/Columbus Villages), the City of
Tustin Community Facilities District No. 2014-1 (Tustin Legacy/Standard Pacific) and Stifel, Nicolaus
& Company, Incorporated, as underwriter (the "Underwriter"). This letter is being delivered to you
pursuant to Section of the Purchase Agreement.
We have examined the record of proceedings submitted to us relative to the sale and issuance
of the Bonds and originals or copies certified or otherwise identified to our satisfaction of (i) the
Indenture, (ii) the Preliminary Official Statement for the Bonds dated , 2025 and posted on
2025 (the "Preliminary Official Statement"); (iii) the Official Statement for the Bonds dated
2025 and posted on , 2025 (the "Official Statement"), and (iv) the certificates, opinions
of counsel, instructions and records delivered pursuant to Section _ of the Purchase Agreement.
We have assumed, but not independently verified, that the signatures on all documents, letters,
opinions, certificates and instructions which we have examined are genuine, that all documents
submitted to us are authentic and were duly and properly executed by the parties thereto and that all
representations made in the documents that we have reviewed are true and accurate.
We are not passing upon and have not undertaken to determine independently or to verify the
accuracy or completeness of the statements contained in the Preliminary Official Statement or the
Official Statement and are, therefore, unable to make any representation to you in that regard. Based
on our participation in conferences with the Underwriter and its counsel, representatives of the
Authority, the City, Fieldman, Rolapp & Associates, Inc., the Authority's Municipal Advisor, Webb
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Municipal Finance, LLC, the Authority's Special Tax Consultant, and others, during which
conferences the content of the Preliminary Official Statement and the Official Statement and related
matters were discussed, our reliance on the oral and written statements of the Authority, the City and
others, our review of and reliance upon the documents, certificates, instructions and records and the
opinions of counsel described above and our understanding of applicable law, and subject to the
limitations on our role as Disclosure Counsel to the Authority, we advise you as a matter of fact but
not opinion that no information has come to the attention of the attorneys in the firm representing the
Authority as Disclosure Counsel on this matter which caused us to believe that (a) the Preliminary
Official Statement as of its date or as of , 2025, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading (except that we
express no view with respect to: (i) the expressions of opinion, the assumptions, the projections,
estimates and forecasts, the charts, the financial statements or other financial, numerical, economic,
demographic or statistical data, assessed valuations, or environmental matters contained in the
Preliminary Official Statement; (ii) any information relating to CUSIP numbers; (iii) any information
with respect to The Depository Trust Company and its book -entry system; (iv) any information
contained in the Appendices to the Preliminary Official Statement, except Appendix A; (v) any
information incorporated by reference into the Preliminary Official Statement; (vi) any information
with respect to the Underwriter or underwriting matters with respect to the Bonds, including but not
limited to information under the caption "MISCELLANEOUS —Underwriting"; and (vii) any
information relating to the Bond Insurer, the Insurance Policy and the Reserve Surety Bond, as to
which no view is expressed); provided, however, with respect to the foregoing conclusion, we note
that the Preliminary Official Statement contained certain information marked as preliminary, subject
to change, and omitted certain information permitted to be omitted by Rule 15c2-12; and (b) the
Official Statement as of its date contained, or as of the date hereof contains, any untrue statement of a
material fact, or as of its date omitted, or as of the date hereof omits, to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading in any material respect (except that we express no view with respect
to: (i) the expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts,
the financial statements or other financial, numerical, economic, demographic or statistical data,
assessed valuations, or environmental matters contained in the Official Statement; (ii) any information
relating to CUSIP numbers; (iii) any information with respect to The Depository Trust Company and
its book -entry system; (iv) any information contained in the Appendices to the Official Statement,
except Appendix A; (v) any information incorporated by reference into the Official Statement; (vi) any
information with respect to the Underwriter or underwriting matters with respect to the Bonds,
including but not limited to information under the caption "MISCELLANEOUS —Underwriting"; and
(vii) any information relating to the Bond Insurer, the Insurance Policy and the Reserve Surety Bond,
as to which no view is expressed). In providing the advice and assistance in connection with the
preparation of the Preliminary Official Statement and the Official Statement, we conducted no
independent diligence on the Municipal Securities Rulemaking Board's Electronic Municipal Market
Access website, and we express no view regarding the Authority's, the City's or the City's related
entities' compliance with any obligation to file annual reports or provide notice of events, each as
described in Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934. We advise
you that, other than reviewing the various certificates and opinions required by Section of the
Purchase Agreement regarding the Official Statement, we have not taken any steps since the date of
the Official Statement to verify the accuracy of the statements contained in the Preliminary Official
Statement or the Official Statement as of the date hereof.
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By acceptance of this letter you acknowledge that the preceding paragraph is neither a legal
opinion nor a guarantee regarding the Preliminary Official Statement or the Official Statement; rather
it is a statement of negative assurance regarding factual information that did not come to the attention
of the attorneys in our firm working on this matter during the limited activities that we performed as
Disclosure Counsel to the Authority. Our services did not include financial or other non -legal advice.
By acceptance of this letter, the Underwriter recognizes and acknowledges that (i) the advice
herein is based on certain limited activities performed by specific attorneys in our firm in our role as
Disclosure Counsel; (ii) the scope of the activities performed by such attorneys in our role as Disclosure
Counsel and for purposes of delivering such advice was inherently limited and does not purport to
encompass all activities necessary for compliance by the Underwriter with applicable state and federal
securities laws; and (iii) the activities performed by such attorneys in our role as Disclosure Counsel
rely in part on representations, warranties, certifications and opinions of other parties to the transaction,
including representations, warranties and certifications made by the Authority, the City, the
Underwriter, and others.
Further, in accepting this letter the Authority recognizes and acknowledges that: (i) the scope
of those activities performed by us was inherently limited and does not encompass all activities that
the Authority may be responsible to undertake in preparing the Preliminary Official Statement and the
Official Statement; (ii) those activities performed by us relied substantially on representations,
warranties, certifications and opinions made by representatives of the Authority, the City and others,
and are otherwise subject to the matters set forth in this letter; (iii) while such statements of negative
assurance are customarily given to underwriters of municipal bonds to assist them in discharging their
responsibilities under federal securities laws, the responsibilities of the Authority under those laws may
differ from those of underwriters in material respects, and such statements may not serve the same
purpose or provide the same utility to the Authority as it would to the Underwriter; and (iv) this letter
is not intended to be relied upon by the Authority or its representatives as a basis for making the
representations made by the Authority in any documents executed by the Authority in connection with
the sale and issuance of the Bonds.
This letter is furnished by us as Disclosure Counsel to the Authority. No attorney -client
relationship has existed or exists between our firm and the Underwriter in connection with the Bonds
or by virtue of this letter. We note that the Underwriter is represented by separate counsel retained by
it in connection with the transaction described in the Official Statement. This letter is delivered to you
solely for your benefit and is not to be used, circulated, quoted or otherwise referred to or relied upon
for any other purpose without our prior written consent. This letter is not intended to and may not be
relied upon by owners of the Bonds or the owners of any beneficial interest therein or any other party
to which it is not addressed.
Our engagement with respect to the Bonds terminates as of the date hereof, and we have not
undertaken any duty, and expressly disclaim any responsibility, to advise you as to events occurring
after the date hereof with respect to the Bonds or other matters discussed herein or in the Official
Statement.
Respectfully submitted,
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